Summer Budget 2015 – Landlords Reactions

Please enlighten us all as to why you think it's fair then ?

Reply to the comment left by "Rajesh Hiremath" at "29/02/2016 - 13:28":

@Rajesh,

1. "rich Landlords" who do not have mortgages on their properties are not affected by this tax
2. the most indebted Landlords are being hit the hardest
3. properties held in a company structure (rather than personally) are not affected by this tax change.
4. the so-called "restriction on tax relief" only affecting 40%/45% taxpayers is only as a result of the fact these Landlords are having their profits taxed at 40%/45% in the first place, if they were treated as an incorporated business for tax purposes then they too would be unaffected just as incorporated businesses are being unaffected.

Please explain how you think that this is fair?

Reply to the comment left by "Rajesh Hiremath" at "29/02/2016 - 13:28":

Rajesh I am a private landlord with a modest portfolio my rental income is £65k my mortgage payment £42k which delivers a profit of around £21k on which I pay tax.
When the budget change fully comes in my supposed taxable income will increase to £42k which will make me a higher tax payer so try tax bill will increase from £2k to over £6K - please explain why you think it is fair my tax bill should increase by 78%. Luckily I've not had a policy of annual rent increases but that will be changing going forward so that my income stream is protected

Reply to the comment left by "Barry Fitzpatrick" at "29/02/2016 - 13:56":

Hi Barry,

1. "Rich Landlords" are who pay higher income tax and can afford to pay little bit more.
2. " most indebted landlords". This is an exaggeration. How many are there such landlords? Need facts to justify.
3 and 4. "BTL companies". This is an alternative form of the tax avoidance scheme. But these companies give employment to people and pay taxes through their employees.

Please note: Most of the landlords have benefitted from low interest and low inflations for last 6 years. Why grumble now?

Landlords can always recoup this cost by increasing the rent. It is always the case in most of the business ventures. I am sure that will happen.

Reply to the comment left by "Rajesh Hiremath" at "29/02/2016 - 13:28":

"According to the BTL association survey 76% of the landlords own BTL property and they pay basic income tax at 20%. Hence, it should not affect them. Only those landlords who own BTL properties and come under higher income tax bracket have to pay little bit more tax. Over all it is fair. Higher earners (rich landlords) will pay more which is the basis of taxation. You must thank Mr Osborne for not removing the tax rebate altogether. Let us not be too much greedy. Leave some profit to the nation."

I hear this argument quite a lot. That it only affects high earners. From the same people I then hear the tax changes justified by arguing that encouraging larger corporates into the market and pushing out Mom'n'pop businesses will raise standards. The two are contradictory. Make your minds up!

You are missing the point big time and I feel that you are making your points to get a reaction I am a private landlord with a decent size portfolio and used to untill clause 24 provide employment for many people just because the properties are in private names I am not considered a business but if I put a ltd after my name I am now a business even though I am still doing exactly the same I was doing under my own name it's a joke and a discrimination on people who have mortgages you still haven't given a decent response as to how it is fair as I don't believe you fully graspe all the details of this grab some will be paying 100% tax so u think that is fair ? Also rent increases may not be an option in certain areas ie lower end so the only other option is sell and make vunerable families homeless who will house them local councils ? I think not

Reply to the comment left by "Carol Duckfield" at "29/02/2016 - 14:14":

Hi Carol,

Please note, I am not a tax expert or a financial advisor. As far as I know one can deduct personal allowance, property maintenance costs, depreciation etc. and 20% deduction on the mortgage payment. I am sure you are doing all that. So tax bill increase of 78% can be bit of exaggeration.

Rajesh,

1. Landlords that are higher income tax rate payers are already paying a bit more, that's why its called higher rate tax because the rate is higher... What they are doing is getting those already paying more to pay even more, at some point the incentive to earn more is lost and people like myself look for jobs where you don't do as many hours to after tax increase the hourly rate... That ultimately leads to reduced tax take and is not good for the economy...

2. You realise indebted means the property has a mortgage right? The new tax is on interest payments on mortgages, thus it is those people that will be hit the hardest, the richest landlords will not have a mortgage as the property will be owned outright.

3 and 4. Setting up a company is a form of tax avoidance, I have never heard such drivel in my entire life, profit is derived from income minus expenses, that's how all business is taxed, if all businesses were taxed on income rather than profit there would be no business and now jobs.

low interest rates are not the fault of landlords, it could be argued that the low interest rates have increased the competition and kept rents lower than they otherwise would in some areas of the PRS and low inflation would usually mean lower house price rises which does not help a landlord..

One thing you have understood, the result will be increasing rents, but actually landlords don't want to increase rents to tenants already struggling to meet the cost of the failure of government to provide enough houses for the population... This is the argument we have been trying to say, it is not a landlord tax, it will be a tenant tax, if you taxed people for renting there would be uproar about the injustice, but by doing it through that back door and calling it a removal of tax relief everyone hails it as a good thing..

Reply to the comment left by "Rajesh Hiremath" at "29/02/2016 - 14:19":

"Landlords can always recoup this cost by increasing the rent. It is always the case in most of the business ventures. I am sure that will happen."

So that is why you think it is fair? Because it won't cost you, the landlord. It'll just get passed onto the tenants?

But yes, today I am writing to nine tenants increasing their rents so that it is in effect for 1 April. I am trying to mitigate the effects of my soon to be higher than 80% effective tax rate (and I'm only a little over 35% leveraged).

Setting up a company as a way of avoidance Im loosing the will live really am if people believe that statement not one landlord I know has got an issue of paying tax on profit.

And carol isn't exaggerating for example if you have 100k per year interest 80k of this is added to your income and you will probably be taxed 40%. do the sums it is a huge increase its ludicrous how anyone can possibly think that's fair you simply can tax debt it is a cost end of story. If all businesses where treated the same the economy would collapse as businesses would become loss making by paying more tax than profit it's madness.