Summer Budget 2015 – Landlords Reactions

Just been catching up on the last few dozen pages or so and the direction a topic is a really useful.

The debates about YOUR position, the impact on YOUR tenants, YOUR mortgage payments, YOUR tax position lets me know where the BTL insight is.

Interestingly comments below begin to show the desired effect:
"You should not tax debt"
"I am going to sell and live off pension credits"
"My only option is to sell a repay debts by 2020".

The word here is risk. Please note this is not YOUR risk on YOUR strategy and YOUR lives but you need to elevate the viewpoint. Borrowing is too high and based upon current interest rates is setting a massively uncomfortable position. (No, not YOU.....this is not about YOU but about the population, the housing market, the mortgage bond markets, the banking infrastructure, the 2008 bail out, the potential default positions, the distribution of debt.)

The suggestion by the poster who asks "then I will rely on pension credits, how does that help the economy George".
It helps because it reduces the risk.

Fairness is a concept considered when looking at things from YOUR position. But whilst you are on the ground fighting - the view from the helicopter looks very different.

Debt is the issue. With Basel coming along I see trouble ahead. It is deliberate and C24 is a warning.

I see people diving into this market to save 3% stamp duty....ouch.

Back to the core post...landlord reaction to the budget. Mine is to reduce debt.

Reply to the comment left by "David Price" at "01/03/2016 - 22:01":

You got me worried now David. The 10% wear and tear allowance is still there right? It just needs to be backed with receipts. Or have I got that wrong?

Reply to the comment left by "Jim Taliadoros" at "02/03/2016 - 09:03":

Hi Jim

No the 10% has been removed as an automatic deduction.

As you said you now claim back what you spend so in some ways you will be able to claim more than the 10% as long as you have receipt.

Reply to the comment left by "Ros ." at "01/03/2016 - 18:53":

Well, we haven't raised rents for 10 years , so I think it's about time we did. Wouldn't have done it if not for Clause 24. No one compensates landlords for the rip-off tenants who trash the property, don't pay their rent and then get rehoused by the Council.

Reply to the comment left by "Kathy Evans" at "02/03/2016 - 10:05":

I likewise haven't raised some rents for years either. Let sleeping dogs lie has been my approach up until now . But no more .The dog in me has been well and truly kicked by the chancellor so naturally I have started to bark and bite back

I`m making another £300 pcm so far with 50 quid here and 50 quid there in rent rises . Many more to come this year and next year and so on and so till i can cover my 5 fold rise in my tax bill Still a long way to go but i will get there.

Its the LHA tenants of mine which I feel sorry for. They will suffer the most. Their rates are frozen for 4 years. They cant afford top up and they already use food banks. The gap will get wider and wider between LHA and private so sec 21`s may be served . That`s 23 of my tenants and their families and 20 of my clients families made homeless . Their fear is palpable

I asked an LHA tenant to go along to the council yesterday to test out a theory . I said speak to the welfare provision department and tell them why you are here. Fight my corner for me as its your corner now as well

Without clause 24 I wouldnt have bothered. The 2 bed rate they are on is the lowest rent in my portfoilo. Tell them about clause 24 and see what they say . Tell them your rent hasn`t been raised in 3 years

The welfare provison department said. Yes of course we will fund the difference . Yippee I thought . Problem solved . Ah but then the low blow . We will only do it for 12 weeks while you find a cheaper property.

If I had been there i would have screamed . 12 weeks is no bloody good . Your LHA freeze is for 4 years. And there are no properties available for them to go to anyway let alone a cheaper one . Are you saying you want me to put them into a 1 bed and then get social services on their back for overcrowding.

I was watching the House of Lords Debate on Housing yesterday, One member appeared to have mouth wide open eyes closed and slumped asleep in full shot of the TV but still no doubt claiming their daily allowance. What an appalling example to set to those being made homeless as we speak because of Clause 24

This government is cruel to the extreme

The large corporate landlords that we are starting to hear so much about will, without doubt, seek to achieve the maximum possible income from their properties.

Generally that is going to mean at least inflation linked increases in rent, unless / until a tenant can't / won't pay. In addition, there will be service charges and other bills that the tenant will be responsible for.

Individual landlords not adjusting the rent to match the market for extended periods of time is quite common. In recent years, where interest rates have been low and reducing and capital values have been appreciating, that hasn't caused any problem for the landlord.

Clause 24 has caused individual landlords to reconsider and, in some cases, to start thinking of rent increases. Not before time in some cases. There are many obvious examples of landlords that are not achieving market rates for their rents and many that aren't earning the cost of capital on their properties.

Whenever you think about rents, it is surely worth casting half an eye on what large corporate landlords are doing. How much did the rent at your local university accommodation go up in the last 12 months for instance?

I just read the full year results from the US institutional landlord, ColonyStarwood. Yes it is different over there, but having in mind that interest rates in the US are close to zero and that CS' interest rate on it's debt is around 3.19%, I was interested to note that its average gross yield on its portfolio of 12,881 homes is 11.15%

Sure, that is a factor of both rent and asset prices in the US compared to here, but 11.15% gross yield is where they are and they are expecting 4% - 5% rental growth in the next 12 months.

Boris Johnson storms ahead in the race for No 10 as he leads George Osborne by more than 20% among the activists who will pick the next Prime Minister

http://www.dailymail.co.uk/news/article-3472597/Tory-activists-pick-Prime-Minister-Boris-Johnson-huge-margin-polling-suggests-beats-George-Osborne-TWENTY-points.html

Conservative Party membership £25 or £2.09 per month - worth the 'temporary membership' to punish Gideon if he goes head to head with BoJo after Cameron's position proves untenable following a landslide Brexit ? I think so. Bring it on.

Anyone recommend when to join in case they start playing with party rules to stop another Corbyn membership swell debacle ?

Reply to the comment left by "adam prospect" at "02/03/2016 - 08:42":

"Back to the core post…landlord reaction to the budget. Mine is to reduce debt."

And not increase rents at the same time?

Charitably subsidising your tenants rather than de-leveraging quicker and building a bigger reserve fund.

What a good egg.

Almost too good to be true.

Reply to the comment left by "Jonathan Clarke" at "02/03/2016 - 10:53":

I`m making another £300 pcm so far with 50 quid here and 50 quid there in rent rises . Many more to come this year and next year and so on and so till i can cover my 5 fold rise in my tax bill Still a long way to go but i will get there.

I've been doing the same and I'm keeping going until I can weather the 20% rate being scrapped as well. Obviously only as much as the market allows but I think there is plenty more to come yet- amazed at the lack of understanding of this by some (most?) landlords. Realisation will sinks in eventually.

Its the LHA tenants of mine which I feel sorry for. They will suffer the most. Their rates are frozen for 4 years.

Fully agree, no where else to go for those right at the bottom. At least Shelter are fighting their cause.

LHA rates for the forthcoming year (same as last year);

http://www.rla.org.uk/landlord/guides/local-housing-allowance-rates-2016-2017.shtml