Summer Budget 2015 – Landlords Reactions

Further proof of Gideon's intentions?
http://www.cityam.com/236295/uk-house-prices-mps-show-cross-party-support-for-emerging-build-to-rent-sector?ITO=stream

Video published yesterday by RLA:
http://www.youtube.com/watch?v=JTTLDTtITY0

Source: http://news.rla.org.uk/landlords-back-r-relief-campaign/

It's not just the wealthiest corporate and cash-buying landlords that are exempt from Clause 24.

Also exempt from the effects of the tax change are ROGUE LANDLORDS, who choose not to declare their earnings to HMRC at all, while also providing disgusting living conditions for their tenants.

George Osborne is additionally rigging the rental market in favour of landlords who truly are scumbags: those who cram 10 people into 3 bedroom houses, who rent out garden sheds, and who subject their tenants to exposed electrical wiring and other environmental health issues.

By driving those individual landlords to have operated openly and legitimately out of the market, Osborne is going to force more tenants to live in slum conditions.

This is the complete opposite of "professionalising" the rental sector!

Reply to the comment left by "Gareth Wilson" at "09/03/2016 - 11:39":

Quite so, and perhaps the biggest scumbag rogue 'landlords' -

the 1 in 6 tenants that are stated to be subletting. Again below radar, crammed in, no tax paid.

So easier licensing in London FIRST is NOT the answer. They call it the Tenants' Tax.
https://www.landlordtoday.co.uk/breaking-news/2016/3/rla-housing-commission-wrong-on-licensing

Reply to the comment left by "Mark Shine" at "28/02/2016 - 18:15":

Hi Mark

Property Partner is featuring BBC News as part of its self-promotion in its Blog section. The details are on the dedicated thread:

http://www.property118.com/complaint-to-the-bbc-on-reports-concerning-tax-changes-for-landlords/85050/comment-page-5/#comments

Putting aside the RLA's unnecessary dig at the legal case, I think it is worth people sending their template letter to their MPs. I've just done so. Here is the link:

http://www.rla.org.uk/landlord/lobbying/tax/index.shtml?ref=current-activity

North West property investors concerned over George Osborne's March budget

http://www.manchestereveningnews.co.uk/business/property/north-west-property-investors-concerned-11014866

Good news from Scotland, there is hope!!!

Not good news for all but helpful for those in Scotland wishing to move their property into a ltd company...... Hopefully the UK government will follow suit and help landlords survive the changes.

http://www.scottishconstructionnow.com/11217/second-homes-tax-passed-into-law-by-scottish-parliament/

In brief

Transactions of six or more properties were made exempt from the charge last month following evidence provided to Holyrood’s finance committee from the Scottish Property Federation (SPF).

Reply to the comment left by "Carol Duckfield" at "09/03/2016 - 07:42":

Carol - A Brilliant find!

https://www.timeshighereducation.com/news/student-accommodation-what-driving-spiralling-costs

I have long suggested that we call Clause 24 or C24 or The Restriction of Finance Costs Relief , what it is …TENANT TAX.

The symptoms are now catching up with the early obvious diagnosis –

In about September 2015 I suggested a standard letter to tenants explaining what had happened in the budget and why their rents would be going up by about 35% over the next 3 years and what they may wish to do about it. My draft letter received quite some stern rebuke form members here. I accepted the rebuke on the chin and always thought that perhaps time needed to pass, for the notion to settle with landlords, that we could not fix this. It was, in my mind, always the tenants that would pay the new tax it and so, as they outnumber landlords massively, it was they that needed to understand it and then when they did and or when they felt the impact in their wallets and budgets, they would fix it, if it were fixable.

I have seen the RHA youtube video

https://www.youtube.com/watch?v=JTTLDTtITY0

I disagree that George Osborne is open to reasoned argument. His pompus nature prevents MPs (minions) from even approaching him on any sort of challenge or questioning of his policy or ideas. More over, George Osborne is the most arrogant and dangerous of the politician breed. He believes enemies are just a price of “change politics” and so he is immune to all other opinions whilst enemies are numbered just 1:5. Lets be clear he will be open to changing his mind when he finds he will personally be significantly impacted. That will happen when the 1:5 claim is exposed as the lie which it is, and tenants and their benefactors (employers, universities, benefits offices, parents and friends) mass against him.

I am therefore suggesting a second letter as a “straw man” to student unions so that the student population is informed of external changes that will impact them their studies and their ability to get or afford accommodation. And how, that may get harder and much more expensive over the net 5 years.

I and using google (not scientific) to suggest there are 2.4 million students in the UK, First year students get access to Student Halls and those Halls are priced in line with the local PRS as per the article, so I am including them too, as those rents will rise also. That is, 2.4m students are disadvantages by the Tenant Tax, 10% W&T and new +3% stamp duty.

The Straw man letter… ( yes Ros I am baiting you to take over and improve / professionalise this)

Dear student union.

You may have seen the article at https://www.timeshighereducation.com/news/student-accommodation-what-driving-spiralling-costs

You may also be aware that in the July 2015 budget that the Chancellor of the Exchequer introduced the Restriction To Finance Costs Relief for individual landlord. The legislation was introduced without consultation and was not in the Conservative manifesto. It was also cleverly entitled to disguise it, and or was named so that it will mean nothing to anyone and will not be questioned my most and may not be opposed.

The treasury implied “no big deal” and said that only 1:5 landlords will be affected. They also said only the wealthiest of landlords would pay more tax. Of course, these are ignorant statements as each landlord may have a few properties and in the case of students, a landlord may have 4-7 tenants in a house. It is not unusual for a student landlord to have for instance 5 properties and so we are not talking about just 1 landlord we are talking about maybe as many as 35 students or tenants. Are students now the wealthiest who should pay more tax on their accomodstion?

How the change works –
Individual Landlords with mortgages have been allowed, until now, to deduct the costs of their mortgages from the rents they receive to arrive a profit. Of course landlords would be taxed on that profit. The July 2015 budget change, stops individual landlords claiming their mortgages as a cost of doing business. That will mean that they will have to pay tax on their gross rents as if it were income. Assuming landlords are not sitting on huge posts of money, the increased Tax burden they face, has to be paid from somewhere. Obvioulsy, landlords have cut their cloth according to global standard business and taxation principlas. So, the change means that either:

1. landlords have to sell up and stop renting, so there will be even fewer properties for students, which in itself will mean rents increase as demand increases. Or,
2. landlords will have to increase their rents to collect what is in effect a “Tenant Tax”.

There are no real options to this and clearly the Tenant Tax will be paid by the least wealthy tenants not the wealthiest landlords at all!

The impact of increased rents will be universal and you will see from the attached article that rents are already increasing due to corporate bodies maximising profits. It is worth noting that these companies can still claim interest costs as a cost of doing business.

If you look at rents in your university town. you’ll see that rents for 2016-17 have risen greatly and you may even have noticed that there are significantly fewer houses available for students already as some landlords sell up or improve their properties to rent to a tenant base who can afford significantly higher rents.

Knock-on effect - Student Halls appear to price themselves inline with the local market. They are a commercial enterprise and so why wouldn’t they? Therefore, even Student Halls will increase their rents. Corporate landlords in all sectors, including the student sector, and even landlords who do not have mortgages will, and have, increased their rents for 2016-17 too. With, less money for landlords to spend, standard repairs and maintenance are bound to be affected.

It gets worse – Landlords have, until now enjoyed an annual 10% wear and tear allowance against their taxes. That allowance has also been withdrawn – it is a new tax. Landlords have been used to that money and it has helped keep rents lower. Landlords may reasonably implement a rent increase to replace these monies in their budgets / income. As importantly, with the introduction of the deposit protection legislation landlords have absorbed some clear claimable damages setting them off against the 10% W&T allowance so as not to claim and deduct form deposits. In addition to the increase in rent to replace the 10% W&T, we may see more contested exits and legitimate damages claims from landlords that no longer have the ability to absorb such things anymore.

Not done yet – worse still… In the 2015 Autumn statement the chancellor introduced a plan to increase stamp duty by 3% on buy-to-let properties and second homes. (Stamp duty is the tax you pay when you buy a house) You’ll appreciate, that all this new tax will do, is increase rents further. Landlords will have to create profit and save to raise the additional 3% monies to buy their next rental property and or will increase rents in the sound belief that there are fewer rental properties now and as the property cost more to buy it should rent for more.

So what –

There is an arrogance in government that needs to be challenged. That is, the clearly stated position that those that chose to rent and those that have to rent, are substandard members of our society. Renters are not worthy of the support of the government and they must be taxed into buying a home even if they can’t afford to, even if they can not get a mortgage or even if they don’t want to own a property. The proactive discriminatory anti-tenant position is an offensive discriminatory position at best and forgoing the obvious rent increases, it is contemptible, abhorrent, & socially repugnant.

No MP’s have stood up for the tenants or landlords and none have voiced concern for the obvious increasing rents as a results of the chancellors 3 anti-tenant new taxes!

Most students have at least two MPs they can contact to complain about the Tenant Tax and rent increasing measures of the current government. Their home MP and their student town MP (s). Students also have benefactors that may end up footing the bill who perhaps ought to be made aware of the inevitable rent increases and accommodation problems. They too may wish to contact their MP and complain and challenge the Tenant Tax and rent increasing measures.

We at property 118 are a group of very concerned landlords who know that the changes impacts tenants and only increases rents and we are concerned for the future of the Private Rented Sector (PRS) and so, we are suggesting that student unions act to challenge and see to repeal the changes and in doing so, invite the local MP (s) and press to the student union for a symposium to answer why they have not opposed the tenant tax, why they have not challenged the removal of the 10% wear and tear and have done nothing about the introduction of the additional 3% stamp duty – all of which will clearly only mean less property for students to rent and significantly higher rents for all.

Reply to the comment left by "Gareth Wilson" at "09/03/2016 - 11:39":

10 in to 3 bedrooms???? Man I am missing a trick!

Fixed it now though!

I met a chap last year when buying a fridge freezer from craigslist who had 6 rental properties and declared none of them.... How bothered do you think he is by the Tenant Tax, 10% W&T or 3% stamp?

is GCT on his mind? - Not likely!

All of this tax stuff is only going to be a problem for him when he runs out of family to use on the mortgages = no time soon!