Summer Budget 2015 – Landlords Reactions

Just to say thanks to Simon L, Jason E and Appalled Landlord for your review of my real life figures.

Appalled Landlord, in response to yr questions which was: May I ask what you do will in the light of this loss of after-tax income as regards: (1) buying new-builds, (2) reducing your portfolio, or (3) using a company?

My answers: (1) It was always my intention to do new build in terms of design and build at some point in the future, although due to the cost of land that might now be unrealistic. Buying someone else’s new builds is not for me personally.

(2) & (3) I have no answer to these questions that presumably every UK resident sole trader with a mortgaged 2nd residential property that is not an FHL is also asking themselves right now? Whether that property is in UK or elsewhere? If I can afford not to, then ideally not sell.

May I put the same 3 questions to you?

Following on from my earlier point about us possibly using the Human Rights Act, I am pasting some other possibly useful points, this time about discrimination, that we can use in our arguments against the measure:

'Protection from discrimination

Discrimination occurs when you are treated less favourably than another person in a similar situation and this treatment cannot be objectively and reasonably justified.

It is important to understand that the Human Rights Act does not protect you from discrimination in all areas of your life. Instead it protects you from discrimination in the enjoyment of those human rights protected by the European Convention of Human Rights. This reflects the core idea that all of us, no matter who we are, enjoy the same human rights and should have equal access to them.

There are other laws that protect you from discrimination more generally.

The protection against discrimination in the Human Rights Act is not free-standing. In other words, in order to rely on this right, you need to show that your ability to enjoy one or more of the other rights in the Human Rights Act has been affected by the discriminatory treatment. However, you do not need to prove that this other human right has actually been breached.

The Human Rights Act prohibits discrimination on a wide range of grounds including ‘sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status’.'

[of note here, is that this point can be linked to my earlier point about one's right to one's property and property is also mentioned in the last sentence above] There are more points that can we use, if this is the route we eventually have to go down with a legal case. The arguments might also be applied at this point though, with the hope that the Government will not want it to go that far.

Also: there was a case about variable tax treatment of women and men, and the general point made was:

'Article 14 only protects people from discrimination who are less favourably treated compared to others in a similar position.'

Well, I'd say that covers us private landlords compared to limited companies, self-employed business people and so on...

On a general note, it certainly feels like our human rights are being attacked. In fact, I feel like a criminal has a gun to my head, asking me to hand over all my money. It does feel like a crime - it's a lot more stressful than my experience with drug producers wrecking my house and nearly burning it down a few months ago. And in financial terms just one year of the new tax regime would rob me of more than all my tenants from hell have done over the last 18 years...

Reply to the comment left by "Appalled Landlord" at "17/07/2015 - 19:32":

Appalled,
Thanks for your replies. Yes the correct interpretation of that "elsewhere" as "everywhere" (worldwide) would suggests that UK residents with mortgaged property in their names abroad (from one single property to a large portfolio), say Miami or Orlando, would need to add back foreign mortgage interest paid, after the current system of offsetting the tax already paid offshore, to determine a much higher taxable income....so that one ends up paying 20% to 25% of the interest in extra tax as you rightly say.... utter madness indeed !!

Anyway.. just thinking aloud... if this tax policy gets implemented and in a few years down the line a property crash eventually does occur, there will be a counterintuitive benefit from the price crash: one will be able to transfer deflated assets to an Ltd, especially properties recently purchased in the last few years and attract no CGT on the sale but just a one off SDLT... so there's a trade off there.

Ros. .... If yoy want to put together a good argument for the cause. ...Please don't patronise FTBS trying to get on the housing ladder. Your type of comments...that assume that a lot of people have not been able to afford property because they squandered their money is offensive and just fuels the type of hatred that you see on the forum board's of house price crash.

HMRC’s illustrative figures: http://www.property118.com/budget-2015-landlords-reactions/76164/comment-page-48/#comment-58439
show that someone with a real rental profit of £1,200 will pay 50% more than that in extra tax.

In other words, after dealing with the property for the year he hands all his rental profit over to the state. And he hands over a 50% penalty on top, which has to come out of his salary after PAYE and NI have been deducted.

This is not taxation, it is confiscation of assets by the state.

It is as if the communist party had infiltrated the Treasury.

Reply to the comment left by "James Tallis" at "17/07/2015 - 20:52":

Hi James

I don't think that is what Ros mean't .

Ros clearly pointed out that where she saved and bought property that was on the market for a while .No first time buyer seemed interested in buying them. As a result she bought a bargain. These where low cost houses.

People had a choice if they wanted they could have bought property but decided to enjoy their money and go on holidays or buy clothes or cars. A lot of people in property went with out to build a future where they could do these things.

The amount of people I know who blow there credit rating for a mobile phone bill is ridiculous
They at the time may not have considered there credit ratings which is what most in property do.

I believe the real problem is a lack of decent well paid jobs to allow people to obtain mortgages.

Zero hours contracts part time jobs are the main reason most cant get a mortgage. Business don't want the expense of full time workers.

Then people twig if they only work so many hour the government will give them tax credits and make up there money so why work full time

Reply to the comment left by "Appalled Landlord" at "17/07/2015 - 20:56":

Hi Appalled Landlord

That is a fantastic description of what the government will be doing,

I think that should be put in all of the letters being sent to MP's and government,

Confiscating the landlords property brill.

So if the can make landlords pay these taxes which are unjust why can't they do it to Starbucks and Vodafone to name but a few

Reply to the comment left by "Neil Robb" at "17/07/2015 - 21:13":

Perhaps I was a bit too harsh.....its just that I feel that any argument against the recent budget move that is based on any kind of comparison to residential buyers is just not going to win any sympathy with anyone outside of the btl community, and in fact probably just serve to antagonise them.

Reply to the comment left by "James Tallis" at "17/07/2015 - 21:21":

Hi James

Totally agree.

Reply to the comment left by "James Tallis" at "17/07/2015 - 21:21":

So far, I have written to the Chancellor, various Ministers, the DPS trying to start an e-petition, the IFS to get them on board, I've done research on some of the arguments we could use and I've posted sample letters here for people to use. I'm working on persuading a newspaper to cover the story and am doing other research which I hope will strengthen our case.
I know there are a lot of male egos on the forum (hence the need to argue ad infinitum about the financial details IF this thing goes ahead, rather than getting on with the campaign to stop it happening), but even if my female ego is also a feature of my personality, I have not let it get in the way of being proactive, positive and determined to get this decision over-ruled, by taking the debate away from this forum and out into the world.
I also like to encourage others and if I see someone has had a good idea I praise it to encourage them to come forward with more great ideas, as this could be what makes us succeed. I do not appreciate being told off. And I don't accept the criticism.
But thanks, Neil, for your support. It is much appreciated.