Summer Budget 2015 – Landlords Reactions

Hi everyone, I have been closely following this thread...some interesting posts. The only thing which I observed may backfire against us landlords would be comparing tax treatment for Ltd company against properties held in personal name.

The government may be quick to change tax treatment for properties held in Ltd company and bring it in line with properties held in personal name which could prove detrimental to us, should we like to change the ownership from personal to ltd company so caution is required.

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Appalled Landlord says: 12/07/2015 at 00:37
Reply to the comment left by “Vero streetflat” at “11/07/2015 – 17:56“:
Are you saying that your property is owned by your company? If so, can you explain why you think that all your mortgage interest cost should be tax deductible, but mine should not?
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In answer to your question:
No, I am not saying that my property is owned by my company.
My properties are investments and fall under PAYE.
My company is a business.

You have made incorrect assumptions about
(a) my property investments
(b) my business and
(c) what I think

There seems to be quite a delay in some posts appearing in this thread. For example I don’t think a post I submitted last night has appeared yet, but when it does it will be placed some pages back.

None of the below is to be confrontational, but just to let people here know.

Having had a look at various property related forums again late last night, it seems that the folks at HPC are analysing every single post on this forum looking for angles. In many cases over the last few days they have copied & pasted posts from this forum into theirs. There are many examples, below are just a couple:
http://www.housepricecrash.co.uk/forum/index.php?/topic/205534-tax-relief-on-buy-to-let-mortgage-interest/page-89
http://www.housepricecrash.co.uk/forum/index.php?/topic/205642-btl-scum-regrouping-and-on-the-offensive/page-2

They are also adding their own ‘analysis’, which is often based on a distorted version of what had been written on other forums or even on their own one.

I think they simplify matters to: every tenant who rents a property is undoubtedly a top / fab person, whilst every landlord is scum, no questions asked. The reality is that there are nice people and unpleasant people in all walks of life.

Another thing to bear in mind, is that they are actively encouraging their members to complete the RLA survey pretending to be landlords and ‘have some fun’ as they put it to distort that survey’s results. I think Ros said she was in contact with someone at RLA? If so, you may want to alert them.

For such a monumental change in the system surely a clearly defining test should be established. A ltd co with 1 or 2 flats who uses a letting agent to tenant find & manage the properties, conduct viewings etc is being compared to Profesional Landlords who trade as soletraders.

Prof LL may have 10 or 20 properties, is a HMO license holder, and by default an accredited LL, proven and documented as a fit and proper person to act as a LL. He has paid fees to gain this status, he is obliged to complete CPD (Continued Professional Development). He will prob employ full time staff to assist in running the business, He will need to organise and comply with a growing number of compliance issues - gas safety schecks, electrical safety checks, fire alarm tests insurances, deposit protections/unprotections, new tenant referencing, check ins, check outs, inventories, managing damages, repairs, replacements, getting quotes for repairs & new kitchens, bathrooms and all other works, financing, re-financing, not to mention the back office tracking all if this for accounting purposes. That is just day to day activities, then consider lay payers, non payers, protracted HB claims, non responsive LL, the eviction costs in time , money and stress. the list goes on and on and is far more "hands on" than any other business i know of.
On top of all this all Landlords are now to be registered from next year so more administrative headaches and costs - I assume that, as non incorp investment these LL will not be to required to comply with the new costly reistration scheme, or the upgrading of property due to EPC regs in a few years (more hands off investment stuff!)

It seems the basis of this decision is that one is a business one is not ...even if i did agrre (which i dont as a full time LL of 20 yrs), the test is certainly NOT wether the LL is incorporated or not. As the activities listed are applicable to ALL buy to let i shall be very interested to learn how, the decision that non corp is an investment. Clearly as such huge changes sre propsed the defining criteria should be very robust, i can see NO such evidence in any way. The responsibilities and activities are like for like regardless of how prop is held.

It may be the case that the BTL market needs cooling but the criteria used to single out no corp LL is ridiculous has no basis , is unfair and unjust. It also sets a very dangerous precedent on ALL unicorporated entities being reclassified as "investment" and not business and being destroyed in a similar manner.

Reply to the comment left by "Appalled Landlord" at "12/07/2015 - 00:37":

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Appalled Landlord says: 12/07/2015 at 00:37
Reply to the comment left by “Vero streetflat” at “11/07/2015 – 17:56“:
Are you saying that your property is owned by your company? If so, can you explain why you think that all your mortgage interest cost should be tax deductible, but mine should not?
—————————————————————————————————
In answer to your question:
No, I am not saying that my property is owned by my company.
My properties are investments and fall under PAYE/SA.
My company is a business.

You have made incorrect assumptions about
(a) my property investments
(b) my business and
(c) what I think

Reply to the comment left by "Simon Dewsberry" at "18/07/2015 - 12:18":

I guess we can compare it to shares as an investment, i guess we can compare it to owner occ buyers - comparing apples to pears is not very satisfactory is it?

There is a similar business to compare it to , in fact an exact identical business, the only difference being how it is legally owned. Some very smart barrister needs to get on this and put this firmly in the bin.

These are the abbreviated responses from Conservative MP, Charlie Elphicke, that I received earlier in March this year following my questioning his views regarding this issue. You can probably guess my questions and responses:

Charlie-

"I firmly believe that we should stop the tax deductibility of mortgage interest payments"

"I believe that we should look at reform to more closely target the wear and tear allowance to actual property maintenance on a cash receipts basis. This would ensure that wear and tear deductions are given at the point of actual expenditure and so incentivise actual expenditure to be made."

"Regarding the tax deductibility of mortgage interest payments, I think the tax foregone due to tax breaks for buy to let investors would be better used to help first time buyers to own their own homes."

"The evidence suggests that first time buyers are being crowded out by buy to let landlords when it comes to affordable homes. In particular, buy to let landlords tend to have existing properties which they can leverage to raise funds to out-compete first time buyers and young people. I am not in favour of vindictive taxes on businesses and the rich."

I decided at the time to start taking defensive steps. If a closet socialist was thinking this way, lord knows what the real ones would do. When the Conservatives won, I breathed a sigh of relief, thinking I had 5 more years to restructure. I never expected this stab in the back.

Hi Monty.
Have you any idea what influence he has had or is having? From an earlier comment by someone it seems that he has an extreme prejudice against private landlords, based on a personal experience when he was younger (this is something someone said; I have no idea if it is true as I had never previously heard of the man).
Politicians (and maybe people in general) like to present their views as if they were somehow objective and reasoned - but from what I can see only organisations such as the IFS really try to work according to that principle of impartiality. If Mr Elphicke's views did emerge from a negative personal experience, it brings to mind Hitler having been spurned by a Jewish girl and we know what that led to.
I know some may object to my comparisons with the Third Reich, and I am a very pro-Jewish person and believe we should never trivialise the Holocaust. However, one of the methods used in an explicitly discriminatory way against Jewish people in 1930s Germany was to financially discriminate against them, make it illegal for them to earn a living and so on - setting up a set of financial rules which applied only to them and not to any other group of people. I know as landlords we don't face the level of horror they faced, but to single us out for this measure really makes me feel like a financial victim of a fascist state.
I know this may spark controversy, but it's how I feel and also how I believe people's 'political' opinions often emerge from their personal experience. I
I wonder what influence this man has had and what influence Shelter has had in this. Shelter has made no secret of its animosity towards landlords as a group. I read one of their documents recently which went on and on about tenants' rights and landlords' responsibilities without once mentioning tenants' responsibilities, for example.
I believe the Chancellor has made a major mistake in being influenced in this way and has not thought through at all the ramifications of this focused and discriminatory attack on us a whole group of people.
NB. These are my personal opinions and I don't know if Mr Elphicke or even Shelter has had any direct influence in this, as I mentioned above. But if not, how on earth did the Conservative Government come up with this astonishing measure completely out of the blue and without any consultation with the group who would be exclusively affected by it?

Message to Mark: if any of my post I just did is not legally permissible, can you delete it? Thanks.

Reply to the comment left by "Vero streetflat" at "18/07/2015 - 11:33":

Hi Vero

Your original posting was a week ago on page 25: http://www.property118.com/budget-2015-landlords-reactions/76164/comment-page-25/#comment-58093

Your first solution was to pay off the mortgage but retain the asset. That is impossible for many of us.

You then asked “is the property portion really PAYE, or is it a business?”

Then you said you “had a business and claim interest as a cost, because that is a limited company and unrelated to my PAYE. My company pays 20% corporation tax on profit.”

This was could have implied that you held ran a property business through a company. A few people have posted on this forum how they are unaffected because their properties are in the name of a company. That just rubs salt in our wound. I wanted to know if you fell into that category. Hence my first question.

You wrote “The schedule and way this is introduced, 25% at a time, seems gentle enough” and “DON’T PANIC”, twice. The whole tone of your posting seemed complacent as if we should just accept it.

In the light of your reply today, I will re-phrase my second question: Do you think our interest should stop being deductible just because we hold the properties in our own names?