Summer Budget 2015 – Landlords Reactions

Yes, it will be the tax free lump sum that will go into the portfolio. Time freed up from the NHS will be redirected to my Private medical company - earning more and paying a lot less tax overall. I don't need much to survive on and my monthly pension should more than cover my needs. I think today is my light bulb moment.

Reply to the comment left by "Ahmad Jibril" at "08/09/2016 - 23:42":

Just make sure it's and energy efficient light bulb.

Sounds like your best plan, though not good news for the NHS. The unintended consequences of Osborne's meddling continue to mount, almost all of them negative.

Reply to the comment left by "Old Mrs Landlord" at "09/09/2016 - 08:30":

I've been thinking hard and can find only one thing positive. Even the increased tax revenues may not be what Osborne anticipated as landlords alter their business model. We have all concentrated on the downside, can anyone produce a list of positive outcomes for Section 24? Even one single point would be interesting.

Positives for Government
Possible extra tax income

Positives for Home ownership
None

Positives for tenants
None

Positives for landlords
Unencumbered landlords can substantially increase rents and blame Osborne

Positives for housebuilding and refurbishment
The increased rents may encourage large corporate landlords to invest

Positives for tenants
None

Positives for society as a whole
None

Reply to the comment left by "Jon Pipllman" at "08/09/2016 - 21:07":

– as part of its anti high leverage individual property investor campaign –

Not convinced there is an 'anti high leverage individual property investor campaign'.

Some landlords geared modestly at 20% LTV will be absolutely hammered by this, some geared at 110% will be totally unaffected. It is one of many things so wrong about this.

If that was the aim, why not just tax high LTV loans?

How does the W&T, SDLT, CGT changes fit in with this 'campaign'?

Sounds like some wishful thinking conspiracy theory from the house price losers.

David

You missed one out "Positive for George Osborne" - get lucrative non-exec Directorships at several BTR companies and housing charities when he leaves Parliament. (But he might now have screwed that up for himself as well)

Reply to the comment left by "David Price" at "09/09/2016 - 09:02":

"Positives for house building and refurbishment
The increased rents may encourage large corporate landlords to invest"

Any such encouragement will be counterbalanced by the massive disincentives now conspiring to deter investment in new build/off plan purchase/refurbishment by individual landlords, which was previously a major source of funding, especially for small and medium size developers.

I am a little sceptical about the assertion that rents in general will be driven up - there will come a point at which supply outstrips demand because those relying on Housing Benefit can no longer afford private rents and the pressure for rent reductions and controls will increase dramatically. The concept of Increasing rents to cover all the additional costs imposed by Clause 24 and SDLT may then be found to have unintended negative consequences for landlords.

We live in interesting times.

Ahmad - had my light bulb moment last year. Decided to jack in the day job at the start of this year (5 years before I planned) and haven't looked back. Hadn't touched my rents for years but they have now been raised by 8% and I expect them to be 25 - 30% higher by 2020. Will be consolidating/selling off from next year to bring down my LTVs. Worked out that my tax bill will be a lot lower as a result of the changes that I'm making and I've got my life back. Well done George ... when will the powers-that-be stick their heads out of the Westminster bubble and take a reality check!! As everyone is saying, unintended consequences

Reply to the comment left by "David Price" at "09/09/2016 - 09:02":

We have all concentrated on the downside, can anyone produce a list of positive outcomes for Section 24?

Here are my positives David;

1. My rents have increased already by over 10% directly because of clause 24.
(That equates to a bottom line increase considerably higher than that BTW)

2. As awareness of this increases, I'm optimistic of at least another 10% rent increases.

3. Less work. I have/will be selling off my worse performers.

4. Less risk. I'm deleveraging with the released equity.

5. Less work and risk. Bit controversial this, but clause 24 has been the final straw for me to get out of the benefits market. LHA rates weren't keeping pace with rents and look unlikely to do so in future. IME benefits are harder work and more risk- other landlords' experiences may differ.

6. Less rental competition already. Maybe a coincidence and luck but I've had less voids than ever before and no problem finding good new tenants at increased rents.

7. Less rental competition in future. Less landlords will be buying in future. Many accidental landlords will be hammered by this. Those landlords remaining will be able to pick and choose tenants.

8. More buying opportunities. I'm selling rather than buying but I've just bought a repossession I know I'll be able to make an easy 20% on. More repossessions predicted if this comes in. Who will buy them? First time buyers don't touch them with a big stick.

9. More business opportunities. I'm converting a residential let to a holiday let next year. I'll do more if it works out. Also looking at 3 month corporate lets.

10. I've worked out I'm happy with what I've got. Time to enjoy it.

Reply to the comment left by "Monty Bodkin" at "10/09/2016 - 10:12":

Positive outcome of clause 24 (for existing landlords) number 11;
- Less competition from new build.

How many landlords will be buying new build now?

In my young and foolish days I had a few built to rent myself. Not 'pricing out the younger generation' but homes that simply would not be there if I hadn't had them built.

I know this for a fact because I was also negotiating building more on the land adjacent, but it never came to fruition. Decades later it still remains undeveloped, the property price hardly having kept pace with inflation. A monument to my young and foolishness.

I certainly wouldn't have had them built if I couldn't offset the business finance costs.

N.B In recent years, 60% of new builds were 'built to rent'.