Summer Budget 2015 – Landlords Reactions

I am selling the larger houses I have in decent areas that have larger mortgages where demand is high. I have had really difficult conversations explaining why. I will walk away with a decent pot and a manageable portfolio of low end high Yield properties theses poor families who I feel for go into an already shrinking rental market and for what ? Thanks George another example of how this Ill thought out policy is really affecting poor families who cannot afford there own homes

Reply to the comment left by "NW Landlord" at "02/10/2016 - 10:50":

I was under the impression that Irish " 100% of Mortgage Interest Relief" had been reversed as opposed to 75% (reversed).

Considering there(Ireland) are housing crisis, yet they still tax 25% of Mortgage Interest seems like grossly unfair. I also thought the idea had been introduced by Green Party but the treasury may have followed Irish suit.

Received today:
http://us13.campaign-archive2.com/?u=2cc9ae06bb1d86c37d20e143c&id=d947ad79f7&e=304689a813

A voice of reason - but probably landing on deaf ears....

This morning comments at the BBC website:
http://www.bbc.com/news/business-37547912

IMHO there is a likeness that the big companies building for tenants are going to benefit, at the expense of private small landlords.
Is there anything we can do? I am going to write to my MP again, I guess in vain, but it is worth probably to put some pressure on.

Just been on the BBC news that we need 2m more rental homes and that buy to let purchases are down 60% due to osbournes SDLT raid. When s24 starts biting it's going to get worse I just can't understand where they are coming from there's no way build to rent are going to plug that gap and that sector is aimed at a certain type of tenant, families want to live in traditional houses not student style complexes. This government needs to encourage investment by us not choking it off it really is crazy

Reply to the comment left by "NW Landlord" at "04/10/2016 - 08:31":

Axe the Tenant Tax FB page proposes an action, I think we all should do that:
https://www.facebook.com/clause24/posts/1255746734468328?notif_t=notify_me_page&notif_id=1475480612259983

Looks like things are gathering momentum it just highlights the ambiguity of the tax that RICS don't really understand it !

cost of the benefit cuts on 7th Nov

North East is up from 590 to 8345 households a 14-fold increase while London increases from 8790 now to 26661 which is (just!) a 3-fold increase or tripling – and you can make such comparisons for all other regions.

The North West sees an increase from 1456 to 20,152 households and like the North East is also a 14-fold increase yet note well that the North West alone will have more benefit capped households than the whole of England, Scotland and Wales combined now have currently!

I could discuss the above with a further 20,000 words here if not more as to the numbers and especially the impacts these swingeing reductions will have, many of which are staggering such as putting an additional 529,169 children into poverty and most likely made homeless.

The statistical average I project across the country will be 3.34 children per household which is slightly lower than the DWP average of 3.47 from their scan figures and each household will contain 1.31 adults which is the same.

There are valid arguments that the numbers of evictions could be lower than the 158,422 households and also that it may be higher as landlords take flight from the ‘benefit tenant’ market.

Social landlords will see the ubiquitous 3 bed property (36% of all social housing) become financially toxic as if fully occupied the amount of HB their benefit tenants (77% of all social housing) have cut will be five ties more than the HB cut in bedroom tax for under occupying. When considering that impact on allocations and asking the obvious question of Where will the benefit tenant live also make sure to consider that the North West region has 39 councils yet only 3 council landlords.

How much added cost will all local councils face in temporary homeless costs is yet another obvious question. I suggest the overall benefit cap is a £3 billion plus per year transfer of cost to local government.

The total amount of Housing Benefit cut in a full year I project to be just over £622 million and for comparison purposes the latest bedroom tax amount of HB that is cut is £343 million per year. What impact will that have on DHP allocation and will it mean current bedroom taxed households who have relied upon DHP to date will no longer get a DHP? Yes is the simple answer and so does that mean that another consequences of the reducing benefit cap is much higher bedroom tax evictions? Yes again is the answer.

Is there a very valid argument that London in having 44% of those currently affected has (a) become accustomed to the policy and (b) given the London-centric bias of housing and housing benefit policy and (c) of the London-centric nature of all national issues such as homelessness, eviction and poverty that this policy and its impacts been chronically under reported? Yes, yes and yes!!

The noticeable absence of the likes of Shelter (and all other homeless lobbies) hardly saying a word about the prospect of today’s 100,000 children living in unsuitable temporary homeless provision could increase to 600,000 by Easter and all due to the benefit cap reduction!

Then we have section24

Reply to the comment left by "Appalled Landlord" at "07/09/2016 - 17:03":

I have exchanged further correspondence with the Treasury since my email of 7 September, above.

On 20 September Nicholas Irvin sent me the standard letter that the Treasury has been sending out for well over a year now, . It included the following:

“We understand that some landlords, such as the landlord that you know, may face difficult
decisions regarding their properties. This is why the Government has chosen to act in a
proportionate and gradual way. Basic rate income tax relief will still be available on a
landlord's finance costs, the restriction will not be introduced until April 2017 and then it
will be phased in over 4 years. This gives landlords time to plan ahead of the changes.”

I immediately sent an email to Messrs Hammond, Gauke and Irvin, and Mrs Ellison, with the following question:

“If you consider a 78% reduction of net income to £10,900 - for two people to live on - and a tax rate of 83% to be proportionate, would you please advise me what you would regard as disproportionate.”

Today Mr Ryan sent the following reply:

“Thank you for your email dated 20 September. In the previous letter, the word ‘proportionate’ was reflective of the fact that the Government is phasing in the change to the tax treatment of finance costs for landlords. This change is being introduced gradually from April 2017 over 4 years.”

So I have sent the following email to Messrs Hammond, Gauke and Irvin, and Mrs Ellison:

“The word gradual in both letters can only refer to something that happens over time, in this case the phasing-in over 4 years. The word proportionate refers to a comparison of one thing with another. It is disingenuous to pretend that it means gradual, and the attempt insults my intelligence. The fact that both words are used in the standard letter indicates that they mean different things.

However, the pretence that the word does not have its normal meaning here is a clear admission that the Treasury has no justification for using the word proportionate in connection with Section 24. A tax rate of 83% is clearly disproportionate when compared to the maximum rate of 45% which will be applied to all other types of business. In fact, it is ruinously confiscatory. Do you not agree?”

Reply to the comment left by "Appalled Landlord" at "05/10/2016 - 22:18":

Thank you appalled landlord...a very clear example of exactly why this tax change is in fact entirely punitive.It is in fact not really a a TAX at all. If you use the tax calculator on this web site or others..you will find that a landlord with say 75 to 85%..finance who was operating at an annual break even or indeed a small loss as many have been... ( in many cases investing for the long term.. as a pension or longer term investment )..will now pay tax upon that same loss or break even situation,...that is not TAX as we know it but effectively a punitive fine upon borrowing. There are also thousands of landlords who were making tiny profits... say 2 of 3k per annum...again with maybe 80% finance..who will pay tax of over 100%.on those real world profits....in some cases even 200 % or more !
TAX in any event is generally meant to be a portion/fraction of income or profit...not a portion ( eventually 75%) of a cost. That makes it effectively a fine upon borrowing and indeed its based upon the level of borrowing..NOT income OR profit...in as much as the more you borrow then under this clause the more tax you pay. That means that it is in fact not income "TAX "as we have always previously known it but in fact an annual charge or a fine or levy.. upon the cost of a landlords borrowing. I believe that the essential truth of this basic fact should be at the heart of our legal case against clause 24....because..it is not merely an extension of..or an increase in tax..it is in fact something so absolutely and completely different to tax..it is a levy upon borrowing and therefore an unlawful unjustified and inapropriate use of taxation law and procedure...to create such a levy. And if a government can "tax" any business based upon its main cost then this is a huge inversion of every previous conception and construction of what both profit and TAX actually are. It would allow for and "open the gates" for any business person to be taxed upon all their business finance costs rather than upon a fraction of income or profit.....
and as such a thing it should have been very fully exposed to a national debate and examination of epic proportions ..Its significance would..potentially be certainly more significant to uk business people than something called brexit for example ! The majority of all business people use large amounts of finance...very few will be fully and properly aware of clause 24s true nature and the huge precedent which it sets in completely inverting what was previously a sensible and previously accepted principle that income tax is based upon INCOME not cost. Even V.A.T was highly debated..but at least that was based around sales and income.Clause 24 is something completely and totally different in being the first ever use of tax law to raise massive charges/levys upon borrowing COSTS for a legitimate business purpose.
It completely breaks all previous and fundamental principles of our taxation system. On that basis in itself it is an abuse and unlawful manipulation of the UKs tax system..and this argument and rationale properly goes before and above several other arguments against this clause.