Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Simon Hall" at "06/10/2016 - 19:38":

Dear Simon.

I really don't know what you or mean by:-
"it was to deter unsustainable level of Buy To Let Lending to protect Financial Institutions".

I know this is also supposed to be a claim made by the 'Bank of England" I did some research on this last year and there is nothing to substantiate this claim.

For example my portfolio of mainly HMO properties was currently running at just over 60% LTV. All bar one of my properties would need conversion back to the normal residential market. Residential purchasers usually purchase at a deposit of 10% equity. Therefore the risks to lending to this market is much greater.

Plus despite record low interest rates - we are still paying approximately 5% plus interest rates on all our mortgages (as they are mainly HMO). Therefore the financial institutions make far more from us in interest payments than from other types of lending.

All the official reports I have read have refuted this claim that BUY-to-Let lending is un-sustainable - if that was the case than the banks own risk assessment teams could and would have easily limited this type of Lending by simply restricting the number to Buy-to-Lets available .

Further-more it was shown, during the 2008 financial crisis that the Buy-to-Let market held firm and did not de-stabalise the markets.

As far as I can see this is just another un-substatiated claim that has been used to justify this ridiculous Tax grab.

Reply to the comment left by "Sunita Rickman" at "06/10/2016 - 23:00":

It was also discovered - although the source escapes me now (CML?) that the BOE claimed BTL was a more risky loan than OO. However, the most risky loans of all were OO 2nd charge loans. For some reason best known to themselves, BOE lump BTL in with the OO 2nd charge figures so that BTL looks high risk, when it is in fact extremely low risk. Not only this, but default rates on both BTL and OO are at their lowest level ever - and falling!

Reply to the comment left by "James Fraser" at "06/10/2016 - 23:09":

I have a conspiracy theory.

What if the BOE were tipped off about clause 24 and duped into doing the governments bidding?

THE COURT JUDGEMENT.,,and WAY FORWARD.
Firstly condolences and sincere thanks to all those who worked hard up to this point on our behalf..There will be a lot of stressed and angry landlords and worried families after yesterdays result and I know we are all extremely frustrated by this whole nonsense.
Unfortunately this negative outcome yesterday is what i expected.The judge has seen the flaw in a case put forward on a central theme of inequality. I have always believed that was the weakest of our points...precisely because of the numerous precedents..as indeed the judge commented.I have posted previously suggesting that our case..both on the legal front and politically/socially and media wise needs to be kept very simple....perhaps around>>> Clause 24 was announced in the commons by Osborne as a change to income tax.It was brought in using incoming tax law and procedure and is to be enforced and collected as such..whereas... It is in fact very simply not a tax on income..nothing of the sort... It is therefore an abuse of the whole income tax procedure law and protocols and it is on that basis and principally on that basis alone that it should be opposed.Whether this is being done in a court or tribunal..within a debate a hearing or the media. It is not an income tax and no rational person could possibly describe it as such and indeed it has no operation upon income in its specific machinations. It operates and is drafted and designed and intended to operate as a very severe charge upon a cost, or if you prefer the word.. an expense. Furthermore it was not intended to raise revenue..the normal, correct protocol and ,rational and correct function of any and all income tax. It was therefore contrarily conceived and it was in fact clearly and specifically designed, drafted and implemented to drive private landlords out of their businesses. Indeed and again specifically it was further designed to allow those landlords four years in which to do so again in full recognition and enablement of that purpose. It was also intended to reduce the numbers of any further future entrants into private landlordship. This followed Carneys rationales of a supposed economic threat from growth in Buy To Let. For all these reasons it is an abuse of the income taxation system and -processes and with these factors and its true purpose quite plain from its construction and operation it is best opposed on those facts alone. It is also on those facts that it has no precedent....and not on the equality arguments.
If the government felt it had a case for reducing the growth of buy to let ( and it actually didnt )..there were many logical and transparent ways it could have dealt to that for the future. It did not do so. Instead choosing to create a severe charge on pre existing and future costs/expenses of landlords . That is not an income tax. That is a misuse of the income tax system and income tax law and income tax procedure to add one cost (tax) to another.cost.. namely finance..... and thereby reduce the number of private rentals in this country. That was its intended purpose and that is not an income tax..... and... that is what income tax protocols and precedents do not support. Thats the message we need to stick to and pursue.
I know there are many other arguments but thats the main fact and very difficult to counter...by our opponents. Tax on a cost is simply not income tax. This extension and distortion of "tax protocols" is a dangerous and frightening use of government control and power over individual citizens and their enterprise. If allowed to continue it is a threat to all enterprises not just those of rental landlords. Perhaps this gross extension of power wielding is also far more palatable as our message to the public than saying we will pass its draconian effects on to our tenants.
I believe we have lost yesterdays case because we have focused upon inequality ( v,, corporates etc.)...in any event that has been the actual judgement rendered. I dont believe all possible legal avenues are yet closed. However I do fear that we will fail again both in the legal sphere and in the media and political sphere if we do not centre upon this theme and clarify that fact precisely because it is a fact not an opinion. Message..>>>>This is not income tax.<<<,.and say why. Pursuing the inequality line and pursuing the "tennant tax" theme in the way we are is I believe..a mistake in strategy...and yes I know we have been advised. However I really think we need to pause for a moment to reflect on the judgement and how its come about and perhaps re centre our main theme and messages. I do not think we should make the same mistake again and I do not think the message that we will shove this problem onto tenants will ultimately be beneficial to either this case or longer term public perceptions of us as a group. I am not being "wise "after the event here ive posted before on these themes..including as recently as early morning yesterday. I do feel that the message and main thrust of our cause needs re focusing..to the effect that this is an abuse of the income tax system and a major extension of government control and interference... it is not ..on any sensible and factual view a tax upon income because it is a tax or charge on a cost and operates without limit and without precedent in those respects and isnt and wasnt intended to raise revenue..which is the normal and proper purpose of income tax. This should be our repeated and consistent message.
We live in a world of short media sound bites..simplest is best along the above lines perhaps and I really dont think the ....we will pass the burden to tenants..message is really helpful to our broader cause and the publics view of us.
As for the longer term future on this tax matter... history tends to be a much better prophet than any guru..financial, political or otherwise. Those landlords who are now thinking of exiting the market and who are not absolutely forced to do so very quickly,,,might take sustenance from the recent Irish history in what was a remarkably similar and recent past.
Once again thanks to all who have tried so far in furthering our cause and please understand that I intend no offence to any person or their work and efforts on our behalf.I simply suggest its time to re focus and renew our efforts.

Reply to the comment left by "michael fickling" at "07/10/2016 - 10:01":

Excellent article, Michael!
I am only surprised that such an experienced counsel like Cherie Blair did not explore that 'tax on expenses' avenue, which was the most obvious one.

Reply to the comment left by "Whiteskifreak Surrey" at "07/10/2016 - 10:25":

Thank you.Whiteskifreak Surrey...and i should add a touch of humility to my comments as I wasnt there at the hearing ..so maybe it was mentioned but i dont believe it was the main thrust . We have so many arguments for our cause that there is always a risk that a "fog of war" can descend and then central and most important and decisive rationales can become obscured in anyones thinking...appellants advocates jurists and judges...either at the hearing or in strategy forming....earlier. I can think of many an enquiry, hearings and trials and even higher court appeals that have reached illogical conclusions and then taken many years to be eventually sorted out due to this..many of those examples are still highly controversial and some still going on this very day.. so I shall let discretion be the better part of valor and not name any of them. My plea here of course is for us to stick to the indisputable facts that whatever this clause is it isnt income tax....and stick to that...whilst also thinking about the wider concerns for and within our society on the wielding of governmental power. I like that concept of bad, big and inapropriate governmental action being a core argument for us in opposing the clause..I dont like the noise we are making around the claim..even if largely correct.. that tenants will be the ultimate victims via us hefting their rents.. it maybe.has some unfortunate overtones and perceptual impacts upon our audiences and i particularly dont like the "tenant tax" slogan...certainly not in public domain.
On that particular score I would prefer to simply quote the facts of what happened in Ireland within the rental market.That is at once provably more factual having already occurred and statistically impactive without pressing so hard upon emotive thoughts and beliefs which are already often widely against us. We should sensibly apprehend that some politicians will be thinking of imposing rent restrictions..as a counter too..( to the tennant tax approach ).and the current chancellor is currently pursuing his own agenda around tenant security. A potentially toxic cocktail that we landlords should not help to stir.
Good day to you and to all landlords and their families in this hard moment and please be assured we shall prevail if we maintain our rightness of mind even if it takes the passage of time and the workings of market forces. These are powerful allies that can not be turned against us and over which no government can prevail..

Reply to the comment left by "michael fickling" at "07/10/2016 - 10:01":

What's your hourly rate, Michael, and when can you start?

Reply to the comment left by "Whiteskifreak Surrey" at "07/10/2016 - 10:25":

There have been plenty of examples of "taxes on expenses" e.g. disallowance of entertainment costs, replacement of white goods etc. The only legitimate complaint is that this change will have a devastating retrospective effect on those who have pursued a particular business model which will no longer be viable and are left with no escape route. Catastrophic for some of those affected (including their tenants) but ultimately a political decision which Government is entitled to take and which will only be reversed when they recognise the impact and unintended consequences of this misconceived measure, so keep up the pressure.

Reply to the comment left by "michael fickling" at "07/10/2016 - 10:01":

I'm in whole hearted agreement with you Michael & I do not think we need to be ashamed of Re-focusing our argument to this simple issue.

This is, as you say a total abuse of power by the Government.

"This extension and distortion of “tax protocols” is a dangerous and frightening use of government control and power over individual citizens and their enterprise"

I think your above sentence should now be our main focus. There is another point that has not been fully explored I feel. Our "unwritten" Constitution & the Bill of rights & our right to petition HM to highlight this "Gross manipulation of the tax system & abuse of Governmental power".

Further-more, I do still believe that there is a case of un-fairness - but not just between Private landlords & those that have incorporated, but between Private landlords & every other Non-incorporated & Incorporated, Business Enterprise or Venture.

For example, I can-not think of any business (and before people start suggesting that we are not a business !!!! please note this has already been tested in the courts and it has been deemed that property letting is a business (Ref :the case of Ramsay v HMRC (2013) UKUT 0226) and also HMRC's website - which by the way still says the following :

Running a property business
You have to pay Class 2 National Insurance if your profits are over £5,965 a year and what you do counts as running a business, eg if all the following apply:

* being a landlord is your main job
* you rent out more than one property
* you’re buying new properties to rent out

I can not think of any other business where the costs of financing that business are not an allowable expense - So I again agree with you, That this policy was:

"designed,drafted and implemented to drive private landlords out of their businesses".

Below is an extract from a letter I have just received from Theresa May.
"Dear Sunita,
Today I set out details of my vision of a country that works for everyone.

More still needs to be done to put government at the service of ordinary working class people – focusing on the good that government can do.

Looks like we have to keep fighting - But regardless - As I said before - I shall NOT be paying this additional amount & will complete my tax return as before. No doubt I will end up in prison !!!.

I didn't like the Tenant Tax slogan to begin with. But just now the government could announce that they are confiscating all landlords' assets and the general population would still cheer. Hence communicating the fact that it will necessarily be passed on to tenants - even if not in full - is an important one if we are to have any chance of popular support.