Summer Budget 2015 – Landlords Reactions

Appalled landlord.....what is your proposal....A two tier system? One for new mortgages versus old?

James. Why are you assuming other people have all the answers? What have you done against this outrageous and discriminatory measure? Can you give us a list of everything you've done?

Reply to the comment left by "James Tallis" at "19/07/2015 - 22:30":

I think what he is suggesting is not suddenly changing the goalposts short term on a long term investment. Without causing offence it's like introducing an iceberg into the path of the good ship Landlord out of thin air without warning. Obviously some leftie socialist landlord hating Treasury spotty nosed whizz kid thinks it's a good idea. Has Ed "The Red" Milliband"got a new job?

Reply to the comment left by "James Tallis" at "19/07/2015 - 22:30":

Yes.

I would be very surprised if anyone bought in their own name, knowing about this proposed change, but if they did, at least they would know what they were getting themselves into.

I've only done two things to date....I spoke to my accountant on Wednesday about the implications of transferring my property into a limited company......and on friday spoke to a couple of specialist brokers about my eligibility of getting a limited company buy to let mortgage. My main reason ....is not so much the loss of mortgage relief but the affect this has on me reaching my higher dividend tax level earlier which is how most small business extract their incomes out of their businesses. I've been hit really hard by this budget as have most small business owners. ....but to tell you the truth....as harsh as it is....I understand why George boy has done what he has. For the past 10 years I have been cursing the government for ir35.....an unjust and discrimatory tax.....For the past 2 years I have been cursing the government for pension changes....and now I curse the dividend tax. I've been saying for a while now that I am suprised that given the state of the property market that the Chancellor has not yet attacked the btl market....It was only a matter of time that a move waa made to remove this generous tax relief. So to reiterate.. .It am doing what I have been doing for the last 10 years...arranging my affairs to deal with the new landscape.

Reply to the comment left by "Appalled Landlord" at "19/07/2015 - 18:24":

Call me stupid if you like, but that equates to a tax of 150% of "real" rental profit ?

I am now choosing to ignore James, as he is clearly in favour of this abolition of private landlords' right to put all our costs in our tax return as legitimate costs of running our businesses. He is also only seeing this in how it will affect him and so the moves he has taken have been purely related to his own interests. The bitterness and vengeful note behind what he says is also clear. He feels he has been stung over the years and so now relishes the idea that a whole other group will be.
Right. On to the proactive campaign to get this overturned. Someone a while back mentioned that we should have about 10 simple examples of different scenarios. I'm wondering if someone can volunteer to do this? Keeping the examples as simple as possible - e.g. the person who has a full-time job and one BTL and is currently a basic rate tax payer - including the percentage tax they pay now on actual income and that they would pay in 2021 on their actual income. (I liked the simple eg Mark gave of the £300,000 rental income, the £200,000 interest, and the £100,000 other costs - zero income. And then the second scenario where £200,000 is suddenly 'income' and taxable.) And then other egs., like the person with 3 BTLs, with 10, up to 50 or 100, whatever you decide. Including also those who also have other jobs and those of us who don't and rely completely on our BTL income. It would be good to include one or two egs where the person is already operating at a loss and would be expected to pay income tax on a loss.
I am working on a 3rd letter where I want to point out what this betrayal of landlords is going to mean to the Conservatives' prospects at future elections - and I want to include these examples, if I can. I will also send them to the IFS.

Reply to the comment left by "James Tallis" at "20/07/2015 - 09:15":

'.It was only a matter of time that a move waa made to remove this generous tax relief.'

It is NOT a generous tax relief....We are running a business...every other type of business can claim interest costs on its property against tax.

Reply to the comment left by "Lisa Stux" at "20/07/2015 - 09:51":

Absolutely Lisa. And we have to challenge this deliberately misleading terminology whenever we can and call a spade a spade. I believe the Chancellor deliberately talked about 40% changing to 20% to mislead people. Instead of saying 'landlords can no longer put 100% of their interest costs as a legitimate cost of running their businesses. But don't worry - we won't introduce this for anyone else. Just the nasty landlords.'

Reply to the comment left by "Appalled Landlord" at "19/07/2015 - 18:24":

Hi Appalled.
I just re-read your excellent letter and think that if we go along the route of arguing for this not to be applied retrospectively (obviously, the idea is still crazy, even if it only applies to new purchases), we should say on 'existing BTL properties,' because if re-mortgages came under the new rule, a lot of people would be trapped in mortgages and for those of us with MX mortgages, when they end we would have to sell. So, in effect, the Government would be interfering with our businesses by making it impossible for us to raise finance (who wants to raise finance when it is bizarrely treated as income?) making us sell and with this too there could be a glut on the market and a house price crash as no-one will be investing in BTL from then on, apart from very rich individuals who can buy for cash and limited companies and other organisations. The currently large business sector of private landlords who use BTL mortgages won't be able or willing to expand (even if they haven't gone bankrupt).