Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Sunita Rickman" at "25/10/2016 - 13:14":

Sunita, your "Thinking" is like breath of fresh air!

Reply to the comment left by "Trendo " at "25/10/2016 - 10:43":

Trendo. referred to

https://www.landlordtoday.co.uk/breaking-news/2016/10/buy-to-let-landlords-undeterred-by-brexit-and-tax-changes

I am afraid this may be a further example of market penetration and landlords not fully understanding what is going to happen to their rental businesses as a result of the 4 tax grabs.

It is clear to me that the demographic buying their insurance from a company called “Simple Landlord” Insurance, may just be that... Simple! Their view of the market or what they will do is not really that reliable or at all indicative. There are host of very very good insurance providers that offer real insurance at very competitive rates some of which are supported by Property118.

I would suggest that a survey of simple landlords may give a somewhat simplistic and unreliable result.

This independent report by the London School of Economics on the private rented sector and buy to let supports many of the arguments that Property 118 landlords and others have used to urge the Government to scrap section 24.

http://lselondonhousing.org/wp-content/uploads/2016/05/GRP12392-LSE-report-design-WEB.pdf

Reply to the comment left by "BTL INVESTOR SCOTLAND" at "26/10/2016 - 21:21":

Good find... interesting read although as you say it's what we have been saying all along. I have sent a copy to Jeremy Hunt and asked him to get Philip Hammond's view on the facts and evidence.

Whilst the report is generally helpful ...particularly in making it plain that Carney ( and apparently the Gov.) have no real reason to believe growth of B to L is a serious threat to economic stability ..and in pointing out that it may not be sensible to effectively restrict B to L when tenant demand is growing.......it is a very weak piece of work in two key areas. Firstly it completely fails to mention the recent Irish history on all this..which has to be the best predictor of what will happen here given the very similar circumstances around the tax matter...and makes too much of alternative investments and by implication how those options effect landlords and prospective landlords...decisions....without rationale or evidence.
Landlords are landlords for fairly solid reasons and dont generally as a whole flit to other investments...very often or indeed very easily. Also I find it strange in a paper such as this that..Paras 16 and 18 contain what might be important comment...and also perhaps quite questionable comments again without any rationale.

Reply to the comment left by "michael fickling" at "27/10/2016 - 09:30":

Hi Michael

I was dismayed by paragraph 18 of the LSE report:

“The mortgage tax changes announced will mostly impact private individual investors with small portfolios and Buy-to-Let loans.”

This is extremely misleading. Such victims will be in the majority, but the tax changes will impact private individual landlords with large portfolios and Buy-to-Let loans hardest, in some cases ruinously.

It would be helpful if someone could write to Kath Scanlon and thank her for the report, praise what should be praised - eg the stuff on the Bank of England - and also point out what we think of paragraph 18 and maybe give her some evidence and stats on that and also point out the Irish situation.

Reply to the comment left by "Appalled Landlord" at "27/10/2016 - 11:29":

The LSE report does, however, debunk the Bank of England’s claim, coincidentally published in July 2015 just before Osborne announced Section 24, that BTL posed a threat to the country’s financial stability.

Under paragraph 13, in extra-large type, it states “The worry that landlords might sell properties during a crisis does not reflect the experience to date of landlords’ behaviour – during the last financial crisis we did not see a mass sell-off of property. The concerns of the Bank of England, who will very likely be granted powers over the Buy-to-Let market, seem overdone.”

This is a diplomatic understatement. As described in section 10 of Dr Beck’s report, these “concerns” were unfounded, and their publication was politically motivated to support Osborne’s levy on finance costs/tax on tenants.

The Governor of the Bank of England was accused of doing Osborne’s bidding this year by publishing unfounded political propaganda over Brexit. As Peter Oborne wrote in the Daily Mail:

”There is, however, very troubling evidence indeed that Mr Carney makes his errors in part because he is placed under political pressure. This became obvious during the EU referendum campaign.

He turned the Bank into a leading activist for the Remain campaign by providing important support for George Osborne's unscrupulous 'Project Fear'.

As a result, Mr Carney, 51, has cemented his reputation as a man who does not simply get his predictions wrong, but reliably wrong.”

Given the excellent evidence we have from Ireland on the impact of disallowing tax deductability on tents, can we not cast our net a bit wider and compare rent levels as simple property yields in lots of different countries?

We could divide them into two groups - those countries which allow individuals to deduct interest on individuals' investment mortgages and those that don't and so demonstrate that rents are higher in those countries without tax deductible mortgages.

This will show that the impact is universal and not a purely local event in Ireland that could be explained by other factors. It would be done very powerful data to show to our MPs.

Does anyone have any information on different countries' tax regimes to get me started?

Carney does indeed make incorrect predictions..even on interest rates in which he has the biggest influence (repeatedly incorrect )..His call on the economic stability "threat" of Buy to Let .last year...was utterly ridiculous. History shows that so called financial experts have a very bad record on predicting major economic downturns..including many fund managers ! and others who are paid for their supposed wisdom.What is really surprising is that they and many economics academics also fail to simply look at histories which over time repeat again and again and need very little interpretation. As per our issue with clause 24.Ireland etc...... Instead they try and predict without giving weight to or fully considering similar past events/situations. Its absent again in the latest LSE paper.
We now have a whole lot of financial institutions with billions of credit out there on tiny interest rates....and it was they who caused the last major economic upset!!..Weve already seen a number of lenders try to hoist rates...sometimes against the principals on which the lending was made. I suspect that many lending companies and banks are facing a dire set of circumstances now..and a Gov. of a westernised democracy cant really let a major lender fail...as we have seen ..so...once enough of them face the wall....the Gov. would have to step in.This time, maybe, on a very large scale. They wouldnt have sufficient gov. funds without some severe revenue raising. We landlords have already seen a levy..clause 24 ( for different "reasons")...and attempted rate raising..used.The next ..levy.. could be emergency legislation stuff to prop up the lenders...and their tiny margins.. paid by the debtors.( including people with mortgages).even with that possible "help" one has to suspect the next big downturn will again arise from credit.....perhaps this time at least partly because the lenders now have those very small margins .Its also noticeable that Chinas increasing trade dominance and their Govs. persistent efforts to buy key oil fields...gas etc.and ..major food sources in the west and pacific regions.... Australia etc is still growing........sometimes (strangely ?) being bought ..or attempted purchase... at what might be considered uneconomic prices for them.. Other motives applying perhaps?...There has been little comment generally on either of these two issues. They are a major potential threat.....but Mr Carney thinks Buy To Let is more dangerous!... Make what you will of his motives in saying that but he did...couple it to his repeated incorrect predictions on interest rates...and some comments way back that he didnt see controlling the domestic property market as being any part of B of E s remit/role whatsover!...then he later.. but not much later.. decided that in a number and range of ways that it was !!...All of this leaves him with little credibility .