Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Dr Rosalind Beck" at "13/11/2016 - 16:03":

``I also think that when MPs are visited about this and things are explained to them that a little remnant of doubt will be placed in the recipient’s brain and this may gradually spread – even if they are explicitly disagreeing with you (my mother’s brain works like this)``

Yes that made me giggle and is so true
Often in a real time arguments one seemingly hits a brick wall time and time again with your opposition. One can leave a room somewhat deflated because they just don`t seem to get it . But the face to face stuff is often just the bruising foreplay in the longer battle to put across your point of view . They may well get it but they need to process it all in slow time. And in any case the ego almost always prevents an instant climb down . And the bigger the personality and public profile the more the climb down has to be thought about and structured.

The brain has to process the information and that`s hard to do when you are both full on. When I have been on a verbal assault course with my mother ( or others ) I try to allow plenty of time for the dust to settle and theirs ( and my ) wounds to heal. I then look for the subtle change in their behavior which may tell me that they have been listening and in fact do agree with me even though they are of course far too proud to say.

Actions then will indeed often speak louder than words . I`m sure i would do the same if ever I was wrong. ( The last time I was wrong was I think way back in the summer of 1974 so my memory is somewhat hazy ha ha )

Politicians are the same

Their egos need soothing and they will respond in time I`m sure to the drip drip dripping tap method.

Lets hope they respond positively come the Autumn statement. Brexit and now Trump provides them with an excellent ideal opportunity to find all manner of easy escape routes or u turns on so many policies whilst not losing face. Lets hope sec 24 will be in the mix

I have sent my post to 2 different threads and hope this does not cause a problem. I am a pretty good judge of character (was a G.P for 30 years myself). On the positive side I do believe he admired our pluck and stance.
My partner Helen was with me and I suggested that if she wanted to she should wade if she saw an opportunity. When we mentioned our geographical spread (Liverpool to Bristol, via Cape Verde but NOT including London) he looked perplexed. Helen waded in about foreign investors, Chinese, Russians etc buying up London property.

His view? Well they all need a lesson. We are cracking down on money laundering but what we need is a big crash in house prices in London to teach these investors that they will not always make money because they think they can't lose. Pick the bones out of that one.

I did also mention the Irish situation, but he said " the trouble with the Irish is that the housing bubble had got hopelessly out of control so it had to collapse". We knew we had a disconnect at that point. He said he had read the report!!

Slowly slowly catch your M.P./monkey. Let's keep up the good work, even though we may have to wait until some damage is done. I have 2 domestic residences so another M.P. to see soon. O.K. so I am pulling a crafty. (Helen did not want to go it alone and the house is half mine) K.C. did not spot even though it was in my extensive brief.

Chris.

Reply to the comment left by "Chris Novice Shark Bait" at "13/11/2016 - 18:38":

Hi Chris.
I have extracted some points from my report, related to Ken Clarke's concerns. Perhaps you can forward these points to him in a follow-up email, pointing out that he might have missed these critical points given that it is a fairly lengthy document (I seem to have lost the formatting doing the cut and paste, so you will want to tidy it up a bit to make it more readable):

1. The idea that landlords and first time buyers are in direct competition and that attacking the former will help the latter:

⦁ Research has also shown that the assumption that landlords and first time buyers are in direct competition with each other is largely false. In a report by the London School of Economics it was found that landlords and first time buyers are mostly interested in different types of housing and that:

‘Only a minority of sales to landlords involved first time buyers.’

The Residential Landlords Association has also been bemused at the Government’s approach to ‘private’ landlords in this context, because, as they say, landlords are more likely than owner-occupiers to buy properties which are in a bad condition to renovate and refurbish, and many of these are in areas which would not appeal to house buyers; they will also often be large properties unsuitable for. Despite this, the last Government went on a ‘cash-grab by increasing taxes on landlords to deter further growth of the buy to let market.’

⦁ The report shows how rents will rise, tenants will be evicted and immense damage will be done to the private rented sector, whilst at the same time, first time buyers will find it even harder to get a step on the housing ladder as a direct result of the policy.

The Institute of Chartered Accountants of England and Wales rubbished the Chancellor's assertion that Section 24 would 'level the playing field' in their submission to the Finance Bill Committee:

‘The level playing field argument is specifically referenced to home owners not being able to claim tax relief on their mortgage interest, but the playing field is also skewed by the capital gains tax treatment; the home owner pays no capital gains tax on the sale of their home but a landlord pays capital gains tax at up to 28%.’

The idea that landlords will be taxed on the profit of their businesses, but not be allowed to offset the costs of creating that taxable profit is absurd, unjust and unsustainable. It overturns a fundamental, centuries-old principle of taxation.

‘The Chancellor introduced the change to “create a more level playing field” but as the measure does not apply to companies far from being level it leaves the playing field with a cliff edge in the middle.’

They further state:

‘It is likely that landlords will increase their rents to compensate for the loss of tax relief and the number of rental properties may decrease.’

Higher rents will also not help first time buyers to purchase as raising enough money for a deposit will become more difficult.

Professor Philip Booth of the Institute of Economic Affairs, reporting his expert opinion to the Treasury Select Committee on the Summer Budget, also made it clear that the decision did not address the problems of supply and planning restrictions which were the real cause of the housing shortage. He added that the reasoning behind the decision to disallow landlords’ interest costs:

'…didn't make sense.'

⦁ No statistics were presented regarding the number of first time buyers who are actively seeking to purchase a home and in a financial position to do so, or indeed how many starter homes may be freed up from rental stock by landlords offloading their portfolios (and evicting tenants to do so). No assessment has been made as far as we are aware of the considerable regional and local variation in supply and demand.

Had the Government done some research before legislating on this critical matter, it would have found that millions of people do not have it in their sights or ambitions to purchase a property:

‘This was confirmed in last year’s Tenant Survey, with 38% of under-35s saying they didn’t want a mortgage or that renting suited their lifestyle, rising to 49% for those aged under 25. The number of under-45s living in the sector has more than doubled, to nearly 3.1 million over the last decade, and those aged 25-34 now account for nearly 37% of PRS households, up from 32% in 2009, according to the English Housing Survey.’

2. House prices:

⦁ Landlords have been blamed for a wide variety of problems in housing. For example, they have also been blamed for the increase in house prices. A detailed analysis was published in 2008, however, which measured the effect of BTL on house price growth between 1996 and 2007. It was found that only 7% out of the 150% rise in property prices between 1996 and 2007 was due to increased lending to landlords; another way of putting it is that 143/150ths of those price rises were not associated with landlords’ activities at all.

This was according to a report published in 2007 by the National Housing and Planning Unit.

The rise in prices was presumably caused by increased demand for housing of all kinds coupled with a chronic under-supply of new dwellings, which would have been greater without BTL. What would prices and rents have be now if landlords had not contributed greatly to the housing stock?

Despite this independent evidence, landlords are still often blamed for the rise in house prices.

⦁ Buy-to-let has promoted increased housing supply by, in effect, forward-funding housing development:

‘High-density development often requires significant amounts of advance funding to pay for the necessary infrastructure involved.’

The viability of these cash-intensive developments has been improved through off-plan sales to ‘private’ landlords. This is because owner-occupiers generally purchase much later.

Without the necessary capital being supplied by ‘private’ landlords even before one brick has been laid, hundreds of thousands, maybe millions of homes would not have been built –many of which were then sold for owner-occupation.

In addition:

‘The confidence that is brought to a scheme by investor sales has led to a higher number of housing starts in less established residential areas, particularly in town centres that are undergoing large-scale urban regeneration, which generally costs more and is viewed as higher-risk.’

Such a positive contribution towards solving what would otherwise be a far greater housing shortage seems to be wholly unacknowledged in the context of the recent attacks on the sector.

Just another out of touch elite politician who doesn't understand the real world and business

Hi Chris
Well done for the effort
Did he make any comment on why it is ok if you are in a company structure?
Did he not think the right to buy was keeping prices high? If the market drops many will be in negative equity.

http://www.propertyindustryeye.com/landlords-start-to-explore-selling-off-properties-as-tax-change-draws-nearer/

Reply to the comment left by "NW Landlord" at "14/11/2016 - 07:33":

NW Landlord, that's exactly what the government wanted, Landlords sell up so they can tap into CGT receipts hence the reason why the introduced s24.

Why do you think, BTL Landlords were excluded from reduction in CGT rates as government knew full well due to emergence of s24 many landlords will feel trapped and will get clobbered. In fact this is exactly what Osborne wanted....government could not give 2 hoots about first time buyers and all that flannel.

https://www.theguardian.com/business/2016/nov/14/most-renters-feel-theyre-unlikely-to-buy-home-in-next-five-years-review

"Most renters feel that they are unlikely to buy home in next 5 years"

This finding proves that, Osborne's rhetoric attack on BTL landlords is well and truly flawed!

In the same website - another thing the LLs are blamed for:
Lack od DIY skills in the generation rent!!! I just wonder what next? I suppose we will all go to jail for being LLs - as I always say, we are definitely worse that ISIS:
https://www.theguardian.com/lifeandstyle/2016/apr/29/buy-to-let-landlords-decline-diy-under-30s-generation-rent-age-first-time-buyer

BTW - read the comments too, e.g:

TheROF phaine 29 Apr 2016 11:34

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Even more so now that the government has decided that a property doesn't have to be deemed "habitable" to rent out.

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bartelbe Optymystic 29 Apr 2016 12:01

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Which is another good reason to exterminate buy to let landlords. Heavily tax buy to let mortgages, second homes, and rental income. That will get rid of BTL and increase home ownerships, owners who will maintain their properties.