Summer Budget 2015 – Landlords Reactions

Tax Hike for Self Employed Won't happen. Details In Link:

https://uk.yahoo.com/news/tax-hike-self-employed-isnt-161100566.html

Unless your a BTL Landlord, where pledges not to increase NIC's, Taxes or VAT don't apply.

That's the response, I have received from my MP from my rather lengthy email in relation to Mortgage Interest Relief Restriction:

Dear Mr Hall,

Thank you for contacting me about changes to the taxation of landlords.

I can understand your concerns in this area, which reflect the representations I have made to the Treasury over the last year regarding this policy, having heard from a number of affected constituents. In particular, I have asked that the Government at least keep the policy under review to avoid some of the consequences you have described.

I am afraid that the replies I have received have made no such undertakings. Whilst I am sympathetic to the rationale behind the Government’s policy, given that it is based on advice from the Bank of England, I am concerned about the consequences that you describe and I continue to raise my concerns with the Treasury.

I am aware that permission was not granted for a Judicial Review to challenge the legality of these measures, and so it is now highly unlikely that the policy will be stopped. I would be happy to write further to the Treasury if you wish to emphasise any particular points, but with the failure of the legal challenge, the changes will now come into force.

Thank you again for taking the time to contact me.

Best wishes,

Tania Mathias

Dr Tania Mathias
Member of Parliament for Twickenham
0207 219 4696 (Westminster) 0208 622 4426 (Constituency)
T: @tania_mathias F: fb.com/tania4twickenham W: tania4twickenham.co.uk

Reply to the comment left by "Simon Hall" at "14/03/2017 - 16:07":

Whilst outcome is the same, do I detect a change of tone in this letter, Simon?
I have now my letters to the tenants ready explaining in detail who do they owe an honour of their rent increase. Asking them to write to various individuals in the Gov and protest.

Finally - I keep repeating the same mantra (almost like Gov says about 1 in 5, lol) that we will achieve noting without taking tenants on board (and possibly Daily Mail and Daily Express. But I have no idea how to do that.

Reply to the comment left by "Whiteskifreak Surrey" at "14/03/2017 - 16:15":

I do not think they will ever change their stance on this unless there is a huge carnage such as people in streets etc. I exchanged couple of emails with Chris Cooper and he shares same views.

By 2020 they have done their trial to ascertain whether this policy is feasible.

Totally agree Simon the main aim is to push portfolio landlords that incorporation in my view

Reply to the comment left by "NW Landlord" at "14/03/2017 - 16:36":

So we are pretty much sc...ed up, as incorporation is not for everyone and incur enormous costs...

I know it's totally unfair and unjust but of you look at the figures raised by this tax it's buttons. Putting their ridiculous hat on they may have thought larger landlords can incorporate and smaller ones with one or two will put them on the market for ftb. I totally disagree with it all but in there eyes they want companies running the PRS not loads of individuals as it's easier to monitor from a tax perspective and it gives the impression that the sector is becoming more structured and professional even though we all know that it is anyway. It's just my opinion and I still am a million percent against it I think it is immoral and a state confiscation of assets as the tax bills for larger landlords who cannot incorporate will be unaffordable.

Reply to the comment left by "Simon Hall" at "14/03/2017 - 16:07":

Hi Simon

Your MP needs correcting. The Bank of England did not advise Osborne to restrict the deductibility of finance costs, it was the Intergenerational Foundation that did that. The Bank did not advise Osborne to make landlords bankrupt and tenants on benefits homeless.

My (Labour) MP also referred to the Bank of England’s concern that “ the rapid growth of buy to let mortgages could pose a risk to the UK’s financial stability”, and went on to say that he “therefore appreciated the Government’s rationale for imposing tax relief restrictions”.

I replied to him as follows:
“This concern was expressed in its Financial Stability Report Issue 37 of July 2015: http://www.bankofengland.co.uk/publications/Documents/fsr/2015/fsr37sec4.pdf

This report ended with: “Buy-to-let lending could pose a risk to financial stability. The actions of buy-to-let investors affect the broader housing and mortgage markets as individuals compete to buy the same pool of properties. ……. And in a downswing, investors selling buy-to-let properties into an illiquid market could amplify falls in house prices, potentially raising losses given default for all mortgages.”

The last paragraph read “HM Treasury will consult on tools for the FPC related to buy-to-let lending later in 2015, with a view to building an in-depth evidence base on how the operation of the UK buy-to-let housing market may carry risks to financial stability. The FPC will continue to monitor this sector closely.”

In other words, the Treasury had no evidence as to how there may be a risk, if any.

There are a couple of things wrong with the report above. Firstly, “individuals compete to buy the same pool of properties”. There is some overlap, but relatively few owner-occupiers buy derelict buildings and re-habilitate them, or buy houses that are too big for families and turn them into HMOs, or buy off-plan and wait a year or two for the property to be built.

Secondly, “in a downswing, investors selling buy-to-let properties into an illiquid market could amplify falls in house prices, potentially raising losses given default for all mortgages.” Experience after the credit crunch in 2007 showed that landlords did not choose to do this. They would not sell at a loss. If the market was illiquid, there would be no finance for a buyer. If prices were falling, aspiring buyers would not buy something that would lose value.

This section is so shallow and inaccurate that it screams propaganda. It is remarkable that this report was issued just as George Osborne was preparing to announce Clause 24. Osborne also used the Bank for supporting propaganda during the EU referendum campaign, for which Mark Carney was taken to task by Jacob Rees-Mogg.

Even if the future growth of BTL mortgages did pose a risk, that is no justification for bankrupting people who bought property in previous years or decades by introducing a tax with retroactive effect. If Osborne really wanted to influence future behaviour he should have made the change apply to future purchases only. That is the normal procedure for tax changes.

Osborne really had three different motives. The first was to increase tax receipts to help eliminate the budget deficit, a policy that the new PM made him recant just before sacking him. (That was the last of his many U-turns.) The second was to steal the Green Party’s naive policy, to give young people the illusion that he was helping them onto the housing ladder. The third was to drive private landlords out of business to make room for the giant Build to Rent companies, many of which are donors to the Conservative Party. Their rents will be much higher than current levels in the PRS, and they will not be housing tenants on benefits. Indeed, two days after announcing Clause 24 last year, Osborne was on the TV news in connection with making planning approval automatic for building on brownfield sites. He wanted to make it easier for these developers.”

Hi whiteskifeak

I trust you have explored incorporation ? Consulted mark smith ?