Summer Budget 2015 – Landlords Reactions

I've bought those! A few years back they were going for around £50,000 and still are. I know the likes of Shelter would shoot me down, but I don't see it as an impossible feat to save £7,500 and get an 85% mortgage. If someone can save £200 a month they could get there in about 3 years. Since many people spend a fortune on their mobiles, nights out, car (when they don't always need one), Sky TV, holidays, Christmas, children's gizmos they don't need, etc., the fact remains that there are people who choose not to save a deposit. And I would imagine even on quite a modest wage, mortgage companies would lend to a lot of these lower-earning people on such cheap properties.

Reply to the comment left by "Ros ." at "20/07/2015 - 22:03":

Hi Ros

Some people have posted recently about buying run-down properties that nobody wanted, including FTB's.

As regards new-builds, I saw a statistic today on one website to the effect that 57% of them were bought by landlords. This was a good thing for everybody, including FTB's, as I have posted before:

Without us there would be fewer homes in the country today, and the housing crisis would be worse than it is. Therefore, due to supply and demand, rents would be higher than they are today.

It was the commitment of BTL investors who bought off-plan who enabled developers to build many of the hundreds of thousands of new flats and houses on brownfield sites since the millennium.

We did not take existing properties away from first-time buyers (FTB’s). On the contrary, we facilitated the construction of new homes. Some of these were bought by owner occupiers who thereby freed up other properties in selling chains which ultimately allowed FTB’s to get a foot on the ladder.

In addition, in order to get planning permission developers had to build affordable housing on the same sites for housing associations.

If BTL landlords had not made this commitment, developers would not have sold so many properties, or so quickly. Therefore they would not have been able to develop so many sites before the recession started in 2007.

If the reasoning behind all of this is to slow the growth of BTL because it is moving to fast, getting to big and keep it in check, then that is what needs addressing. In order to accomplish that they need to do something, Individuals have been selected because they are an easy target to manage and control - those 2 simple measures (10% wt & lowering tax relief) will tranform the BTL landscape for most non corp BTL LL. Harsh but true. Unfair - yes very. Effective - yes very. The guvmunt has a responsibility to the people as a whole, inc FTB. I have not joined the Con party here, but we need to be objective about where we go - If i was GO and someone came to me complaining about this - i think i would point out i feel it is for the greater good of all , and if it not controlled this way, then how else? to expect them to just drop it is more than optimistic, so what needs to happen is a compromise or alternative way of cooling BTL needs to be offered up. we already have ideas:
1. Full U-turn on the measure
2. if not a U Turn, then an amnesty on SDLT/CGT charging for a one-off move to Ltd structure for landlords who register with a scheme within a set time frame.
3. Apply the measures only to purchases subsequent to 2017

I think it is wrong in everyway to heavily penalise sole trader /ptnrshp whilst letting corp bodies carry to as before - we have focussed heavily on the tax relief removal but the 10% WT removal is also going to hurt , has that been removed from corp enities as well or not ? have things like enforcing reduced ltv ben considered across the board ? maybe allow existing LL to sell up with no/low CGT on 1,2 & 3 bed properties ? .....(watch all the 4,5 6 props get remodeled into 3 beds!)If this is to come in we need a path out of the corner that we will enevitably will be backed into? we certainly do NOT have a level playing field at the moment and with interest rate rises on the horizon the whole market will slow up. LL have a raft of new legislation with LL registration and many other things kicking in over next few years which will slow up BTL by default shortly.... it remains a sector that can afford to take a hit/raid but we need to shift some of that onto the whole sector NOT just the non corp, that is grossly unfair. It is of course possible that a second wave of legislation could apply the proposed measures to the corp BTL sector at anytime as well ...so restructuring into a ltd co for those that can, may not be as safe as it may seem.

just a thought ...are letting agents fees still allowable expenses ?

Reply to the comment left by "Appalled Landlord" at "20/07/2015 - 21:51":

Don't understand that one Appalled, so if you have, income 45,000, costs 5,000, interest charges 15,000, how would much would you have to pay 40% on ?

Reply to the comment left by "Simon Roads" at "20/07/2015 - 22:10":

Your numbers are a bit out Simon. ...They come in slightly lower at around 71.3k and 91k....For overall tax rate of 35.6% and 45.6. You must have used the wrong amounts for you tax bands. Also don't forget that for 2021...The personal allowance amount will be at least 11k as opposed to 10.6k

Reply to the comment left by "Appalled Landlord" at "20/07/2015 - 22:48":

Appalled landlord....what you say is part true. Yes. ..obviously demand from btl helps keep house builders books healthy....I'm all for that as quite a large chunk of my sipp portfolio is invested in house builders. Where the government could have stepped in for residential buyers is to help FTBS by underwriting interest only mortgages for FTBS. With interest rates so low it is the capital repayment part of a mortgage that puts property out of reach of a lot of residential buyers. You cannot argue that this does not give btl investors an advantage. If interest only mortgsges where still available on residentials then i am sure ftb demand would be much stronger thsn it is now. Securing a btl mortgage for me was much easier than a btl one. Once you have a residential property it is much easier getting a btl. In fact the banks wouldn't agree to giving me a btl until I had a residential property!

Reply to the comment left by "Simon Roads" at "21/07/2015 - 01:26":

Simon, Management charges, letting agent fees indeed all costs (other than finance costs) still definitely deductible.

Let's not give the government any ideas

I think some people are getting a bit side tracked by the wear and tear allowance. This is not being removed.....They are requiring that these claims are backed by actual expenditure. If the money has been spent on refurb then then claim can be made.....just as for limited companies.

Reply to the comment left by "Simon Roads" at "21/07/2015 - 01:26":

Yes....letting fees are allowable. This is not a finance cost.