Autumn Statement 2016 – Landlords Reactions

Autumn Statement 2016 – Landlords Reactions

13:30 PM, 23rd November 2016, About 6 years ago 30

Text Size

Chancellor Phillip Hammond delivered his Autumn statement today. No doubt there will be much discussion amongst landlords and letting agents yet again. autumn statement

And the good news for private landlords and their agents is ….. drum roll ….. errr ……. NONE!

Did anybody really expect a repeal of the legislation that will remove mortgage interest as a legitimate business expense from private landlords over the next four tax years? The responses from MP’s and Treasury are clear evidence that our concerns are not being heard and that we need to shout louder. Perhaps the best we could have hoped for was a softening of the policy to remove the retroactive effects by applying the changes to new purchases only. However, the Treasury clearly don’t give a damn about how their policies will affect the lives of hundreds of thousands of landlords and tenants and the misery it will cause, as has already proven to have been the case in Ireland. They simply continue to trot old the same old sophistry in the apparent belief that if they say the same thing often enough it will all turn out fine.

Clearly we need to re-double our efforts and I am pleased to announce that we have a plan for just that. Our survey below will be the catalyst for our biggest media campaign to date.

Oops! We could not locate your form.

If you wish to make a donation to support our media campaign please click on the button below.

Insurance Premium Tax

This will increase from 10% to 12%. The Property118 GUARANTEE to undercut any ‘like-for-like’ property insurance quotation will continue to apply LINK

Letting Agents will no longer be able to charge fees to tenants

Major letting agents including Foxtons and Countrywide have already seen sharp falls in the value of their shares since this announcement was leaked last night.

Whilst the Chancellors announcement will no doubt be treated by tenants as good news, industry bodies do not see it that way.

David Cox, Managing Director, Association of Residential Letting Agents (ARLA), said …

“A ban on letting agent fees is a draconian measure, and will have a profoundly negative impact on the rental market. It will be the fourth assault on the sector in just over a year, and do little to help cash-poor renters save enough to get on the housing ladder. This decision is a crowd-pleaser, which will not help renters in the long-term. All of the implications need to be taken into account.

“Most letting agents do not profit from fees. Our research shows that the average fee charged by ARLA Licenced agents is £202 per tenant, which we think is fair, reasonable and far from exploitative for the service tenants receive.

“These costs enable agents to carry out various critical checks on tenants before letting a property. If fees are banned, these costs will be passed on to landlords, who will need to recoup the costs elsewhere, inevitably through higher rents. The banning of fees will end up hurting the most, the very people the government intends on helping the most.” 

Richard Lambert, Chief Executive Officer at the National Landlords Association (NLA), said …….

“The new Chancellor is clearly aware of the pressures facing those living in the private-rented sector, but in attempting to improve affordability he has shown that, like his predecessor, he lacks an understanding of how the whole sector works.

“There’s no doubt that some unscrupulous agents have got away with excessive fees and double-charging landlords and tenants for far too long.  Banning letting agent fees will be welcomed by private tenants, at least in the short-term, because they won’t realise that it will boomerang back on them.

“Agents will have no other option than to shift the fees on to landlords, which many will argue is more appropriate, since the landlord employs the agent.  But adding to landlords’ costs, on top of restricting their ability to deduct their business costs from their taxable income, will only push more towards increasing rents”. 

Chris Sheldon. Managing Director of LettingSupermarket.com said ….

“It was only a matter of time before the legislation introduced in Scotland would filter into the rest of the UK so our business model was already prepared and ready for implementation. Our new fee scale to landlords will continue to be the most competitive in the Country offering full management for just 5% of rent (6% for properties inside the M25) and letting fees of just £100 per new tenant (£150 inside the M25). We will not charge for renewing tenancies for existing tenants. We anticipate a substantial increase in business as many landlords will be looking to reduce costs to in order to compensate for continually squeezed profitability, not only as a result of this announcement but also the tax changes announced over the last 18 months to mortgage interest relief and additional stamp duty.”

Contact LettingSupermarket.com



Comments

Mark Alexander - Founder of Property118 View Profile

16:20 PM, 23rd November 2016, About 6 years ago

Reply to the comment left by "Simon Hall" at "23/11/2016 - 15:58":

I wouldn't worry about giving them idea Simon, there are many more forums than ours that do that.

The scrapping on incorporation relief for landlords was a major talking point amongst accountants prior to the 2015 Autumn statement, particularly on Accounting Web. It never happened but I think it will soon based on the consultation on incorporation relief announced in the budget today.

The message to all landlords is this; if you are planning to incorporate, do it now.
.

Ian Hamilton

19:16 PM, 23rd November 2016, About 6 years ago

Is it possible that smaller landlords will be better to remain un - incorporated seen as the income tax thresholds are to rise. The higher rate is to rise to 50k. This along with the 20% tax credit which comes with S24 must be a bonus for landlords with say less than five rental properties. Is there anyone who can do a back of fag packet calculation?

David Lovegrove

21:22 PM, 23rd November 2016, About 6 years ago

In my local towns there are presently as many letting agents as there are charity shops.
I imagine the consequences of letting agents receiving less income whilst paying increasing business rates will be the increase in online agents and more shops becoming empty.
With all the legislation that has been introduced and is still planned perhaps the government ought to guarantee us a fixed percentage profit for the risks we take to try and make a moderate living rather than taking the view that we have such a high margin that all these announcements only reduce our profit slightly.
I am sure Travelodge and other temporary accommodation providers take less risks for undoubtedly better returns.

Lee Humby

13:26 PM, 24th November 2016, About 6 years ago

Lee Humby

13:29 PM, 24th November 2016, About 6 years ago

Reply to the comment left by "Whiteskifreak Surrey" at "23/11/2016 - 16:57":

I too got the notification but certainly didn't sign the petition. Somewhat concerning.

Lee Humby

13:58 PM, 24th November 2016, About 6 years ago

Reply to the comment left by "Mark Alexander" at "23/11/2016 - 16:20":

Mark

My understanding is that I need to have been in a partnership for at least 3 years (and I'm currently a sole trader) before I can even consider incorporation. In view of your thoughts on the exclusion of landlords from incorporation relief in the not too distant future would you estimate it's already too late for me?.

Thanks

Old Mrs Landlord

14:04 PM, 24th November 2016, About 6 years ago

Reply to the comment left by "Lee Humby" at "24/11/2016 - 13:26":

Well, well, so the Housing Minister wants more homes in the PRS! Obviously, the best way to provide these homes is to bankrupt many of those currently providing them and deter other individuals from entering this business, then subsidise corporate bodies (possibly overseas based) to build rental accommodation at a price which will yield sufficient dividends to satisfy their shareholders! All tenants' problems solved! Why hasn't somebody thought of this obvious answer before? Could it be that common sense indicates that this is a far more expensive and less satisfactory solution? No doubt there is a place for corporate provision, mainly in big cities, but it's no panacea and, just as with Right to Buy, the removal of current provision is taking place before its replacement is set up. I pity my grandchildren's generation.

Mark Alexander - Founder of Property118 View Profile

14:05 PM, 24th November 2016, About 6 years ago

Reply to the comment left by "Lee Humby" at "24/11/2016 - 13:58":

Hi Lee

You can consider incorporation at any time, having a partnership for three years will avoid your paying SDLT.

If you act now though (before you file your 2015/16 tax return) you could incorporate on 6th April 2018 without paying SDLT.

To discuss further please book consultancy time with me >>> https://www.property118.com/optimal-tax-planning/91857/
.

Lee Humby

14:09 PM, 24th November 2016, About 6 years ago

Reply to the comment left by "Old Mrs Landlord" at "24/11/2016 - 14:04":

Absolutely. As has been mentioned before in these pages, 'the removal of current provision' seems to be all part of the plan to clear the field so that the big corporates can come in and clean up. It really does make me wonder just who this government is working for.

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership

or

Don't have an account? Sign Up

Landlord Tax Planning Book Now