Summer Budget 2015 – Landlords Reactions

Reply to the comment left by “Appalled Landlord” at “11/08/2015 – 11:38“:

What makes you think that paragon will not move into the property commercial loan sector? They are a public limited company and will need to make their money somehow. If the individual btl sector falls off the cliff it won’t be long before they adapt.

Reply to the comment left by “Mark Alexander” at “11/08/2015 – 13:50“:

Having looked at the Reddit site, I think most of the members will be in the US 🙁

Reply to the comment left by “James Tallis” at “11/08/2015 – 16:18“:

Paragon evolved from national home loans a major lender centralised lender which started lending in the nineteen eighties.They stopped lending for many years due to the recession of the early nineties They restarted lending in the late nineties as BTL specialists until the last recession when they ceased lending again due to the lack of appetite for securitisation.I believe they still remained very profitable through the years of no lending as have Capital Home Loans who stopped lending due to the last recession and have never restarted .My point is do not rely on lenders to adapt or take on unacceptable risk such as when panic selling sets in.I was a director and partner in two major Mortgage and Secured Loan packagers over a period of some twenty five years and can give you a list as long as your arm of Lenders that through the towel in when the going got tough .History will repeat it’s self so please prepare for the next mortgage drought.I am sorry but it is coming and probably sooner than later

Reply to the comment left by “James Tallis” at “11/08/2015 – 16:18“:

Hi James

I had not considered what alternative sector Paragon might to try to get into if “BTL falls off the cliff” as you put it. Its chief executive appears to be unconcerned in public about the tax change. I am only hoping that he understands the impact it will have, and is working hard behind the scenes to prevent it.

Reply to the comment left by “Lisa Stux” at “11/08/2015 – 09:54“:

Hi Lisa

This is front article came out today from Property Tax insider written by James Bailey

Not sure if this is the one you are referring too

A radical change was announced in the Chancellors Budget on 8 July 2015, in respect of how landlords of residential propertry will get relief for interest in future
The new rules apply to individuals and partnerships, not limited companies, and they do not apply to the letting of furnished hol accommodation or commercial property.

There is an example and the text says the tax relief on the interest paid has been halved.

In the case of a landlord making losses, unused basic rate tax credit can be carried forward to the next tax year, but not any losses arising from deducting interest from profit
The new rules will not affect landlords who only pay basic rate tax in the first place, but they will impact particularly hard on those landlords who are heavily borrowed and are looking for capital growth rather than rental profits as their real reward

The good news is that we have almost 2 years to plan how to deal with this threat. The first step is to calc what yr tax for 2014/2015 would have been if the 2020/2021 rules had applied and then to decide if the rental business can withstand the shock. If not some means must be found to reduce borrowings, or perhaps to move from ordinary residential letting to either commercial property or furnished hol accommodation

The problem for many lanlords is that it may not be simple to sell one or more properties to reduce borrowings. There is the classic tax trap whereby selling a property is impossible because after repaying the borrowings secured on the property there is insufficient left to pay the CGT arising from sale

There will no doubt be other knock on effects lenders will need to factor in the limited deduction for interest when deciding if a landlord will be able to service the loan he is asking for. If many landlords get out of the buy to let market, that could affect house prices. the list goes on

Tip
There is no simple planning suggestion to be drawn. The important thing is to recognise that these changes are coming (assuming they are enacted in the Finance Act) and to start dealing with the results now.

I would have liked to have seen something about how wrong it is from the article, but he does acknowledge that house prices will be affected
He not’s said anything about pushing 20% tax payers into the 40%

An article on moving aboard would be good!

Reply to the comment left by “KATHY MILLER” at “11/08/2015 – 18:05“:

Yes…I agree…not a bad article, but could have been better.

I haven’t heard back from the email I sent them yet.

Paragon Group are a FTSE 250 company listed on the London stock Exchange and as such it would be inappropriate of the CEO to make any comment that might affect their share value.If as Mark says 80% of BTL’s are owned by 20% of landlords if just a small percentage are highly geared and the market tanks then all the lenders will run for the hills.I do not wish to be a messenger of doom but just want to highlight further why we need Osbourne to re think

Reply to the comment left by “Mark Shine” at “11/08/2015 – 14:17“:

Hi Mark

Our page design is automated based on our Google News algorithm so that would be incredibly complicated to change. However,on the right hand side of Property118 we display the most popular threads. This one is currently at the top (because it is the most popular). The first things people see when they click through are the petition, the spreadsheet to download, the Q&A download and the campaign group membership joining form. I’d say that’s even better than having the petition on the home page because we provide more information and encourage people to do more than just sign the petition.
.

Reply to the comment left by “Michael Barnes” at “11/08/2015 – 16:56“:

Hi Mike, according to the BBC there are 6.6 million UK Reddit users.
http://www.bbc.co.uk/newsbeat/article/33254299/who-uses-reddit-in-the-uk
So far, it seems to be a fairly balanced debate.
https://www.reddit.com/r/personalfinance/comments/3gknys/uk_an_important_petition_to_sign_that_effects/
I’ve seen far more/worse anti Landlord commentary on other sites.
Perhaps we should all try to contribute and at the very least keep that balance.

Could someone please remind me who gave us the excellent 150730 BTL spreadsheet, Ta.