Summer Budget 2015 – Landlords Reactions

Reply to the comment left by “KATHY MILLER” at “20/08/2015 – 22:46“:

Thanks Kathy

The graph shows that the gross value of BTL mortgages rose between mid-2006 and mid-2007. This will include re-mortgaging, which the West Bromwich heavily promoted in early 2007 for example.

It shows that the gross value of loans to FTB’s fell. Unfortunately, the graph does not show loans to owner-occupiers who were not FTB’s.

So this graph does not confirm or counter my theory. It would be helpful to know the change in the number of mortgages for BTL purchases, compared to the change in the number of mortgages for purchases by owner-occupiers, in that period.

Reply to the comment left by “Appalled Landlord” at “20/08/2015 – 21:41“:

Hi Appalled,

As a developer I sold something like 30 flats (all good quality conversions in South London) between 2002 and 2008. I never sold a single one to an investor.

Reply to the comment left by “Appalled Landlord” at “20/08/2015 – 23:18“:

Would you be able to get this info under a FOI request

Reply to the comment left by “KATHY MILLER” at “20/08/2015 – 22:43“:

Hi Kathy.
Yes, it is a very good and useful report – you found a good one there. I’ve pulled out some extracts we can use in the tenant submission. Could you cut and paste the latest version with your additions etc. to me in an email and I’ll work on it a bit tomorrow and email it back?
Thanks.

Reply to the comment left by “Appalled Landlord” at “20/08/2015 – 21:41“:

100% bang on the money App LL i bought 36 props between 200 -06 , i was halted in my tracks due in to int rates and house rpices not stacking up by early 07. anecdotally i never gazumped or was gazumped on any of those props. out of the 36 i offered and paid less than asking price on every single except 1 where i paid full asking price ..only because it was an open house viewing and i got spooked by the number of people there (early days …and i was a bit green!) altho the prop was still excellent value and still shows 10% roi, that agent had several offers at full asking price but put me forward as i it was I had already successfully completed qquickly on 3 others just before, it was a great time when vendors were coming direct to me before going to the estate agent as i spent much time engineering ths ! . EVEN on my own home i offered under asking price and got it. I do not accept in any way shape or form that BTL is pushing prices up ..where is the evidence? It it doesnt stack we walk away. The only place this happened in my view was city center & docks regeneration “luxury apts” which any fool could see were ridiculously overpriced and did not stack up in any way , with service chqs parking premiums etc…many btl & OO got stung in a big way on these, but hey a 10 yr old maths student would see that they couldnt work.

Thank you so much Kathy Miller for finding and posting the 2 reports , Mark the treasury NEED to read these. They are extremely well researched and clearly presented. The more we all dig the clearer the picture becomes. The mist is clearing considerably for me, the guvmunt and populus have it VERY wrong and are buying the media spin and outright BS presented, even the HPC halfwits have taken a step back today. With all of us digging and exptrapolating figs from real & proper research i really believe and am confident we can help create the u turn that has to happen to stop a PRS catastrophe.

The crux of this “budget problem” is that the vast majority of people do not understand figures let alone the uk tax system. As a member if mensa i like to think i am fairly good with figures( iam just good at stupid puzzles!) , when Megan shaw eg was first prented to this forum i was too busy (like most people) looking at the bottom line ….how much extra tax will i have to pay as a LL ? …when i saw that the example meant an extra £1800 i thought Ok thank god for that i am unlikely to go bancrupt then, just pay a little more tax. It took several days to sink in that the extra tax due on that example COMPLETELY wiped out ALL of the BTL profit and produced a further bill of £840 which would have to be paid from an alternative source ie. from LL earned income (salary) Most LL wont get this EVEN whilst they are writing out the check to HMRC ! To educate & alert all of UK LL, their sleepy accountants and the media of this ridiculous situation is a mighty challenge but if we can it will be enough to get this reversed IMHO if presented properly, then to examine a loss that will be taxed, fundamental PROFIT=INCOME -EXPENSES priciples upended, million pound portfolios destroyed , tens if not hundreds of thousands of tenants displaced, average earning LLs bancrupted, housing market unstabilised, a very likely house price crash (even if localised in pockets), will surely force a u turn on this extremely ill thought out move. The policy makers clearly need to re-assess the impacts as they have certainly NOT got it right.

Reply to the comment left by “KATHY MILLER” at “20/08/2015 – 22:04“:

Excellent, Kathy. So much here we could use! The reports I found were not as current or as detailed as this. An interesting read, too.

Reply to the comment left by “KATHY MILLER” at “20/08/2015 – 22:46“:

From the 2014 report, there’s a great deal in our favour, too. This:

Any attempt by a future government to control the private rented sector –
for example, by reimposing regulation on the level of rents – would be counter-productive in such an environment. In the absence of higher housing supply, it would risk a reduction in investment in the sector leading to an increase in rents.

And the section on taxation…

Role of the tax system (as members have mentioned on here). From the IMLA report that Kathy posted:
Another factor that has been cited as a driver of the private rented sector, and specifically of the buy-to-let mortgage, is taxation. It is argued that because landlords can deduct mortgage interest in calculating their tax bill in a way that owner-occupiers cannot, they have an advantage over first time buyers. However, this argument is erroneous. Owner occupiers in the UK are not subject to capital gains tax or, since 1963, to any tax on their ‘imputed’ rental income (previously known as Schedule D income). Private landlords in contrast are subject both to capital gains tax and tax on rental income, subject to allowable deductions for most of their costs. The more advantageous tax position of the owner-occupier is best
understood by considering the impact of two homeowners swapping properties and renting to each other. By renting these same properties there are subjecting themselves both to capital gains tax if they sell and income tax on rental income less costs. Even where their costs (e.g. repairs, mortgage interest) exceed their rental income this will leave them in an inferior tax position as such tax losses cannot be offset against other (non-property) income and they still face a potential capital tax liability.
However, homeowners’ tax position was even more advantageous when mortgage interest tax relief was available up until 2000. So there has been a levelling of the playing field in favour of landlords which at the margin may have discouraged some from entering homeownership.