Summer Budget 2015 – Landlords Reactions

Reply to the comment left by “Saeef Khan” at “17/09/2015 – 09:31“:

Saeef rents are high in the uk but they have to be because prices are high. If you look at Germany the biggest landlord owns over 300,000 homes (a listed company) and the average rent they charge is 400 euro a month.

Its a simple question of supply and demand. Likewise in France rents are considerably cheaper. But france has over 35 million homes and the uk has 28million homes even though both nations have almost the same population.

If the aim is cheaper rents amd houses the government needs to allpw building rates to increase markedly

Here’s the example.

Buying Individually V Buying Ltd Company.

Buying Individually:

2 Years typical Fixed rate @ 3.99 for 200K mortgage with an arrangement fee = £995.

The cost of this loan over the course of 2 years will be £16955, This includes arrangement fee (Annual excluding arrangement fee cost = £7980).

You will lose £3391 in Tax relief i.e £16995 @ 20% assuming you are higher rate tax payer. Therefore your total outlay for servicing this loan = £20386.

Buying Via Ltd Company.

2 Years typical Fixed rate @ 5.49 for £200k mortgage with an arrangement fee of 2% = £4000.

The cost of this loan over the course of 2 years will be £25960- This includes arrangement fees. (Annual cost excluding arrangement fee = £10980)

You will not lose anything in Interest Tax relief however you will be worse off by £5574.(£25960 – £20386).

The moral of this calculation, do not touch company with a barge pole.

Fleet mortgages offers a 3.85% tracker 1% fee for ltd companies which on a £200k mortgage would be £17,200 over two years.

I would hope that the anks start offering more competitive laons to companies. In fact writing letters to lenders asking for such after these changes might be a good idea. I can’t see that ltd companies with guarantor wpuld be amy more of a risk so why do products need to be more expensive?

I would suggest one of the bigger landlords here emails the relevant people at the BTL lenders askig them to consider offering their products to both landlords and LTDs at the same rate. It would only take one lender to do ot for the rest to follow imo

Reply to the comment left by “Roger Rabbit” at “17/09/2015 – 10:05“:

I would hope that Mark Alexander still has lots of contacts with lenders, going back to his days at The Money Centre as well as the current commercial finance broking. It would be interesting to get a feel for how they regard lending to small Ltd Cos in the future.

This tax change is coming. The best outcome all landlords can hope for is that this tax is not applied to existing loans and to future purchases only. Hence your OK were you are and if you want to buy more you will able to crunch the numbers and decide if they are viable or not.
Remember changes in the law bankrupted a lot of nursing homes and nightclub owners. Appealing to the government about how tough it will be for Landlords is “talk to the hand because the face isn’t listening”

PLEASE STOP is not viable campaign. Modify and focus the tax changes might work, but the government prefers to do it first and then see what happens and if needs be, change it.

The Labour party brought in the 1977 rent act with protected tenancies and rent controls. It decimated the rental sector and it collapsed, but it took time for protected tenants to die ect. As these properties became vacant they weren’t re-let. Slowly the UK rental stock all but disappeared. This was reversed by the Conservatives in 1989. It took 12 years to correct the mistake.

Reply to the comment left by “Jerry Jones” at “17/09/2015 – 10:34“:

Hi Jerry

Mortgage lenders are very keen to retain their buy to let lending business and most are busy working on their products for Limited Companies.

They prefer to lend to brand new special purpose vehicles and for the shareholders/directors to provide personal guarantees. On this basis, both the the lenders and the borrowers risk profile is no different to lending to an individual landlord.

In the past, several mortgage lenders haven’t provided finance to Ltd Companies because they recognised that these were the preserve of landlords with much larger portfolio’s. Given that most lenders prefer to lend to people with a smaller exposure to BTL property they didn’t consider that products for Ltd Companies were applicable to their model, hence they chose not to offer them. However, as we know, that is likely to change and most BTL purchasers will consider a Ltd Company structure from now on.

The likelihood is that we will see far more lenders offering mortgage products to BTL companies and this will drive down pricing for those lenders who have priced their products based on scarcity in the past. This will be very good news for existing BTL company borrowers who will see competition for their business intensify and margins and fees charged by lenders falling.

It’s not all bad news 😉
.

Reply to the comment left by “Ros .” at “17/09/2015 – 09:25“:

Hi Ros my email is [email protected]

Given that we have been using Freedom of Information requests, it might be appropriate to sign this petition against charging huge fees for requesting information under the Act.

https://speakout.38degrees.org.uk/campaigns/FOI-Court-and-Tribunal-Fees-Consultation

Reply to the comment left by “Ros .” at “17/09/2015 – 09:25“:

Ros – can you please remind us where to send this to the Pubic Committee? Are there any details on what form the comments should take?

Reply to the comment left by “Dr Monty Drawbridge ” at “17/09/2015 – 13:11“:

Monty, details of how to do this are at:

http://www.parliament.uk/business/news/2015/july/have-your-say-on-the-finance-bill-/