Summer Budget 2015 – Landlords Reactions

Reply to the comment left by “Ros .” at “03/12/2015 – 23:41“:

Hi Ros, do you have an email address I can contact you on? Want to run a couple of ideas by you. My email is [email protected]

Reply to the comment left by “Chris Cooper” at “03/12/2015 – 23:14“:

Chris, the last paragraph in your post included one of HMTs favourite lines:
“Only one in five individual landlords will be affected by this change, which will help address unfairness in our taxation of property.”

We’ve heard it many times from DG/GO/HMT and then also repeated by HMRC.

I wonder what percentage of ALL residential landlords, not just ‘individual landlords’ (meaning anyone not running an incorporated LL business) will benefit as a result of C24? Or to put it another way: What increased percentage of the PRS does GO/HMT estimate that their mates/sponsors hope to own in 5 and 10 years time, as a result of C24 being implemented?

2013 marked a significant year for the London Stock market, it was the year that the majority
of the stocks listed (53%) became foreign owned. The foreign takeover of the UK housing
market began much later, but already by 2012 the majority of the office space in the city of
London was foreign owned. Qatar now owns more of London than the Crown Estate, and all
of this has happened in a few years. One need not be a “buy British” protectionist to be
troubled by this trend. The unchecked rise in foreign ownership has left the UK’s economy
more vulnerable to international economic shocks and its government more willing to listen to
foreign investors. The British, still accustomed to think of themselves as owners are, in reality,
increasingly a nation of tenants.
Location is key to the value of property and this fact produces highly significant local variations
to property prices, but for simplicity this is usually reduced to regional variations. Since 2010,
London has been by a new trend, when it broke away from the rest of the UK housing market,
a phenomenon that also hit the SE to a lesser extent in 2011. Figure 3 shows the extent of
London’s lead in property prices, and also the north-south divide

Lord Lamont is the only one concerned about foriegn buyers , he is correct so lets guess why the elite are not!

Over the last 30 years residential
property has outperformed every other investment class which has attracted private investors.

In the last 5 years institutional investors have shown greater interest in residential property,
this is likely to sustain the bubble for decades, while homelessness and landlordism increase.
The government under the influence of the property industry has made the bubble much
worse, by loosening planning regulations and allowing the building of poor quality housing, by
sustaining bizarrely low interest rates which encourage buy to let, by refusing to listen to public
concern over immigration (both legal and illegal) and by subsidising buyers (including foreign
buyers) through the “Help to Buy” scheme. Each of these policies has further inflated property
prices.

The housing crisis has been spun by the property lobby as being a problem of antiquated
planning law and narrow minded locals who resent school playing fields, historic buildings and
green belt being lost to the growth of more houses. In fact, additional supply of houses will not
affect prices. Extra supply simply increases the crisis by adding a population crisis on top of a
housing crisis. The single biggest factor in the rise of house prices to their current incredible
levels is the growth of a vast foreign buyer segment. This foreign buyer segment is now so large
that it has fatally distorted the market and is a serious hazard to British living standards and
the British way of life. Foreign buyers are able to target the best quality housing stock, leaving
British citizens living in smaller and smaller accommodation, whilst paying such high prices that
their disposable income is constrained for the whole term of the mortgage.

The number of buy-to-let mortgages grew most strongly in the years 2005-07. They now
account for 15% of all home loans, and the proportion is still growing, since they account for
18% of all new mortgages. Buy-to-let investors have been helped by favourable tax
arrangements through tax relief on interest payments on buy-to-let mortgages of up to 45%
alongside a 10% wear-and-tear allowance. Between 1999 and 2011, the number of
outstanding buy-to-let mortgages grew from 73,200 to 1.39 million, with the value of
mortgages outstanding increasing from £5.4 billion to £159 billion in 2011. Government figures
show that between 1986 and 2012 about 5 million new homes were built. Of these just over
half are now owned by private landlords and let.24 In 2000, Gordon Brown ended the
“Mortgage Interest Relief at Source” (MIRAS) scheme. MIRAS had been introduced in 1969 and
allowed home buyers to claim tax relief on their mortgage payments, of up to £30,000 per
annum per house. The tax-break was ended for owner-occupiers but retained for buy-to-let
landlords, giving them a substantial tax advantage when buying a home. In the summer budget
of 2015, George Osbourne announced that the tax break for landlords will be cut. From 2017,
the amount landlords can claim as relief will be gradually reduced to basic rate of tax –
currently 20 per cent, rather than 45%.
Investors can have a useful role in the housing market as risk-takers and regenerators. But the
vast majority of money coming into UK housing is not from genuine investors but from
profiteers who are riding the current trend, rather than innovating, risk taking, and leaving the
housing market better than they found it. In addition, much of the foreign money in UK housing
is undoubtedly dirty money, i.e. the product of government corruption and organised
criminality, since the purchase of housing is a common method of money laundering.
The UK housing market is particularly attractive to foreign buyers because of political stability,
the use of the English language, the presence of large diaspora from every nationality on earth
and the absence of restrictions on foreign purchase of UK housing stock.
Investment buyers provoke price inflation because they are less price-sensitive, prone to herd
behaviour and have considerable buying power. Foreign buyers exacerbate this situation
because of their dependence in intermediaries and “experts” who aggressively market UK
housing as an investment opportunity. Large blocks of housing are purchased by foreign
investment companies and then sold abroad, at inflated prices.
London’s emergence as the second-home capital of the world, does not just affect the prices
of high-end properties, but pulls up prices throughout the whole market, as buyers at every
level are downgraded to the level below. This effect is nothing new in London, which has been

24 http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/11176988/1996-the-birth-of-buy-to-letBritain-in-numbers.html

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a market for second homes for over a century, but the scale of the phenomenon is new, with
up to 85% of prime property being sold to foreign buyers. In many parts of London, it is the
British who are the outsiders.25
The influence of foreign buyers is not limited to London. Price inflation which began in London
now affects the market generally, both because the lower end of foreign buyers are now
themselves priced out of London and investing in regional cities but also because of the bullish
mood that infects the whole UK market, driven by stories of ridiculous prices and ridiculous
profits.
A huge marketing operation promotes London properties as investments across the world.
Large trade shows do not merely visit New York, Hong Kong or Dubai but now tour former
Soviet Republics, the Arab states and South-East Asia, in order to sell apartment blocks. Buyers
do not need to even visit the UK to buy a property.
The UK is estimated to have 550,000 of the world’s 15 million HNWIs, putting it in the top five
globally behind the US, Japan, Germany and China. Over the past 10 years, the total number
of global HNWIs has risen by 77%, and their wealth is forecast to rise by a further 25% over the
next three years. These UK HNWIs own an estimated 38% of the UK’s total wealth, and 45% of
them live in London.
Figure 8 shows the connections between cause and effect in house price inf

The scale of investment buying both from domestic and foreign buyers
is now so great that people on average incomes are now being excluded from owneroccupiership
from large parts of the UK. The social nuisance of these three effects is magnified
by the growth of foreign buyers because foreign buyers exhibit certain characteristics that
make them less socially desirable as buyers and owners:
Second
homes
Buy-to-let Buy-toresell
Owner
occupation
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• Foreign buyers, because of their average wealth, are less price sensitive, which again
leads to over-paying.
• Foreign buyers exhibit herd behaviour, relying on market trends rather than product
knowledge, which leads to over-paying and price instability
• Foreign buyers have a much greater propensity to leave property vacant, or near-vacant
Foreign buyers tend to be less knowledgeable about the UK property market, making
them more susceptible to marketing “puff” and to paying over the odds. Figure 10 is an
example of the misrepresentation that property marketing companies use to investors.
The area, Peckham, is described as being the “No.1 London hotspot” but Londoners
regularly vote Peckham as being the most dangerous place to live in London.26 This type
of misrepresentation would be prohibited in other investment markets such as the
equity markets, where very strict standards apply to how products can be marketed and
the claims that can be made. The property market, by comparison is the “wild-west” of
investment, with inexperienced investors and sharp marketing practices. Property
investors might be due little sympathy, but they are not the only ones who suffer. The
inflation of property prices to investors pushes up prices for everyone, since they are
competing directly with owner-occupiers in the market, and their over-payment results
in aggressive rents being charged in order to obtain the expected yields.

Reply to the comment left by “Mark Shine” at “03/12/2015 – 21:14“:

No….your wrong. You don’t need to be cash rich……all you need to do is incorporate for your new purchases.

Reply to the comment left by “Mark Shine” at “03/12/2015 – 21:14“:

No….your wrong. You don’t need to be cash rich……all you need to do is incorporate for your new purchases..

Further test comment, please ignore
.