Summer Budget 2015 – Landlords Reactions

On the Sunday Politics Show, Damien Green, during a discussion of how many extra people would be attracted to coming to the UK because of the National Living Wage, and in reference to the OBR saying ‘not many’ would be said:

‘The OBR sre good guessers. But it’s a guess.’

That’s interesting, since the OBR said rents would not rise as a result of C24 and the numbers involved were so small as to have a negligible effect. I’d say that was a very poor guess! How great to have national policy decided on the basis of guesses, rather than thorough research, reliable data and indeed common sense – whack up landlords’ or any other businesses’ costs and they won’t increase the price they charge to the consumer. Yeah, right.

Reply to the comment left by “Ros .” at “25/01/2016 – 14:46“:

The OBR are just another bunch of out-of-touch civil servants.

If the Chancellor increases duty (tax) on petrol/or diesel by 1p/litre then guess what garages increase the price by 1p/litre.
If the Chancellor increases the duty on beer by 1p/pint then guess what pub landlords increase the price of beer by 1p/pint.

Why on earth does the OBR, the Chancellor, David Gauke, the Treasury, HMRC do not think increasing the tax on Landlords will not result in rents increasing?

Reply to the comment left by “Barry Fitzpatrick” at “26/01/2016 – 10:24“:

http://www.theguardian.com/society/2016/jan/26/benefit-cap-on-social-housing-will-leave-thousands-homeless-landlords-warn

Good job there are plenty of philanthropic private landlords still offering low cost homes to the vulnerable below cost, as we are so profitable.

Er, No.

I’ve just published a superb open letter from Charmaine to Michael Fallon MP. You can access it via the link below.
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The end of the article pretty much sums it up.
http://www.standard.co.uk/comment/comment/simon-jenkins-panic-over-a-property-crash-will-just-leave-london-poor-and-ugly-a3165241.html

See link below. Concerning to say the least. As an aside, I used to work with Tracey McDermott referred to in this article many moons ago who at the time I found fair albeit firm (sometimes rigid) in her role. Whether Andrew Bailey will worsen or improve on matters is something for us to find out in due course I guess.
http://www.mortgagesolutions.co.uk/news/2016/01/26/buy-to-let-tax-changes-may-prevent-bank-of-england-intervention/?utm_source=Adestra&utm_medium=email&utm_term=&utm_content=%20Buy-to-let%20tax%20changes%20may%20prevent%20Bank%20of%20England%20intervention%20&utm_campaign=Roundup%20Daily%20HouseAdvert2&utm_campaignid=216&utm_cmdid=14806

Can someone help a while back someone (maybe Ros) posted a link to a report on the outcome of similar mortgage interest changes in Ireland which I read at the time have been back throu 80 pages but can’t seem to find it can anyone re-post the link

The Irish experience:

There is some directly relevant experience of this in Ireland. We have published a brief article on this here:

UK rents set to sky-rocket because of Osborne’s tax grab | Property118.com

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UK rents set to sky-rocket because of Osborne’s tax grab…
Property118 Forum for Private Landlords

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And here is a more up-to-date picture, showing that even ‘restricting tax relief’ to 75% has coincided with/led to a worsening housing crisis in Ireland:

Rental crisis: Why landlords are struggling to make money

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Rental crisis: Why landlords are struggling to make mone…
The burden of taxes mean that, despite the surge in rent, it is hard to make a profit

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And there has now been a partial backtrack on the 75% restriction in Ireland, with them re-introducing 100% in cases where landlords will house ‘social’ tenants:

Landlords to get tax relief for social tenants

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Landlords to get tax relief for social tenants
Increased relief will be given retrospectively at the end of three-year period

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We would question now whether this partial reversal in Ireland will undo the damage it has wrought. The damage may be irreversible; it will certainly have led to much social misery at the lower end of the scale.

The lessons are there for the learning, but we do not believe that the British Government was even aware of the Irish experience before they decided upon the ‘tax grab’ against landlords and we do not see why the policy in the UK will lead to a different trajectory in terms of rent rises, evictions and homelessness to that which occurred in Ireland.

Reply to the comment left by “Chris Byways” at “26/01/2016 – 17:01“:

I`m a weak philanthropist
It wrestles with my capitalist instincts daily

Approx 60% of my portfolio and 60% of my clients portfolios are rented to LHA tenants . Often the LHA tenant is somewhat vulnerable with a fragmented life history living near to the breadline. It was the perfect business model 16 years ago when I started. I bought cheap ex local authority properties and the LHA rate was at the same level as the neighboring posh estates where the houses cost twice as much to buy.. Two for the price of one i would boast. It gave homes to the disadvantaged, solved some of the councils housing problems and made me a shed load of money.

Over the past few years though LHA rates have failed to keep pace with private rents for a number of reasons . My philanthropy will extend to a £25pcm or even perhaps £50 pcm difference between the two if I`m in a generous mood. . They find life difficult enough but some attempt to and manage to struggle to top it up. I tend to let goes those who dont pay. I stomach the loss. I`ve a mind to support those who go without themselves in order to put a roof over their kids heads. Rather them than those who moan if they haven’t got the latest x box game or an 80 inch plasma

The last year though has seen the gap increase from anything from £50 to £150 in a typical LHA ex local authority estate. I am having some tough conversations with tenants who have been with me for 5 – 10 years.

With a 4 year LHA freeze now in place and C24 on its way rents will rise maybe lets say another 5% pa for the next 4 years. In 2020 a standard 3 bed house will see the LHA rate in my area still at 757 pcm whereas the private rent now at an average of £850 pcm will become more in the region then of £1000 pcm

My philanthropic self can hack a £25 pcm rent shortfall
My philanthropic self will not hack a £250 pcm rent shortfall

Something will have to give…….
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At last the London Evening Standard has something positive to say about the PRS. Simon Jenkins has summed it up nicely. You may wish to skip to the last couple of paragraphs.
http://www.standard.co.uk/comment/comment/simon-jenkins-panic-over-a-property-crash-will-just-leave-london-poor-and-ugly-a3165241.html