Summer Budget 2015 – Landlords Reactions

The record low interest rates appear to have lured any Landlords into a false sense of security. I fear many may not have planned for the futurue beyond the rock bottom rate it sits at now.

Reply to the comment left by “Ros .” at “17/07/2015 – 13:33“:

Hi Ros
Would it also be worth contacting the IFS highlighting the fact that – this new proposal if implemented will affect:
1. ALL Private Landlords who have mortgage interest payments and financial costs associated with their business – not just 1 in 5 Landlords as stated by HMRC.
2. For all these Landlords their tax will increase even to the point of paying tax on no actual income! Theses Landlords will not be able to continue their lettings business – if these new proposals are implemented – hence the knock on effect on their Tenants having to vacate due to Landlord not being able to continue on a financial basis. Where do all these tenants go? This will have a very de-stabilising effect on all these people. Because of these forced sales – all coming on the market at the same time – there will be a downwards effect on house prices – this will effect both Landlord and Residential owner – and will trigger large scale negative equity.
3. The problem will be further exasperated by the pending rises in in interest rates – as Landlords interest rates will increase and they will be taxed on this increase!

How do we approach them – or should we do it individually.

Reply to the comment left by “Simon Lever” at “17/07/2015 – 14:44“:

Thanks Simon

So, on identical figures for rent, interest and other costs, Mark’s tax goes up from £18,102 today to £37,727 for 2020/21. This is more than double. His effective rate of tax on real income goes up from 25.2% to 52.3%. This is solely due to the proposed change in treatment of finance costs.

This is a real case, it is not theoretical. As you wrote earlier, this gives a good indication of how deeply these changes will bite.

Reply to the comment left by “kathleen drea” at “17/07/2015 – 15:35“:

Hi Kathleen.
You have had an excellent idea. I will contact them – and I’d say the more the merrier – there is strength in numbers. I’ll have a think about what to say. Maybe something along the lines of can they elaborate now that they have had more time to absorb the information from the Budget – as they responded to it very quickly – and pointing out the repercussions of the measure, as we see them. Naturally, we see them from a point of view of the injustice being committed against us and the discrimination against us as a group, but they can take a more in-depth look than they initially did and hopefully they can relay their findings also to the Government. I have the contact page. It’s: http://www.ifs.org.uk/about/contact

The great thing about their contribution is that they have said the measure won’t succeed with its alleged main aim – to create this so-called level playing field between first time buyers and ‘private landlords’ (the Government is fine about companies and Housing Associations not being on this level playing field for reasons not stated).
People can send a short note, a long letter, a letter with calculations in it – whatever – but it is a really good idea you’ve had. Well done.

Reply to the comment left by “Klaire Lynch” at “17/07/2015 – 15:11“:

No, they have planned based on extant tax regimes and being treated as a business.

Reply to the comment left by “Klaire Lynch” at “17/07/2015 – 15:11“:

I think most us actually have planned for this – i can sustain substantial interest rises , but i certainly didnt have that interest being taxed as profit in my planning, why would anyone plan that …it doesn t apply to ANYONE except an individual landlord , no other business model.

Reply to the comment left by “Ewan Murray” at “17/07/2015 – 16:38“:

It may be worth googling new profiles and have a think about what comes up. EG through images.

Reply to the comment left by “Appalled Landlord” at “17/07/2015 – 15:39“:

That is correct.

Also it is based on the basic rate of tax band being £37,500 in 2020/21 (my estimate) not the current one of £31,875.

He loses his personal allowance and goes into the top rate of tax purely becuase of the way it is anticipated that the relief on the interest will be given.

This is obviously much more than just reducing the tax relief on the interest from 40% to 20% which I think most people would understand it to be.

Reply to the comment left by “Ros .” at “17/07/2015 – 16:23“:

“the more the merrier” as a sole trader retailer as well as being a LL, this new taxation model is worrying , maybe my high street store is not a business either and this new tax model is the thin of the wedge for all businesses …on that basis I would think any business owner has concerned whether incorporated or nor, LL or not…that is a much bigger and wider audience to attract

Reply to the comment left by “Jay James” at “17/07/2015 – 17:03“:

Circling vulture you mean?