Summer Budget 2015 – Landlords Reactions

Reply to the comment left by “James Fraser” at “21/03/2016 – 20:15“:

‘Yeah, great. But there IS SDLT due. I think the ONLY way to beat SDLT is in a partnership – which I don’t have, currently.’

James, I’m not in a partnership currently either.
Does your above point not answer the question as what the first step might be if the ultimate aim is to one day (3 tax yrs after partnership initiated) be able to be
on a level playing field with incorporated BTLers?

Reply to the comment left by “Mark Shine” at “21/03/2016 – 22:37“:

Hi Mark. Maybe you and I should form that partnership?!

Yes, it’s an option. I do have a life partner I could do something with, but even then there’s a large stamp duty issue even if the split was 99:1.

I’m massively keen on BICT, as its a good option that should work well for me, but have got some unresolved mental block about it that prevents me from going ahead. I just know that come 1 April I shall severely regret not doing it, especially as the partnership route takes a long time and is almost as expensive.

Nightmare. In some ways I want April to arrive quickly just so I can get some sleep!

Reply to the comment left by “James Fraser” at “22/03/2016 – 06:39“:

James. I don’t know how far you would go to avoid SDLT but if you were married you could transfer properties to a partnership with your wife without incurring SDLT (transfer between spouses). Then incorporation from a partnership avoids SDLT, I believe?

I’m no accountant so someone might quickly correct me on this!

Reply to the comment left by “Dr Monty Drawbridge ” at “22/03/2016 – 09:39“:

No, you’re right Mr. Drawbridge.

The only drawback is that being the romantic I am, I’ve always sworn never ever to get married. I always joked that Id only ever get married for tax advantages… Hmmmm, looks like that moment might be approaching after all…!

Has anyone looked at how “chattels” and “goodwill” can be used to reduce SDLT?

I’ve had my accountant onto s162 relief on SDLT. Here’s how I understand his advice;
1. You need to identify ‘true’ partners and connected persons who continue to own an interest in the properties after any transfer takes place.
2. If these connected partners and parties incorporate a company owned wholly by them then a transfer of ownership can take place as effectively no interest has changed hands – the ownership is still by the same connected persons, including the company which is effectively a ‘connected person’ as it is wholly controlled by the partners.
3. One very important consideration is; are the connected parties truly partners or do they simply own the properties in joint names?
4. To have access to the partnership SDLT rules, you must be seen to be operating as a partnership as a question of fact. If not, then you might be open to a challenge on the SDLT general anti-avoidance rules which may deem that you are deliberately and artificially taking advantage of the partnership rules to gain an SDLT advantage e.g. forming an LLP with a view to incorporating shortly after is unlikely to cut it.
5. To pass the test you need to be able to demonstrate the partnership as a serious undertaking conducted on sound and recognised business principles which have a degree of substance that you can represent, with a reasonable amount of time being spent on any property related activities.
6. My accountant suggests that one or two properties with minimal management wouldn’t pass the test whereas 100 properties would do so quite easily.
7. Depending on where you are on that continuum, proceed with caution is my advice.

I only have 5 BTL so I won’t bother with s162 – Refinancing with low rates with a view to paying down BTL debt is my priority and assuming a capital growth strategy moving forward. I will incorporate a company for new purchases once all this shakes out. I’m convinced the treasury is just waiting to see how LLs move before catching them on the way out…

Reply to the comment left by “Claudio Valentini” at “22/03/2016 – 12:12“:

Excellent post, and my feelings and information entirely match yours. I too plan to start a new co for further purchases after this mess has passed.

My dilemma is that I’ve always been keen on incorporation for the long term/IHT etc, but the sheer cost and uncertainty of trying to put 20 houses in gives me concerns. Wait til it’s all over and try to go forward under the ‘new normal’ is roughly where Im at with it… today at least!

I think most people are exactly where you are James !

Reply to the comment left by “Trendo ” at “22/03/2016 – 12:32“:

It’s good to know. I’m feeling pretty sick about the whole sorry affair and I’ve never been so worried by a business decision in my life.

For those of you that are, like me, keeping half an eye on how the large corporate landlord scenario is unfolding.

Crystal Amber Fund (CRS) is a significant holder of Grainger plc shares (it owns 3.4% of the company). CRS published its interims last week and is pretty critical of Grainger’s proposed strategy to invest heavily in BTL. CRS sees the best value for shareholders in the regulated tenancies part of the business and compares Grainger unfavourably with that other, more focussed, regulated tenancies business, Mountview Estates plc

You can read the full CRS piece on Grainger on pages 3 and 4 of its interims

http://www.crystalamber.com/_library/_downloads/31-12-15-CAFLInterimReportRNSVersionV2.pdf

I have highlighted here a short extract

“…Neither is the Fund convinced of the merits of investing £850 million into the private rental sector rather than reducing debt, particularly at the time of global financial uncertainty for asset classes.”