Summer Budget 2015 – Landlords Reactions

Reply to the comment left by “Monty Bodkin” at “11/09/2016 – 09:22“:

Positive outcome of clause 24 (for existing landlords) number 12;
– Less competition from brownfield conversions.

How many landlords will now be converting disused factories, mills, prisons, barracks, hotels etc into rental homes?

I’ve done them in the past, won’t be doing any more in the future. Maybe those corporate superhero landlords will spring into action and fill the void?
– not much sign of it so far.

Reply to the comment left by “Monty Bodkin” at “11/09/2016 – 09:22“:

Clause 24 and the other changes to taxes have made me much more financially aware as I’ve had to spend a lot of time improving my knowledge. Through this I discovered that I was entitled to tax relief on business travel expenses incurred in my day-job that I was unaware of and could be claimed retrospectively for previous years. Most of that was incurred before I even became a landlord and it’s been a welcome bonus payment that will make up for some of my expected S24 costs.
My new knowledge means I plan and budget better, and proactively manage my pension and savings far more intelligently than I did before.

HM Treasury wants to know if you have any comments on the summer budget of last year, ready for the new Chancellor’s Autumn Statement:

https://www.gov.uk/government/publications/budget-representations-guidance

They want evidence. You can submit your personal experiences – rent increases, evictions, ceasing to re-furbish/convert/ buy off plan, or giving up a day job which is already short-staffed – for example.  

So that the Treasury doesn’t just keep these real world experiences to itself, you could copy and paste your submission into an email to both your MP and the councillors responsible for housing where your properties are.

Reply to the comment left by “Appalled Landlord” at “12/09/2016 – 18:55“:

I have put the following on the Treasury’s Autumn Statement survey:

“My submission relates to Section 24 of the Finance (No. 2) Act 2015.

George Osborne was as naive as the Green Party from which he stole section 24 if he thought that home providers would bear the new levy on finance costs, and go bankrupt in the process. I know one whose tax on rental profit would go up from 23% now to 83% in 2020/21, and another whose rate would go from 29% to 93%. Taxation is not the right word for this. This is state confiscation of assets, going even beyond socialism.

Like any supplier that has a new tax imposed on it, home providers will pass it on to the end user.

George Osborne announced Section 24 without consultation. If he had consulted, he might have learned from the experience in Ireland. There, interest was disallowed between April 1998 and December 2001, and the average rent rose by almost 50% in that period.

A description of the tax change is to be found in paragraph 9 of the Irish tax authority’s document [4.8.6] Deductibility of Loan Interest (section 97(2)(e)): 
“Temporary restriction on interest deductibility for residential premises (Bacon Report)

Finance (No 2) Act 1998 terminated the deductibility for interest on borrowed money used on or after 23 April 1998 in the purchase, improvement or repair
of residential premises in the State.
Finance Act 2002 restored interest relief for residential premises where the
interest accrued on or after 1 January 2002, regardless of when the property
was purchased.”

Ronan Lyons of Trinity College Dublin published a report entitled “The spread of rents in Ireland, over time 
and space”  http://www.ronanlyons.com/wp-content/uploads/2015/06/Public-and-Private-Renting-in-Ireland-Ronan-Lyons-chapter.pdf”

The graph on page 2 shows that the average monthly rent in Ireland in the third quarter of 1998 was 600 euros. 
The average had been climbing at a steady rate for 20 years, but it then accelerated, twice.  It reached almost
900 euros in the third quarter of 2001, just before the deductibility of interest was restored as from January 2002.
So while interest was disallowed, rents increased by almost 50%.

Home providers in the UK started to increase rents last year in order to be able to pay the levy as from 2017. This meant evicting tenants on HB/LHA who could not afford the increase. Some have decided never to take any HB/LHA tenants in future, so the latter are being made homeless in droves, to be put in “temporary” accommodation at much greater cost to the public purse than the HB/LHA.

This effect on poorer tenants is irreversible.  Simply going back to normal tax principles will not be enough to
 create homes for them again. The longer it takes for section 24 to be repealed, the higher rents will ratchet up, and the more homeless people there will be.

Section 24 has also had a dampening effect on the supply of dwellings. Those home providers who realised its consequences stopped financing new-builds, stopped making derelict properties habitable again, and stopped converting over-large houses into HMO’s. The tradesmen who used to do the refurbishments and conversions are now short of work. It is no surprise that construction output fell in the 12 months following the summer budget last year.

Section 24 has been a disaster before it is even in force. Its repeal is a matter of urgency.”

I then sent it in an email to my MP, with a copy to Philip Hammond [email protected] and to three local councillors. The subject was the last two sentences of my submission above, in block capitals.

Resopnse to apalled landlords submission on summer budget….Very well put and i particularly like the ref to ireland and quotes and links to history there
.I sent a similar submission but yours is better and harder to ignore with those references.Well done.
Maybe if a few hundred more mention the ireland comparison and its repeal across the water they just might consider it and maybe use that and BREXIT as an opportunity to back off and pull the clause.
Thank you.

Reply to the comment left by “Appalled Landlord” at “12/09/2016 – 20:37“:

Excellent, AL. I particularly liked the repetition of the phrase ‘home providers.’ For that is what we are!

BTL and pensions are being discussed on Money Box on BBC radio 4 at 15.00 today.

If you want to contribute, the phone number is: 03700 100 444, the email is: [email protected]

https://www.politicshome.com/news/uk/economy/economic-growth/press-release/council-mortgage-lenders/79164/buy-let-past-no-guide

Very interesting article…there is a potential that Osborne mad policies may well be reversed.

REF COURT CASE pending re summer budget. A couple of recent things that might help our case….
1…The gov. rationale for clause 24 initially…?…. centred upon Mr Carneys false belief that B to L was a threat to the economy…however the council of mortgage lenders have stated in their recent comments that buy to let…has a better record on payment being made than the residential mortgage sector.Couple that with the lack of a mass egress from B to L during the last Global.Fin.Crisis..??? perhaps.
2….Also Mr Carney (BBC NEWS today)..has told the Gov. that the Help to Buy Mtge guarantee scheme for first time buyers is no longer needed …so theres one in the spokes for the alleged
need to help first timers by driving us out of the market. If we were such a problem to these people surely theyd need that help which he now states isnt required?

Both points raised by major bodies who are supposedly wise, informed and not landlords !

https://www.ft.com/content/3f7a84b4-d4a1-11e5-829b-8564e7528e54

There is a clue in this article that, Tax Changes in Mortgage Interest Relief will not be retrospective;

“With a tax surcharge due to take effect in April, there have been reports that would be Landlords are piling into the market determined to complete purchases beforehand”