Budget 2016 – Landlord reactions

Budget 2016 – Landlord reactions

14:00 PM, 16th March 2016, About 7 years ago 137

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The Chancellor George Osborne has just delivered his Government’s Budget.

Quick reference details for Landlords Below:

Stamp Duty surcharge of 3% on residential property to apply to all investors regardless of size.

Stamp Duty on commercial property transactions is to be reformed. Our understanding is that bandings will be applied similar to residential property, albeit with a zero rate up to £150k and then 2% of any amount over £150K and up to up to £250K and then 5% of any amount over £250k. As an example, on a property that costs £300,000 the SDLT would be £4,500 – i.e. £0 on the first £150k, 2% on the next £100k (£2,000) and finally 5% on the next £50k (£2,500). If our understanding is correct then this will also impact on on related transactions of 6 or more connected property transactions (e.g. at incorporation of a property portfolio). More on this HERE

Capital Gains Tax Reduced – from 28% to 20% for higher rate tax payers and from 18% to 10% for low rate tax payers from April 2016. However there will be an 8% surcharge on residential property leaving Landlords selling at the same old rate!

Maximum interest relief against profit capped at 30% of turnover, but this is only for the largest companies and will not affect Landlords. This was a concern for Landlords pre-Budget.

Tax free income tax allowance threshold – increased to £11,500 from April 2017

High rate tax threshold – increased to £45,000 from April 2017

Corporation tax – decreased to 17% by 2020

Insurance premium Tax IPT – increased 0.5% and funds raised to be spent on UK flood defences (£700million)

Fuel Duty – Frozen again this year

Class 2 National Insurance for self employed to be scrapped

The Office for Budget Responsibility has downgraded growth forecasts due to external economic headwinds from the uncertainty in the Global economy.

Growth for 2015 was 2.2% but the forecast has reduced from 2.4% to 2.0% in 2016 with 2017 growth of 2.2% and then 2.1% for the following years.


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Jon Pipllman

11:23 AM, 29th March 2016, About 7 years ago

The BOE Consultation on Underwriting Standards for BTL mortgage contracts could have been worse for LLs



Jon Pipllman

11:29 AM, 29th March 2016, About 7 years ago

2.7 The current industry standard is to set the minimum ICR threshold at 125%. The PRA does not expect these proposals to reduce minimum ICR thresholds and furthermore, some of the factors above may lead to higher minimum ICR thresholds.

2.14 In particular, in coming to a view of likely future interest rates, the PRA expects firms to
have regard to:
(a) market expectations;
(b) a minimum increase of 2 percentage points in buy-to-let mortgage interest rates1;and
(c) any prevailing Financial Policy Committee recommendation and/or direction on the
appropriate interest rate stress tests for buy-to-let lending;
and must be able to justify the basis it uses by reference to (a), (b) and (c).

2.15 Even if the interest rate determined in paragraph 2.14 indicates that the borrower’s interest rate will be less than 5.5% during the first 5 years of the buy-to-let mortgage contract, the firm should assume a minimum borrower interest rate of 5.5%.

Sunny K

11:56 AM, 29th March 2016, About 7 years ago

Interesting read. I am always suspicious when data are presented as relative rather than absolute! Assuming the absolute data show similar trends, one can understand the concerns about the rise of BTL lending especially about practices which might lead to collapse. However the policies of the government are entirely arbitrary: How can increasing expenses improve affordability? The BTL lender do have a lower LTV ratio and stress testing which addresses affordability. The government is making it ease to borrow for more vulnerable owner occupiers borrowers by various schemes. This is causing increasing house prices and dangerous lending by state underwriting risking borrowing. Makes we wonder whether we have been too complementary to GO by labeling him evil when he in-fact he is an idiot?

Jon Pipllman

12:05 PM, 29th March 2016, About 7 years ago

There is a definition for Portfolio Landlords: 4 or more properties

"Lending to Portfolio landlords is inherently more complex given the quantum of debt in aggregate, the cash flows and costs arising from multiple tenancies and potential risks of property and/or geographical concentrations.

3.3 These complexities mean that a specialist underwriting approach is appropriate. Firms underwriting process for Portfolio landlords should assess:
(a) the borrower’s experience in the buy-to-let market and their full portfolio of properties and outstanding mortgages;
(b) the assets and liabilities of the borrower, including any tax liability referred to in paragraph 2.6;
(c) the merits of any new lending in the context of the borrower’s existing buy-to-let portfolio together with their business plan; and
(d) historical and future expected cash flows associated with all of the borrower’s properties.

Chris Byways

12:34 PM, 29th March 2016, About 7 years ago

Reply to the comment left by "Jon Pipllman" at "29/03/2016 - 12:05":

I'm not convinced this is worth the web space it is printed on!

Graphs, no reference numbers, 2 & 3 have no content (on this ipad) and from the fourth the second column must be 11, but looks three times the size of 6, and 5 does not even register.

They say this is from lenders PLANS. Was this BEFORE the LLs plans to pay off or reduce gearing, to largely stop further leveraged purchases, to rearrange portfolios in several ways?

With so many attacks on PRS every month, it seems highly likely this is WISHFUL THINKING on the part of lenders, and talking up thier prospects from past lending.

At first glance seems as lightweight as our esteemed (sic) chancellor's IF "research", and it's unknown effects, like 'won't impact on rents' and other crass remarks.

But thanks for posting it Jon.

Whiteskifreak Surrey

10:56 AM, 13th April 2016, About 7 years ago

Yesterday's Evening Standard published an interesting article written by Simon Jenkins:


I just cannot understand why our "beloved" George is so happy on that photo? He probably is not able to realise the gravity of that situation.

Dr Rosalind Beck

22:50 PM, 13th April 2016, About 7 years ago

Okay, everyone. Important message from Steve Bolton and Chris Cooper. The next stage of the funding of the legal challenge against the Government begins tomorrow. This is the time for us all to put our money where our mouths are. Also, it is important to circulate this to everyone you can think of. I would wait until it is up and running, which I believe should be around mid-day tomorrow. Then help it to go viral like the last time. We are hoping that people who donated before will donate again - you will see that donations over £100 entitle the donor to a ticket at the summit: 'Tenant Tax - Landlords Fight Back', on the 9th of June, which will be a brilliant event and also mean that a lot of us can meet up with each other for the first time in many cases.

This is the link to the funding site:


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