Why you need to contact your MP

Nice one Simon. You've got an interesting one there!

Reply to the comment left by "Ros ." at "08/08/2015 - 16:54":

Yes I have! However he is actually a very good MP and I think he works hard for his constituents - so I hope he will use his influence, even if he doesn't have a vote!

Contacted mark Menzie MP for Fylde , No reply yet.

1. Robert Goodwill
2. Scarborough & Whitby
3. 19/08/15
4. Reply as follows:

Dear Mr Marshall

Thank you for your email dated today about mortgage interest rate relief.

The private rental sector is very important, and home to 9 million people. I know that Ministers are rightly determined to support the vast majority of landlords, who look after their properties and are fair to their tenants.

That said, buy-to-let landlords have a huge advantage in the market as they can offset their mortgage interest payments against their income, whereas homebuyers cannot. This has contributed to the rapid growth in buy-to-let properties, which now account for over 15 per cent of new mortgages, something the Bank of England warned could pose a risk to our financial stability. For this reason, I think it is sensible that the Chancellor announced in the Budget that mortgage interest relief will be limited to the basic rate of tax.

Prior to this change, for every pound of mortgage interest costs a top rate taxpayer incurred, they got up to 45p back from the taxpayer. Furthermore, the better-off the landlord, the more tax relief they get, which I cannot support. This will now be reduced to 20p, gradually over four years from April 2017. I believe this strikes the right balance between tackling this unfair advantage for the richest, while recognising that at the other end of the spectrum many hard-working people have saved and invested in property depend on the rental income they get, and tenants benefit too from a competitive sector.

It is of course important that the impact of changes such as this are reviewed, and I know that Ministers will continue to promote the best interests of the sector.

Thank you again for taking the time to contact me.

Yours sincerely

Robert Goodwill

Robert Goodwill MP

6 Albemarle Crescent

Scarborough

YO11 1XS

Telephone No: 01723 365656

1. Robert Goodwill
2. Scarborough & Whitby
3 19/08/15
4 Reply as follows:

Dear Mr Marshall

Thank you for your email dated today about mortgage interest rate relief.

The private rental sector is very important, and home to 9 million people. I know that Ministers are rightly determined to support the vast majority of landlords, who look after their properties and are fair to their tenants.

That said, buy-to-let landlords have a huge advantage in the market as they can offset their mortgage interest payments against their income, whereas homebuyers cannot. This has contributed to the rapid growth in buy-to-let properties, which now account for over 15 per cent of new mortgages, something the Bank of England warned could pose a risk to our financial stability. For this reason, I think it is sensible that the Chancellor announced in the Budget that mortgage interest relief will be limited to the basic rate of tax.

Prior to this change, for every pound of mortgage interest costs a top rate taxpayer incurred, they got up to 45p back from the taxpayer. Furthermore, the better-off the landlord, the more tax relief they get, which I cannot support. This will now be reduced to 20p, gradually over four years from April 2017. I believe this strikes the right balance between tackling this unfair advantage for the richest, while recognising that at the other end of the spectrum many hard-working people have saved and invested in property depend on the rental income they get, and tenants benefit too from a competitive sector.

It is of course important that the impact of changes such as this are reviewed, and I know that Ministers will continue to promote the best interests of the sector.

Thank you again for taking the time to contact me.

Yours sincerely

Robert Goodwill

Robert Goodwill MP

6 Albemarle Crescent

Scarborough

YO11 1XS

Telephone No: 01723 365656

1) Nus Ghani
2) Wealden
3)19th August 2015
4)Yes 19th August 2015

Just to say that more people need to get on board with this, I was the first person to raise this with my MP. I cannot be the only landlord in the Wealden area. Apathy will destroy us, we are all busy but sooner is better than later.

Reply to the comment left by "Joe Marshall" at "19/08/2015 - 15:39":

OMG. It's honestly like dealing with automatons. We're putting in submissions this week to the Public Committee which expose this unthinking nonsense for what it is. The challenge is getting MPs to actually read them and pay attention to what's in them. Anyone who did would be immediately converted to our point of view.
Thanks to you and the others for contacting the MPs. We need to keep this up and find the MPs who can actually have an independent thought rather than blindly follow a party political line which is pure rubbish.
if you could face it, you might want to go and see him and make him listen to the actual arguments. Once the Public Committee puts our submissions on-line, you will be able to use them to back up your case - we can't let people have them yet as they have to not have been 'published' before.

1) Craig Williams
2) Cardiff North
3)20th August 2015
4)meet offered by me

Dear Craig Williams,

I write with regard to the BTL Tax relief proposed in the latest budget.

The simple stance set out on the Budget sounded plausible and possibly reasonable on the face of it ” rich Landlords will have to pay a bit more tax , and those that have save hard and rely on BTL will not – std rate tax payers will not be affected”

These were the comments made in the Budget:
“.....That said, buy-to-let landlords have a huge advantage in the market as they can offset their mortgage interest payments against their income, whereas homebuyers cannot. This has contributed to the rapid growth in buy-to-let properties, which now account for over 15 per cent of new mortgages, something the Bank of England warned could pose a risk to our financial stability. For this reason, I think it is sensible that the Chancellor announced in the Budget that mortgage interest relief will be limited to the basic rate of tax.

Prior to this change, for every pound of mortgage interest costs a top rate taxpayer incurred, they got up to 45p back from the taxpayer. Furthermore, the better-off the landlord, the more tax relief they get, which I cannot support. This will now be reduced to 20p, gradually over four years from April 2017. I believe this strikes the right balance between tackling this unfair advantage for the richest, while recognising that at the other end of the spectrum many hard-working people have saved and invested in property depend on the rental income they get, and tenants benefit too from a competitive sector.”

HMRC were contacted to find out exactly what mechanism would be employed to achieve this and an example was provided to demonstrate. Below is the example with some fairly obvious, but hair-raising observations:
One simple example direct from HMRC illustrates very clearly that those budget statements are wholly untrue and do not do what was set out at all. The little guy is going to get hammered very hard indeed (recognising the hardworking people who saved and invested in property ..?).
On this basis and this alone – the proposal, as is, should be withdrawn.

This is direct from Megan Shaw Product Owner HMRC, contact details are on the bottom so this can be confirmed very quickly should you feel it is incorrect.

"Only 1 BTL and HMRC Tax me out of business!
Observations from this very simple example below we can see that :

1. A 20% tax rate payer is pushed into the 40% band with the new proposals
2. The taxable property profit of £1,200 will be deemed by HMRC to be £12,000
3. The “real profit” of £1200 was initially taxed @20% making tax due £240
4. The tax payable increases by £1800 making a total of £2040
5. The tax liability completely wipes out the profit and leaves a further liability of £840 - this will need to be paid from alternative income.
6. In percentage terms £2,040/£1,200 x 100 is 170%, the effective rate at which tax will be paid.
7. This simple model is no longer viable, the landlord must sell up, pay down borrowings or increase rent.
9. The tax due based on 1 BTL property in this e.g.. Is an increase of 750% from £240 to £2040

Example:

Prop rental income is £15,300, or £1,275 pcm (a 3, 4 or 5 bed HMO maybe depending on location)
Prop Val £275K
Expenses: 10% agent fees (£1,530) and a few repairs, gas safe, insurance etc =£3,300
Finance on a loan of £216k (78.5%LTV) @ 5% = £10,800
Net profit £1,200

These figures are very realistic and common place for individual Landlords, this example represents a large number of landlord positions.

If the landlord had a second property, also with a profit of £1,200, his tax in 2020/21 would go up by £2,640 compared to his liability if he only had one. The effective tax rate on this second property would be £2,640/£1,200 x 100, or 220% of the rent. Not viable.

Under the current system this landlord would have remained a basic rate taxpayer even with 2 properties. Under the proposed system he will very much be a higher rate taxpayer.

HMRC EXAMPLE
After April 2020 (when the restriction will be fully implemented) landlords who incur interest (and other associated finance costs) on residential properties that they let will need to calculate their tax differently. You will no longer be able to deduct interest from your rental income to arrive at your taxable profits, you will instead receive a reduction from your income tax liability equivalent to 20% of those interest costs. If that means you become a higher rate taxpayer (or you were anyway) then you will have to pay more tax as a result of this change.

Please see the example below. This comparison is designed to show the effect of the change, not to calculate someone’s exact tax liability. The tax bands were rounded off for simplicity, and applied to both years so as not to confuse the result of the calculation.
Before restriction 2016-17 £ After restriction 2020-21 £
Salary 40,000 Salary 40,000
Property income 15,300 Property income 15,300
Less Other costs (3,300) Less Other costs (3,300)
Less Finance costs (10,800) Less Fin costs (0)
Property profits 1,200 Property profits 12,000
Taxable income 41,200 Taxable Income 52,000
Less Personal Allowance (11,000) Less Personal Allowance(11,000)
Tax due on 30,200 Tax due on 41,000
Tax at 40% 3,600
Tax @ 20% 6,040 Tax @ 20% 6,400
Total Tax 6,040 Total Tax 10,000
Less Finance Costs @ 20% (2,160)
Final Tax 6,040 Final Tax 7,840

Please do get in touch if that doesn’t clarify the mechanism.
The Bill is subject to parliamentary scrutiny and so there are no guarantees as to what will become law before the Bill receives Royal Assent in Autumn.
Megan Shaw
Product Owner – Property Income & REITs
HMRC, Room 3/64, 100 Parliament Street, London, SW1A 2BQ
03000 585628

Yours sincerely,"

It is plain to see that low yield, highly leveraged props will cause huge problems for some people, especially for anyone currently in std rate bracket who gets artificially pushed into HR 40% band.
In percentage terms of their overall income, they are going to be hit much harder than than “the big boys” and these are very likely to be the families that rely heavily on tax credits & child benefit to support their earned income and meagre BTL profits. For them to be pushed in high rate then taxed on non existent income, then double stuffed by removing the tax credits & Child benefit (because their "income" has been artificially inflated with non existent rental profit and taken them over eligibility thresholds is going to cause clear financial devastation for them.

Effectively the Conservative party is proposing to tax the interest payments that a Landlord has, his biggest expense in running his business.

If we could deduct BTL interest from our salaries or any other income to reduce tax, that would be a tax break. But we can’t and that is not why we took out the loans.

We took them out to buy assets that would yield taxable income, like any other business. And we should be allowed to continue to deduct finance costs, just like any other business.

As you will be well aware Cardiff is a university City with a large Private Rental Sector, most Landlords and indeed accountants, and indeed i would suggest MP's have not understood or looked in detail at how this is going to play out if it goes ahead. There are huge and deep knock on affects that clearly havent been considered at all. There is far too much to go into in this single letter, I call upon you to stand up and represent the private Landlords of Cardiff and lobby to reverse this very damaging proposal.

A very informative website has been set up to help educate people on the the far reaching imacts of this proposal, please take the time to read it.Also a petition to reverse these proposals.

http://www.saynotogeorge.co.uk
https://petition.parliament.uk/petitions/104880

There is much discussion on all Landlord forums but particulary at property118, with >3000 comments and >150,000 views as i write

http://www.property118.com/budget-2015-landlords-reactions/76164/

This letter writing facilty doesnt allow me to address my concerns properly here due to content space limitation: most of the concerns are clearly laid out here :

http://saynotogeorge.co.uk/landlords/

I am available to meet you at your convenience to discuss this further.
As an active and accredited Cardiff Landlord of 20 years my personal position is also now somewhat financially precarious, if i am forced to sell up then i will need to give 107 people within Cardiff notice to leave my properties in order to sell them with vacant possession, there are many landlords in Cardiff who will be in the same position, who & where will these people be housed as private landlords will be forced out of the PRS ?

I look forward to your response, understanding and support on this critcal issue.

Great work Trendo. We share the same stomping ground it seems. I'm just off to Starbucks in Llanishen now!

Please note comments of NLA:

https://nlauk.wordpress.com/2015/08/20/it-was-better-when-they-forgot-all-about-the-prs/