General Election 8th June – Who on earth do landlords vote for?


Property 118 - Published on 18/04/2017
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We are asking all landlords to complete this Poll.

We are also extremely interested in your views so please post comments.

For example, you may well despise what the Conservative Government has done and you may well mistrust them but will any other party be better?

If landlords vote for minor parties might this hand a win to Labour?

Do you think a coalition Government is likely, and if so between which parties?

Which party would you least prefer to be elected and why?

Could not voting hand this election to Labour?

If you don’t want to post a comment but you do want to follow this discussion please complete the box below with your name and email address, then click the green button.

Major Breakthrough in Landlord Tax Planning

Incorporation Relief – Do You Qualify?

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Comments

  • Reply to the comment left by “Barry Fitzpatrick” at “18/05/2017 – 12:16“:

    I’ve just received this reply from Andy Knee, LMS:

    Barry. Thanks for your note.

    My point is that I don’t think the government should mess with the tax system to tip the playing field in favour of any particular group. You will note that I came out against the recent stamp duty surcharge on second properties.

    However, I maintain that many BTL landlords have invested in the market as an alternative to other forms of saving not other forms of employment. If I were to borrow money to buy shares I couldn’t offset the interest on my borrowings against the dividends I receive and so it should be with any form of saving. By encouraging speculators in a market to gear their investments you inflate the value of those assets unnaturally.

    I simply don’t accept that there is no connection between the rise of the buy to let landlord and the decline of the first time buyer or that buy to let properties are different properties to first time buyer properties.

    Finally I am sorry if by expressing my views I’ve alienated anyone. That’s not my intention however I’m also not inclined to misrepresent my views simply because some people don’t agree with them.

    Kind regards

    I shall now consider my response, he made the traditional mistake of confusing captial and revenue which will be one of the major points I shall be making along with the EHS ,LSe or IFS findings on the overlap of FTB & BTL.


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  • Member of The Landlords Union - Click Here for Details

    It irritates me when buy to let is correlated with shares like comparing apples and pears here lies a fundamental issue the classification of buy to let as an investment as opposed to a business. Any portfolio landlord knows that it is 100% a business,full time In my / many cases. This should be promoted to the powers that be and maybe we may get a change of stance as the people who classify it like shares clearly have no knowledge of the industry and what it takes to run a portfolio.


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  • Reply to the comment left by “NW Landlord” at “18/05/2017 – 19:22“:

    It’s sad that the CEO of a not insubstantial company doesn’t know the difference between capital costs and revenue costs.


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  • Reply to the comment left by “Barry Fitzpatrick” at “18/05/2017 – 19:16“:

    Hi Barry

    He has swallowed the Treasury’s spurious comparison with shares. Who would lend him money to buy shares which might become worthless overnight, like those in Ratners, RBS, Bank of Scotland?

    Like the anti PRS brigade he uses the derogatory term speculators. Speculation is the act of trading short term in an asset or conducting a financial transaction that has a significant risk of losing most or all of the initial outlay with the expectation of a substantial gain. With speculation, the risk of loss is more than offset by the possibility of a huge gain, otherwise there would be very little motivation to speculate.

    I am risk averse so I bought property, as a long-term commitment.

    It might be better for his conveyancing business if he kept his ignorant views to himself.


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  • Reply to the comment left by “Appalled Landlord” at “19/05/2017 – 00:03“:

    You were risk averse, so bought property – me too as a result of bitter experience. Having always been saver I put my (then) full ISA allowance of £6000 into a fund which did not do very well and some investors pulled out. We who remained were offered a transfer into an Aberdeen fund which would take over the assets and invest them for much better returns. I did not vote for this as it had a geared policy which I thought too risky, but the majority did, so the takeover went ahead. How I wish I had just sold then at a loss! In about 2000 the fund was wound up insolvent and in the distribution of assets I got nothing. On registering a protest I was advised to take my grievance to the FSA but since this was the very body which had overseen the distribution there was no redress. My thinking at the time was at least if I put my money into bricks and mortar it will always be worth something. I am of the generation which got no NI credits for years spent out of the full-time workforce raising children and needed my savings to supplement my partial state pension, so my thinking at the time was at least if I put my savings into somewhere where people can live it may fall in value but will always be worth something and will give me a small income. Forgive the personal story, but I feel it illustrates your point perfectly.


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  • Reply to the comment left by “Cautious Landlord” at “18/05/2017 – 16:40“:

    Hello CL
    The “never properly privatised” line is so similar to “we never tried proper Communism” line that I had a quiet giggle.

    I suspect we are more in agreement than it seems: I believe the real difference is between big and small companies. It make no sense to nationalise small companies, which tend to be more efficient than large ones and do compete. I happen to believe that it makes all sorts of sense to nationalise large organisations in industries where there is a natural monopoly and competition is just invented. Rail is a prime example, electricity generation another (though less so with renewables.) But you have to have a strong regulator, not the powder puffs we have been lumbered with. (I’d love to go on about my battle with Ofcom who wont even enforce the law; but I’d start crying.)

    I made a lot of money when I set up my own company, sold out to a large corporation and was made a VP. It took me about 2 weeks (I’m a slow learner) to realise that inefficiency was endemic (and this was a supposedly hotshot fintech company.) I negotiated my terms of exit ASAP.

    Good old Adam Smith got some things right: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”


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  • Sent this response to Andrew Knee, CEO LMS:

    Thank you for your reply. And yes I was aware of your support for opposing the SDLT surcharge. I wouldn’t disagree that many small Landlords became BLT Landlords as a pension alternative (given the appalling returns on pensions at the moment who could blame them). But that is not a reason to impose punitive rates of tax on them, given that they are providing housing for people.

    I do have to disagree with you regarding your perception of mortgage interest relief. It comes down to whether or not a Landlord is running a business. It is certainly not like shares where you can sit back and do nothing, most Landlords, I know, it is a full time occupation – managing Tenants and the properties ensuring you meet the 150+ rules and regulation is far from trivial.

    If a property investor borrows money to buy a property and never lets the property out then I agree with you that this is a pure investment and finance relief should not be given. But even treating it as a business as there is no rental income there would be no relief given (no negative gearing is permitted in UK tax law).

    If you were running a business and in order to expand the business you took out a business loan. As a result the businesses revenues increase (hopefully), when calculating the profit of the business the interest paid on the loan would be taken a revenue expense – I think you would agree. The taxable profit would follow GAAP principles and be calculated as revenues less legitimate business expenses(including loan interest). However, if this was a listed company and an investor bought shares in the business he would, quite rightly, the investor not be allowed to claim tax relief on any loan used to buy the shares. BUT crucially this does not affect the trading position of the business which still incurs the revenue cost of the original loan interest and therefore the taxable profit. Were, say, this business was a car hire business any finance cost to purchase the fleet of vehicles would tax deductible, would it not? So why would a property rental business be treated an differently?

    The English Housing Survey produced by the DCLG found that between 1996 and 2008 only 7% of the 150% rise in house prices was attributable to Buy to Let activity. A report by the LSE (I think) found that Buy to Let Landlords only compete with First Time Buyers in 3% of cases. These findings prove that Buy To Let Landlords rarely compete with FTB’s and that BTL Landlords have not pushed up house prices significantly. The drop in FTBs, I believe, is a symptom of the shortage in supply of housing which has driven up prices to the point where FTBs struggle to save a deposit to buy. MMR has made it more difficult in recent times for FTBs to buy as it effectively negates, for approval purposes, the affordability that the current low interest rate environment provides (not that I disagree with the principle of responsible lending at all).

    Government spin on “levelling the playing field with FTBs” and liking property purchases for letting to investing in shares is just sophistry. Unfortunately, many people are taken in by this. The reality is very different, many Landlords will be having to raise rents (as happened in Ireland twice) just to pay this extra s.24 tax burden – David Miles former member of the Bank of England MPC and Professor of Financial Economics at Imperial College Business School estimates that rents will have to rise by 20-30%. Where local markets conditions do not allow for such a rise that those Landlords affected will have to exit the market and in all probability will evict their tenants in order to sell with vacant possession. This will in turn increase demand for rental properties and drive up rents.

    I look forward to your further thoughts.

    Regards


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  • Reply to the comment left by “Barry Fitzpatrick” at “19/05/2017 – 17:17“:

    Andrew Knee is deliberately avoiding the question in his latest response:

    Thanks Barry.

    I think you make a number of fair points and I won’t seek to argue each of them.

    However I don’t believe governments should mess with the tax system to distort markets one way or the other.

    Clearly the idea of growing portfolios through leverage has proved attractive to landlords and as you say has kept rents low. I believe this equates to a tax subsidy to tenants and personally, I don’t want my taxes spent on this.

    If rents reach a fair level and landlords only leverage their investment where they have to rather than to receive a subsidy from taxpayers I believe the market will function far better.

    What I haven’t mentioned previously though is that I’m not a fan of retrospective legislation and I have every sympathy for landlords who have built a portfolio on one premise only to have the rug pulled. As someone who built a HIPS business I know how that feels.

    Kind regards

    AND my reply:

    Andrew

    I don’t follow your logic
    “Clearly the idea of growing portfolios through leverage has proved attractive to landlords and as you say has kept rents low. I believe this equates to a tax subsidy to tenants and personally, I don’t want my taxes spent on this”
    How is this different from any other business borrowing to expand its business? It’s NOT a subsidy it’s a cost of doing business.

    For instance, say LMS wanted to open a new office in, say, Manchester and chose purchase premises (rather than rent). And let’s say it borrowed money to effect the purchase. The interest would be deducted as a business cost but by your definition it would be a tax subsidy. So why is it OK for the tax payer to subsidise this expansion which would grow your business/revenues. How is this different for a Landlord?

    By excluding a major business expense from the calculation of taxable profit produces massive distortions. I know of several Landlords whose rate on actual profit will increase from 40% to well in excess of 100% of actual profit, who are potentially facing bankruptcy if they cannot increase rents substantially. Selling up is not an option for some as the proceeds of sale is insufficient to pay the CGT, and early redemption charges on his mortgages.

    Not only is s.24 retrospective, but is highly anti-competitive as unencumbered Landlords and corporate Landlords are exempt from this tax hike.

    I sympathise with you over the HIPS business.

    Regards


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  • Hi
    Buying shares is highly speculative.
    Buying Resi BTL property(homes) is creative and a proper investment and not to be confused with sharebuying.


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