Iain Duncan Smith Has Spoken Out For Landlords

Iain Duncan Smith Has Spoken Out For Landlords

22:06 PM, 21st June 2017, About 4 years ago 163

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On Sunday 18th June 2017, Iain Duncan Smith was quoted by the Sunday Telegraph as saying ….

“Finally, it is time to look again at the way we treat private landlords who buy houses to rent. George Osborne’s decisions to impose a stamp duty levy on the purchase of homes to rent, to restrict mortgage interest relief to the basic rate of income tax and to tax a landlord’s turnover rather than profits have led to landlords scaling back or even leaving the sector altogether.
They are a significant provider of the additional housing we need. We should be encouraging them with devices such as VAT relief on conversions or even capital allowances, not punishing them. It’s no wonder buy-to-let purchases have fallen dramatically. If the purpose was to stop foreign owners buying up property and leaving it empty

…………………………………………………. We are in danger of throwing the baby out with the bath water.”



Comments

by Monty Bodkin

16:22 PM, 4th July 2017, About 4 years ago

Reply to the comment left by "Pamela Potter" at "04/07/2017 - 14:04":

Hello Pam,

Well done for getting a positive response.

I'd send her the details of the amount you paid last tax year.

Then a projection of 4 years time based on the same figures but with full s24.

Then a projection of 4 years time with a modest rent increase in line with the inflation target of 2.5% pa (over 5 years compounded) and at a mortgage interest rate at the PRA stress rate of 5.5%.

In my case I would also inform that as a direct result of s24;

1. I have ended tenancies to benefit tenants and will not be accepting them in future as they simply cannot afford the rents.
2. I am not building any new homes to rent, nor converting any brownfield (things I have done in the past).
3. I will not be buying and refurbishing derelict properties and bringing them back into use. (Properties that no first time buyer would consider buying, even if they were mortgagable.)
4. I have already increased rents over 10% (provable on request).
5. I will be switching suitable properties to holiday lets.

Business always reacts to unfair taxation so none of this should be a surprise to them.

by Whiteskifreak Surrey

16:28 PM, 4th July 2017, About 4 years ago

Reply to the comment left by "Monty Bodkin" at "04/07/2017 - 16:22":

Thanks you Monty and Good Luck Pam!
Is there any spreadsheet available which would allow for that type of modelling?
I think it was Upad who provided something like that, but it was rather useless.
Thanks!

by Dr Rosalind Beck

16:46 PM, 4th July 2017, About 4 years ago

Reply to the comment left by "Whiteskifreak Surrey" at "04/07/2017 - 16:28":

The best spreadsheet for it is the tax calculator by Alex Caravello. Perhaps Neil or Mark can put a link to it here?

by Neil Patterson

16:56 PM, 4th July 2017, About 4 years ago

by Appalled Landlord

23:56 PM, 4th July 2017, About 4 years ago

Reply to the comment left by "Whiteskifreak Surrey" at "04/07/2017 - 16:28":

Hi WS

If you don’t need the comprehensive tax planning analysis software you can download the free spreadsheet by going to https://www.property118.com/budget-2015-landlords-reactions/76164/
and clicking on the last two words of “To calculate the impact of this policy on your personal finances download this spreadsheet” at the top of the article.

Click on the Calculator worksheet tab at the bottom. You need to bring the Tax Band column up to date by changing the Personal allowance to £11,500 and the Basic rate band to £33,500.

Then put your own real figures (your share only if you are a joint owner) in the boxes showing red figures on the top three lines of the next column. The rental profit before finance costs goes on the second line and the finance costs go on the line below. Any other income must be put on the top line.

When these three figures have been entered the spreadsheet will calculate your tax under the old rules and the new rules. It will show how much tax you would have paid in 2016/17 and how much tax you will be paying in 2020/21 thanks to S 24.

Multiply the tax increase by 100, and divide it by 60 (or 55 if you will pay 45% tax) to find the extra rental profit before finance costs that you will need in order to have the same after-tax income as last year. If you use managing agents you will need to gross this figure up to take account of their commission.

This is the increase in rents that you will need to phase in by March 2020.

by Whiteskifreak Surrey

8:19 AM, 5th July 2017, About 4 years ago

Reply to the comment left by "Appalled Landlord" at "04/07/2017 - 23:56":

This is great, Thank you so much AL!

by Neil Patterson

14:56 PM, 7th July 2017, About 4 years ago

On Question Time last night (nearly halfway in) Jacob Rees-Mogg Member of Parliament for North East Somerset advocated reducing the Foreign Aid budget - and he said the money saved should specifically be put into housing.

Do any readers live in his constituency and would you be able to write to him to ascertain his position on Section 24?

by Ian Narbeth

17:33 PM, 7th July 2017, About 4 years ago

Reply to the comment left by "Pamela Potter" at "04/07/2017 - 14:04":

No matter what work you do you will get a reply from the Treasury to the MP on the lines of "I am sorry if your constituent's business will be affected but only one in five landlords will be adversely affected. The Government is committed to providing a level playing field in the housing market and to helping first time buyers."

by Ian Narbeth

17:34 PM, 7th July 2017, About 4 years ago

Reply to the comment left by "Monty Bodkin" at "04/07/2017 - 16:22":

Monty
As to your points 2 and 3, why not buy through a company?

by Monty Bodkin

11:32 AM, 8th July 2017, About 4 years ago

Reply to the comment left by "Ian Narbeth" at "07/07/2017 - 17:34":

Good question Ian.

Basically because I've lost all trust in government to treat business fairly under whatever structure. Taxing turnover through section 24 is bonkers to any true capitalist.

So I'm just consolidating and protecting what I've got.

If a very good opportunity arose, I might be tempted in either via a company or family but it would need to be something spectacular.

And to be perfectly honest, it might be an age thing as well (I'm about your age). The thrill of risk taking with a new project has lost much of its appeal. Boring as it may seem to thrusting entrepreneurs, there is a lot to be said for paying down debt and building a big reserve fund.


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