Landlords are selling up because of ridiculous tax policies that are bleeding us dry!

Landlords are selling up because of ridiculous tax policies that are bleeding us dry!

0:02 AM, 24th February 2023, About A year ago 15

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Hello, How long does the government think this situation is sustainable for? Squeezing landlords dry with increased taxes and high BTL mortgage interest rates!

I have personally, for the past 4 years, accepted that I was only just breaking even with my 2 rental properties… then with the change in tax rules meaning I paid 40% tax on my total rental income (instead of 20%) regardless of my monthly mortgage expenditure, I ended up topping up my tenants’ rent by £100-£200 per month after paying my tax bill!

And even then, I accepted the situation… believing that long term I would still be better off keeping the investment.

Then the Bank of England base rates started to climb… and then a shift in UK Prime Minster from Boris to Liz, sky rocketed mortgage interest rates into seriously unsettling figures!

My interest only fixed rate is ending in October and my circa £1,000 per month mortgage payment will be turning into circa £4,000 per month!!!

With rental income of circa £3,500 I will already have to chip in £500 per month to cover the deficit to meet my monthly payment.

But then there is the 40% tax bill on the the rental income… despite the fact that the rent does not even fully cover the mortgage!

Is it just me?? Or does anyone else see the ludicrously unbalanced situation landlords are facing?

Perhaps my circumstances are unique… but coupled together with all the other cost of living crisis conditions, messy tenants causing repair work, tougher eviction policies making landlords more vulnerable to financial loss, and tougher capital gains tax rules… I really cannot see how the BTL market can carry on like this unless the government and banks step in to reduce steep BTL mortgage rates and reintroduce more favourable taxation policies on rental income!

Lisa

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Comments

Azad Peshderi

13:24 PM, 24th February 2023, About A year ago

You are not alone in this mess as I have three properties and facing exactly the same scenario as you. I also know three other landlords having the same issues.
The unfair heavy taxation caused lots of landlords like me and you to sell up and move on. I think is the government trying to kill the buy-to-let market for whatever reason, leaving potential tenants homeless as they can't rent properties due shortfall of housing supply.
The solution out there is mostly for larger landlords and big corporations, not for smaller landlords like you and me. Maybe that's precisely what the government is trying to achieve, which is eliminating small competitors from the market leaving the larger corporations only.
Well done Tories for your so-called “housing solution”.

Judith Wordsworth

14:10 PM, 24th February 2023, About A year ago

Depending on your income, either from self-employment or employment and income from property (less allowable expenses) or solely income from property then surely you are taxed according to the tax band you are in.

Because you need a BTL mortgage is something that you chose to have, if not being able to purchase outright, or your accountant has advised this, as is the loan to value. The higher the loan element then the more precarious your "rental business" is in.

If you were only just breaking even, with interest rates I hate to say at a pittance for those of us that remember 15% interest rates, and now will not be, and your tenants paying their rent, why aren't you selling up? If your rents don't cover the mortgage, and you are subsidising from "other income", this is not a sensible financial place to be. Sell, clear your debt and rethink the PRS perhaps in 2025 or 2028 if that's the place you want to be in, or buy - do up- and sell. You'll earn as much if not more and not have the worry of tenants stopping their rent; legislation, fines, Selective Licensing fees etc etc. I can honestly say I am sleeping way better now lol.

Granted you might also be liable for some CGT if you sell and complete before 5th April, but leave it another couple of years, even if property prices come tumbling down (if EPC C minimum does become law) the CGT allowance is halving over the next 2 years, and likely to become £0. If Labour get in then definitely likely to be £0 CGT allowance!

Robert Otter

14:24 PM, 24th February 2023, About A year ago

Same, we are selling up, good luck trying to find an affordable rental property any time soon.

Anne Nixon

14:53 PM, 24th February 2023, About A year ago

Meanwhile in fairyland, rent activists, trade unions and several Labour Mayors, including Sadiq Khan, are calling for a private rent freeze and an eviction ban in England to help tenants in the ‘current rental crisis’.
Landlords can apparently afford this as they earn an average of £55,415 before rental income so can afford not to increase rents.
Couldn't make it up . . . .

HthMik

17:18 PM, 24th February 2023, About A year ago

Like the rest of you been in the letting game for over 30 years, governments have made a hash of it, the rot started with Osborne as chancellor, now Hunt who has never been successful in any government department, am selling all my properties when agreements expire last one to go end of 2024 as an election is due early 2025 Labour will walk it, the situation then will most probably be you as owner cannot sell for any reason, I've had enough, my tenants don't deserve this but head is now ruling the heart!

SimonP

18:24 PM, 24th February 2023, About A year ago

I too am selling up. Too much stress and aggravation, even with a managed property. And with an added CGT burden, it's just too much.

The rental income was only supposed to top up my pension, not the other way round. I'm done

Now I have to find someone who'll buy with a sitting tenant or I'll have to ask him to leave. And these "helpful" companies who'll buy anything, I'm not prepared to chuck away 15%-20% of my property's value for a quick sale.

Ed Duncan

10:49 AM, 25th February 2023, About A year ago

A lot of people mention the tax policies
But with two million landlords Why is the government Petition only 35k ???

https://petition.parliament.uk/petitions/627785

Kris with a T

13:40 PM, 25th February 2023, About A year ago

Reply to the comment left by Azad Peshderi at 24/02/2023 - 13:24
I'm with you on this too, btl was a pension top up, two properties, low Income vulnerable tenants from DV and bin man family.
Can my social consciousness take the fall on income by 50%.. discussing my options with my FA and its quite straight forward sell and buy a new home as my only residential property so not to lose CGT.
Or pay ridiculous high interest rate because the tory mini budget caused the start of no confidence.
Take tbe hit and no more 1.9% IR ever again and see 2.5/3% future IR.
Putting rent in (which I hadn't done for 5 years) to support those in more need than I.
Now my family needs housing support..
I have until July to see how things develop.
So put the onus back into rehousing my tenants with section 21..

Kris with a T

13:42 PM, 25th February 2023, About A year ago

Reply to the comment left by Azad Peshderi at 24/02/2023 - 13:24
Friends of friends once again reap the benefits of being a tory investor.

shaun carter

20:15 PM, 25th February 2023, About A year ago

Every landlord please read

Its time to take the goverment to either court, or confront the house of Lords.

All business are taxed on net profit. Net profit is the amount after all your business expenses. Yes interest being the biggest. Legally the goverment cannot change the meaning of the word expense.
All other businesses claim interest so a challenge to reverse the decision has to be done.
All the goverment are doing is to kill off the private landlord. This all has to be challenged. Personally I think compensation to private land lords should be filed.
Private landlords ? What are you ?
You are somebody running your own business;
The goverment are being dracial againgst private land lords. This is like racial discrimination, and should be challenged.
Any solicitors and baresters reading this we can join up and challenge.
If it doesn't happen it will be the end of the private landlord.
Interestef there is a way. We can set up a payment company. Pay mortgage to them, plus £10 charge. You then receive a complete receipt for services. Eg mortgage 800. Pay mortgage payment services £810. You get receipt from payment services for £810. Thats now a receipt you can claim. If interested contact me at shauncornwall@aol.com
Ps no money transferred at this moment and time until professionally set up.
I want to speak to landlord zone and property118 to move this forward. Ive studied law to degree level. We have to work together; ive got 8 properties i rent. I know how you all feel. Look forward to your feedback or contact
Shaun carter
Shauncornwall@aol.com

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