Graham Kogan

Registered with
Thursday 24th April 2014

Latest Comments

Total Number of Property118 Comments: 5

Graham Kogan

21:49 PM, 14th May 2016
About 4 years ago

Summer Budget 2015 - Landlords Reactions

"The Telegraph understands that six Tory MPs are prepared to champion landlords amid concerns that they are being unfairly treated."

Does anyone have any ideas as to who the 6 may be?... Read More

Graham Kogan

20:18 PM, 30th March 2016
About 4 years ago

Bank of England Buy to Let affordability rules update

Do we know what the timescale for the application of these proposals is?... Read More

Graham Kogan

20:29 PM, 21st February 2016
About 4 years ago

Judicial Review - Landlord Tax Grab

Does a vote to leave the EU in the forthcoming referendum end the path to Judicial review?... Read More

Graham Kogan

13:59 PM, 14th August 2015
About 5 years ago

Summer Budget 2015 - Landlords Reactions

A depressing blog post which sums up the situation many of us find ourselves in now....

How a landlord can survive in 2021

MY day job is to try and save people money on Property Insurance of all kinds. After that, I am a private landlord with seven properties and I am still reeling from the Summer Budget 2015 and the changes it will make to my income and lifestyle in 2021.

Basically I will be paying at least £2000 more in tax in 2021 if nothing else changes. That’s harsh and I expect interest rates to go up before then as well, so I could be paying thousands on top of that as well.

So what are my options?

1: Move my properties into a company
This simply doesn’t add up for me, my company cannot afford to buy the properties from me, pay the stamp duty or the new finance/mortgage costs. This is tens of thousands of pounds of cost – 7 x new commercial mortgages (even if you can source one, which is difficult) at say £1500 arrangement fee alone = £10,500 in new costs! Stamp duty at £2000 each is another £14,000. That’s £24,500 so far.

Now let’s talk about the redemption clauses on my mortgages to sell the properties to my company. Let’s say 3% is the overall figure. I have approximately £700k on loan. That’s another £21,000 in costs and total of £45,500 so far. Add in accountancy costs and that’s another £1000 per year at least

My new business cannot afford that, never mind the deposit costs to get the mortgages in the first place.

This is not an option for me at all. Who is funding the new business in the first place – me! I cannot afford this option.

2: Sell my properties
OK, I get £11,100 allowance in Capital Gains Tax right now. So if I sell a property and make above that number, I will be paying CGT at 18% if basic rate tax payer or 28% if higher rate tax payer.

All of my properties have more than £11,100 in gain in them. Let’s say the average is £30,000. That means if I sold all in one year I’ll be paying away a maximum of 28% on £198,900 or £55,692.

Even if I sell one or two a year until 2021, I’ll still be paying tens of thousands of pounds in CGT.

I bought these properties responsibly with a view to my retirement and being able to live without a bank based pension scheme as they have underperformed dramatically over the last decades. I was being responsible, now I am being penalised.

If I wanted to sell properties and consolidate and buy outright one or two properties, then the CGT penalty kills that idea dead. £55,692 would buy at least one property outright.

3: Move to another country and become a non-dom
I don’t want to leave the UK, I have lived here all my life, my children go to school and I have as much right as anyone else born here to live here.

I am assured if I move away I may miss the new tax rules. I may even miss all CGT on properties sold if I moved to somewhere like Malta or Andorra.

I am not ruling this out as this is my retirement fund and I don’t have the time or earnings to make a change now.

4: Reduce my earnings (retire early) so the properties are viable
I could do this but I am only 43. I am not ready to retire on a low income yet. But this is possibly an alternative. If I earned nothing else, the income would allow me to survive and I would remain in basic rate taxpayer territory.

5: Maximise expenses on the properties
This is a no brainer. Anything I can claim as an expense will now be put through the properties. I’ll go out of my way to buy the best boilers and carpets etc. as these are directly deductible and ultimately will add value to the properties and allow increased rental charges. It’ll reduce my earnings but I also need to do this for the next option, the most likely one I will do…increase the rents accordingly.

6: Increase the rents accordingly
This is the most viable option for me. I need on average to increase rents by £33 per month on all seven properties to maintain the same income and I think in 2021, with landlords diving out of the market and rents skyrocketing due to lower supply, that will be very achievable.

Effectively the landlord tax will be passed on to renters and tenants. The construction industry will falter as there will be less demand for properties (1 in 12 approx. are bought by BTL investors now, that will be more like 1 in 50 or worse given how hard it will be to make money in the future). And tenants trying to save for a property will now find it harder to exit renting and purchasing.

I will say this. I have little interest in investing in more BTL properties now. Instead, I will look to cash in on property sales when capital gains allow and make sense and then put cash somewhere else.

As an investment class or alternative retirement plan, to start on property now is simply non-sensical. You can lose money and have to pay tax on that. It’s poorly thought out policy and I am sure if it had been touted before the election, landlords may well have voted for alternatives to the Conservatives. So much for the Conservatives being the party of opportunity and entrepreneurship.

I am sure other strategies will emerge but right now increasing rent is the most obvious and straightforward solution for me. That and maybe moving out of the country, which is growing in attraction every passing moment.

Jason McClean... Read More

Graham Kogan

20:53 PM, 20th December 2014
About 6 years ago

Leasehold advice please!!!!

Thank you for all your responses to date! Very informative and helpful!

Could someone please confirm the process in my situation for purchasing the freehold. Is the collective enfranchisement route open to me even if I own both the flats?... Read More