More Benefits Caps – Implications to LHA Landlords?Make Text Bigger
I am a landlord in the North East, most of my tenants are benefits claimants.
When the new £20,000 benefit cap comes (£3,000 pa reduction) who will be hit hardest?
How many LHA tenants will this affect?
When direct LHA payments to landlords are replaced with Universal Credit, will landlords get knocked for this £3,000 a year? I suspect they will and there’s nothing we can do about it other than take the negative cashflow hit of rent arrears and the expense of evictions.
Am I the only person who’s considered this effect of yesterday’s budget?
All talk seems to be about the tax relief on interest rate announcement but I’ve been hit at least three ways; tax relief on interest reduced, increased insurance premium tax and worst of all the benefits cap.
It’s like I’m on death row. I can’t sell up because we maxed out on remortgages before the credit crunch. The properties are in negative equity but even if the values recover by the time the budget announcements hit my cashflow I still can’t get out due to the CGT implications. I built my portfolio based on a leveraged finance strategy. In other words, even if the sale price is equal to the mortgage debt, CGT will still be payable because I originally purchased most of the properties for less than I now own on mortgages. Most of the larger landlords in the North East are in the same position.
Talk about being stuck between a rock and a hard place!
I had hoped that writing this would clear my mind and make me feel better but it hasn’t.
It seems clear cut it’s curtains for me and many of my tenants will become homeless. Employment is so bad around here it is highly unlikely that my properties will be sold to homeowners regardless of the price. Many other landlords will be in the same situation so where are all these LHA tenants going to live and what’s going to happen to all of these properties?
Does the Government have the funds to buy up all the properties that will become vacant and re-home all of the people who will become homeless back into them?
I will be sending this to my MP.
Steve – Landlord, North East
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