Tag Archives: Mortgage Express

Mortgage Express stopped lending and were taken over by a Government quango called UKAR. This forum shares tales of woe and advice from affected borrowers.

Tax Efficient Investment Latest Articles, UK Property Forum for Buy to Let Landlords

Own Shares in the Property118 Rental Property for-sale PortalWhat is a tax efficient investment for landlords to consider if they don’t like the idea of pension schemes and want to invest into something else other than property? Tax Efficient Investment

The answer is a business which benefits from the Seed Enterprise Initiative Scheme, AKA SEIS.

Clearly they would want to invest into something they understand, i.e. property related.

The good news is that investment into Property118 Portal Ltd fits this criteria.

More details about the tax incentives below but first  ……

What is Property118 Portal Ltd?

Property118 Portal Ltd. is a new venture (a completely new business) hosted on the Property118.com website. It is an advertising portal to help landlords and agents to sell properties with tenants in situ. Adverts are free but there are premium upgrade options too.

Buyers search by postcode or town and simultaneously set up email alerts so they are notified each time a property matching their purchasing criteria is listed.

Shares in Property118 Portal Ltd are being sold to raise funds for a national TV advertising campaign.

How is the business structured?

To explain the structure in laymans terms I have used an analogy of retailers and shopping malls.

The value and profitability of a retailer generally improves if its shops are located in a busy shopping mall. Most retailers do not own the mall, they rent the space for their shops.

In our case the developer and the owner of the mall is Innovative Landlord Solutions LLP. The name and location of the mall itself is the Property118.com website – it is very busy.

The retailer seeking crowd funding in this instance is Property118 Portal Ltd. It is an anchor tenant for the mall, hence it has prime location – the home page of Property118.com.

All major retailers and shopping mall owners recognise that anchor tenants attract more footfall into shopping malls. All of the retailers benefit from the footfall created by shoppers visiting other retailers. This is a proven and very successful business model. As an online business we do not have footfall but we do have user traffic, hence the use of this analogy.

This is legally documented in a Business Cooperation Agreement.

How will Property118 Portal Ltd make money?

There are four sources of income as follows:

1) Premium upgrades to advertisements cost of £11.80 per week per advert. The benefit of upgrading is that adverts rank above free listings in search results.

2) Reveals – In order to minimise the occurrence of nuisance calls to advertisers we charge £1.18 to display contact details of vendors, developers and agents to prospective buyers.

3) Auction House Referral commission – We cross promote the online conditional auction model (operated by Auction House UK franchisees) to vendors and receive income from Auction House UK for successful referrals.

4) Newsletter Sponsorship – The Newsletter will be sent to the database of enquirers who have previously expressed an interest in a property advertised on the portal.

How big is the market?

According to Paragon Mortgages Plc. there are five million UK properties owned by private landlords. Portals dominating the online advertising of property with vacant possession (e.g. Rightmove and Zoopla) and the estate agents supporting them naturally assume the traditional vacant possession sales model.

“An army of two million private landlords now own and rent out five million properties, according to the report by mortgage lender Paragon. This means 18pc of households now rent from private landlords. And the proportion is growing, as investors continue to see property as a source of future income and profit.” Source The Telegraph 22nd October 2014

The Private Rented Sector has been growing rapidly since the phase “buy-to-let” was first coined by the Association of Residential Letting Agents in 1996. The sector is continuing to grow, at least in part due to over 55’s seeking better returns from their pension funds, which can now be liberated and used to fund alternative asset classes such as rental property to provide income in retirement.

We have estimated that over 60,000 UK families are forced to consider the sale of BTL properties every year.

The following data was published by HMRC on 21st April 2015.

Number of residential property transaction completions with value £40,000 or above for the tax year 2014-2015 = 1,204,320.

Based on 18% of all households being in the Private Rented Sector (according to data produced by Paragon Mortgages Plc) this suggests that approximately 216,777 sales fall into the target market for the Property118 portal every year.

What are the projected returns?

Business plans and projections are available on request, email: mark@property118.com

The following is a snapshot of our 5 year financial forecasts

Property118 Portal Ltd Projections Summary

How do I invest?

Before you are able to invest you will need to certify yourself as a high net worth investor or complete a short test to make sure you understand the risks associated with investing into start up companies.

Click here to invest

Anything else I should know?

Yes absolutely, especially if you would like to reduce your tax bill.

Would you consider swapping the majority of your tax bill for shares in Property118 Portal Ltd if it was possible to do so?

Good news – this is entirely feasible!

Here’s how it works …

Due to completion of our crowd funding being SEIS conditional, you would get 50% tax relief on your investment (regardless of what tax band you fall into). For example; if you invest £10,000 your tax bill would reduce by £5,000.

If you have made a capital gain on the disposal of an asset and use the amount of the gain in making a SEIS investment into Property118 Portal Ltd you will not pay capital gains tax on 50% of the amount you invest either – in other words, you get an extra benefit.

Example; if a taxable capital gain has already been made of £10,000 (after deducting in the annual CGT exemption) a CGT liability of either £1,800 (18% basic rate tax) or £2,800 (28% higher rate tax) will arise.   In this scenario, the £10,000 invested results in 50% of the capital gains tax being saved as well, i.e. £900 or £1,400.

The maximum tax relief that can be obtained if an SEIS startup succeeds is 50% income tax credit PLUS 14% (50% of 28%) capital gains tax relief = 64% tax relief.

After three years, no capital gains tax is payable on the future sale of the shares.

If the business were to fail then CGT loss relief could be claimed to reduce future CGT.  This has the effect of increasing the tax relief by a further 18% or 28%.

If you decide to invest into Property118 Portal Ltd the outcomes are:-

1) we achieve our investment target

2) you swap the bulk of your tax bill for shares in Property118 Portal Ltd

Win/Win = happy days 😀

How do I invest?

Shares are available to purchase via the Seedrs crowd funding platform – LINK HERE

What is SEIS?

SEIS is a Government tax incentive scheme to encourage investment into start up companies, the full name of the scheme is Seed Enterprise Initiative Scheme. You can obtain a full explanation and examples by visiting the .Gov website via THIS LINK

Related articles

Tax Efficient Investment – LINK

Buy or Sell Tenanted Property – Improved Search Functionality – LINK

Own Shares in Property118 Portal LimitedOwn Shares in Property118 Portal Limited


Agents chasing for payment but I have moved out? Latest Articles, UK Property Forum for Buy to Let Landlords

I rented a house which had 12 months minimum term. This was unknowingly signed by me and my wife because we discussed 6 months. We had intention of staying in the house for 6 months because we were already looking for mortgage to secure our own house.moved

Luckily after staying for 7 months (March 2015) we sent an email to agent that we have intention of leaving the house in April ending because we have secured a house. This email suppose to give the agents 2 months notice i.e. March and April. The agent replied that they have got a tenant who will be ready to move in by 1st of May which seemed okay for us.

At a point in time there was a bottleneck in the mortgage coming forth quickly, I sent an apology email to agent that we will not be able to move by April ending but unfailingly we should be able to move by May ending. The agent expressed disappointment and said the tenant is not ready for May ending but they have to look for another one.

Shortly they told us that they have been able to get a tenant which is ready to move in by May ending. By middle of May, we have started moving out and by 25th we have moved all our stuff to our new house. About the time we have moved all our things out of the house the agent called us saying the search for the new tenant is not running through and they would not give the house to him and that I will be responsible for paying the rent until they get new tenant.

I have move out since May 25th but now received a mail from the agent that I have to pay for June and if not the will submit submit a claim against me, which will affect my credit history and have a CCJ on my records.

Please could you advise me on what to do.

I have argued that I gave them 2 months notice before I left and it was not my fault that the credit check of the proposed tenant not running through, but they are insisting that I will have to pay until they have a new tenant. They have gone to my previous energy provider to send me bill of June which is not my responsibility.

Please how do I argue this out. I am paying my mortgage and how do I pay someone else s mortgage at same time.

Thanks for your time.

Akin


Restricting finance cost relief for individual landlords – PETITION Budget 2015 Campaign, Latest Articles, UK Property Forum for Buy to Let Landlords

Restricting finance cost relief for individual landlords

This is the petition that intends to STOP the Government making the biggest mistake in recent history.

“Restricting finance cost relief for individual landlords”

Restricting finance cost relief for individual landlords

The petition isn’t branded by any particular organisation because this issue is far too important to us all than to allow rivalries to influence campaigning.

All you need to know about the Government’s plans to restrict finance cost relief for individual landlords

What is the proposal and when was it announced?

The proposal was announced in the Chancellor’s Summer Budget on 8 July 2015 and it will restrict relief for finance costs on residential properties owned by individual landlords to the basic rate of income tax. Finance costs include mortgage interest and interest on loans. Property Companies and Institutions who hold residential properties are not affected by the proposal.

In plain English, what does this mean?

Landlords are currently able to offset all their finance interest against their rental income, before calculating their rent profits and therefore their tax bill. This is quite normal in business as the general taxation principle is that tax is applied on profit.

The Government proposes to break this normal taxation practice and require landlords to pay tax on part of their costs. By the year 2021, it will still be possible to get a deduction for finance interest, but the amount will be capped at 20%. This is a big change because in most cases, finance costs will be the landlord’s largest cost. No other business is taxed in this way. No other business is taxed on interest on loans taken out to buy assets that generate taxable income. We believe that individual landlords who provide valuable housing across the UK are being unfairly discriminated against by the Government.

What is the Government’s policy objective?

In its latest Financial Stability report the Bank of England commented that the buy to let market could pose a risk to financial stability, especially if interest rates go up. The theory is that this could cause landlords to fall into negative cashflow, where their rental payments no longer cover the cost of mortgage payments. This could force them to sell in a hurry, potentially destabilising the housing market. It was following these comments that George Osborne decided he needed to exert some control over buy to let.

The Government say that their policy objective is to make the tax system fairer. The Chancellor has said that landlords are taxed more favourably than home owners. Both the Institute for Fiscal Studies and the Conservative’s favourite think tank, Policy Exchange, have warned that this is not correct. Unlike home owners, landlords are taxed on rental income and capital gains.
We believe that the Government’s proposal to tax landlord’s debt goes too far and will destabilise the housing market, which is what the Bank of England wants to avoid.

When will the measure be introduced?

The measure will be introduced gradually from 6 April 2017 and is ‘tapered’ over 4 years. By 2021, the full impact of the change will bite. Although the implementation of the proposal is to be phased, it is already causing uncertainty for landlords and tenants.
Who is likely to be affected?

The Government say that individuals that receive rental income on residential property in the UK and elsewhere and incur finance costs will be affected. We believe that the proposal will not only affect landlords as there will be many unintended social and economic consequences of this ill thought out proposal.

How might landlords be affected?

Landlords will fall into 1 of 3 categories, in terms of how the tax change affects them:

1) Landlords remains basic tax payer = no change
2) Change pushes basic rate tax payer into Higher Rate Band = more tax paid
3) Existing Higher Rate Tax payer = more tax paid

Many thousands of landlords will pay more tax as a result of the proposal. For some, the additional tax will not impact on the viability of their businesses. However, for thousands of landlords who have borrowed substantially to invest in their property business, the consequences will be serious. Some landlords will even lose their personal tax allowance because of the unfair way that the Government will calculate taxable income; in many cases, landlords will pay more in tax in connection with their property business than they make in net profit; in many cases, landlords who make a loss from their property business will still be faced with huge tax bills. We cannot understand how the Chancellor considers his changes will result in a fairer tax system.

The implications for some landlords are such that they will need to sell properties to reduce the tax they pay on their finance costs. There is concern that many landlords will be declared bankrupt as their tax bills will exceed their taxable income and they will be left with property businesses that are no longer sustainable. The situation will get worse when interest rates increase. The Governor of the Bank of England has publicly stated that he expects interest rates to increase before the end of 2015.

Can you show some examples of the impact on landlords?

The Government’s proposal is quite complicated and we can’t go into too much detail here. We can however give 3 simple examples to illustrate the issue.

Example 1: Joe is an architect and earns £ 45,000. He is what has become known as an ‘accidental landlord’. He has only one buy to let property. This used to be his home but he let it out when he moved in with his partner Monica. Joe is a 40% taxpayer. His rental income is £7,200 per annum; his mortgage costs are £2,500; and his repairs and other tax deductible costs are £1,000. Under the current tax system, Joe would pay £1,480 tax on his property income. Under the proposed tax system, Joe would pay £1,980 tax on his property, an increase of £500. For Joe, the new tax system still results in him making a ‘real profit’ but his effective rate of tax on ‘real profit’ increases from 40% to 53.5%.

Example 2: Dave and Margaret are a married couple. They consider themselves to be entrepreneurs and operate a sizeable buy to let business. They have invested in property to provide a livelihood for themselves and to provide a pension when they retire. They have tenants who are professional people in employment but most of their tenants are in receipt of housing benefit. Their only source of income is from their rental business. Their property rental assets are jointly owned and they split the rental income 50/50. Properties have been acquired over a period of nearly three decades. They have recently fixed their interest rate at 4.99% for 10 years to protect their business from risks associated with rises in interest rates. That seemed to be the sensible thing to do at the time. Their rental income is £600,000; their mortgage costs are £350,000; and their repair and other tax deductible costs are £200,000. Their net rental profit is £50,000. They are currently basic rate taxpayers. Their taxable income, after deduction of their personal allowance, is £28,000. Under the current tax system, Dave and Margaret each pay £5,600 tax. Their effective tax rate over personal allowance is currently 20%.
Under the proposed tax system, because Dave and Margaret will not be able to offset any of their mortgage costs against their rental income, they will become higher rate tax payers and their individual taxable income will increase to a staggering £400,000, the same as their rental profit because they lose their personal allowance at £121,000 each. The actual tax they would each pay would be £38,900, making £77,800 in total. This is £27,800 more than they actually make in profit from their rental business.

Their effective tax rate on their real profit is now 155.6% as the amount of tax paid exceeds their income. Dave and Margaret are now higher rate tax payers. For Dave and Margaret, the Government’s proposal is catastrophic as their business is no longer sustainable as the tax they pay exceeds their ‘real profit’. Dave and Margaret are now very worried and feel trapped. Their once profitable business is no longer viable. If they were to look at selling their properties they would incur early repayment charges, incur selling costs, be required to pay a significant sum in Capital Gains Tax and repay their outstanding mortgage balances in full, the sum total of which would be greater that the proceeds of sale. They are responsible landlords and are concerned about what will happen to their 187 tenants if their properties are repossessed, especially those tenants in receipt of benefits. The are scared to share their concerns with their tenants as they fear that their tenants may give notice to quit and look for a tenancy that is more secure.

Example 3: Emily is a civil servant and has non-property income of £40,000. She started to invest in property to create an additional income stream to fund her children through university. Her rental profit is £25,000 and she pays £35,000 in mortgage interest on her rental properties giving her a total income of £65,000. Her total tax bill under the current tax system would be £15,200, of which £9,400 arises from her rental income. This would increase to £22,200 under the new tax regime of which £16,400 would arise from her rental income. Emily’s effective tax rate on her real profit of £25,000 would increase from 37.6% to 65.6%. Emily is now concerned that her tax bill has increased by £7,000 and that her profit from her property rental business has been substantially eroded. She is becoming increasingly concerned about risk, especially knowing that if interest rates go up, her margins will be further eroded. This was not what she had in mind when she used all her savings to invest in property to fund her children’s further education. She assumed that the long established principle of income – expenses = profit would remain and that tax payable would be based on profit made. The Government’s proposal fundamentally changes that formula.

Download this spreadsheet to calculate the impact of this policy on your personal finances.

How many landlords will be affected?

The Government has stated that 1 in 5 landlords will be affected. Such figures completely miss the point, since what matters is not the number of landlords affected, but the number of properties. Properties are mortgaged, not landlords. The Government has to date been unable to confirm how many properties will be affected. Many property businesses will own more than one property so the proportion of the private rented supply affected is likely to be quite high.

How will the proposal affect the private rented sector?

For decades, the private rented sector has been providing much needed homes to meet a growing demand for flexible accommodation. A healthy supply of rental properties keeps rents down and tax relief on mortgage interest payments is a key way for the Government to incentivise investment.

At the end of 2014, the Council of Mortgage Lenders reported that there were around 1.6m buy to let mortgages in the UK, with an aggregate balance of £188bn. This money is used by landlords to invest in their property businesses. For many people, the private rented sector is their tenure of choice and currently 21% of all households in the UK rent privately. 18% of new home loans are buy to let. The sector has grown in recent years to meet demand.

As a result of the Chancellor’s Summer Budget, many landlords would cease to make a profit and would decide to sell. Landlords with several properties will want to sell to reduce their mortgage debt to ensure that they are not faced with unsustainable tax bills. There is a risk that some landlords will be declared bankrupt as their tax bills will exceed their profit. In cases of bankruptcy, rental properties will be repossessed by lenders and this will further reduce supply.

Future purchases would require a higher yield to make business sense. This could result in the provision of more Houses of Multiple Occupation ( HMOs). Less family housing would be provided in the private rented sector. Investment in the private rented sector is likely to decline and the supply of rental properties will not meet the growing demand.

Once individual landlords begin to withdraw from the private rented sector, it will become increasingly dominated by large private companies and City Institutions.

We desperately need more rental property and the reduced supply of available homes for rent in the private sector would be devastating for the UK housing situation.

How might tenants be affected?

A fall in the supply of private rental properties will result in rents increasing. An interim survey of 1,146 landlords by the Residential Landlords Association (RLA) has revealed that 65% of landlords are already considering rent increases to mitigate the impact of the Government’s rental property tax levy.

If landlords decide to sell to avoid unaffordable tax bills, they will want to sell with vacant possession and tenants will be forced to move as a result of the Government’s tax policy. Some tenants may find themselves homeless if lenders repossess landlords’ properties. We are concerned that the supply of rental properties available to those on benefits will fall and that this will result in people having to move into temporary, unsuitable bed and breakfast accommodation at considerable expense to the public purse. The demand for social housing will increase at a time when there are already very large waiting lists for social housing.

Has the Government considered the impact on tenants?

It would appear not. The Government’s impact assessment is silent on how tenants may be affected. We have asked the Government to consider the impact on tenants.

Will the proposal have any impact on home owners?

There is a risk that the housing market will be flooded with houses for sale as landlords try to withdraw from the market or as a result of lenders repossessing houses from landlords. This could lead to a collapse in house prices, resulting in owners being in negative equity and having difficulty selling if they wish or need to move. The Bank of England has acknowledged in its July 2015 Financial Stability Report that ‘investors selling buy to let properties in an illiquid market could amplify falls in house prices’.
Falling house prices is likely to result in a decline in new house building, thus reducing housing choice. This is what happened during the credit crunch and it could happen again. A decline in house building generally will adversely impact on the delivery of much needed affordable housing as much of this type of housing is provided as part of private housing developments to meet the requirements of local planning authorities.

Will the proposal reduce demand for housing?

The Government say that the proposal could marginally reduce the demand for housing. We cannot see how this will be the case and the Government has not provided any evidence to back up its claim. Demand is influenced by demographic factors and household formation rates and all the available evidence points to population and household growth in the UK.
Will the proposal affect businesses and the economy?

The Government has said there will be no impact on business. We disagree. Landlords provide support for local economies by employing solicitors, letting agents, accountants, mortgage brokers, plumbers, joiners, electricians, builders, painters, cleaners etc so any reduction in investment in housing by landlords will impact on these types of businesses. The UK needs more houses in all tenures to cater for the expected demand for housing.

The Financial Secretary to the Treasury, David Gauke, has previously admitted that rented housing provides an important boost to the economy ‘ through improved labour market flexibility’. This flexibility will be greatly reduced if there is a reduction in the supply of privately rented accommodation.

Landlords will, with immediate effect, be less inclined to buy the new-builds which the Government is hoping to facilitate by making planning approval automatic in England. Historically they bought 57% of new-builds, but are unlikely to volunteer to increase their potential liability from this proposed new tax treatment.

What has been said in the media about the proposal?

We are actively campaigning to raise awareness of the issue and in particular the unintended social and economic consequences. We would welcome your support to raise awareness. Here are some of the comments that have already been made by organisations who share our concerns:

The Residential Landlords Association has said ‘ The reality is that the Chancellor’s belief that rental property is taxed more favourably than home owners is simply not correct. Rather than supporting the sector to provide the vital homes needed to support a flexible labour market, today’s Finance Bill will choke off supply and drive up rents.’

The Scottish Association of Landlords has said ‘this is a shocking decision by the Chancellor of the Exchequer which unfairly discriminates against landlords. As a result of this increased cost and risk to landlords, you may see some within the sector feeling they are forced to increase their rent levels which would obviously have a huge negative impact on tenants.’

The Institute of Fiscal Studies (IFS) has pointed out ‘the Budget red book states that the current tax system supports landlords over and above ordinary homeowners and that this puts investing in a rental property at an advantage.’ In response to this claim the IFS has said ‘This line of argument is plain wrong. Rental property is taxed more heavily than owner occupied property’.

Price Waterhouse Coopers (PwC) has said ‘if interest rates increase over the coming years, and rental yields don’t keep pace, investors could be paying tax on a loss’.

The National Association of Landlords (NAL) has said ‘private lettings’ profitability is less than 5%, which leaves little room to squeeze margins. Landlords would be left with no other option than to recoup their increased costs through higher rents. The last thing the UK economy needs right now is to put greater pressure on the cost of housing’.

What do you want the Government to do?

We want the Government to withdraw its proposal to restrict finance cost relief for individual landlords. We want the Government to take stock, to listen to all relevant stakeholders and to bring forward revised proposals for consultation that are aimed at meeting sensible policy objectives and help address the country’s housing needs.

We want the Government to support small businesses. We want the Government to think about the housing market more holistically and to recognise that the private rented sector is an important tenure. We want the Government to have more balanced approach towards landlord taxation.

We think the big housing issue in the UK is one of supply. We want to see more land freed up for house building so that the demand for housing is met.

If I am concerned about the proposal, what can I do?

We are writing to the Chancellor and our local MPs to express our concerns. We suggest you do the same. We have set up an e-petition to try to get the issue debated in Parliament.

You can sign the e-petition by clicking on the linked image below.

Restricting finance cost relief for individual landlords

Related articles – LINK

http://www.property118.com/category/budget-2015-campaign/

Recruiting more helpers and getting more signatures

Take action each day to scrap the mortgage relief levy before tenants are forced out and rents up.

Lets Follow One Course Until Successful (FOCUS).

Join The Landlord Tax Levy Campaign Group

YOUR Money, YOUR future, YOUR choice.

 


Council want document signed stating intention to let to tenant for 5 years? Latest Articles, UK Property Forum for Buy to Let Landlords

Th council want to remove old bath and fit level access shower facilities for one of my aging tenants to make it easier for him.sig

They want me to sign a document stating that my “intention” will be to allow the disabled tenant to live at the property for a period of 5 years once the work is completed.

My mortgage is with the dreaded Mortgage Express.

I would like to do it for the tenant but I don’t want ME using this against me if I have somehow breached their T’s & C’s.

Do you think it’s a good idea to allow this?

Many thanks

Fiona


Emails to George Osborne – Chancellor of the Exchequer Latest Articles

The following are just a selection of the emails that Property118 members have sent to George Osborne since his budget announcements affecting landlords last week. 

Please feel to post yours in the comments section below ….

Dear Mr Osborne

I am writing to you to express my dismay and consternation at the proposed changes to the allowances on taxation for small landlord businesses like my own.

I have tried to provide an income for my retirement to avoid relying solely on the state pension and a meagre pension from my employer and have chosen to do without luxuries in order to build up a small portfolio of properties to provide that income and the proposed changes will destroy those plans.

As with any other small business, finance and loan interest costs are a direct running cost and the treatment of any other business in the same way as that proposed is inconceivable (a plumber not having an allowance for purchase of van etc).

If these measures are adopted a landlord having a long void due to a maintenance problem eg a fire or a non paying tenant, would still have his mortgage interest to pay but would have no income to set it against. Not only may he have no income due to the above circumstances but he would still receive a tax bill for interest he has paid on his mortgage.

Large property owning corporations and wealthy investors who have no borrowings will not be affected by these changes, it will hit hardest landlords, including basic tax payers incidentally, who have invested as individuals and who have planned their businesses from day one around the current allowances.

It is vital that a business letting property is seen as just that – A BUSINESS. Running this type of business is as complicated and time consuming as any running any other. It takes long term planning, it has overheads, it is affected by late paying and non paying customers as is any other – it cannot be right or fair that there are totally discriminatory rules for only this kind of business.

The assertion given by the chancellor that landlords paying the basic rate of tax will be unaffected by the changes has now been shown in calculations to be patently untrue, including by HMRC themselves.

Along with the extreme financial hardship caused to hard working business people – most of whom helped to put the Conservatives in office, ultimately this will inevitably also cause a reduction in the supply of privately rented housing and an associated escalation of rents for the tenants, as landlords decide the diminishing margins make letting property no longer a viable proposition.

I sincerely hope that you are able to look again at these proposals and hopefully ditch them altogether or if not then make them apply only to new investments thus not affecting businesses built on a certain previous business model.

Yours sincerely

 

And another ….

Dear Mr Osborne

I am most concerned about the proposals, for the following reasons:

Landlords who bought in their own names will pay tax on their interest expense, rather than on real income. Interest is a legitimate cost of our business, just as it is for any other form of enterprise in the country which borrows money to buy assets that generate taxable income.

Rental property is not a hands-off investment like buying gold bars. Being a landlord requires work. They can be called upon any day, at any hour, to deal with problems. For some of them it is a full-time job maintaining their properties and dealing with tenants and agents and the administrative and accounting work that is entailed.

If this proposal is applied to existing mortgages you will be changing the rules for people who bought 20 years ago or more. You will undermine the concept of certainty which businesses of all types of rely on.

The illustrative example from Megan Shaw, Product Owner – Property Income & REITs at HMRC, of the effect of the proposed change shows a man with a salary of £40,000 and a real rental income from one property of £1,200 after deducting interest of £10,800. Currently he is a basic rate payer.

When the interest is disallowed, he becomes a higher rate payer. His tax goes up by £1,800. So after spending his time and money looking after this property for a year he has to hand over the real profit of £1,200 to the government, plus 50%. out of his net salary. If he had a second property with the same figures, he would hand over 175% of the real profit.

This is not taxation, it is confiscation of assets by the State. The communist party would be delighted.

Even if the landlord makes a loss he will have to pay tax on the interest, out of his other resources.

If landlords have no other source of income then HMRC, a branch of the government, will make them bankrupt. The result will be divorces, suicides (single and double), and an increased burden on the state.

Lenders will lose money in the bankruptcies.

Landlords who bought in their own names will exit the sector on masse, causing a house price crash. Lenders will lose money in the crash.

Affected landlords will not start companies to buy the new-builds, so fewer homes will be built, fewer sites will be developed, so less affordable housing will be built as well. This announcement may already have had the effect of deterring purchasers.

For both reasons the amount of rented accommodation will fall, reducing the mobility of labour both within the country and from outside, and rents in the remaining properties will rise.

The IFS says the measure is wrong.

You are attacking your party’s natural supporters.

Please do not apply this confiscatory measure to existing mortgages.

Yours sincerely

 

and another …..

Dear Mr Osborne

Following your proposed reduction in interest relief for private landlords (whilst exempting those who have a Ltd company structure) the unfortunate full implication of this is that many buy-to-let landlords will end up paying more tax than they are actually making in profit, even paying tax after having experienced a loss!!

The other effect will be that many highly geared landlords (i.e. those with over 75% gearing on their portfolios) will face bankruptcy due to this measure and the double tax whammy of CGT hitting them as well, as they sell out.

Please also bear in mind the mass of distressed sales which will result, not to mention the thousands of rental homes which will become unavailable as a direct result of this measure, just at the time when government is seeking to provide more homes, not less.

I would like you to please reconsider this measure which is grossly unfair and discriminatory to these small business owners, (Buy to Let is without doubt a business , (and a very labour intensive one at that) and not a passive investment.

Some Positive Ideas to improve things going forwards:

1. Full U-turn on the measure
2. if not a U Turn, then an amnesty on SDLT/CGT charging for a one-off move to Ltd structure for landlords who register with a scheme within a set time frame.
3. Apply the measures only to purchases subsequent to 2017

I have spoken to Ann Milton , MP for Guildford this morning at a Conservative party breakfast, and she agrees that many ramifications of proposed new laws are often not thought through fully, and open forums like this morning are very important in deciding how to proceed and also advised me to write to you, and to Mr Howarth, hence the email

I do hope you will decide to help

Yours sincerely

NOW IT’S YOUR TURN!


50% tax relief on shares in the new Property118 portal Latest Articles, UK Property Forum for Buy to Let Landlords

Updated 7th July 2015 – First published on 30th April 2015

 

Property118 Portal Limited is a new start up business hosted on the established Property118.com website. It seeks to attract investment of £150,000 in return for 10% of the shares in the new company.

The Property118.com website now serves two separate businesses owned by two separate companies. The nature of the relationship between these businesses and companies is documented in a contract which is available on request.

The Property118.com website provides an online community platform with a mission to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents. It was established in 2011 and is an official Google News feed as well as being a leading forum in the UK Private Rented Sector.

The new company now seeking crowd funding (Property118 Portal Limited) is focussed exclusively on advertising tenanted property for sale. The portal pages became operational on the home page of the Property118.com website in mid April 2015.

Buyers search by postcode or Town and simultaneously set up email alerts so they are notified when a property matching their purchasing criteria is listed.

Consider how much money buyers and sellers of tenanted property could save in terms of rental voids and agents fees as a result of buying and selling with reliable tenants in situ.

Have you ever come across a tenant who is happy to be served notice because their landlord wanted to sell? What if they don’t have to leave?

Basic advertisements are FREE for both landlords and agents to create.

Premium listings feature at the top of search results.

Sponsorship of a featured property Newsletter is available to agents and developers on an ex-gratia, meritocratic basis, i.e. sponsors who make the largest payment per enquiry receive preferential placement of advertisements.

Tax Advantages
Own Shares in the Property118 Rental Property for-sale Portal

When shares in Property118 Portal Ltd become available to purchase via our nominated crowd funding platform investors will attract a 50% tax credit on all shares acquired, e.g. buying £10,000 of shares would reduce your tax bill by £5,000 regardless of what rate of tax you pay. Furthermore, if/when those shares are sold there will be no CGT payable either, regardless of the amount of the gain. This is because the company will qualify for SEIS (the Seed Enterprise Initiative Scheme) which also means that investors are able to roll capital gains into the scheme to offset the other 50% of their investment against CGT, this includes rolling over gains realised from the sale of BTL property. In other words, the shares could end up being acquired at a net cost of zero, or to put it another way, the tax relief you get back on the investment could be as much as the investment itself!

The idea for the new property portal, which came from Svetlana Alexander CIMA MA (wife to Property118 founder Mark Alexander), is a completely ring fenced business in its own right.

Marketing is planned to extend well beyond the existing Property118 reader base and will reach out to both buyers and sellers of rental properties, and of course their agents.

Initial funding of the brand awareness campaign (£25,000 pcm over TV and other forms of media) will be raised by selling 10% of the shares in the new company via an FCA authorised crowd funding platform.

Within seven days of launching a similar campaign (promoted via Property118) LettingSupermarket.com reached its £250,000 fund raising target. Demand for shares in the Property118 Portal are anticipated to be even higher, hence we are giving Property118 members the heads up to register their interest now.

The Market

According to research conducted by Paragon Mortgages Plc. there are five million UK properties owned by private landlords.

“An army of two million private landlords now own and rent out five million properties, according to the report by mortgage lender Paragon. This means 18pc of households now rent from private landlords. And the proportion is growing, as investors continue to see property as a source of future income and profit.” Source The Telegraph 22nd October 2014

The Private Rented Sector has been growing rapidly since the phase “buy-to-let” was first coined by the Association of Residential Letting Agents in 1996. The sector is projected to continue to grow, at least in part due to over 55’s seeking better returns from their pension funds which can now be liberated and used to fund alternative asset classes such as rental property to provide income in retirement.

It is estimated that upwards of 200,000 rental properties change hands in the UK every year. When tenants learn that their home is on the market via conventional estate agents, and advertised on portals such as Rightmove and Zoopla, they are immediately spooked into looking for somewhere else to live. In many cases the owners suffer rental voids due to the expectation of properties to be sold with vacant possession. Purchasers then suffer rental voids until the property is re-let. With the new portal it does not have to work this way. Once tenants realise that their property is being sold tenanted to new landlords they can rest assured that they do not need to start looking for a new home because it is being sold to another landlord.

In most cases landlords do not buy enough life insurance to repay their mortgages, which means their families need to sell some or all of their properties when they die in order to repay mortgage lenders. Even if every landlord sold none of their buy-to-let properties prior to death, and if we assume that death will probably occur within 60 years of becoming a landlord, that’s 33,333 landlord deaths a year and circa 83,333 property sale related dilemmas to be considered, i.e. whether to sell conventionally with vacant possession or tenanted. Not all landlords will hold onto their BTL properties until the day they die so it stands to reason that far more rental properties change hands every year.

These figures are supported by the following data from HMRC which was published on 21st April 2015.

“Number of residential property transaction completions with value £40,000 or above for the tax year 2014-2015 = 1,204,320”

Based on 18% of all households being in the Private Rented Sector (according to data produced by Paragon Mortgages Plc) this suggests that 216,777 sales fall into the target market for the Property118 portal every year.

Other

The key point of difference between the Property118 Portal and the likes of Rightmove and Zoopla is that it advertises rental properties only. Furthermore, the portal is available to both agents and owners to use without the requirement of a premium membership.

Voting shares in the new advertising portal (Property118 Portal Limited) will be offered subject to a minimum £1,000 investment, whilst shares without voting rights will be subject to a minimum investment of just £10. The company will be seeking to raise £150,000 in return for 10% of its shares in order to finance initial costs of brand awareness marketing until such time as cashflow is projected to turn positive. Shareholders will be invited to invest on the basis of receiving dividend income during their lifetime and as a legacy for their heirs. This is not to say that a trade sale or flotation could not be considered in due course by voting shareholders. 

For legal, compliance and commercial reasons we are unable to share too many details of the business plan at this stage. However, to ensure you don’t miss out on the opportunity to snap up shares as soon as they are released please register your interest in investing into this new business venture by completing the form below. We will then notify you as soon as the option to obtain a copy of the business plan and to buy into the business is launched on the Crowd Cube funding platform.

 


LPA receivers causing late payments and ruining my credit rating Latest Articles, UK Property Forum for Buy to Let Landlords

My partner and I had a portfolio of 15 mortgages with Mortgage Express and due to my partner (only) going into an IVA on his personal loans (not the mortgages – these had never been in arrears at all), an LPA receiver was appointed on all of the properties. LPA receivers causing late payments and ruining my credit

There was one line in the Terms & Conditions booklet which stated that an LPA receiver could be appointed if the mortgagor went into an IVA.

I offered to have all the mortgages transferred into my name but they would only agree to transfer one of them.

There are only a few properties left as most have been sold but when the LPA receiver pays the rental income to Mortgage Express it is after the due payment date and classed as arrears. A late payment charge is then added to the account and our credit files are affected.

I have done nothing wrong and yet my credit rating is so poor due to the actions of the LPA receiver that I cannot get any credit whatsoever.

Can I take action against the LPA receiver for paying the rents after the due payment date into the Mortgage Express account?

Thanks

Louise Star


Mortgage Express / UKAR calling in instant remortgages Advice, Cautionary Tales, Landlords Stories, Latest Articles, Legal, Property Investment News, Property News, UK Property Forum for Buy to Let Landlords

I am aware of two Mortgage Express / UKAR borrowers who received a letter this weekend calling in their loans, an extract of the letters, which are both identical, can be found below. In both cases the properties had been purchased using instant remortgages, i.e. the property had been purchased for cash or with bridging finance and instantly remortgaged based on opem market value to Mortgage Express.Mark Alexander

Mortgage Express UKAR calling in instant remortgages

These are the first cases I have seen where Mortgage Express have called in performing loans on these grounds. However, I have acted as a professional witness on a number of occasions in Solicitors Disciplinary Tribunals and in cases where Mortgage Express have commenced litigation against solicitors, both scenarios relating to instant remortgages. In all cases I have been involved in so far the Solicitors Regulatory Authority have ruled the solicitors were acting in accordance with accepted protocols at the time and none of the litigation cases I have provided witness statements regarding instant remortgages have progressed to Court.

I will be working as a private consultant alongside Cotswold Barristers and https://www.litigationwarranty.co.uk/ in the role professional witness regarding Mortgage Express practices relating to instant remortages (AKA same day remortgages) where required.

If you have received a similar letter to the one above please get in touch using the enquiry form below.

Mortgage Express Have Called In My Mortgage(s)


Mortgage Express – Should I redeem? Latest Articles, UK Property Forum for Buy to Let Landlords

With all the issues with Mortgage Express I have taken the decision to lie low and avoid meetings with them.

I have 3 properties which are in mine and my ex business partner’s name and one in my own name. Mortgage Express - Should I redeem

Problem: The one in my own name has equity and I’d like to sell. The others don’t have equity but I’m scared of selling the one with equity for 2 reasons:

1. They may ask me to use that equity to pay towards mortgages on the other properties. Is this the case even though it’s solely in my name and the other three are in both my name and my ex business partner’s?

2. I’m scared of waking a sleeping dog and getting another visit request

Please can someone advise?

Thanks

Fiona


Mortgage Express sells a part of its portfolio to Rose Mortgages Latest Articles

I received a letter from Mortgage express today explaining that they are selling part of their portfolio to Rose Mortgages ltd. and that the ‘day to day’ admin of the mortgage will be managed by Pepper UK LTD, trading as Engage credit. It also says that if I have other mortgages with them (I have 15) then I may get further letters confirming that they also have been transferred.

There’s obviously a reason as to why some of the mortgages have been transferred. Have Rose taken the worst or the best? Obviously a case of ‘cherry picking’…Possibly with the intent of increasing the variable rate as BOI have done.

Anyone else had a letter?

Hughrose


Property Forum and News website where UK landlords and letting agents share best practice