Tax Relief On Buy To Let Mortgage Interest.

[Si1]

Why - because you don't want to live in a mess?!

False argument. That's not the same thing as you were saying. Of course I don't want to live in a mess but I'm not going to maintain the fabric of my house.

[Frugal Git]

I for one am thankful that the pioneers of the building society movement never had your outlook. http://blog.abundancegeneration.com/2013/05/history-of-building-societies/

Fair enough - i was considering borrowing to build as allowable in my fantasy utopia but as I've always been able to save pretty flipping fast, whatever my income level, it clouds my outlook.

If I'd been born 5 years earlier, I'd have had a decent house paid for by the age of 24 whilst earning an average income.

Edited July 15, 2015 by Frugal Git

[giesahoose]

I have to hand it to the property 118 guy, he is never shy to try and start a new enterprise

http://www.property118.com/tax-restructure-opportunity-for-portfolio-landlords/76476/

2k for advise on how to restructure your portfolio in his new consultancy practice.

I would continue personally to be responsible for the letting and the income, maintenance, insurance etc, as the landlord, but as opposed to paying interest, I would be paying rent to the head lessee (NewCo). I would be liable to pay tax on any profit I make personally, but guess what, I doubt there will be any!

All I need to do now is to persuade a few commercial lenders to consider this structure (and perhaps a few of the more commercial BTL mortgage lenders) and to negotiate decent terms. I suspect they are as worried about the Budget announcements as most portfolio landlords are (default possibilities), so I suspect they might be a lot easier for me to convince than some people might imagine, especially due to my commercial finance broking background and all of my contacts in the NACFB, both member brokers and lander patrons.

This structure is likely to be most attractive to landlords with high levels of borrowing (e.g. over £1 million)

Have I cracked the problem for established portfolio landlords like me, those of us who will be worst affected by this budget?

I will be sharing the results of my investigations with my Consultancy clients, including ………

1) details of all lenders who are willing to consider this structure, and

2) copies of the documentation I use to put such an arrangement into place

[Bland Unsight]

I responded to someone else's point about the provision of rental property, as you can well see. I did not decide to muddy the waters. The waters get muddied by those why try and justify the change as being fair because landlords are scum and are responsible for all ills in the property market.

(Emphasis added)

When you come out to play you really come out to play. Adding to "It's not fair", you do realise that you've just posted "He started it"

And also, nice Freudian dick in the typing... Let me give that a polish for you, as the actress said to the Bishop.

...why try and justify the change as being fair because landlords are scum and are responsible for all ills in the property market.

+1

There is nothing to concede. You have your point of view and I have my point of view. We shall see in a few years time whether the changes made in the budget achieve the outcome you think they will or whether I'm right with my opinions.

It's a forum for argument and discussion. People may be interested in your opinions, but if your opinions are challenged and you want to defend your opinions, you need to roll your sleeves up and bring data, sound knowledge and reasoned argument. If you refuse to defend your opinions then we'll know what they are worth to you, and presumably therefore, what they are worth. You are just trotting out the same dull vested interest claptrap we've read and demolished times many. One of the reasons I love this forum is that it is a place where the nonsense is acknowledged as nonsense. If you are going just regurgitate it here and not defend it, your claim to be balanced is a castle built on sand, (and presumably financed with an interest only mortgage and rented out).

By the way - you are really struggling to keep your argument straight. I've been having a go at you because your argument is just "It's not fair", and my counter-argument is "Life's not fair". A number of other posters have developed the argument, starting out from the radical proposal that "Life's not fair", to include the corollary that an investment strategy based on assuming that life is fair is dumb.

You seem to think that the outcomes from the budget might resolve the question of fairness. How the hell is that supposed to work? All we'll learn from outcomes was whether or not the heavily leveraged large portfolio buy-to-let strategy can survive these changes (which were obviously designed to shut it down). We may then separately discover whether or not the buy-to-let investor was the marginal buyer (I'd bet the ranch they are at these interest rates with MMR keeping the lid on owner-occupier borrowing LTIs). Following that we'll discover if the market is far more prone to over-correct downwards in the presence of a large cohort of leveraged speculators with weak hands and face-washing investments. There is no way the outcomes will have anything to say about fairness.

Shape up, buddy - or go find a kiddies table of your choice (Property118, Property Tribes, LandlordZone etc.)

Edited July 15, 2015 by bland unsight

[Bland Unsight]

I for one am thankful that the pioneers of the building society movement never had your outlook. http://blog.abundancegeneration.com/2013/05/history-of-building-societies/

Presumably because you got Nationwide or Bradford and Bingley's Mortgage Express or maybe West Brom to finance some of your buy to lets?

The historical building society movement is one thing. Your lack of IT skills suggests a certain seniority but if you've personally benefited from the formation of friendly societies you'd have to have been economically active between 1800 and 1870. That puts you at about 160+ minimum, though admittedly it would explain your willingness to take the long view on land as an investment asset.

The Dorling book ain't perfect, but it makes pretty clear that the building society sector was a changed beast by the turn of the century, (sorry, sleeps, I mean 1900, most of us have only been around for one, much less three). Certainly throughout the lifetime of anyone but the forum's resident Methuselah, the building societies have been all about looking after the institutions and enriching the executives.

[Neverwhere]

...It is often the case that poor properties attract poor tenants.

...Something I have noticed is that landlords and tenants do seem to eventually settle at their own level, e.g. stubborn tenants who resent landlords tend to end up with stubborn landlords who resent tenants...

You are Mark Alexander and I claim my £5!

In other news there is no shortage of housing stock: the vast majority of housing stock is underutilised, a fact which is very easily confirmed with the Office of National Statistics.* To claim that there aren't enough properties is to either be ignorant of the facts or to be motivated by an agenda which would be undermined by acknowledging them. It's also quite illogical as if it were true we would ipso facto be experiencing a significant increase in out-and-out homelessness and yet there are only 742 rough sleepers in the whole of London.

There is a logical fallacy in implying that freeing up existing buy-to-let stock for owner occupation wouldn't provide accomodation in the right places: if the properties are occupied they are clearly in viable areas. Some of those areas might not be that nice at present but an increase in owner occupation would be likely to change that. Additionally you don't seem to be able to tell the difference between landlords in general and buy-to-let landlords in specific. Many landlords have no leverage and are therefore entirely unaffected by this change and will continue to provide rental accomodation.

The only landlords who could be affected are those, like yourself, who are inclined to arbitrage the difference between what they can can borrow against their tenant's income (via the medium of rent) in the unregulated buy-to-let mortgage market and what their tenant can borrow against their own income in the regulated residential mortgage market. Buy-to-let can die a death and the rental sector will be fine.

* Homeownership and renting in England and Wales - detailed characteristics

[Neverwhere]

Presumably because you got Nationwide or Bradford and Bingley's Mortgage Express or maybe West Brom to finance some of your buy to lets?...

Bingo

From the snippets of the judgment posted previously the judge commented that his decision was based on the terms of the loan there seemed an implication that he did not consider West Bromwich Building Society's change to the base rate to be fair. Still a small concession is that the base rate is not being increased by 1.99% but 1.49%, if the post I saw is correct.

In a similar vein Santander tried to impose charges on their "free for life" business bank account. They backed down.

As for the unsophisticated and simplisitic (sic) gibe, yes I was fully aware of the terms and conditions of the mortgages I had with West Bromwich Building Society, even down to the clause allowing them to demand repayment at any time during the term. Which by the way is contained in most lenders mortgage T&Cs.

Not sure that my posts are gibberish though Kondratiev, perhaps you should sit down quietly and concentrate when you read.

http://www.housepricecrash.co.uk/forum/index.php?/topic/193439-west-bromwich-building-societys-increases-interest-rates-for-btlers-merged-threads/?p=1102661291

Edited July 15, 2015 by Neverwhere

[Neverwhere]

I have to hand it to the property 118 guy, he is never shy to try and start a new enterprise

http://www.property118.com/tax-restructure-opportunity-for-portfolio-landlords/76476/

2k for advise on how to restructure your portfolio in his new consultancy practice.

The rentier's rentier

Mark Alexander 14/07/2015 at 16:27

Reply to the comment left by “Ewan Murray” at “14/07/2015 – 16:13“:

That’s exactly what I’m planning to do. Effectively I will be crowd funding the initial cost of the advice and allowing my supporters to have full details of it. Their own insured advice should then be far cheaper as it will already be pretty much templated. They may even choose to use the same advisers as I do.

Mark Alexander 15/07/2015 at 00:04

Reply to the comment left by “Simon Dewsberry” at “14/07/2015 – 19:24“:

The company takes the loan.

The complex part is, as you say, utilising the company money to repay personal debt without triggering tax liabilities.

My professional advisers are considering a variety of options. It seems there will be tax to pay but in the scheme of things it will still be an efficient option for a lot of people. I will share the full details of the arrangement with my Consultancy clients, i.e. the people who assist me to effectively “crowd fund” the cost of the professional advice.

Worst case scenario will either be that people pay £1,995 to have it confirmed that a scheme isn’t possible, or that worse still, they pay nothing and there is a scheme will could save them a fortune which they are oblivious to.

It is never a good idea to over publicise tax wins, otherwise any loopholes are quickly closed.

Edited July 15, 2015 by Neverwhere

[Guest_growlers_*]

I have numerous family and friends in the BTL game. All amateur/accidental landlords.....

None has a "Plan B". The "I'll hold onto it as it's my pension" mentality exists with every one. As for repairs and maintenance? Only when necessary and usually only when a pipe bursts or water comes through the roof, with the Insurance being claimed. None of them maintain their properties the same way an OO would maintain theirs.

That's my experience as a tenants who has 'professional' landlord friends. It's funny because I've seen their HMO properties (and stayed for short periods) and think it is utterly immoral they way they behave - Absolute shit holes, no investment. One place has no working central heating just electric heaters. But they almost have contempt for their HMO tenants. I've often wondered if that's a psychological thing - i.e. you are literally screwing the poorest in society for a quick buck and in order for you not to be a 'bad person' these tenants must have deserved it and had it coming.

Anyway, point (1) I was going to make - does a scumbag get attracted to BTL or does BTL make you a scum bag? May seem like a stupid question but my mate was alright 4 years ago before he drank the coolaid. He has demonstrably changed and there are times that I can't stand the sight of him now. Things he says, views he holds etc. Part of it might be the property investor GF.

Point (2) Not seen mentioned - again a variation on the select selection point above - my HMO BTL friends are up to their neck in other stupid investments. It's not just BTL. I tell no lie (and posted about it about it a couple of months ago) but they have been buying off plan holiday homes on some Atlantic island and they invested a large sum of money in high yielding European debt around Christmas of last year. Straight face no lie. My point being that BTL risk maybe massively underestimated because it is a honey pot to greedy, stupid people who are up to their neck in OTHER bad investments. Not just property.

Makes sense to ***** the bubble before the next (pending?) recession for these knob heads.

Edited July 15, 2015 by growlers

[BalancedBear]

(Emphasis added)

When you come out to play you really come out to play. Adding to "It's not fair", you do realise that you've just posted "He started it"

And also, nice Freudian dick in the typing... Let me give that a polish for you, as the actress said to the Bishop.

+1

It's a forum for argument and discussion. People may be interested in your opinions, but if your opinions are challenged and you want to defend your opinions, you need to roll your sleeves up and bring data, sound knowledge and reasoned argument. If you refuse to defend your opinions then we'll know what they are worth to you, and presumably therefore, what they are worth. You are just trotting out the same dull vested interest claptrap we've read and demolished times many. One of the reasons I love this forum is that it is a place where the nonsense is acknowledged as nonsense. If you are going just regurgitate it here and not defend it, your claim to be balanced is a castle built on sand, (and presumably financed with an interest only mortgage and rented out).

By the way - you are really struggling to keep your argument straight. I've been having a go at you because your argument is just "It's not fair", and my counter-argument is "Life's not fair". A number of other posters have developed the argument, starting out from the radical proposal that "Life's not fair", to include the corollary that an investment strategy based on assuming that life is fair is dumb.

You seem to think that the outcomes from the budget might resolve the question of fairness. How the hell is that supposed to work? All we'll learn from outcomes was whether or not the heavily leveraged large portfolio buy-to-let strategy can survive these changes (which were obviously designed to shut it down). We may then separately discover whether or not the buy-to-let investor was the marginal buyer (I'd bet the ranch they are at these interest rates with MMR keeping the lid on owner-occupier borrowing LTIs). Following that we'll discover is the market is far more prone to over-correct downwards in the presence of a large cohort of leverage speculators with weak hands and face-washing investments. There is no way the outcomes will have anything to say about fairness.

Shape up, buddy - or go find a kiddies table of your choice (Property118, Property Tribes, LandlordZone etc.)

Your post has no more facts than most others. If you are happy with unfairness you should be happy that many people are paying over the odds for homes and you are not. You get over it too sunshine life is not fair and Mr Osbourne sure as hell is not concerned about you buying a house you can afford.

Edited July 15, 2015 by BalancedBear

[giesahoose]

The rentier's rentier

I'm pretty sure there is a legal obligation now to inform the inland revenue of tax schemes anyway so the loop hole would be closed.

[spyguy]

That's my experience as a tenants who has 'professional' landlord friends. It's funny because I've seen their HMO properties (and stayed for short periods) and think it is utterly immoral they way they behave - Absolute shit holes, no investment. One place has no working central heating just electric heaters. But they almost have contempt for their HMO tenants. I've often wondered if that's a psychological thing - i.e. you are literally screwing the poorest in society for a quick buck and in order for you not to be a 'bad person' these tenants must have deserved it and had it coming.

Anyway, point (1) I was going to make - does a scumbag get attracted to BTL or does BTL make you a scum bag? May seem like a stupid question but my mate was alright 4 years ago before he drank the coolaid. He has demonstrably changed and there are times that I can't stand the sight of him now. Things he says, views he holds etc. Part of it might be the property investor GF.

Point (2) Not seen mentioned - again a variation on the select selection point above - my HMO BTL friends are up to their neck in other stupid investments. It's not just BTL. I tell no lie (and posted about it about it a couple of months ago) but they have been buying off plan holiday homes on some Atlantic island and they invested a large sum of money in high yielding European debt around Christmas of last year. Straight face no lie. My point being that BTL risk maybe massively underestimated because it is a honey pot to greedy, stupid people who are up to their neck in OTHER bad investments. Not just property.

Possible. BTL does require a total suspension of future thought and ability tto enter data in spreadsheets and work out a couple of scenarios - pure housing == good.

AS Ive said countless times before - I come from the future.

Well, the yorkshire coast.

Even before BTL, people there have been pouring money in guest houses, B+B.

Despite the fact that a quick run thru the figures show that they will not make money.

Despite the fact there is page + after page of B+B and hotels up for sale.

Despite me telling people that Ive looked atthe actual real figures and it makes no sense as a business.

'Why are so amny people doing it then, if its so unprofitable' they ask, seriously.

'Because they are thick and cannot work out the numbers' I reply.

Its that simple FFS.

[spyguy]

That's my experience as a tenants who has 'professional' landlord friends. It's funny because I've seen their HMO properties (and stayed for short periods) and think it is utterly immoral they way they behave - Absolute shit holes, no investment. One place has no working central heating just electric heaters. But they almost have contempt for their HMO tenants. I've often wondered if that's a psychological thing - i.e. you are literally screwing the poorest in society for a quick buck and in order for you not to be a 'bad person' these tenants must have deserved it and had it coming.

Anyway, point (1) I was going to make - does a scumbag get attracted to BTL or does BTL make you a scum bag? May seem like a stupid question but my mate was alright 4 years ago before he drank the coolaid. He has demonstrably changed and there are times that I can't stand the sight of him now. Things he says, views he holds etc. Part of it might be the property investor GF.

Point (2) Not seen mentioned - again a variation on the select selection point above - my HMO BTL friends are up to their neck in other stupid investments. It's not just BTL. I tell no lie (and posted about it about it a couple of months ago) but they have been buying off plan holiday homes on some Atlantic island and they invested a large sum of money in high yielding European debt around Christmas of last year. Straight face no lie. My point being that BTL risk maybe massively underestimated because it is a honey pot to greedy, stupid people who are up to their neck in OTHER bad investments. Not just property.

Makes sense to ***** the bubble before the next (pending?) recession for these knob heads.

HMO is a breed apart - or a lot futher down the poperdee evolution.

Thankfully, its getting harder - LA licenses + parking restrictions.

There is a hap for something like a HMO for single old + young people.

But not the slums I seen.

[Neverwhere]

Your post has no more facts than anyone elses. If you are happy with unfairness you should be happy that people are paying over the odds for homes and you are not. Get over it sunshine.

It has reasoned argument. Care to find some?

[Bland Unsight]

Your post has no more facts than most others. If you are happy with unfairness you should be happy that many people are paying over the odds for homes and you are not. You get over it too sunshine life is not fair and Mr Osbourne sure as hell is not concerned about you buying a house you can afford.

I didn't suggest that you should get over anything, I suggested that as what you want is not on offer here, it would be better for your blood pressure for you to go somewhere else, somewhere where you can find other people also sleepwalking into financial ruin having sung their ability to reason and the appraise evidence to sleep with lullabies gleaned from the comments section of personal finance articles in the Daily Mail. (Not a strategy I'd recommend.)

And you are still spelling Osborne incorrectly. Forgiveable in a morourn, but given your incisive intellect, we expect better. (Some punctuation wouldn't go amiss either.)

Edited July 15, 2015 by bland unsight

[Venger]

It is Osborne, sunshine, not Osbourne. Seems like nearly every 118er is calling him Osbourne too.

Just so you know for any lobbying letter about the unfairness; "Landlords haven't been outbidding anyone Mister Osbourne; "younger people don't want to take advantage of great value £300K houses, as need the effort of a lick of paint."

Response the West Brommers got, when one of them got his name correct.

Part of one campaign letter to another MP, describing Osborne's response:

“Letter arrived from HM Treasury in reply to the one I sent over a month ago to George Osborne.

Basically says they don’t intervene in these decisions and the pricing of loans remain commercial decisions for lenders etc etc which has

completely missed the point – Its the contract entered into that has been changed! ”

As you can see there is no sympathy at all as this is purely a business matter (As was the RBS until the government was embarassed into taking

action even if only to make the above statement.)

http://www.property1...mment-page-184/

[Bland Unsight]

"younger people don't want to take advantage of great value £300K houses, as need the effort of a lick of paint."

To be fair, Venger, painting does sound exhausting, it sounds like, pardon the four letter word - work. Can't I just sign some forms my mortgage broker printed off and declare myself an investment whizz, canny businessman and all round good egg. It would be a lot easier.

[Venger]

Another example...

http://www.property118.com/budget-2015-landlords-reactions/76164/comment-page-6/#comment-57753

Mark Alexander - Property118 says: Please view our official business sponsor profile
08/07/2015 at 19:56

Reply to the comment left by “Simon Dewsberry” at “08/07/2015 – 19:47“:

Fantastic idea Simon. I have played with your words slightly and sent him the following email ….

Subject: Unfair tax on landlords

Dear Mr Osbourne

Today you took the fundamental basics of business “Business profit = Income – Running costs” and you destroyed it, along with any trust or credibility that you had.

BTL mortgage interest costs are a straight forward cost of running a business, as is rent, rates etc.

You are now planning to collect tax on money spent, not a tax on profit.

This is past ridiculous.

This needs undoing and quickly – have you lost your mind?

This and one of his other entries - can't find it - outlining concern how much he will be affected by the change.... under some view that dancing bankers going to welcome his debt to Ltd company? With his plan, I suspect he is one of the BTLers carrying over £1m in BTL mortgage debt. Let's hope they learn the true nature of debt and debtors - to break them up, charge fees, make profit, and sell back to market.

I have to hand it to the property 118 guy, he is never shy to try and start a new enterprise

http://www.property118.com/tax-restructure-opportunity-for-portfolio-landlords/76476/

2k for advise on how to restructure your portfolio in his new consultancy practice.

This structure is likely to be most attractive to landlords with high levels of borrowing (e.g. over £1 million)

Have I cracked the problem for established portfolio landlords like me, those of us who will be worst affected by this budget?

Edited July 15, 2015 by Venger

[Guest_northshore_*]

The full text of the Finance Bill has now been published.

http://www.publications.parliament.uk/pa/bills/cbill/2015-2016/0057/16057.pdf

Clause 24 (page 36):

"Relief for finance costs related to residential property businesses"

Edit: Section -- > Clause

Cheers. Parliament's off on holidays next week so guess whatever's passed won't be until autumn.

[hankdd]

How does this affect Rent To Renters ?

Have they been claiming rent as an expense?

Sorry if it's been covered,

have read most of thread

[XswampyX]

BTLer's.... RUN FOR YOUR LIVES!

[sleepwello'nights]

Rent is a legitimate business expense. http://www.hmrc.gov.uk/manuals/bimmanual/BIM46801.htm

[The Preacherman]

Several flats and terraces have appeared as new instructions in the local rag property section all advertised as ideal for a first time buyer or as an investment.

[hankdd]

Thank you Sleepwell o nights- I phrased that badly, is the whole of the rent paid to the owner a legit expense?, has there been any changes?

[Killer Bunny]

It is Osborne, sunshine, not Osbourne. Seems like nearly every 118er is calling him Osbourne too.

God these people who are so picky about getting Ausbaurne's name right.