Neverwhere

Bump, just for the amusing contrast between the billboard funding saga on BTL Regrouping and the-share-issue-that-never-was:

Transferred to the liquidators and then on to the Seedrs investors: h/t @Lavalas

You think you're just joking... (Source)

I'm sure the priced-out-and-forced-to-rent-against-their-will generally, object to landlords generally. The really great thing about Ireland having experimented with restricting limiting tax reliefs for landlords is that the results clearly demonstrates what was fairly obvious anyway: the direction of rents has nothing to do with landlords' costs. Landlords' tax bills coming down do not bring down rents, hence rents present no incentive for the UK Government to reduce landlords' tax bills. Landlords' tax bills going up is completely compatible with rents coming down, if that's what they were going to do anyway, and so rents present no barrier to the UK Government increasing landlords' tax bills. Weapons free, as they say

gruffy's thread was a good prompt for something I should probably have done some time ago It's pretty amusing given the BTL penchant for trying to use Ireland as a scare story that, outside of Dublin, rents stayed below their previous peak for the entire time that restrictions on Irish landlords' finance costs were fully in force, and only recovered to their previous level after these restrictions had already started to be phased out. Ireland is an excellent example of how rents can fall and stay down at the same time as landlords' tax bills are increased.

So, restrictions on Irish landlords' ability to claim finance costs as a tax deductible expense, introduced in 2009, have started being phased out, as of January 2017: And yet somehow Irish rents have continued to rise despite this reduction in leveraged landlords' costs (and originally continued to fall when said costs were introduced in the first place): (Source: The RTB Rent Index Quarter 3 2017) h/t @gruffydd: It's almost as if landlords' tax bills have absolutely nothing to do with the trajectory of rents.

You're welcome With the inadequacy of the 145% ICR for affected landlords in mind the CML's assessment here makes for pretty interesting reading (even the higher 155% ICR which they consider is likely to be inadequate for higher and additional rate taxpayers, as at the stress rate the amount of rent leftover to cover all other costs would only be 8.4% or 3.4% respectively).

AIUI rental property equity is likely to exclude most landlords from being entitled to UC, and so I think the below rule would apply: (Source)

That's what it looks like to me, but as Si1 points out tax credits are supposed to be being phased out for universal credit, so it could end up being a very temporary reprieve. Conceivably it might be intended to minimise the need to reassess tax credit claimants before switching them over to UC?

It's not a loophole, it's an intentional exemption introduced into legislation by Hammond's Treasury in March 2017.

It's pretty bonkers.

That appears to be correct: The Government webpage that LITRG links to does have this to say though, so it might just be tax credits:

Supposedly "balls deep" since 2013 and SE located However, this one flops all over the place like a fish (they also claim to have only become an owner occupier in Luton, a year after they got heavily into BTL) so I wouldn't rule out spotty-teen-trolling-for-kicks. Especially given their exceedingly poor understanding of the changes in BTL underwriting standards, though it amuses me to think that perhaps those are their pre-SS13/16 figures failing to meet even an inadequate 145% ICR at a 5.5% stress rate

The PRA don't specify an ICR, they require that lenders take into account recent tax changes in addition to other costs (letting agent fees, maintenance, voids, etc). 145% ICRs are not going to be enough to meet PRA requirements for higher and additional rate taxpayers, as per FreeTrader's posts here: And here: At the stress rate and a 145% ICR a higher rate taxpayer would be paying 69% of the rent in interest and 26.2% in tax, leaving only 5% of the rent left over to cover all other costs. At the stress rate and a 145% ICR an additional rate taxpayer would be paying 69% of the rent in interest and 31.2% in tax, leaving them already in negative territory before we've even considered any other costs at all. Neither one of these scenarios would satisfy the PRA.

My best guess is always BTL landlord

Lenders concerned they might be criminally facilitating tax evasion?

Worth remembering also that, with finance costs no longer tax deductible once changes to their tax treatment are completely phased in, total rental income for tax purposes will increase substantially, so there will be buy-to-let landlords who currently think themselves unaffected because they've previously been basic rate taxpayers (though I doubt that there are many given the need for initial deposits, and lenders' requirements for other income as additional security) but who will find in reality that they've been pushed into a higher tax bracket and are directly affected in more ways than one.

+1 to all of this. Though imperfect institutional investors would be a significant improvement on the current situation, (not that they're captured by this survey at all), as they're unlikely to be competing with first time buyers for ownership of the existing housing stock.

Okay, so this is just silly: Firstly, it's taking Simple Landlord Insurance's survey seriously, as if it were a credible source of information, which means that it's bought into the idea that a.) Landlords are all well-informed and numerate and understand all of the policies in question. b.) Holiday letters and residential landlords are interchangeable and will respond in exactly the same way to legislation which only targets residential landlords. c.) A survey of 500 people which includes less than 500 landlords (because of the holiday letters natch) and which gives no indication of how representative the few landlords which it does include are (in terms of location, leverage, or portfolio size) can be taken in place of any understanding of how all of the landlords in the UK as a whole are behaving. d.) Intentions always translate into actions and no landlord ever intends to do one thing and then ends up finding out that what they want to do isn't really as easy or as possible as they thought. Secondly, it characterises landlords and holiday letters with two or more properties (as Simple Landlord Insurance's survey main differentiation is between landlords and holiday letters with one rental property or holiday let, and landlords and holiday letters with two or more rental properties or holiday lets) as "larger" and "professional" when that is as misleading as characterising them all as "landlords". Thirdly, it misunderstands the nature of the policy changes as larger buy-to-let landlords, who have routinely employed debt to expand their property portfolios, are more adversely affected than smaller basic rate taxpayer landlords; and it misunderstands how rents are set, as it assumes that landlords aren't already charging the maximum that they can (or receiving a benefit in kind) in order to maximise profits. A more likely explanation is that the inclusion of holiday letters skewed the results of an otherwise already dodgy survey of wishful thinking so that, in addition to the intentions of those landlords who are ignorant of the policy changes or who have also misunderstood them, we have existing holiday letters behaving as if the policy changes to the treatment of buy-to-let finance costs don't directly affect them (they don't) and panicking buy-to-letters fantasising about switching over into holiday lets (or Serviced Accommodation as they describe it in the case study attached to Simple Landlord Insurance's survey in which they are doing just that) with little thought to the practicalities of refinancing (as using buy-to-let loans to fund holiday lets is mortgage fraud, which carries a potential jail term).

Mixing holiday letters in with debt-free residential landlords and buy-to-letters and then asking them all how they were responding to policy changes centred on the private rental sector and buy-to-let in particular was a nice touch With these small surveys of pie-in-the-sky intentions it's pretty easy to ask a bunch of questions and cherry pick the answers that best serve the company's interests and then only report those, (or even to run a bunch of surveys and then focus in on the one which gives the results that look most attractive from a PR point of view), and it's pretty easy to influence what those answers are going to be by skewing the profile of those surveyed away from the worst affected and most informed. As they can't even get their own numbers right, (see the HMO example above), their figures aren't even a reliable guide to the results of their unreliable survey.

It seems that this is the report that the article is based on. Simple Landlord Insurance surveyed 500 people who are either residential landlords or who own holiday lets, but - AFAICS - don't differentiate between them, or note how many of them are buy-to-let landlords, (i.e. funding their rental properties with buy-to-let loans). They also appear to have made no effort to check whether the small number of landlords they did question understood the changes under discussion before asking how they had affected their plans, so there is no way of gauging how realistic those plans are. There's also a glaring error between the HMO chart and text which suggests, unsurprisingly, that the report was quickly thrown together as a marketing exercise, and that it may contain less immediately obvious errors elsewhere. Surveying intentions is also quite different to surveying actions. Someone may intend to expand their rental portfolio, only to find that they no longer meet the banks' lending requirements and that they simply can't borrow the money that they need to do so. Equally someone may intend to sell a rental property but find that the market won't actually support the price that they imagine that it's worth in their head, or that they need to clear the debt secured against it, and fail to sell it in any reasonable time frame. Intentions are all pie-in-the-sky. Great if you want to convince people that the future is going to be a certain way, without actually having to provide evidence that it is, but not really anything more than a record of worries and wishful thinking.

With the caveat that - AFAICS - they're only looking at securitised BTL loans that haven't refinanced since origination, this report from S&P Global is pretty interesting: (Covered in the FT as ‘Sixty per cent of older buy-to-let loans will become loss making’; h/t jimmyblueeyes) I think they're missing a trick on the "fire sale" scenario because they don't appear to be considering the impact on prices of changes in purchasing power, with even buy-to-let landlords increasingly unable to afford them, or what would happen if prices falls were added in to all of the above.