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Epetition For Fair Treatment

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BTL landlords are attempting to petition the government to backtrack on the proposals to change the rules on the treatment of mortgage interest tax relief in the summer budget 2015.

In an environment of dwindling home ownership, persistent immigration, poor new build volumes, and historically low returns on savings, our country's housing crisis needs to be tackled on all fronts.

The current government has recognised that this is an issue of not only boosting the supply of new homes, but also disincentivising speculation on house prices.

This is the first time in more years than I care to remember that we have had a government that has agreed with the longstanding belief of most of this forums members that the supply side of this equation cannot be redressed without the demand side being addressed first.

If we truly believe that a fair days wage should afford a fair modicum of accommodation with the fair benefit of home ownership, then we need to act now to make ourselves heard over the clamour of highly leveraged landlords who use BTL tax releif to wage a house price war against us, outbidding us on home purchases, reducing the supply of houses gor homes, and forcing us into wage slavery to fund their gambling habits on house price inflation.

One stand we can take is to attempt to route their efforts to spread fear and disillusionment by launching a counter petition to demonstrate that we, the people, demand that the BTL sector is not to be granted the privilege of using borrowed capital to deny us the homes we desperately want and need.

So, this thread is a call to action, an invitation to submit proposals for a petition we can all sign up to, to show our support for the governments determination to deter speculation in the property market and our resolution to deter those who seek to restrict home ownership opportunities in order to extract rent from those who would otherwise be able to purchase a home of their own.

Some may doubt (as I do) whether the BTL contingent may be heard in the houses of parliament, but this is no time for complacency, our future financial security, and that of our descendants is at stake here. A counter petition would at least let our minds rest easy that at the time when most was at stake, we took action instead of sitting back and watching the chips fall.

We can use this thread as a discussion starting point to reach some agreement on the gist and content of the petition(s), after which I will, if need be, create a poll where we can discover the most popular submission and thus most likely to garner enough support to route any possible support these leaches may gather among our representatives.

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Remove the unfair tax treatment of buy-to-let landlords

We welcome the recent budget announcements that will phase out financial costs as a deductible expense for buy-to-let landlords. We call upon the government to now end all tax relief on financial costs for buy-to-let landlords in line with other classes of investment, and to rescind the ability of buy-to-let landlords to easily avoid capital gains tax by claiming to have briefly resided in the property in question.

The holding of land, including rental properties, is considered in law to be an investment activity and not a business. Its taxation should reflect this. No other investment receives the unfair tax breaks that are currently given to buy-to-let landlords. No other investment allows a token action of the investor - an assertion of residency for a brief period of time in a large window of opportunity - to completely negate their capital gains tax bill. No other investment allows the high risk activity of gearing said investment to accrue any tax relief whatsoever. The Bank of England considers the rapid expansion of this sector, which is no doubt partially fuelled by these tax breaks, to be a threat to financial stability. We ask that the government help to remove this threat to the wider economy and productive businesses.

Buy-to-let landlords do not provide new housing, they take housing out of owner occupation. When a buy-to-let landlord outbids a first time buyer they create a renter where there was none beforehand. Their unfair tax treatment contributes to their ability to do this and to an ever increasing generation of Britons who are locked out of homeownership and whose most basic need of shelter is subjected to the whims of largely amateur investors. We call on the government to make buy-to-let pay its way and to further level the playing field for tenants who want nothing more than to own the homes that they raise their families in.

;)

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My two cents:

- title needs to be more obvoius, so people know this is against BTL

- we should not mention their petition anywhere as we do not want to give them extra publicity

- we could say that this would be good even for landlords who are not subprime overleveraged monkeys and who are buying on cash, or on repayment mortgages, cause than they could be buying easier and potentially cheaper. This might happen, that new people could enter BTL sector, who are playing safe, replacing the former subprime monkeys. We might get a few votes from landlords too.

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So basically this should not sound as a general attack against all BTL, it should be like throwing out the subprime monkeys who are dangerous to the economy, and opening up the field for new possibilities for other BTL landlords.

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I think the petition is wrong as the whole idea of the change is to remove the unfairness of the tax releif on people competing for the self same homes.

In a normal business, the discount comes in the price, the trade price, and profit from the mark up.

In BTL, there is no discount, just an advantage in the leverage they can acheive due to the tax advantage.

It was never about the business costs...it was always about the leverage.

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My two cents:

- title needs to be more obvoius, so people know this is against BTL

- we should not mention their petition anywhere as we do not want to give them extra publicity

- we could say that this would be good even for landlords who are not subprime overleveraged monkeys and who are buying on cash, or on repayment mortgages, cause than they could be buying easier and potentially cheaper. This might happen, that new people could enter BTL sector, who are playing safe, replacing the former subprime monkeys. We might get a few votes from landlords too.

This.

Mentioning poor savings rates looks like it gives tacit approval to BTL. Also no need to bring to bring immigrants into the equation, just BTLers, bankers and house builders failing to build.

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Lol. Thanks for the input so far, but you seem to be discussing my post as if it were the proposed petition?

That part is addressed to you rather than the government, meant to be a rallying cry to inspire some petition proposals, of which Neverwheres is the first, so that is what should be discussed.

I think it says the right things, although it seems a bit to be a repeat of the budget in that it does not explain why the full removal of relief is better than the partial removal.

I also think that in the unlikely event that we manage 100,000 signatures, it should be calling for something worthwhile, and I think the government have very carefully chosen the partial solution so as not to spook the market and wouldn't seriously consider removing the releif fully.

The call to remove all interest releif in Neverwheres text could be replaced by a call for the banning of IO mortgages, and most of the rest of it would still make sense.

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The landlord/BTL side have finally agreed Ruhal Uddin's original e-petition should stand and continue to run.

The private rented sector is heavily reliant on individual landlords. The planned change is likely to result in higher rents due to landlords looking to offset higher tax liabilities.

In some cases, employed individuals own buy to let properties as investments for retirement. The planned restriction would adversely and unfairly affect them.

https://petition.parliament.uk/petitions/104880

They condemn themselves. :rolleyes:

The landlords beating their own chests with their ego entitlement petition.

The more I consider putting my name to any sort of counter-petition the more I realise just how much the BTL scene have left me damaged. Can't help feeling some anxiety. Landlords/BTLers reviewing and harvesting our names on the counter-petition... many renter-savers. Not trusting authority anyway when it comes to tenants interests, given the market of the last decade+ and policy.

I'm not a wuss. Put me down for me in for £1,000 towards hiring a full-size HPC Blimp to fly over some major town... (like Orange Telecom did in 94), or something like that, and big yes.

http://www.vanwagneraerial.com/blog/blimp-advertising-faq

http://www.abpic.co.uk/search.php?page=0&q=American%20Blimp%20Co%20A-60&u=type&sort=&limit=50

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Nice post from neverwhere.

I'd be tempted to take the line that it would be good for BTLers if they didn't get tax relief - weeding out the ameteurs and over leveraged, encouraging professional investors etc. it's a good counter argument to the nonsense that tax breaks for landlords are good for tenants.

And it's fun to troll them just a little bit. :D

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Some may doubt (as I do) whether the BTL contingent may be heard in the houses of parliament, but this is no time for complacency, our future financial security, and that of our descendants is at stake here. A counter petition would at least let our minds rest easy that at the time when most was at stake, we took action instead of sitting back and watching the chips fall.

FWIW I agree. It can`t hurt.

I emailed my MP the other week about this and received this as a reply

Thank you for your email, and for your congratulations. I happen to be seeing Mr. Osborne tonight, and if I get the chance, I will pass on your words to him regarding the Budget.

I would definitely be keen to sign a petition.

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Remove the unfair tax treatment of buy-to-let landlords

We welcome the recent budget announcements that will phase out financial costs as a deductible expense for buy-to-let landlords. We call upon the government to now end all tax relief on financial costs for buy-to-let landlords in line with other classes of investment, and to rescind the ability of buy-to-let landlords to easily avoid capital gains tax by claiming to have briefly resided in the property in question.

The holding of land, including rental properties, is considered in law to be an investment activity and not a business. Its taxation should reflect this. No other investment receives the unfair tax breaks that are currently given to buy-to-let landlords. No other investment allows a token action of the investor - an assertion of residency for a brief period of time in a large window of opportunity - to completely negate their capital gains tax bill. No other investment allows the high risk activity of gearing said investment to accrue any tax relief whatsoever. The Bank of England considers the rapid expansion of this sector, which is no doubt partially fuelled by these tax breaks, to be a threat to financial stability. We ask that the government help to remove this threat to the wider economy and productive businesses.

Buy-to-let landlords do not provide new housing, they take housing out of owner occupation. When a buy-to-let landlord outbids a first time buyer they create a renter where there was none beforehand. Their unfair tax treatment contributes to their ability to do this and to an ever increasing generation of Britons who are locked out of homeownership and whose most basic need of shelter is subjected to the whims of largely amateur investors. We call on the government to make buy-to-let pay its way and to further level the playing field for tenants who want nothing more than to own the homes that they raise their families in.

;)

It's a very good first draft. Well thought out.

My only suggestion at this moment would be altering the header to something like:

Remove the generous tax treatment of buy-to-let landlords

joe42* makes some good points, even if he may be one of the ones wanting to enter BTL in the future (?) , if we get a basic hpc, and he's able to buy in for lower prices. Although if values fall further at a later point, then he made his own market decisions. For balance it's the property speculators who've taken their claims on multiple properties to an extreme who need to be shaken out hard. Left themselves fully exposed to risk of bankruptcy via multiple properties, MEW, structural debt, and renting out multiple properties. Although I know there is a character limit to these e-petitions.

Although I've not changed my mind. I doubt I will be adding my name to a public list of renter HPCers.

*

[...]I agree with most of what you said, but I am sure we will never go back to 2001 and 1997 prices (unless there is a huge international recession).

For example the average wage has inreased around 40% since that period. Foreign investors would also flood London way before prices fall that much.

We also have a generation of property "experts" and whatever happened in the past they would buy in, way before prices would fall that much. On the long term property is always a good investment - if you can get it for a good price (which you can't right now).

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I have been a bit lax in keeping this thread's momentum going while concentrating on other things. One of those was my investigations into the rules surrounding PPR relief on Capital Gains Tax which potentially could have formed the basis of a proposal, but which I rejected in the end.

So far, we still only have Neverwhere's proposed content, and while I support that, it is better to have a number of potential candidates to pick from so that we can ensure we have a petition with the widest appeal if we do go ahead with this.

So, I have written my own proposal, and I urge anybody else with ideas for either whole proposals, or issues that could form the basis of one, or even just paragraphs they think could be included, to submit them for discussion.

Ban or Restrict Interest Only Buy-to-let Mortgages

By continuing to have access to Interest Only mortgages in circumstances where there is no provision for repayment of the loan, Buy-to-let borrowers are able to unfairly and favourably compete with would-be home owners, thereby reducing the stock of homes available for home ownership and bidding prices beyond the affordability of hard working families, while at the same time increasing the risk of negative equity to existing home owners by increasing the volatility of the housing market as a whole.
The FCA's Mortgage Market Review placed a regulatory onus on lenders to restrict Interest Only mortgages to borrowers who can demonstrate a credible repayment strategy. This requirement is not applicable to Buy-to-let mortgages.
As a result, the affordability of Interest Only Buy-to-let mortgages is determined only by the extent to which the rental income is able to meet the interest payments at current interest rates only, whilst for home owners the affordability is determined by the extent to which their income is able to meet both interest and capital repayments, both at current interest rates and at projected higher interest rates. This cannot be seen as representing anything other than a profound bias away from home ownership and towards landlordism.
Furthermore, there is a significant risk that too many Buy-to-let borrowers have no repayment strategy other than relying on capital appreciation of the property they are securing the loan against.
This risk is compounded by the fact that it is common within the Buy-to-let investment strategy to release equity from one property as it's value appreciates to fund a further Interest Only mortgage on another property, and this strategy is then extended to further properties. The effect of this is that some, or in some cases, all of the gain from the capital appreciation of one asset is tied up as equity in the next. When Capital Gains Tax liabilities are taken into account, is it easily possible for the borrower to find themselves in a position where they are unable to repay the amount borrowed without meticulously unwinding the entire portfolio.
If the Government is serious in it's commitment to reverse the recent trend away from home ownership, and reduce the risks to financial stability posed by the Buy-to-let sector, it needs to level the playing field far further than the measures proposed in the 2015 Summer Budget. While we appreciate that there are proposals to grant the Bank of England further powers with respect to Buy-to-let lending, and welcome the prospect, this is a political issue as much as a financial issue, and should be treated as such.
We, the petitioners, request the House of Commons to directly impose restrictions on the availability of Interest Only Buy-to-let Mortgages, either wholly or subject to affordability requirements in line with those for owner occupiers, in particular with respect to the borrowers repayment strategy outside that of any projected capital appreciation of the asset.

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Perfect title!

The description contains almost everything, but I would put a bigger emphasis on the fact that as the interest only mortgages do not repay the capital, the monthly instalments are way smaller, so the landlord taking an interest only mortgage can easily outbid the hardworking families in every scenario. This is especially sad, as families are repaying the capital, while most landlords do not have a real plan to repay the capital. So at the moment we actually subsidy the risky interest only mortgages against the safer repayment mortgages.

The content is good otherwise, but wording is a bit complicated and I think there is some limit on the description like 1000 characters or similar, so imo make it simpler and shorter!

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Free up housing supply - discourage leveraged housing speculation by ensuring speculators pay full tax

We propose that all businesses be treated fairly and that loan tax deduction is only applied to business purposes. House prices are incredibly high and home ownership is at al all time low. The interest rates are at historic lows.

This has encouraged speculation in house prices and the proliferation of leveraged investment in properties due to the free taxpayer money bonanza of interest relief. Leveraged investments limit the supply of housing as it encourages those with easy access to credit to borrow far more than private owner-occupiers or first time buyers can obtain because they cannot deduct the tax relief on interest or business loans. This subsidy pushes house prices up, creates renters by extracting salaries from the economy that could be spent by owner occupiers in the wider economy.

Why should property investments not receive tax relief?

Business loans are tax deductable because the loans directly fund items mandatory to run a business such as equipment or commercial property. Business tax relief benefits the economy because it reduces risk and ultimately means more tax collection down the line in the form VAT and income taxes when products or services are exchanged.

For example, imagine a business that starts with £7000 and borrows £13,000 then buys a van and a green house. In the next two years, the van and green house are less than 13,000 but the loan on the full amount is still owed and the business makes 19,000 in profit. Even after taking out the £19,000 profits as salaries the loan is still paying for the van and green house and the original £13,000 loan is still 'funding' the business.

It makes sense that this gives a tax relief because the business was dependent on this loan and still is.

The contrary scenario is that a landlord buys a house with £20,000 and a mortgage of £60,000 for a total cost of £80,000. In three years, the house value has gone up to £150,000 and the landlord remortgages to this level. The £70,000 gain from this house value rise and remortgage is not through business activity but from appreciation in asset value. Assuming a rental yield of 3.5%, the business income is £2400 per year and £7200 for the period minus maintenance. This business can remove the capital and loaned amount of the business without affecting the business: it can do a Mortgage Equity Withdrawal (MEW) and remove the original capital and loaned amount of £80,000. Following the Summer 2015 budget, it gets up to a 20% discount on the interest even though the loan is no longer being used for business purposes.

Releasing equity means that the loan is no longer funding the running of the business, it has left the business. Loans used for non-business and private purposes are not tax deductable. For example, the interest on personal credit cards for individual are not tax deductable. A normal business cannot release equity from its business trade but a property investment can. Leveraged property investments benefit disproportionately from tax relief because the effects cumulative. A leveraged property business can repeatedly take out mortgages, receiving a 20% tax relief on all interest each time. This profits can then be used for any purpose, unburned by tax.

This is a great cost to the exchequer but does not result in any future economic gain. The deal of giving tax relief to landlords is a bad one because:

  • Relief is better given to businesses which trade rather than leveraged property investments because as they grow, they collect VAT, provide employment, increase GDP and pay NIC and income tax. The tax relief to business encourages businesses to exist and offers a copious return on the tax relief for taxpayers.
  • The money extracted by a leveraged investment portfolio does not employ many people, does not result in VAT or income tax being collected.
  • Businesses provide wage inflation. Property investments are extractive in the economy, as more money is paid in rent, less money can be spent in the wider economy. Less products can be purchased and businesses receive less revenue.
  • Relief given to a leveraged property investment is relief that could be given to a business instead.
  • Basic rate taxpayers and corporations pay tax but leveraged property owners avoid paying the 20% that others must.

From this, I hope it is clear that leveraged property investment tax relief only serve to push up prices and restrict the growth of the economy and wage growth.

I have tried to take a different non-emotional approach based on the law.

(http://www.hmrc.gov.uk/manuals/bimmanual/bim45690.htm)

We should be shouting about how landords are not paying tax which is basically what relief is.

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I recommend checking character limit on petitions. Had a go using Osborne's language - so for input sake - but best written by someone who's really behind it as I think homeownerism is just as bad as landlordism. And not sure whether downside (narrow issues, no. of likely signatories) could outweigh upside.

Reform the housing market to create a level playing-field.

1. Extend mortgage regulation to the unregulated buy-to-let sector
2. End landlord tax breaks; an advantage not available to others
3. Eliminate interest only mortgages that could pose a risk to financial stability according to the Bank of England
4. Build more social housing for secure tenancies

The Chancellor has highlighted the unfairness of our housing market, but reform should be faster and go further. Raising productivity depends on everyone benefiting from security of ownership or rental. The Intergenerational Foundation outlined the problems in a 2013 report 'Why BTL equals “Big Tax Let-off”'. Favouritism is regressive, distorts the market against younger buyers, hasn’t increased housing supply, pushes up prices, prevents young people from saving and leads to lower homeownership.

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What is the point of the petition though? Is it just to counteract the BTLers petition? The petition should be proactive, so recommending that tax relief is removed altogether and the timetable is brought forward (otherwise there are so many petitions regarding housing in the UK that could be made). It just needs focus, probably shouldn't be too long, get to the pertinent points quickly, show any maths/statistics if necessary. Job done.

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northshore, that is good.

I think point 4 ought to be changed because Conservative are ideologically opposed to council estates and state housing.

Could we mention something to do with restoring the balance or limiting credit? 'Stop over-borrowing by capping mortgage lending to 3 times local household earnings' If house prices are tied to access to credit and earnings to credit then house values must fall.

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northshore, that is good.

I think point 4 ought to be changed because Conservative are ideologically opposed to council estates and state housing.

Could we mention something to do with restoring the balance or limiting credit? 'Stop over-borrowing by capping mortgage lending to 3 times local household earnings' If house prices are tied to access to credit and earnings to credit then house values must fall.

Social housing - depends whether the realistic intention is getting anything actioned or getting people beyond this forum to sign it. Credit is a problem but realistically homeowner HTB is apparently very popular. Just for suggestion anyhow, and idea of character limit.

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What do you want us to do (80 characters)


Presumably this is the title.


Background (300 characters)


Use this section to back up why you want action. Some people include a personal story here.


Remember that people won’t always know that much about the issue you’re petitioning about - explain it.


Additional details (500 characters)


Background information, evidence and references

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IMO any petition needs to be:

  • A single proposal.
  • Summed up in one short sentence.
  • Use clear language.

Otherwise it has no hope.

The property118 petition is simple - give us back our tax relief. Any counter-petition has to be similar.

I like northshore's attempt but I would also remove point 4 as it is unrelated to the others and there is likely already a petition out there asking for more social housing.

I would propose a petition that just asks for BTL tax relief to be scrapped entirely, with the justification that owner-occupiers (and presumably people who borrow to gamble on shares?) do not receive such relief.

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