I'm A Btl Landlord, Worried That My Government Subsidy Will Be Removed

[One-percent]

See thread here

http://forums.moneysavingexpert.com/showthread.php?t=5516143

Might be a troll, but, if not the sense of entitlement is breathtaking.

Three btl, child tax credit iro 27k and wondering whether changes to be introduced will have a negative impact on unearned (taxpayer funded) income stream will be negatively affected.

It is truely broken

[Royw6]

See thread here

http://forums.moneysavingexpert.com/showthread.php?t=5516143

Might be a troll, but, if not the sense of entitlement is breathtaking.

Three btl, child tax credit iro 27k and wondering whether changes to be introduced will have a negative impact on unearned (taxpayer funded) income stream will be negatively affected.

It is truely broken

Defo a wind up, everyone knows that the new tax levy provides full relief at 20%, and the tax credit bit makes the whole thing a joke.

Also, she'd never have got a mortgage that just covers the interest particularly when rates are so low.

Edited August 26, 2016 by Royw6

[eek]

Discussed from http://www.housepricecrash.co.uk/forum/index.php?/topic/207774-buy-to-let-investors-to-challenge-tax-hike-in-court-merged-threads/?p=1103077438 onwards in that thread.

What I find more worrying is the people in the MSE thread who still couldn't comprehend what the slight change was and the impact. Then there is the person who linked to the benefit rules not realizing that Working Credits aren't savings tested...

[One-percent]

Ah, apologies, didn't realise it had already been discussed and discounted as trolling. Mind, the sense of entitlement from the general population, nothing would suprise me anymore, hence getting suckered in

[eek]

Defo a wind up, everyone knows that the new tax levy provides full relief at 20%, and the tax credit bit makes the whole thing a joke.

Nope its not a wind up nor Trolling - its a side effect of the S24 changes and probably intentional...

Her Current income is £25k income and £2k profit on the BTL after all costs (including mortgage interest payments) say total (£27k).

As of next year her income is £25k + £13k from the BTLs (profit on the BTL properties - excluding mortgage repayments) total £38k.

There is then a separate allowance on your tax return allowing you to deduct part of the interest paid on the mortgages so she won't be paying any tax on the £11k of interest paid so tax wise she isn't worse off.

The issue comes on her tax credit form she where she will have to show a gross income of £38k from next year rather than the £27k it showed for this year..

Edited August 26, 2016 by eek

[One-percent]

Discussed from http://www.housepricecrash.co.uk/forum/index.php?/topic/207774-buy-to-let-investors-to-challenge-tax-hike-in-court-merged-threads/?p=1103077438 onwards in that thread.

What I find more worrying is the people in the MSE thread who still couldn't comprehend what the slight change was and the impact. Then there is the person who linked to the benefit rules not realizing that Working Credits aren't savings tested...

Yeah, Durhamborn pointed out in a thread a few days ago that savings are not taken into account. Madness

[Ah-so]

Defo a wind up, everyone knows that the new tax levy provides full relief at 20%, and the tax credit bit makes the whole thing a joke.

Also, she'd never have got a mortgage that just covers the interest particularly when rates are so low.

She would if the rental value had been overstated at the time of applying.

[Royw6]

Nope its not a wind up nor Trolling - its a side effect of the S24 changes and probably intentional...

Her Current income is £25k income and £2k profit on the BTL after all costs (including mortgage interest payments) say total (£27k).

As of next year her income is £25k + £13k from the BTLs (profit on the BTL properties - excluding mortgage repayments) total £38k.

There is then a separate allowance on your tax return allowing you to deduct part of the interest paid on the mortgages so she won't be paying any tax on the £11k of interest paid so tax wise she isn't worse off.

The issue comes on her tax credit form she where she will have to show a gross income of £38k from next year rather than the £27k it showed for this year..

Now I didn't know that! oh dear, what a pity, how sad...... Edited August 26, 2016 by Royw6

[Royw6]

She would if the rental value had been overstated at the time of applying.

Surely the banks check that type of thing, fraud is pretty serious. Perhaps in my innocent world I am a bit naive to this type of thing.

[eek]

Now I didn't know that! oh dear, what a pity, how sad......

The funny bit is that she is well ahead of the game here. There will be a lot of people in April 2017 filling in their tax credit forms unaware of this change. Then when HMRC get their full tax returns in April 2018 - January 2019 and HMRC match the figures up to the initial tax credit form a lot of families are going to get tax credit overpayment requests for £3-4,000 with 30 days notice to pay...

Edited August 26, 2016 by eek

[Royw6]

The funny bit is that she is well ahead of the game here. There will be a lot of people in April 2017 filling in their tax credit forms unaware of this change. Then when HMRC get their full tax returns in April 2018 - January 2019 and HMRC match the figures up to the initial tax credit form a lot of families are going to get tax credit overpayment requests for £3-4,000 with 30 days notice to pay...

I never thought I'd say anything good about Osborne, but this is fair, and I hope it is not reversed. It's gonna be pretty serious when those overpayment demands get sent.

[knock out johnny]

The funny bit is that she is well ahead of the game here. There will be a lot of people in April 2017 filling in their tax credit forms unaware of this change. Then when HMRC get their full tax returns in April 2018 - January 2019 and HMRC match the figures up to the initial tax credit form a lot of families are going to get tax credit overpayment requests for £3-4,000 with 30 days notice to pay...

What happens when they can't get their hands on £3-4000 in 30 days?

[Bland Unsight]

What happens when they can't get their hands on £3-4000 in 30 days?

That's easy.

Initially the landlord collects the rent from the tenants and uses it to pay their own mortgage and their own bills. The mortgage on the buy-to-let goes into arrears. About three months later the lender takes possession of the BTLs. The tenants pay the LPA and are evicted at a time of the lender's choosing once the AST times out. The landlord loses their own home and becomes a private renter.

[Bland Unsight]

I never thought I'd say anything good about Osborne, but this is fair, and I hope it is not reversed. It's gonna be pretty serious when those overpayment demands get sent.

The chapter of The Blunders of Our Governments on tax credits is horrifying.

[dpg50000]

The funny bit is that she is well ahead of the game here. There will be a lot of people in April 2017 filling in their tax credit forms unaware of this change. Then when HMRC get their full tax returns in April 2018 - January 2019 and HMRC match the figures up to the initial tax credit form a lot of families are going to get tax credit overpayment requests for £3-4,000 with 30 days notice to pay...

Hmmm... I hope this turns out to be the case, but given recent Government pandering to anyone who kicks up the slightest fuss (I'm entitled, innit) I fear they will give them months, if not years, to pay it back at a derisory amount.

[eek]

Hmmm... I hope this turns out to be the case, but given recent Government pandering to anyone who kicks up the slightest fuss (I'm entitled, innit) I fear they will give them months, if not years, to pay it back at a derisory amount.

HMRC (unlike DWP) are not really ones for being nice and friendly - their main enforcement unit are ex customs and excise people and they still like to use the old excise rules of act now and never ask for forgiveness later...

Edited August 27, 2016 by eek

[RIP]

I don't post often despite being around this manor since about 2003/4 - mainly cos I can't add much, quick enough, to the amazing knowledge and comment punted out by my betters :-). Am here most days though. Anyway, sometimes I'll get riled enough to stick my head out of my bunker, and the latest I/R drop had me throwing weighty objects at the telly and unsuspecting passers-by. At the time, I lobbed a rant at the BoE, Treasury, and MP, as I usually do and interestingly this is the first time I've had no response. Have they finally given up defending the indefensible? The point I made in my mail to them was a/ why drop when stats show should be doing the opposite, and b/ why single out home-debtors, sorry, owners for a free bung yet again?

Here's my email to them anyway:

"Dear Mr Carney, [CC: Treasury + MP]

Yes me again I’m afraid.

“Insanity is doing the same thing over and over again and expecting a different result.” Attributed to Einstein but it was Rita Mae Brown. Whoever, they seem clearer minded than the MPC with yet another round of rate cutting and helicopter money.

We have record employment, a plunging pound, FTSE rocketing, and house price speculation at 8.4%/year and rates go DOWN?

You said on LBC Radio that this is specifically to “help” mortgage payers – but they don’t create wealth they lock it up, unlike job-creating businesses which have no need for any more loans. Mortgage debtors have had unlimited “help” since 2008 and they STILL need more? The existing £1.5Tn of household debt cannot possibly ever be repaid, so why reward over-indebtedness yet again?

And why single out mortgage debtors as always? We have the lowest levels of home ownership for decades. How does it put more money into the pockets of the majority with no mortgage? How does it help renters? If you’re going to “force” banks to pass cuts on to mortgagees I assume you’ll force landlords to reduce rents so that renters have more to spend in the economy? No, thought not.

You said a while ago that Brexit would cause rates to go UP – quite a miscalculation there! Still, even Theresa May isn’t immune to rapid about-turns: the day before becoming PM she said “monetary policy – in the form of super-low interest rates and QE – has helped those on the property ladder at the expense of those who can’t afford to own their own home.”

Apparently you’re not in favour of negative interest rates, but you said there will be more cuts. To what - 0.1%? 0.0000000001%? You’re running out of decimal places.

The rate cut isn’t interesting though, it’s the £170bn of QE. Put together they can only result in asset price inflation. No less than Adam Posen ex-MPC seems to agree: “The new TFS won't work as demand for loans remains weak. You’re still pushing on a string. Banks will simply refuse to take the extra reserves because there is no demand. The MPC is making a dangerous move by encouraging lending, considering real estate prices in the UK are already inflated”.

You said: “What we've seen in other countries is, to be honest, they've got this a bit wrong, rate cuts haven’t been passed on”. If YOU have been right all along, why do we need another round of cuts and QE now then?

By the way, my complaint has NOTHING to do with “poor old savers”. In fact lower rates will make me even LESS likely to spend any savings – which hardly helps the economy.

More unrepayable debt. So yes, I think old Albert and Mae were right – insanity.

“Reg”

PS> Mortgage debtors need more “help” do they? They already have: Dual income mortgages, Interest only mortgages, buy-to-let tax advantages and unregulated lending, lowest ever interest rates, relatively lower Basel capital requirements/risk weightings for property backed assets, Funding for Lending, NewBuy Guarantee, FirstBuy Scheme, Homebuy, Help to Buy equity loans, Help to Buy mortgage guarantee, Shared Ownership, Housing Benefit, Support for Mortgage Interest payments, Build now pay later scheme, New Homes Bonus, Affordable Homes Programme, Get Britain Building Fund, Builders Finance Fund, Right to Buy, Proposed building standard and regulation cost cutting, Looser residential planning approval rules than for offices/commercial property, Releasing more public land for private rather than public uplift, New homes zero-rated for VAT, Build to Rent Fund, Stamp duty reforms, Rental Deposit Loan Scheme, Help to Buy ISA, main home inheritance tax allowance, 'Discounted' starter homes, Expropriated HA properties, Housing Growth Partnership, 40% HTB-London, blah blah, the list goes on and on.....

"

Having re-read my email recently I’m now even more riled about my point that if Carney is going to “force” banks to pass cuts on to mortgagees I assume he’ll force landlords to reduce rents so that renters have more to spend in the economy as well. Why should home-debtors get to spend more and not renters?

And, if Brexit is a risk to the economy and an I/R drop is supposed to “smooth” things for a while, why hasn’t he said “this drop will last a year”.

And and, what the hell has Brexit (his current excuse) got to do with someone’s ability to pay their mortgage? No more no less than any other risk to their ability to pay. So, he must surely not give a monkey’s about people’s repayment abilities, but is more concerned about putting cash in pockets. But that brings me to my original point, why single out mortgage debtors you hateful one trick pony???

And and and, (thanks for listening so far!): re my comment about forcing LL parasites to drop rents to match dropped IRs (in the same way as they jack them up with raised I/Rs), has anyone got any examples of individual altruistic (HAH HAHA HA!) LL’s doing just that – because they’d like to “put more spending money in their tenants pockets”?

In fact, why haven't HB payments to landlords been dropped to match the I/R drop? Another bung right there, to a private individual.

So angry at the moment I can hardly type.

“Reg”

[Fully Detached]

Here's my email to them anyway:

Every email I've sent to the BoE, Treasury or any MP has come back with a standard copy and paste reply, the content of which reflects their view overall and is designed to make sense to the average 10 year old.

In fairness to them, they couldn't possibly find the time to respond individually to every letter they receive, and I imagine they realise there's little point sending the same standard reply in response to a letter that begins, "Yes it's me again I'm afraid."

Does that mean that writing to them is a waste of time? No, absolutely not IMO. They are all politicians to a greater or lesser degree, so public opinion shapes their policy (obviously less so in the case of the BoE, but even they'll come to a point where they realise they have zero credibility and that will affect their decision making process).

Keep up the good fight, Reg

[RIP]

Thanks FD. Take your point about "they couldn't possibly tailor a response to everyone" - fair enough.But I've probably emailed them six or seven times since 2003 and to be fair to them each of those had a response that was about as tailored as one could hope for. Either they've indulged me and now given up, or the black van's on its way round to my place as we speak.......

"Reg"

[One-percent]

Thanks FD. Take your point about "they couldn't possibly tailor a response to everyone" - fair enough.But I've probably emailed them six or seven times since 2003 and to be fair to them each of those had a response that was about as tailored as one could hope for. Either they've indulged me and now given up, or the black van's on its way round to my place as we speak.......

"Reg"

Well done Reg. I've written letters in the past but quickly realised that they were filed in the round grey cabinet under the label of 'awkward squad' and so stopped. Guess that this is what they want. Keep on with the good fight if you have the energy

[Ah-so]

Every email I've sent to the BoE, Treasury or any MP has come back with a standard copy and paste reply, the content of which reflects their view overall and is designed to make sense to the average 10 year old.

In fairness to them, they couldn't possibly find the time to respond individually to every letter they receive, and I imagine they realise there's little point sending the same standard reply in response to a letter that begins, "Yes it's me again I'm afraid."

Does that mean that writing to them is a waste of time? No, absolutely not IMO. They are all politicians to a greater or lesser degree, so public opinion shapes their policy (obviously less so in the case of the BoE, but even they'll come to a point where they realise they have zero credibility and that will affect their decision making process).

Keep up the good fight, Reg

I suggest that you don't start every letter with that phrase - whoever is answering your letter will probably be different to whoever answered the previous letter, but such a turn of phrase is more likely to immediately place it in the crank category, whatever comes after.

You will probably get a more considered reply if you leave it out.

[Fully Detached]

I suggest that you don't start every letter with that phrase - whoever is answering your letter will probably be different to whoever answered the previous letter, but such a turn of phrase is more likely to immediately place it in the crank category, whatever comes after.

You will probably get a more considered reply if you leave it out.

That was kind of the point I was making

[Pop321]

RIP - Great letter.

I would consider mortgage payments a symptom of a rate drop rather than the purpose. The main driver was business sentiment and assisting investment.

However, I can absolutely see how this drop and 'Carny Comments Corner' about helping mortgage payers is a disgrace for the increasing population who will not see the benefit.

I get that....thanks and appreciate the insight.

Nice balance in the letter of contempt, anger, over in formality and precise analysis.

Keep going....you are not wrong.

[dgul]

RIP - Great letter.

I would consider mortgage payments a symptom of a rate drop rather than the purpose. The main driver was business sentiment and assisting investment.

...

You know, I don't think that any more.

If they wanted to make things more attractive for business they'd introduce mechanisms to encourage business lending (to be fair, they sort of have (FFL), but this is unrelated to the interest rate drop). IMO they'd have a much easier time introducing stimulative fiscal policy (eg, increasing tax rebates on investment).

The monetary stimulus is all about supporting banks (well, the financial sector in general, which includes little people like mortgage brokers).

[ElPapasito]

I don't post often despite being around this manor since about 2003/4 - mainly cos I can't add much, quick enough, to the amazing knowledge and comment punted out by my betters :-). Am here most days though. Anyway, sometimes I'll get riled enough to stick my head out of my bunker, and the latest I/R drop had me throwing weighty objects at the telly and unsuspecting passers-by. At the time, I lobbed a rant at the BoE, Treasury, and MP, as I usually do and interestingly this is the first time I've had no response. Have they finally given up defending the indefensible? The point I made in my mail to them was a/ why drop when stats show should be doing the opposite, and b/ why single out home-debtors, sorry, owners for a free bung yet again?

Here's my email to them anyway:

"Dear Mr Carney, [CC: Treasury + MP]

Yes me again I’m afraid.

“Insanity is doing the same thing over and over again and expecting a different result.” Attributed to Einstein but it was Rita Mae Brown. Whoever, they seem clearer minded than the MPC with yet another round of rate cutting and helicopter money.

We have record employment, a plunging pound, FTSE rocketing, and house price speculation at 8.4%/year and rates go DOWN?

You said on LBC Radio that this is specifically to “help” mortgage payers – but they don’t create wealth they lock it up, unlike job-creating businesses which have no need for any more loans. Mortgage debtors have had unlimited “help” since 2008 and they STILL need more? The existing £1.5Tn of household debt cannot possibly ever be repaid, so why reward over-indebtedness yet again?

And why single out mortgage debtors as always? We have the lowest levels of home ownership for decades. How does it put more money into the pockets of the majority with no mortgage? How does it help renters? If you’re going to “force” banks to pass cuts on to mortgagees I assume you’ll force landlords to reduce rents so that renters have more to spend in the economy? No, thought not.

You said a while ago that Brexit would cause rates to go UP – quite a miscalculation there! Still, even Theresa May isn’t immune to rapid about-turns: the day before becoming PM she said “monetary policy – in the form of super-low interest rates and QE – has helped those on the property ladder at the expense of those who can’t afford to own their own home.”

Apparently you’re not in favour of negative interest rates, but you said there will be more cuts. To what - 0.1%? 0.0000000001%? You’re running out of decimal places.

The rate cut isn’t interesting though, it’s the £170bn of QE. Put together they can only result in asset price inflation. No less than Adam Posen ex-MPC seems to agree: “The new TFS won't work as demand for loans remains weak. You’re still pushing on a string. Banks will simply refuse to take the extra reserves because there is no demand. The MPC is making a dangerous move by encouraging lending, considering real estate prices in the UK are already inflated”.

You said: “What we've seen in other countries is, to be honest, they've got this a bit wrong, rate cuts haven’t been passed on”. If YOU have been right all along, why do we need another round of cuts and QE now then?

By the way, my complaint has NOTHING to do with “poor old savers”. In fact lower rates will make me even LESS likely to spend any savings – which hardly helps the economy.

More unrepayable debt. So yes, I think old Albert and Mae were right – insanity.

“Reg”

PS> Mortgage debtors need more “help” do they? They already have: Dual income mortgages, Interest only mortgages, buy-to-let tax advantages and unregulated lending, lowest ever interest rates, relatively lower Basel capital requirements/risk weightings for property backed assets, Funding for Lending, NewBuy Guarantee, FirstBuy Scheme, Homebuy, Help to Buy equity loans, Help to Buy mortgage guarantee, Shared Ownership, Housing Benefit, Support for Mortgage Interest payments, Build now pay later scheme, New Homes Bonus, Affordable Homes Programme, Get Britain Building Fund, Builders Finance Fund, Right to Buy, Proposed building standard and regulation cost cutting, Looser residential planning approval rules than for offices/commercial property, Releasing more public land for private rather than public uplift, New homes zero-rated for VAT, Build to Rent Fund, Stamp duty reforms, Rental Deposit Loan Scheme, Help to Buy ISA, main home inheritance tax allowance, 'Discounted' starter homes, Expropriated HA properties, Housing Growth Partnership, 40% HTB-London, blah blah, the list goes on and on.....

"

Having re-read my email recently I’m now even more riled about my point that if Carney is going to “force” banks to pass cuts on to mortgagees I assume he’ll force landlords to reduce rents so that renters have more to spend in the economy as well. Why should home-debtors get to spend more and not renters?

And, if Brexit is a risk to the economy and an I/R drop is supposed to “smooth” things for a while, why hasn’t he said “this drop will last a year”.

And and, what the hell has Brexit (his current excuse) got to do with someone’s ability to pay their mortgage? No more no less than any other risk to their ability to pay. So, he must surely not give a monkey’s about people’s repayment abilities, but is more concerned about putting cash in pockets. But that brings me to my original point, why single out mortgage debtors you hateful one trick pony???

And and and, (thanks for listening so far!): re my comment about forcing LL parasites to drop rents to match dropped IRs (in the same way as they jack them up with raised I/Rs), has anyone got any examples of individual altruistic (HAH HAHA HA!) LL’s doing just that – because they’d like to “put more spending money in their tenants pockets”?

In fact, why haven't HB payments to landlords been dropped to match the I/R drop? Another bung right there, to a private individual.

So angry at the moment I can hardly type.

“Reg”

Excellent letter. You should write more RIP because you have a nice style - humour containing hard punches to the face (of Mr Carney the hateful one trick pony.)