Btl Scum Regrouping And On The Offensive. -- Merged

[Neverwhere]

No, I'm not interested in discussing gender politics, I have nothing to say about it. I'm not interested in millions of things.

If your view of the world requires my anecdotal story to be untrue, then I have bad news for you.

Of course, that doesn't make consumerism a gender issue. I'm not interested in gender issues, so it wouldn't occur to me to generalise an anecdote in this way. Most anecdotes involve people most people have a gender, few are about gender.

'I have observed two kinds of consumerist behaviour, open and explicit vs disguised and dressed up as expertise' is probably what I should have said, removing all colour from my already quite dull point.

I guess I didn't misunderstand you at all then.

[Neverwhere]

Heads up for those interested in the House of Lords Select Committee inquiry into the economics of the UK housing market:

Eight out of ten renters want tenancies of a year or less

Eight out of ten of those renting accommodation want tenancy agreements of one year or less, a large survey by The Deposit Protection Service (The DPS) has suggested.

39,855 tenants whose deposits are protected by The DPS’ responded to the survey, with 80.1% saying that they preferred agreements that lasted no longer than 12 months.

89.83% said that they preferred agreements that lasted up to two years, with 34.60% of the total saying they wanted contracts for six months or less.

Julian Foster, Managing Director at The DPS, said: “This comprehensive survey suggests that the idea that tenants crave longer tenancies is a myth...

Ros 10/11/2015 at 21:14

Thanks for this excellent article – which I am using for the basis of a submission to the Lords Committee on the Economics of the Housing Market. It would be interesting if we can find that they are looking at other ‘non-problems’ too! i.e. as I pointed on the other thread, they are trying to help their ‘target group’ by encouraging the development of something they don’t want – i.e. long-term rentals.

HPC thread on the DPS claims here.

[BorrowToLeech]

I guess I didn't misunderstand you at all then.

If you think I was making a point about gender then, yes, you misunderstood me.

If you think I'm not interested in discussing gender, gender politics, or whether sexism is right or wrong, then yes you are 100% correct.

In hindsight my post was badly worded, but they mostly are. I'll be more mindful in future.

Edited November 11, 2015 by BuyToLeech

[Neverwhere]

If you think I was making a point about gender then, yes, you misunderstood me.

If you think I'm not interested in discussing gender, gender politics, or whether sexism is right or wrong, then yes you are 100% correct.

In hindsight my post was badly worded, but they mostly are. I'll be more mindful in future.

Your supposed disinterest is belied by your need to reply. Sexism is wrong, whether directed at men or women. If you can't just come out and say that it speaks volumes.

[Neverwhere]

Or do you think that this is okay?

Ros 10/11/2015 at 23:56

Reply to the comment left by “Mark Shine” at “10/11/2015 – 23:27“:

Hi Mark.
I can’t imagine being that obsessed with other people. What are they? Consumed with jealousy, hatred, Schadenfreude or what? I remember being told they’re really sexist and that none sound like they are women. I’m not a feminist – as so many women say about themselves – I am in fact a female supremacist, so I wouldn’t think it was worth looking at the nastiness of a load of men. Get a life! I honestly can’t imagine devoting my time to relishing the downfall of others I don’t even know. I’m not an envious person though – I always fancied the idea of a chateau, but if I met anyone who had one I’d be sympathising with them over the cost of heating and I know I could never stomach paying out all the expenses even if I was a multi-millionaire. So I wouldn’t be envious – but so many people are…

[Bland Unsight]

Ros (and we shouldn't neglect the possibility that 'she' is a male misogynist masquerading as a woman) is bringing the rain on the hilarity and bunker mentality front again - emphasis added.

Ros . says:

Read about me on my member profile

11/11/2015 at 13:45

Reply to the comment left by “Barry Fitzpatrick” at “11/11/2015 – 12:39“:

I have just drafted an angry response to Lord Davies of Oldham’s comments which were the usual claptrap.

Could others send some nice emails to Lord Flight for being a lone voice speaking up for us? (I haven’t read the debate but presume he was the only one)

If you add in that the Poverty11Later thread where all this delightful idiocy is culled from is also the home of pipllman's daft claim to be banned (which resulted in him actually being banned) it's now a confluence of digital ley lines - a place of deep, deep stupidity. Some are claiming that posting just once on that Poverty11Later Summer Budget 2015 thread will turn a high-functioning neurotypical into a "

". Others are claiming that the thread itself might serve as an Absolute Zero for cognitive prowess.

[Neverwhere]

Adam Hosker Yesterday, 03:27 PM

The Plan has Failed?

Action Plan to fight back!

Unfortunately - the plan has failed.

I can not remember any MP or any Lord raising any question regarding this - Can you?

The bill being a "finance bill" must go unchallenged in the House of Lords, as it was yesterday! when it went through its second reading.

If my understanding of parliamentary procedure is correct - thee are no further interventions until it now becomes law.

That means writing to MP's or Petitions etc.. are useless? as its already passed.

Only thing we could do now? is a private members bill?

Perhaps one to make it not retrospective, but since no MP's supported the campaign that seems unlikely.

The other option being challenging it in court - something id not know anything about.

Its a real shame, lots of landlords rallied behind this one. It was an impossible task in the first instance getting Conservative MP's to challenge a Conservative Budget. Especially as we know Labour MP's would not support landlords in any cause.

Its not the winning that counts? its the taking part.

peter@pjackson.demon.co.uk Yesterday,03:45 PM

Your understanding is not correct.

It still needs Royal Assent.

See http://services.parliament.uk/bills/2015...nance.html

Royal Assent - UK Parliament

The Queen can give Royal Assent in person but this has not happened since 1854. The Queen's agreement to give her assent to a Bill is a formality.

[Guest_northshore_*]

I'd imagine Treasury will want it passed before the autumn statement on the 25th.

[Guest_growlers_*]

http://www.propertytribes.com/my-predictions-for-property-investors-property-market-for-t-127622428.html

Mary gets it

[Neverwhere]

Emphasis added:

Finance Bill

Bill Main Page

Second Reading (and remaining stages)

4.56 pm

Moved by Lord O’Neill of Gatley

That the Bill be now read a second time.

The Commercial Secretary to the Treasury (Lord O’Neill of Gatley) (Con): [. . .] The Bill also ensures that landlords with the largest incomes are no longer unfairly helped by the tax system. Landlords are able to off-set their finance costs from property income when calculating their taxable income. At present, the relief they receive is at their marginal rate of tax. This means that landlords with the largest incomes receive either 40% or 45% relief, whereas landlords with lower incomes benefit only at the basic rate of income tax—20%. Clause 24 ensures that all individual residential landlords will get the same rate of tax relief on their property finance costs. [. . .]

Lord Davies of Oldham (Lab): [. . .] We also recognise the relief for finance costs related to residential property businesses in Clause 24. That will ensure that relief will be at only 20% for those landlords claiming on mortgage interest payments. Some of them in the past have claimed 45%, which approaches a level of being scandalous. We are glad that that loophole has been plugged. [. . .]

Lord Flight (Con): [. . .] Even on buy to let there is a misunderstanding. Before pensions, people used to buy one or two houses, if they could, and let them out. That was their source of income in old age. Those were the people who owned and financed a lot of the Victorian terraces all over south Wales, as well as London. The generation now in their 40s has often gone down the route of buying houses to let rather than using pension schemes—for rather good reasons, because as an asset, houses have performed better. The only tax incentive for that has been the ability to off-set interest. I am not sure how wise these measures will be. Without buy to let, lots of people would have had nowhere to live in the past few years. I certainly do not agree with retrospective taxation. We can change the tax laws for new purchases, but it is unwise to change tax arrangements retrospectively. I can just see what will happen: a time will come when inflation and interest rates rise, and the housing market goes down. Then there will be problems.

That touches on something I mentioned earlier. While the economy is expanding, it is crucial to get our savings rate up so that our investment rate can rise and our external finances come into balance. If anything, what is in the Finance Bill is not at all conducive to saving; in fact it is negative towards saving. [. . .]

Lord Haskel (Lab): [. . .] That paper also referred to the housing crisis. In spite of what the Minister said, the Bill does nothing to hold back ever higher rents, higher deposits, falling home ownership and the lowest rate of housebuilding that any of us can remember. All this is with a rising housing benefit bill and less secure tenancies. Despite what the Minister said, the Bill does nothing to encourage a culture of productivity; the kind of culture you immediately sense when you walk into a highly productive business or service. We have a financial strategy reflected in the Bill, but no industrial strategy. This is why our economy remains unbalanced, with growth still depending on low wages, rising house prices and rising consumer credit. [. . .]

Lord O'Neill of Gatley: [. . .] I draw to a close. I thank all noble Lords again for their valuable comments, and commend the Bill to the House.

Bill read a second time. Committee negatived. Standing Order 46 having been dispensed with, the Bill was read a third time and passed.

Ian Simpson 12/11/2015 at 05:59

I have just sent this to Lord Flight … ref Clause 24 of Finance Bill

Dear Lord Flight

I, along with several of my colleagues in the Private Rental sector (PRS) were encouraged when you spoke in the house recently to raise concerns about this clause, at the second reading of the bill.

As you have probably realised this Clause seeks to tax landlords on their rental turnover, as opposed to their true profit, as is normal with most taxation. As a result, many low-income landlords will artificially be pushed into higher rate tax bands, even to the point of losing CSA payments, tax credits, and the personal allowance, while their true income (profit) has not actually increased at all, as their mortgage interest still needs to be paid. Wealthiest landlords with no borrowing, or those operating within a Ltd structure will be unaffected, which is grossly unfair.

In some cases the new tax will result in landlords paying at rates of over 100% tax on their true profit, resulting in bankruptcies, massed sales of rental properties, mass eviction of tenants and increased homelessness, which then leads to an even greater burden on an already over-stretched local housing system.

I would respectfully urge you to continue to raise questions and try to reverse this Clause, as it will be ruinous for the PRS, affecting tenants even more so than landlords. If the measure were to be applied to new lending or new purchases only, from 2020 onwards for example, this would achieve the government’s avowed aim of helping first-time-buyers, but would not retrospectively tax the sector into oblivion which is what is currently going to happen.

Ros 12/11/2015 at 09:38

Reply to the comment left by “Ian Simpson” at “12/11/2015 – 05:59“:

Well done Ian. He’s also getting a letter off me – I’m just waiting to see if it’s published here as an open letter first. If, in any subsequent letters, you could push for ‘new purchases’ rather than ‘new lending’ as well, I would be grateful as the problem with the new lending one is that it ties us into current mortgages, which will only then delay the problem by a bit – the choice will then be the current lender’s high standard variable rate or the new lender’s better deal with the fictitious income regime – although obviously we’ll be lucky to get any concessions with the way GO is steadfastly trying to stick to his guns on every awful policy he is pushing through, without consultation, without listening to reasoned arguments and so on.
I heard on Question Time last week that in terms of ‘consulting’ with junior doctors the Treasury would only meet with them if they didn’t speak about something like 22 out of 23 of their concerns. I have heard similar things said about meetings between the Treasury and landlord groups. They will not even allow the ‘tax relief restriction’ to be mentioned in their so-called ‘after the decision has already been made consultation.’ They are not interested in the views of the affected groups and/or those with the expertise and much greater knowledge than them on many of the issues.
I know they were voted in, but it is a very dictatorial approach.

Somehow I don't think encouraging Lord Flight in his apparent suggestion (though he seems to view this positively) that buy-to-let represents the mechanism for a return to Victorian-style housing divisions is going to do them any favours with anyone else.

[mattyboy1973]

http://www.propertytribes.com/my-predictions-for-property-investors-property-market-for-t-127622428.html

Mary gets it

A large drop in prices would be needed in many areas for the majority of tenants to take advantage of the situation and buy. Thus, most tenants won't be able to buy there will be a large drop in prices.

The alternative, and just as logical, conclusion.

[Bruce Banner]

http://www.propertytribes.com/my-predictions-for-property-investors-property-market-for-t-127622428.html

Mary gets it

But that Vanessa woman, a few posts down, thinks that when landlords sell up supply will diminish and rents will rise, presumably because she thinks that the property will spontaneously combust when sold.

Dream on Vanessa, if I were to buy an ex rental house from a landlord the house I'm currently renting could be rented by someone else and if the landlord were to sell to another landlord the house would still be available to rent.

Actually, that Vanessa woman seems to think that any change to the regulations will cause rents to rise..... wishful thinking .

[Neverwhere]

More brilliantly bad judgement from Ros! Emphasis added:

Lord Davies of Oldham supports Clause 24

I say: what about supporting the tenants?

Labour, by supporting Clause 24, in effect, continues to support the Government’s attack on landlords who have borrowed to purchase properties. This is despite the fact that it is now generally agreed, the decision will lead to rents rising across the board in the private rented sector. This is an extract from a speech this week, by the Labour Lord Davies of Oldham. It is followed by a reply by Dr Rosalind Beck, landlord at Property118:

Lord Davies of Oldham said:

‘We also recognise the relief for finance costs related to residential property businesses in Clause 24. That will ensure that relief will be at only 20% for those landlords claiming on mortgage interest payments. Some of them in the past have claimed 45%, which approaches a level of being scandalous. We are glad that that loophole has been plugged.’

http://www.theyworkforyou.com/lords/?id=2015-11-10a.1960.2&s=landlord#g1978.1

‘Dear Lord Davies of Oldham

I refer to your comments during the Second Reading of the Finance Bill. Unfortunately, you have been completely hoodwinked by the Government’s ‘spin’ on this. In fact, Clause 24 disallows the offsetting of 100% of finance costs (with a later ‘gift’ back to the landlord of 20%); it is not about 45%, 40% or 20% taxpayers. It is related to all landlords who borrow in order to purchase properties to rent out.

You have fallen into the trap of thinking and repeating the falsity that this will affect ‘the wealthiest landlords.’ It will do no such thing, as landlords have repeated ad infinitum. The wealthiest landlords – those who have inherited vast amounts of wealth and own and rent out property, in central London, for instance – will remain untouched and not pay a penny extra in tax. These are the most significant ‘45% taxpayers’ against whom you would be better suited to direct your venom about ‘scandalous’ behaviour and ‘loopholes.’

What have you to say about this? Do you deny that this is the case and that these wealthiest landlords remain free to receive vast amounts in rent and not pay a penny more because of this measure?

I would draw your attention to the fact that the measure affects those who OWE the most. Look carefully at that word. It is not OWN; it is OWE. Since when does owing money make you wealthy?

In fact you are supporting a decision which disallows business people from offsetting the largest cost of their businesses, which then produce a taxable profit. You want the tax from the business; but you do not want the business person to be able to offset the costs of producing that taxable profit. You are supporting a tax on a massive part of landlords’ turnover.

How do you think the vast majority of landlords were able to purchase properties to rent out? How does anyone, apart from the very rich, purchase property? They get a mortgage. All of a sudden, when private landlords do this it is deemed to be a quasi-criminal offence. This is despite the fact that landlords, in doing this, provide a service which is indispensable, especially at a time of great housing need amongst all tenures.

Do you realise that portfolio landlords – many of whom have filled the gap left by selling off social housing and who now provide an essential service to many, including the low-paid and unemployed – will be ruined by this?

Even relatively uneducated people with whom I speak can see that it is patent nonsense to tax people on money they have paid out to a third party. If this were introduced across business in general there would rightly be a furore. Landlords have been picked off as a result of irrational prejudice and discrimination, based on unfounded myths and stereotypes about who we are. If you took the trouble to study surveys of landlord-tenant relationships for instance, you would see a high level of satisfaction in the private sector. But you have chosen not to inform yourself in this way. Instead you side with a Government that has introduced what has been described by the respected Telegraph financial journalist, Richard Dyson, as the kind of tax one would expect to be introduced in a third world country by a lunatic dictator.

On a personal level, if interest rates remain as they are my situation will be as follows. I currently earn £50,000 per annum (the most I have ever earned, and this is due to the current low interest rates). I am taxed on this, so that my net income is approximately £42,000. Under the new regime, whereby I will be taxed on a new fictitious profit, which includes the finance costs I have paid out to the mortgage lender, I will net £34,000. This is quite a big hit to take.

However, if interest rates rise by 3% at any time, my actual income will fall to £5,000, but because interest costs will be re-defined as part of my profit (when they are obviously not), I will be deemed to be a high earner, earning £90,000. I will be required to pay £9,000 tax (it would be more like £25,000 if not for the ‘gift’ back to me of 20%). How do you think that is fair, logical or sustainable? Why does it only apply to landlords who are not registered as a company? Why does it not apply to holiday lets? Why does it not apply to B&Bs? Why does it not apply to the whole business sector? You will have no reasonable answer to this, because the whole thing defies logic.

Do not bother to reply. I have written so many of these letters and I am absolutely disgusted at both the Conservative Party, who have betrayed many of their natural supporters and also at the Labour Party, which has joined in with the ‘black is white’ absurdities inherent in this decision. I am not surprised the Labour Party has supported this attack on landlords, but to betray the tenants of this country is such a way is unforgivable. Do you not realise that tenants in the private rented sector will now see exponential rent increases, as the first remedy available for landlords to prepare to pay tax on a non-income will be to increase rents? We have already started.

So, thank you from the landlords and tenants of this country. You have played your part in an invidious and destructive attack on the private rented sector. Congratulations.

I will be publishing this as an open letter; the nonsense you spoke in the House of Lords is there for all to see and my reply will also be there for the public record.

Yours sincerely

Dr Rosalind Beck’

My sympathies to Lord Davies for having to read such an offensive letter, I hope that his office staff saved him from the trouble.

[mattyboy1973]

But that Vanessa woman, a few posts down, thinks that when landlords sell up supply will diminish and rents will rise, presumably because she thinks that the property will spontaneously combust when sold.

Dream on Vanessa, if I were to buy an ex rental house from a landlord the house I'm currently renting could be rented by someone else and if the landlord were to sell to another landlord the house would still be available to rent.

Actually, that Vanessa woman seems to think that any change to the regulations will cause rents to rise..... wishful thinking .

Yeah, its a fascinating forum. That one thread alone neatly sums up the complete lack of a logically cohesive grasp on what is going on, and the huge, wilful blindspot they have over there.

They all seem to agree on the first point, which is that large numbers of landlords are likely to sell up.

This is followed by the assertion that 1. none of their tenants can afford to buy and 2. rents will rise as a result of diminished supply. What we don't get is an explanation of where the sold properties end up, but we can surmise that if a property is sold then it is sold to either another landlord or an owner occupier. The former of course keeps the PRS supply constant, whilst the latter removes one property from the PRS and, in many case, makes the same deduction from the pool of tenants - so no net change.

What they also fail to explain is how this large-scale sale of properties is going to happen given that 1. BTL doesn't make sense at current prices with the new regulations and 2. as they repeatedly state, the cast majority of tenants cannot buy at current prices.

So I would say, given all of that information and making the (large?) assumption that the properties are in fact eventually sold, then the only plausible outcome is a large drop in prices, most likely after sitting on the market for many months at aspirational prices and a lengthy void period.

[Neverwhere]

Kathy Miller 12/11/2015 at 09:08

Reply to the comment left by “KATHY MILLER” at “12/11/2015 – 09:07“:

Question

In your area is it first time buyers that buy the flats.?

In my area FTB are going for 2 and 3 bed houses at around 185-200,000. They are competing with 2nd homebuyers moving up

Speaking with an estate agent she said they cannot shift the flats FTB dont want them.

When I asked why , her reply was that as they are older they want a place which they can settle in and grow into.This was due to moving costs.

But I wonder if its due to the government schemes allowing them to borrow more.

THOUGHTS PLEASE

If this is true in other parts and investors stop buying what happens to the flats?

Lisa Stux 12/11/2015 at 09:19

Reply to the comment left by “KATHY MILLER” at “12/11/2015 – 09:07“:

I think you’re quite right Kathy. My daughter, aged 32 with partner , a 4 year old and another baby due in January, has just bought her first home (in the Thames Valley).

It’s a 3 bed, costing £500,000!!!. They could only do it with help to buy. However, she has said in the past that she has lost out on properties because cash buyers have outbid her…they could have been BTLers, but not necessarily. They have been trying to buy for about 5 years, but never looked at a flat.

As you say, this is probably because they are older, have a family, and want a longer term home.

The other end of the spectrum though, is in Bournemouth , which has a huge number of flats. They are being rented by young European families. They are used to taking buggies and shopping in and out of lifts….they like flats…they don’t want gardens.

Simon 12/11/2015 at 09:30

Reply to the comment left by “KATHY MILLER” at “12/11/2015 – 09:08“:

Govt help to buy is a vote bribe like rtb is/was, it’s grossly unfair to those who don’t qualify and simply saddles ftbers with huge debts. The cost of buying/selling/moving is dropping don’t see this as a barrier. Flats will always be popular for ftb and b2let in whatever form but smaller flats more for renting due to cost and benefit cuts, market will find its level but look forward to more ghettoisation with lack of supply and unsustainable immigration levels. I can’t think of any govt legislation which has helped housing recently best left alone in a free market economy.

Barry Fitzpatrick 12/11/2015 at 09:36

Reply to the comment left by “KATHY MILLER” at “12/11/2015 – 09:07“:

Kathy,

I’m not that close to my local market but nationally because they average age of FTBs has gone up substantially, I think FTBs are more likely to have young children (or foresee having children) within the period of their tenure of a property and are therefore wanting some outside space and extra bedrooms.

In essence they’ve rented a flat/house as their first home whereas 15+years ago they’d have bought a starter home. So they’re skipping that first step on the housing ladder.

This is all subject to local market prices of course and affordability under MMR, so there’ll marked regional variations.

S. E. Landlord 12/11/2015 at 09:36

Reply to the comment left by “KATHY MILLER” at “12/11/2015 – 09:07“:

It is probably due to a combination of affordability in terms of the amount they can borrow and the level of repayments.

As to the what happens to the flats, it depends on how many there are. In some areas the percentage of flats in relation to the number of houses is reasonable, in other areas there is a saturation of flats.

I would expect flat prices to remain stable and for house prices to increase. When there is a sufficient difference between the two and / or interest rates rise then the demand for the flats will increase. Also there will continue to be a demand from landlords and flats tend to provide good returns with little maintenance from the owners as the management company takes care of the communal areas etc.

The people that the agent is referring to looking to buy a two – three bed house have probably been renting a flat and as part of moving wants to move up to a house.

The reason for the oversupply of flats is that BTLers have been distorting the supply of new build properties.

As BTLers can currently finance on an interest only basis they can pay more than FTBers and builders have therefore been targetting what BTLers want rather than what FTBers want. BTLers have been preventing the building of appropriate new build supply that people actually want to live in, as opposed to new build supply that they will put up with living in because house prices have been bid up outside of their reach.

The idea that flats were ever appropriate FTBer properties for the majority of people is as much a nonsense as the idea of a housing ladder. Most of the older people I know bought family sized houses as FTBers. This was normal. The idea that this is an unrealistic expectation for younger generations is just part of the whole degradation in their relative living standards.

Expect the price of flats to fall through the floor without significant numbers of BTLers to prop them up.

[Guest_growlers_*]

I don't get ros's letter.

She said a 3% increase in rates leads to £5k rental profit. So that's a £45k jump in mortgage cost = 3% so she has £1.5m outstanding as a mortgage?

But just earning £90k rent pa? At 4.5% rental yield that puts LTV at 75%.

I thought yields where higher than that in Cardiff?

[Neverwhere]

Mark Alexander 12/11/2015 at 21:57

Reply to the comment left by “Mark Shine” at “12/11/2015 – 20:02“:

Hi Mark

Our campaign group teram have been working very closely with NLA, RLA and SAL.

They chose not to involve Vanessa at Property Tribes as she has stated that she wishes to stay “impartial” on the matter. Frankly, I don’t think she understands it enough to offer sensible commentary one way or the other, let alone debate tax mitigation strategies, but I might be wrong.

[Neverwhere]

I don't get ros's letter.

She said a 3% increase in rates leads to £5k rental profit. So that's a £45k jump in mortgage cost = 3% so she has £1.5m outstanding as a mortgage?

But just earning £90k rent pa? At 4.5% rental yield that puts LTV at 75%.

I thought yields where higher than that in Cardiff?

Maybe her rental properties aren't in Cardiff itself?

Looks like a +4% interest rate rise would have her losing money on financing costs alone. She should take the opportunity to sell up before Basel III comes in in full.

[Exiled Canadian]

Maybe her rental properties aren't in Cardiff itself?

Looks like a +4% interest rate rise would have her losing money on financing costs alone. She should take the opportunity to sell up before Basel III comes in in full.

How long until it strikes her that she will have to sell at a price her tenants can afford??

[Neverwhere]

How long until it strikes her that she will have to sell at a price her tenants can afford??

I would put my money on many such landlords never really coming to terms with this, failing to sell up until they are forced to do so, and forever feeling hard done by about any reductions in the "value" of their portfolios when they do.

[long time lurking]

I don't get ros's letter.

She said a 3% increase in rates leads to £5k rental profit. So that's a £45k jump in mortgage cost = 3% so she has £1.5m outstanding as a mortgage?

But just earning £90k rent pa? At 4.5% rental yield that puts LTV at 75%.

I thought yields where higher than that in Cardiff?

I would say 6-7% ish for Cardiff/SE Wales but IIRC she has stated she has property somewhere in the home county's /SE so they may be dragging it down

[long time lurking]

Maybe her rental properties aren't in Cardiff itself?

Looks like a +4% interest rate rise would have her losing money on financing costs alone. She should take the opportunity to sell up before Basel III comes in in full.

I`m guessing it`s mostly the lower end of the valleys higher yield % but a new boiler would cost the best part of a years rental income

Weekly Local Housing Allowances in RCT Number of Bedrooms Category

Merthyr Cynon Taff Rhondda

Shared Room Rate A £48.67 £48.67

1 Bedroom B £67.76 £67.50

2 Bedrooms C £80.55 £86.30

3 Bedrooms D £87.75 £91.81

4 Bedrooms E £119.67 £131.04

Blaenau Gwent

LHA Rates from April 2015

Shared accommodation - £48.67

1 bedroom - £62.40

2 bedroom - £75.00

3 bedroom - £85.85

4 bedroom - £111.57

Edited November 12, 2015 by long time lurking

[renting til I die]

http://www.propertytribes.com/my-predictions-for-property-investors-property-market-for-t-127622428.html

Mary gets it

44 years in the business and she still thinks selling all her lets won't push prices down! Hey, what do I know!

[Neverwhere]

When do all these tax changes come into force anyone?

The replacement of the wear and tear allowance is planned to come into force in 2016 (see the consultation document here) and the change in the treatment of finance costs will be phased in from 2017 and fully in force by 2020:

Restricting finance cost relief for individual landlords

Landlords will be able to obtain relief as follows:

• in 2017 to 2018 the deduction from property income (as is currently allowed) will be restricted to 75% of finance costs, with the remaining 25% being available as a basic rate tax reduction
• in 2018 to 2019, 50% finance costs deduction and 50% given as a basic rate tax reduction
• in 2019 to 2020, 25% finance costs deduction and 75% given as a basic rate tax reduction
• from 2020 to 2021 all financing costs incurred by a landlord will be given as a basic rate tax reduction

[Neverwhere]

Emphasis added:

Finance Bill

Bill Main Page

Second Reading (and remaining stages)

4.56 pm

Moved by Lord O’Neill of Gatley

That the Bill be now read a second time.

The Commercial Secretary to the Treasury (Lord O’Neill of Gatley) (Con): [. . .] The Bill also ensures that landlords with the largest incomes are no longer unfairly helped by the tax system. Landlords are able to off-set their finance costs from property income when calculating their taxable income. At present, the relief they receive is at their marginal rate of tax. This means that landlords with the largest incomes receive either 40% or 45% relief, whereas landlords with lower incomes benefit only at the basic rate of income tax—20%. Clause 24 ensures that all individual residential landlords will get the same rate of tax relief on their property finance costs. [. . .]

Lord Davies of Oldham (Lab): [. . .] We also recognise the relief for finance costs related to residential property businesses in Clause 24. That will ensure that relief will be at only 20% for those landlords claiming on mortgage interest payments. Some of them in the past have claimed 45%, which approaches a level of being scandalous. We are glad that that loophole has been plugged. [. . .]

Lord Flight (Con): [. . .] Even on buy to let there is a misunderstanding. Before pensions, people used to buy one or two houses, if they could, and let them out. That was their source of income in old age. Those were the people who owned and financed a lot of the Victorian terraces all over south Wales, as well as London. The generation now in their 40s has often gone down the route of buying houses to let rather than using pension schemes—for rather good reasons, because as an asset, houses have performed better. The only tax incentive for that has been the ability to off-set interest. I am not sure how wise these measures will be. Without buy to let, lots of people would have had nowhere to live in the past few years. I certainly do not agree with retrospective taxation. We can change the tax laws for new purchases, but it is unwise to change tax arrangements retrospectively. I can just see what will happen: a time will come when inflation and interest rates rise, and the housing market goes down. Then there will be problems.

That touches on something I mentioned earlier. While the economy is expanding, it is crucial to get our savings rate up so that our investment rate can rise and our external finances come into balance. If anything, what is in the Finance Bill is not at all conducive to saving; in fact it is negative towards saving. [. . .]

Lord Haskel (Lab): [. . .] That paper also referred to the housing crisis. In spite of what the Minister said, the Bill does nothing to hold back ever higher rents, higher deposits, falling home ownership and the lowest rate of housebuilding that any of us can remember. All this is with a rising housing benefit bill and less secure tenancies. Despite what the Minister said, the Bill does nothing to encourage a culture of productivity; the kind of culture you immediately sense when you walk into a highly productive business or service. We have a financial strategy reflected in the Bill, but no industrial strategy. This is why our economy remains unbalanced, with growth still depending on low wages, rising house prices and rising consumer credit. [. . .]

Lord O'Neill of Gatley: [. . .] I draw to a close. I thank all noble Lords again for their valuable comments, and commend the Bill to the House.

Bill read a second time. Committee negatived. Standing Order 46 having been dispensed with, the Bill was read a third time and passed.

Lord Davies of Oldham supports Clause 24

I say: what about supporting the tenants?

Labour, by supporting Clause 24, in effect, continues to support the Government’s attack on landlords who have borrowed to purchase properties. This is despite the fact that it is now generally agreed, the decision will lead to rents rising across the board in the private rented sector. This is an extract from a speech this week, by the Labour Lord Davies of Oldham. It is followed by a reply by Dr Rosalind Beck, landlord at Property118:

Lord Davies of Oldham said:

‘We also recognise the relief for finance costs related to residential property businesses in Clause 24. That will ensure that relief will be at only 20% for those landlords claiming on mortgage interest payments. Some of them in the past have claimed 45%, which approaches a level of being scandalous. We are glad that that loophole has been plugged.’

http://www.theyworkf...andlord#g1978.1

‘Dear Lord Davies of Oldham

I refer to your comments during the Second Reading of the Finance Bill. Unfortunately, you have been completely hoodwinked by the Government’s ‘spin’ on this. In fact, Clause 24 disallows the offsetting of 100% of finance costs (with a later ‘gift’ back to the landlord of 20%); it is not about 45%, 40% or 20% taxpayers. It is related to all landlords who borrow in order to purchase properties to rent out.

You have fallen into the trap of thinking and repeating the falsity that this will affect ‘the wealthiest landlords.’ It will do no such thing, as landlords have repeated ad infinitum. The wealthiest landlords – those who have inherited vast amounts of wealth and own and rent out property, in central London, for instance – will remain untouched and not pay a penny extra in tax. These are the most significant ‘45% taxpayers’ against whom you would be better suited to direct your venom about ‘scandalous’ behaviour and ‘loopholes.’

What have you to say about this? Do you deny that this is the case and that these wealthiest landlords remain free to receive vast amounts in rent and not pay a penny more because of this measure?

I would draw your attention to the fact that the measure affects those who OWE the most. Look carefully at that word. It is not OWN; it is OWE. Since when does owing money make you wealthy?

In fact you are supporting a decision which disallows business people from offsetting the largest cost of their businesses, which then produce a taxable profit. You want the tax from the business; but you do not want the business person to be able to offset the costs of producing that taxable profit. You are supporting a tax on a massive part of landlords’ turnover.

How do you think the vast majority of landlords were able to purchase properties to rent out? How does anyone, apart from the very rich, purchase property? They get a mortgage. All of a sudden, when private landlords do this it is deemed to be a quasi-criminal offence. This is despite the fact that landlords, in doing this, provide a service which is indispensable, especially at a time of great housing need amongst all tenures.

Do you realise that portfolio landlords – many of whom have filled the gap left by selling off social housing and who now provide an essential service to many, including the low-paid and unemployed – will be ruined by this?

Even relatively uneducated people with whom I speak can see that it is patent nonsense to tax people on money they have paid out to a third party. If this were introduced across business in general there would rightly be a furore. Landlords have been picked off as a result of irrational prejudice and discrimination, based on unfounded myths and stereotypes about who we are. If you took the trouble to study surveys of landlord-tenant relationships for instance, you would see a high level of satisfaction in the private sector. But you have chosen not to inform yourself in this way. Instead you side with a Government that has introduced what has been described by the respected Telegraph financial journalist, Richard Dyson, as the kind of tax one would expect to be introduced in a third world country by a lunatic dictator.

On a personal level, if interest rates remain as they are my situation will be as follows. I currently earn £50,000 per annum (the most I have ever earned, and this is due to the current low interest rates). I am taxed on this, so that my net income is approximately £42,000. Under the new regime, whereby I will be taxed on a new fictitious profit, which includes the finance costs I have paid out to the mortgage lender, I will net £34,000. This is quite a big hit to take.

However, if interest rates rise by 3% at any time, my actual income will fall to £5,000, but because interest costs will be re-defined as part of my profit (when they are obviously not), I will be deemed to be a high earner, earning £90,000. I will be required to pay £9,000 tax (it would be more like £25,000 if not for the ‘gift’ back to me of 20%). How do you think that is fair, logical or sustainable? Why does it only apply to landlords who are not registered as a company? Why does it not apply to holiday lets? Why does it not apply to B&Bs? Why does it not apply to the whole business sector? You will have no reasonable answer to this, because the whole thing defies logic.

Do not bother to reply. I have written so many of these letters and I am absolutely disgusted at both the Conservative Party, who have betrayed many of their natural supporters and also at the Labour Party, which has joined in with the ‘black is white’ absurdities inherent in this decision. I am not surprised the Labour Party has supported this attack on landlords, but to betray the tenants of this country is such a way is unforgivable. Do you not realise that tenants in the private rented sector will now see exponential rent increases, as the first remedy available for landlords to prepare to pay tax on a non-income will be to increase rents? We have already started.

So, thank you from the landlords and tenants of this country. You have played your part in an invidious and destructive attack on the private rented sector. Congratulations.

I will be publishing this as an open letter; the nonsense you spoke in the House of Lords is there for all to see and my reply will also be there for the public record.

Yours sincerely

Dr Rosalind Beck’

Luke P 12/11/2015 at 11:10

Hear, hear!

Steve Burman 12/11/2015 at 11:38

Ros,

Well said…..yet again!

Unfortunately I fear we are all banging our heads against the proverbial ‘brick wall’.

As you rightly point out we are now faced with no choice but to raise rents exponentially or evict our tenants and start selling off our properties. Many of us will will be left out of pocket no matter what we do…….damned if we do and damned if we don’t.

Personally, I am making plans to sell up and move to Spain…..would the last person to leave the UK please turn off the lights!

SB

Recardo Knights 12/11/2015 at 13:56

Well said Dr Beck,

Maybe eyes are starting to open , I think no one in Government has read or understood the implication. A quick glance and it looks good more taxes.

I did not understand what was happening until it was pointed out on this forum. Lets educate the MPs.

I have forwarded these letters to my MP Tom Break asking if he understands the implications, will look into it, and oppose it.

A week later I am still waiting for a reply. The one I received on the fist day (from his office)was a request for my name and address, and he will get back to me. No problems he is busy so I will get back to him.

Please forward these type of letters to your MP, when they start getting a hundred letters and emails a week they may realise it needs looking into.

Marlena Topple 13/11/2015 at 05:46

Excellent letter. Shame that this person is too biggoted to understand its contents.