Tenant Tax - BTL mortgages

[rendelharris]

Robert Poste's Child Wrote:

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> Face it, this is pure self-interest. And asking

> for a donation to the campaign - Jesus wept! The

> fear and greed index at work. It's almost a form

> of narcissism.

>

> It was really noticeable in the Brexit, London

> mayor and last general election campaigns that

> politicians now expect voters only to care about

> what's in it for them. It makes it all the more

> heartening when someone does do the right thing.

> Good for you, SLad.

Seconded.

[Loz]

Saffron Wrote:

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> This may or may not benefit tenants, but it's not directly about tenants' rights. Framing it as

> tentants' rights seems disingenuous.

Yep, I agree with that as well.

[cella]

Seriously OP - "asking for a donation..." Lost me at that point.

[SLad]

Hi Tracey, we have a significant mortgage on our buy to let, property and my husband and I both pay higher rate tax, thanks. I just fundamentally disagree with you on the principles in issue here because I don't believe in getting a free ride.

I also have a full understanding of the legal system (being a lawyer tends to help) so having now conceded that you're at the permission stage for the JR, not waiting for a decision from the CPS, can you please explain to me why you need further funding via crowd funding before permission is granted? If permission is refused, either the case ends or you have one chance to go to a 20 min oral permission hearing to try and get permission (for which you can instruct a junior barrister for about ?750-1,000). I'm sure the tens of thousands of pounds already raised would cover that. What exactly does your organisation intend to do with any surplus?

[Tracey Forest]

Hi Slad and Partner

Where do you think a 'free ride' comes into this? Can you explain the term you've used because I don't understand what you mean. What free ride are you getting as a btl private landlord?

Secondly the funding raised isn't to cover permissions. It's to cover the lawyers fees. We know where the funds have been raised so so if we don't get permissions it won't be transferred - the total you see is pledged donations.

[Tracey Forest]

Hi Jules-and-Boo

Right to buy is a government initiative not a private landlord one. Agencies increasing rents is something you'll have to take up with the agencies. It's the same with sales property, the agency increases selling prices. The tax on overseas investment isn't something within our control.

Private individuals already pay tax on profits - HMRC treats them as a business but with the increased taxation some individuals will be paying tax on a loss.

A lot of sole traders borrow to build a business and offset borrowing costs from their profits. Is it then ok to say to a hire company for example that they can't offset their borrowing?

[SLad]

The free ride I'm talking about is having the equity in my property paid off for me without my paying tax on the money I make on the enterprise.

On the funding issue, I think you need to go back to your lawyers and ask them why they need more money now as they should be doing very little whilst waiting for the permission decision to come through as your grounds will have been drafted, appropriate court fees paid and you should just be waiting for the decision. If you can't get a case to a permission application for the money you've already raised then you've probably made a bad choice of firm, but then again I would never encourage someone to go to a firm which instructs its own founding director as the lead barrister in a case. But that's just me. So, I ask you again, what does your group propose to do with any surplus? You have to know, right, if you're pushing for additional fundraising...

[Tracey Forest]

Hi Slad and Partner

I've looked back and you've said you have a significant mortgage on your BTL so at this point you'll probably not be paying too much tax because of it. But I'm sure you're aware that you'll be paying tax on all your property income by 2020. So you'll be paying tax on no profit if your mortgage remains significant. You'll also pay a higher rate of CGT because private landlords have been excluded from the cut they've made for other businesses.

The increased taxation on landlords was trialed in Ireland some years back. Rents hit the sky and because of the financial hardship it caused to all concerned it was scrapped. It took another 3 years before rents were affordable again. So it will have a huge impact.

The funding is pledged donations. It's there for the whole matter to be decided - it's not just there for permissions - so unused pledges won't be transferred. The NLA and the RLA along with smaller landlord associations around the country have pledged contributions. Some letting agencies have come forward with generous pledges and landlords have pledged heavily because of the impact the increased tax will have.

I can get one of the guys to contact you if you'd like to know more.

[Angelina]

"one of the guys"?

[SLad]

Thanks Tracey. I think you've missed the point. I'd actually like to know who is on the other side of your case and go and offer them my services on a pro bono basis. Happily, I suspect the Treasury Solicitor has already got this one covered so I'll just be cheering on from the sidelines.

By the way, crass assumption that because our mortgage is significant is represents a high LTV. It doesn't.

Ta ta.

[Robert Poste's Child]

Thank goodness for SLad. Excellent posts.

[Jeremy]

Pretty much what Loz said. Appreciate SLad's position too, but if the landlord has a mortgage then this is not really a tax on earnings, it's a tax on costs.

Yes of course the property is appreciating, and repayments are (probably) being made, but that is unrealised profit. In terms of cashflow, many landlords will find their properties no longer sustainable, so will either have to sell or increase the rent.

So while it's rather disingenuous for landlords to dress it up as concern for the tenants.. it does seem likely that tenants will suffer as a result.

[bobbsy]

I agree that a legitimate business expense should be offset against legitimate income - thus interest should be offset against rental income. Simple. As to the niceness or evilness of BTL landlords I'm not going to get involved.

[DaveR]

Legally it sounds like a very weak case - normally you would share advice on prospects of success with people you're asking for funding. Plus there's massive backlogs in the Admin Ct at the moment - don't bank on getting a decision on permission any time soon, and if by some quirk you get permission, expect to wait a year or more for a hearing.

I think the legislation is pretty poor, and is not going to benefit anyone very much, and I don't buy into the demonisation of BTL landlords, but this is a ridiculous campaign, and as already observed, to characterise it as a tenant tax is both stupid and deceptive.

[Tracey Forest]

Hi Slad and Partner

I haven't made any kind of assumption about your mortgage being high LTV. If the increased tax does become payable you'll be paying tax on all the rental income and you won't be able to offset the mortgage payments. So whether its high loan to value or not the tax may still be payable.

[Tracey Forest]

Hi DaveR

The papers are still with a court lawyer and are yet to be put before a judge for a decision on permission. We pushed for an estimated timeframe as we're hoping that we'll get permissions before the court?s two month summer recess. But the court office refused to be drawn on giving us likely timings. We can do no more at this time.

[Loz]

SLad Wrote:

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> The free ride I'm talking about is having the

> equity in my property paid off for me without my

> paying tax on the money I make on the enterprise.

What Jeremy said - you only get relief on interest costs, not equity pay downs. I'm surprised, given your level on knowledge on this subject, you don't know this.

[red devil]

Loz Wrote:

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> SLad Wrote:

> --------------------------------------------------

> -----

> > The free ride I'm talking about is having the

> > equity in my property paid off for me without

> my

> > paying tax on the money I make on the

> enterprise.

>

> What Jeremy said - you only get relief on interest

> costs, not equity pay downs. I'm surprised, given

> your level on knowledge on this subject, you don't

> know this.

For this reason as well as the general low yields, I suspect most BTL's are taken on an interest-only basis, so the whole 'getting your mortgage paid off by tenants' mantra simply isn't true. Instead it's the capital appreciation of the property that most landlords are looking for, and that has always been subject to CGT...

[????]

...and risk

but haters got to hate

[Otta]

Surely there are good arguments for and against BTL. It's not about hate.

[rendelharris]

Otta Wrote:

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> Surely there are good arguments for and against

> BTL. It's not about hate.

????'s trying to be funny again.

[Loz]

Otta Wrote:

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> Surely there are good arguments for and against BTL. It's not about hate.

That's true, but the ridiculous levels of hate aimed at landlords is pretty unpleasant. Usually by people who have no idea of the details, finances and risks of renting out houses, but feel they can trot out tired, misinformed cliches like 'paying off their mortgage', 'greedy landlords', 'free house' and 'causing the housing crisis'.

[Robert Poste's Child]

They don't do it out of altruism. It's a gamble, like any investment, and if the risks are getting uncomfortable for the individual then they can choose to take the money out of property and stick it somewhere lower-risk, like an investment account. They have a choice.

Have to say I do believe BTL owners are a blocker at the lower end of the market, and I've heard quite a few of them use the one about having their mortgage paid off for them. Maybe they're cliches because they're true.

[Loz]

Robert Poste's Child Wrote:

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> Have to say I do believe BTL owners are a blocker at the lower end of the market, and I've heard

> quite a few of them use the one about having their mortgage paid off for them. Maybe they're cliches

> because they're true.

Sorry, RPC, but having been there and done that, it's not. Maybe for a very few, but not for the many.

[Robert Poste's Child]

Have to agree to differ on that one then. The other one I've heard BTL owners use is 'it's my pension', said as though that somehow carries more moral weight.