Posts with tag: mortgage interest tax relief

Around 25% of investors will quit sector following tax changes

Published On: November 15, 2016 at 9:41 am

Tags: buy-to-let landlords,mortgage interest tax relief,rents,tax changes

A new survey of 1,000 buy-to-let landlords has revealed that around one quarter are thinking of quitting the sector as a result of recent and forthcoming tax changes.

The research conducted by the Residential Landlords Association highlights stamp duty surcharges and restrictions on mortgage interest tax relief as the main features.

Rising rents

This follows a previous study that showed that 56% of landlords plan to raise their rents, in order to cope with the tax alterations.

David Smith, policy director at the Residential Landlords Association, said: ‘The RLA’s findings are a worrying sign of the potential trouble ahead for tenants as a result of the previous Chancellor’s tax rises. Any reduction in supply is going to make it more difficult for them to find a place to live and will inevitably drive rents up.’[1]

‘Ahead of the Autumn Statement (next week), we are calling on the new Chancellor to consider the evidence, reverse policy and support growth in the rented sector,’ Mr Smith added.[1]

Around 25% of investors will quit sector following tax changes

Tax burden

The call from Mr Smih and the Residential Landlords Association comes on the heels of another call from Laura Lamb, director of The Mortgage Company.

Lamb feels that the stamp duty surcharge should be aimed at portfolio landlords, as opposed to amateur ones.

‘Responsible lending is very important and I fully support that but stress-testing mortgages rates at 5.5% interest rates with a rent cover of 145% is just ridiculous and will massively limit lending,’ Lamb observed.[2]

‘I would focus more attention on offering more assistance to those trying to buy. The Government has introduced the Help to Buy ISA but it’s only available if you are purchasing a property under £250,000. Most first-time buyers in London and the south are looking at purchase prices in excess of this so they instantly lose out,’ she concluded.[2]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/11/a-quarter-of-buy-to-let-investors-will-quit-warns-grade-body

[2] https://www.lettingagenttoday.co.uk/breaking-news/2016/11/hands-off-buy-to-let-mortgage-chief-tells-the-government

NLA calls for landlords to protest over tax changes

Published On: November 10, 2016 at 3:33 pm

Author: Em Morley

Categories: Landlord News

Tags: landlords,mortgage interest tax relief,tax,tax changes

The National Landlords Association has carried on urging the Government to abolish tax changes imposed by the previous Chancellor George Osborne.

In particular, the Association is trying to get support fighting against the scrapping of mortgage interest relief. It has launched an e-postcard campaign trying to get landlords to follow suit.

Campaign

The NLA have asked landlords to send one of the two e-postcards straight to the Chancellor and the Treasury through its website www.rethinktenanttax.org. This campaign has been purposely designed to run in the lead up to Phillip Hammond’s inaugural Autumn Statement, due on the 23^rd November.

Richard Lambert, CEO at the National Landlords Association, said: ‘Despite more than a year’s worth of campaigning, the Treasury still won’t accept the disastrous impact that Section 24 will have on landlords and their tenants. It seems that all our words and figures haven’t got through to them, so we’ve decided to make it clear as possible-by drawing them a picture.’[1]

‘With the Autumn Statement just around the corner, this provides the perfect opportunity for landlords to make their voices heard and to relay the message that the proposed tax changes will only make housing problems in the UK worse.’[1]

NLA calls for landlords to protest over tax changes

Tax brackets

Recent research from the NLA revealed that 440,000 basic-rate tax payers will move up a tax bracket from next year, when the changes come into force. Landlords in London, the East of England and the West Midlands are feared to be impacted most.

31% of landlords in London will move up a bracket, as will 30% in the East and 28% in the West Midlands.

Lambert concluded by saying: ‘This policy will push 44% of basic rate tax-paying landlords into a higher bracket, forcing them to either sell up and end perfectly happy tenancies, or increase rents. We want the Government to minimise the impact by applying the rules only to landlords who take out new buy-to-let loans from April 2017.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/11/nla-urges-landlords-to-lobby-parliament-over-tax-changes

Changes to mortgage interest tax relief plans unlikely

Published On: November 4, 2016 at 10:01 am

Author: Em Morley

Categories: Landlord News

Tags: Autumn Statement,landlords,mortgage interest tax relief,tax

Investors expecting a U-turn on mortgage interest tax relief changes to be included in the Autumn Statement are expected to be disappointed, according to an industry peer.

Talking at the Financial Services Expo in Coventry yesterday, David Whittaker of Mortgages for Business, braced landlords for disappointment.

Problems

Mr Whittaker said: ‘Hammond hasn’t got ownership of this problem, so doesn’t have to fix it. Once HMRC has a line of income coming in, if the Government gets rid of it, they’re going to ask how it’s going to be replaced. Tinkering with this would not be welcomed.’[1]

Continuing, Whittaker suggested that the buy-to-let sector was unlikely to see a surge in new lenders, should these potential changes be introduced.

He noted: ‘I think other potential new entrants will be sitting it out for a while. I certainly wouldn’t be looking to launch a lender into these unchartered waters.’[1]

Changes to mortgage interest tax relief plans unlikely

Relaxed

Whittaker also outlined his opinion that buy-to-let lending levels in general could relax in the next two years. Lenders getting to grips with the PRA’s requirements and the greater paperwork affecting portfolio landlords will become a burden for many.

‘In terms of gross lending I think we are looking at £40bn next year if we’re lucky; in 2018 we could then see a 10-15% drop,” he said. “I think the market will log-jam and lenders will take fright; some lenders don’t know where to start when it comes to collecting the paperwork required [by the new portfolio landlord rules,’ Whittaker noted.[1]

[1] http://www.propertyreporter.co.uk/finance/no-u-turn-likely-on-mortgage-interest-tax-relief-changes.html

Tax Hikes on Landlords Won’t Help First Time Buyers, Says the Public

Published On: October 25, 2016 at 8:27 am

Author: Em Morley

Categories: Landlord News

Tags: Autumn Statement,landlord taxes,mortgage interest tax relief,Stamp Duty,tax changes

Tax hikes on landlords will not help first time buyers get onto the property ladder, according to members of the public.

Tax Hikes on Landlords Won’t Help First Time Buyers, Says the Public

Less than 20% of the public believe that higher taxes for landlords will help aspiring homeowners buy their first property.

These figures come from a survey conducted by YouGov for the Council of Mortgage Lenders’ latest publication, Homeownership or Bust?

Of those that said that something should be done to make it easier for young people to buy their first homes, less than 20% said that the Government should introduce tax hikes on landlords.

The study completely undermines the argument made by the former chancellor, George Osborne, that tax hikes on landlords will make it easier for prospective first time buyers to purchase a home.

Landlords are currently facing several changes to their finances, including: Being taxed on their income rather than profit; a reduction in the amount of mortgage interest that can be offset against tax; and a 3% Stamp Duty surcharge on the purchase of additional properties.

The Government has compiled a guide for landlords on how the changes to mortgage interest tax relief will affect them: /government-guide-tax-relief-changes-residential-landlords/

Commenting on the findings by YouGov, the Policy Director of the Residential Landlords Association (RLA), David Smith, says: “These figures back up all that we have been saying.

“Recent tax hikes on landlords will serve only to drive up rents and reduce supply, making it more difficult for people to save for a home of their own.”

He urges: “With the wider public now in agreement, we call on the Chancellor to use his Autumn Statement to reverse these counter-productive measures.”

The new Chancellor, Philip Hammond, will deliver his first Autumn Statement on Wednesday 23^rd November 2016.

Hammond has already received calls to scrap Osborne’s tax hikes on landlords from various industry bodies, such as the Society of Licensed Conveyancers.

22% of landlords to be pushed into higher rate tax bracket from 2017

Published On: October 18, 2016 at 9:37 am

Author: Em Morley

Categories: Landlord News

Tags: buy-to-let landlords,mortgage interest tax relief,tax,tax rates

Around 440,000 basic-rate tax payers will be pushed into a higher tax bracket from April 2017, according to a new report from the National Landlords Association.

Current rules permitting landlords to offset mortgage interest against tax is being phased out from next year. As such, the amount of mortgage interest landlords can offset against tax when buying property is to be restricted.

Changes

The phasing out of mortgage interest tax relief will be complete by April 2021. By then, it is estimated that higher-rate tax payers will only receive 50% of their current relief. This will subsequently cut returns as landlords will be required to pay much more in income tax.

Worryingly, the National Landlords Association claims that while 440,000 basic-rate tax payers (roughly 22% of landlords), will be pushed up a bracket, all landlords could be at risk.

By region, landlords in the capital are likely to be worst hit, with 31% of investors estimated to be impacted by the changes. Next came the East of England (30%) West Midlands (28%).

The full breakdown of where landlords will be impacted is shown below:

Region	Will move up a tax bracket (from basic to higher rate)

East England	30%
East Midlands	22%
London (central)	31%
London (outer)	24%
North East	24%
North West	19%
Scotland	13%
South East	25%
South West	23%
Wales	23%
West Midlands	28%
Yorkshire & Humber	24%

[1]

22% of landlords to be pushed into higher rate tax bracket from 2017

Liability

Further research from the NLA indicates that landlords’ tax liability will rise depending on their yearly mortgage interest payments. These are broken down by portfolio size below:

Single property-£3,600
2-3 properties-£8,600
4-5 properties-£16,300
5-10 properties-£18,200
11-19 properties-£24,900
20 plus properties-£38,000

Richard Lambert, chief executive officer at the National Landlords Association said: ‘When the Government announced these changes last year, it claimed they would only hit a small proportion of higher-rate tax payers. We now know that is complete tosh.’[1]

‘The Government must look to amend these tax changes and minimise the impact on landlords and their tenants-something that could easily be achieved by applying the rules to only new loans written after April 2017. Unless this happens, landlords will face an impossible decision of whether to increase rents and cause misery for their tenants, or sell-up and force their tenants to find a new home,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/10/around-440-000-landlords-will-be-pushed-into-higher-tax-bracket-from-april-2017

Conservative Peer Attacks Tax Hikes for Landlords

Published On: October 17, 2016 at 9:18 am

Author: Em Morley

Categories: Landlord News

Tags: Autumn Statement,landlord taxes,mortgage interest tax relief,Stamp Duty,tax changes

A senior Conservative peer has accused the former Chancellor, George Osborne, of exacerbating the housing crisis through his tax hikes for landlords.

Conservative Peer Attacks Tax Hikes for Landlords

Lord Flight, who previously served as the Shadow Chief Secretary to the Treasury, has written an article on the Residential Landlords Association (RLA) website to warn all those in the sector that tax hikes for landlords will “drive up rents” and “drive out investment in the sector”, at a time when 1.8m new homes to rent are needed by 2025.

Lord Flight referred specifically to decisions to tax landlords on their income rather than profit and the higher rate of Stamp Duty on additional homes.

In his article, Lord Flight highlights evidence from the London School of Economics that challenges the previous Government’s claims that landlords are buying homes that first time buyers could have purchased. He also points out statements by the Institute for Fiscal Studies that landlords are taxed more heavily than homeowners.

The peer calls on landlords to lobby their local MPs, informing them of the damaging impact that the tax changes will have on the supply of affordable homes to rent, and encourage them to seek changes in the new Chancellor’s Autumn Statement on 23^rd November.

Recently, the Society of Licensed Conveyancers called on the Chancellor, Philip Hammond, to scrap Osborne’s Stamp Duty reforms in next month’s Autumn Statement.

Commenting on Lord Flight’s article, the Chairman of the RLA, Alan Ward, says: “Lord Flight’s analysis is correct. When we need almost two million more homes to rent by 2025, recent tax changes will choke off investment, increase rents and make it more difficult for tenants to save for a home of their own.

“The new Chancellor has an important opportunity next month to correct the previous Government’s changes to the way the rented sector is taxed. We call on him to seize this opportunity with both hands.”

Worryingly, landlords have revealed that the changes to mortgage interest tax relief are most likely to discourage them from investing further in the property market.

Which tax hikes for landlords are you most concerned about?