The banks and the taxman, your two favourite people

This tax change thing keeps growing, as people begin to realise the implications of George Osborne’s tax hike for landlords in the July Budget.

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The Telegraph story today explains how the banks (through the Council for Mortgage Lenders, the CML) are responding to what the taxman is doing. They don’t see the issue the same way.

Read the Telegraph article

Here’s our take on it: all landlords who are higher rate tax-payers will be hit by this, and hit harder than people currently understand. Many landlords who are not higher rate tax payers will be hit just as hard because the way the tax hike is implemented can drag someone below the 40% bracket slap bang into the higher rate.

What’s the impact on you? Depends on your own figures, I’m afraid, so it’s hard to be definitive, but we calculate that some predictable “average” circumstances – based on an average loan, a current interest rate, and a local average rent level – will cost such an “average” landlord around £100 a month. It could be dramatically more if your loan versus your rent is out of line with this calculation.

In such a scenario, why would the landlord not increase the rent – how, in truth, could he avoid doing this? So how, for goodness sake George, does this help tenants? How does it increase the supply of properties available to tenants? Does it actually increase the stock of properties available to first-time buyers – never seen that supposed correlation between landlords buying houses that were meant for first time buyers actually being proven to be true – landlords buy at the market rate, same as every other potential buyer (this is not such a burning hot market that prices are getting away from ftb’s because of landlords snapping them up, not here at least!)

So, to chat about where you stand, how it might affect you as a landlord, to get thoughts on how best to prepare, and to see how beneficial the Guaranteed Rent Scheme from Northwood Leicester actually is (it helps you in more ways than just guaranteed rent!), come and see us. We’re here to help and to offer thoughts, as experienced landlords.

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