Completely Crackpot”: a view from Lord Flight about new taxes on landlords

Just released is a video highlights package from the Tenant Tax Summit in London, back in June.

As a landlord I attended, partly gauge the support from the landlord community for the whole issue, and partly so that I could inform you, landlords who may be unaware of the massive impacts of the new “Section 24” tax impacts on ordinary landlords.

A quote from Lord Flight, former Shadow Economic Secretary to the Treasury: “I’m horrified to find that quite a lot of MP’s didn’t know anything about it”. The problem is, so few landlords also know anything about the tax rises: so far, 0.0015% of the approx. 2 million landlords in the country have supported the cause to attack the tax changes and are aware of the issue.

As the speakers said at the Tenant Tax Summit: landlords are “…currently sleepwalking into disaster”

Anyway, here’s the video

There’s a lot of commentary around this whole issue in the “Axe the Tenant Tax” summary here:

I really strongly recommend you read it – I know, it’s tax and it’s therefore dull, it surely doesn’t affect me, it’s done and dusted – I can’t affect it, I’ll just pass on the cost to tenants. All expressed commonly by landlords and agents, and all basically wrong.

In coming blogs I’ll pick up on these points and try to demolish the arguments: for the moment, just focus on yet another impact – if you need to or intend to take out a buy-to-let mortgage now (for instance, if you already have a mortgage and need to re-finance that facility) the lenders rules are changing as a direct result of the tax change. As Mortgages for Business point out, “…The rationale behind the new calculation is that landlords borrowing personally are likely to pay more tax than previously due to the changes to mortgage interest relief, so lenders have to tighten up their exposure to ensure responsible lending.”

On a buy-to-let loan of, for instance £190,000 with around £12,000 a year of rental income, a landlord could now be in a position to only raise around £150,000…on exactly the same rental property as before, at the same rents, with the same tenants. Imagine having to fill that hole in your funding of your buy-to-let from your own cash instead of in your loan, or having to put down that much more deposit. It’s just the impact on you as a landlord because you will pay massively more tax in future.

It’s all complex and it’s frankly wholly unfair on landlords – why does the Government think providers of housing for maybe twenty percent of the population deserve this retrospective change to the reasonable presumption that they could fund and rely upon a bricks and mortar investment?

At the risk of droning on about this whole issue I will return to the facts in bite-sized chunks in coming times, but for the moment landlords in Leicester should comment at our Facebook page And contact Northwood Leicester for help and comments on whatever is your personal situation when renting in Leicestershire..

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