Jump to content

25% Rent increase


pop9770

Recommended Posts

Just bumped into my neighbours their landlord has given them notice of a 25% increase in their rent from April next year from ?1,000 to ?1,250 neighbours are from Brazil and asked me to read it to confirm what it meant.


The letter says it's due to the new George Osborne Buy To Let tax which starts in April next year, that they are increasing rents to all their tenants, for those who can't accept the increase they will sell the property next year to reduce their buy to let portfolio as they believe with their accountants advice any interest rate increases or other higher costs and they will be looking at running a loss making business.


I thought the Tory Government wanted to help the just about managing JAMs?

Link to comment
Share on other sites

The problem is that tax changes for buy-to-let properties were all about increasing the number of properties available for first-time or buy-to-live households - so benefiting JAMs in a different way. HOWEVER there isn't just one 'buy-to-let' tax. Allowances to offset mortgage interest against income is the most likely tax change making an impact here - the landlord is planning to increase rentals to offset the 'lost' tax allowance for mortgage interest as an allowable expense - the other change is to increase stamp duty on second (and subsequent) properties, but that should impact properties in an existing portfolio.


Selling off properties (back into the first-time and buy to live market) is exactly what the policy was intended to stimulate.


And note that Osborne belonged to a previous administration not focused (at least in PR terms) on JAMs - so he cannot be blamed (even incorrectly) for instituting a change which might impact a policy not of his making and not part of his remit.

Link to comment
Share on other sites

Absolutely typical of stupid, ignorant politicians and the Law of Unintended Consequences. Just like the present crazed levels of Stamp Duty which have slowed the sales market so much. Would you rather move for more space and give ?50,000 plus to the daft Government to waste, or extend into the attic? No brainer.
Link to comment
Share on other sites

JAMs will mostly never be able to afford to buy their own home they are always going renting.


This is a crazy tax


I agree the stamp duty tax is also counterproductive


Free market economics are dead this Tory government are as bad as the looney left for the JAMs.



Insane

Link to comment
Share on other sites

This will benefit other areas outside of London as people will look further afield if they are renting. London has destroyed itself with the help of greedy landlords who have been allowed to flourish at the expense of the children of Londoners. All that has happened in the past 15 years is that, for one thing, the business of care for the elderly in their own homes has increased exponentially because young people have moved away in order to buy. That in turn has pushed up prices in other areas so that their children cannot afford to stay in the area....and so it goes on- so much for free movement
Link to comment
Share on other sites

Lets be clear. This isn't a new tax. It is about removing an exemption from paying as much tax. Tax payers have been subsidising the income of people who buy properties to rent them out. The interest payments for buy to let mortgages for such rented properties were tax deductible. It encouraged buy to let businesses to maximise loans because the tax payer paid the interest. This perverse incentive resulted in much more demand for properties to buy forcing up prices.

WE need to see less demand for properties to buy and more supply to see average homes prices down to the long-term historic trend of 3.5 times average income. Sadly I don't see sufficient policies from this government (or any over the last 30 years) to rectify this huge imbalance.

Link to comment
Share on other sites

James Barber Wrote:

-------------------------------------------------------

> Lets be clear. This isn't a new tax. It is about

> removing an exemption from paying as much tax. Tax

> payers have been subsidising the income of people

> who buy properties to rent them out. The interest

> payments for buy to let mortgages for such rented

> properties were tax deductible. It encouraged buy

> to let businesses to maximise loans because the

> tax payer paid the interest. This perverse

> incentive resulted in much more demand for

> properties to buy forcing up prices.

> WE need to see less demand for properties to buy

> and more supply to see average homes prices down

> to the long-term historic trend of 3.5 times

> average income. Sadly I don't see sufficient

> policies from this government (or any over the

> last 30 years) to rectify this huge imbalance.


I've had a look at this and James what you say doesn't make any sense.

From what I've read searched there has never been a tax so how can there be an exemption?

Have you convoluted confused this with something else or is it an old wives tale?


All other businesses investment or otherwise have been able to offset loan costs against profits maybe I'm wrong but this looks like government are targeting the property business as being somehow different so messing with the "free" market.


Regardless it's looking like a bad idea for the JAMs who are going to see rent increases and a bad idea for the property

market which could collapse and set off a UK recession which would be even worst for the JAMs as they're the first to suffer.


James if you think that's a good thing, thank the universe the your lot aren't in government, mind you this lot as as bad.


I remember 15% interest rates and property prices dropping by 1/2 their value in the late 80's this is looking like a similar balls up expecting years of recession driven by a property price collapse it was the Tory's who did it in the 80s too history repeating itself ??



Edit to add JAMES exactly how have tax payers been subsidising the income ?

Please show us the maths?

Link to comment
Share on other sites

Our landlord has done the same, though with no mention or excuse of taxation, they simply referred to the market and the fact that they have heard they should be getting a lot more money.


It's beyond our means. We're leaving and fortunately have family close by enough for our children to keep going to the same schools - otherwise there is nowhere we'd be able to go within miles and miles.


To compound the utter bastardy of his position he's given us notice to leave in January despite initially agreeing to let us stay until Feb / March when the building work in the house we're going to share with family will be ready.


So, a greedy, mean bastard but also, it seems, a stupid one. He has failed to protect our deposit so his section21 notice is unenforceable.


For him it's all about the money so we'll apply for the up to 3x deposit compensation that's available to us under the law.


As a tenant I'm thrilled that the rentier class are being deprived of their lazy income stream.

Link to comment
Share on other sites

Hi pop9970,

I thought I was clear that no new tax is being proposed. What is being implemented is removal of the ability to deduct buy to let mortgage interest payments from buy to let businesses tax bills as it has been for a number of other such exemptions. The general idea of this type of interested tax deduction has been used resulting in other unintended consequences such as Thames Water being bought by private equity, they borrowed huge sums resulting in higher water bills to pay this avoidable interest - and huge dividends extracted from TW. Number of others have done this including Boots for example.


The actual idea for the ability to reduce tax bills by the amount of interest a business pays was aimed at encouraging businesses to invest to boost productivity of businesses and to grow businesses. If this concept is going to continue it needs to be honed to truly support productive businesses only.


As a society we need dramatically lower property prices. But continuing to subsidise buy to let mortgages isn't a method to get there.

Link to comment
Share on other sites

No, I'm across the news and the implications and I still whole-heartedly wish the amateur landlords polishing their pensions and turning houses into investments not homes a cool bitter financial wind. Or certainly proper rent controls and improved tenant rights. I;ve friends who are landlords in Berlin. The rent they charge is capped and they can't evict unless they can show they are moving in themselves. They feel this is absolutely fair.
Link to comment
Share on other sites

I find all this talk of greedy landlords is nonsense

They're about to go from making a small profit on their rents to making a loss.


Also what is the alternative for JAMs do they rent miles away from London which makes London even more elitist or do they rent from a large corporate landlord who will charge even more because they have share holders who require x percentage return on their investment?


It's a bad tax and it's going to create havoc with property prices and the economy.



The question is is the current system broken.


I think the only element of the property market which is broken is lack of supply.


Hitting small landlords and giving the advantages to large corporations is a bad move.

It only results in concentrating wealth in fewer and fewer hands.


Soon almost every rental property will be owned by just three professional landlords.


That's what has happened in banking supermarkets phone providers fuel utilities.


It's not a good solution for prices or progress for JAMs or the rest of the population.


I believe free markets are best not ever increasing bias towards corporate capitalism.


This tax is another main in the coffin of free trade it's bias is away from small landlords in favour of banks and big landlords .. Horrendous


Here comes McLandlord ..


Insane

Link to comment
Share on other sites

To hear landlords bleating that the removal of this tax break means they have to increase rents sticks in my craw.


It's a matter of supply and demand. The number of people needing somewhere to live in London is X. The supply of housing is Y, either rented or owned. The supply and demand haven't changed, so all the tax should do is move the demand from renting to ownership. It won't happen instantly - landlords may try to increase rent - but in the end, if the market can't afford rent landlords won't receive it, will have to sell - and property prices might even fall a little, as supply of houses for sales increases.


And by the way, I'm a landlord (lady?) who thinks many renters get a shocking deal and that the buy to let changes have been broadly a good thing. (Though I'd be more in favour of adding an extra couple of council tax bands at the top end).

Link to comment
Share on other sites

I thought I was clear that no new tax is being proposed.


I think it's fair to use as a short hand the removal of an exemption/ allowance (and interest charges to be offset against business revenues has always been an exemption) as a 'new' tax. It is certainly a new extension of tax into an area previously un-taxed. I suspect that where the rentier incorporated his/ her business so that the properties belonged to a registered company, then interest charges may still be exempt from taxation - the encouragement for the big beasts would be to do so in an company registered abroad. And of course taxation would be at company tax levels - shortly to be below basic rate (but without the tax-free allowance). If interest rates rise then this would be interesting as a tax position - even where you would be paying both corporation tax and then (presumably) Dividend tax for dividends over the new tax-free limits.

Link to comment
Share on other sites

James Barber Wrote:

-------------------------------------------------------

> Hi pop9970,

> I thought I was clear that no new tax is being

> proposed. What is being implemented is removal of

> the ability to deduct buy to let mortgage interest

> payments from buy to let businesses tax bills as

> it has been for a number of other such exemptions.


You politicians have a weird way of looking and twisting reality.


Interest on property loans has never been taxed.

So This is in effect a new tax.


Anyone knows that taxing something has never made it cheaper. Be clear This is an increase in tax on rents by the back door as we are seeing it is resulting in higher rents.


If you can't see that there's no hope for any of us.

It is an idiotic tax harming the JAMs.


A property price collapse will halt construction and make it even more difficult for buyers as banks restrict loans into a falling market.


The future impact on the wider economy will hit just as hard on jobs in construction and property services as the large corporate landlords fill the void and cut costs to the bone whilst increasing rents in a market which will be dominated by fewer players.


How anyone can think taxing anyone out of business is a good idea is beyond me.


The same brains who told us interest rates would increase after brexit are doing the maths on this crock of ?hit.



It's blindingly obvious rents are increasing ... To everyone except you ?


Even if property prices fall the Mortgages need to be paid and only by increasing the rents will that be possible.


Or have I got my maths wrong?



I am truly shocked by the lack of logic on this idiotic tax until I remember it was a George Osborne policy. The man is an elitist moron of the 1st degree he makes Mark Carney look like a genius.. And we all know Carney is just a lucky chancer who ends up in the right job at the right time aka a lucky ba?Tard.


Competition to make Norman Lamont look like a genius .

Link to comment
Share on other sites

This change in tax law is aimed not at benefitting tenants, first time buyers, those renting but unable to buy, or landlords - but simply to increase money to the ex-chequer.

Impacts on anyone affected are entirely irrelevant and merely a consequence.

The Govt is broke and is closing every loophole it can to screw every penny out of the population and businesses, if the Govt was flush this measure wouldn't even be on the horizon, there's no 'fairness' angle intended.

Link to comment
Share on other sites

DovertheRoad Wrote:

-------------------------------------------------------

> I have it on good account that rents on flats are

> actually starting to fall slightly in East

> Dulwich. More and more people seeing better value

> in other nearby and less family orientated areas.


Nonsense bawdy-nan and my neighbours are not seeing that clearly there's an impact.


As this new tax only comes into effect from next April this looks like the beginning of the increasing rents.

Some landlords are getting going before the changes and likely property price collapse.


In my experience when a Tory government messes with the property market it always ends in disaster.

Link to comment
Share on other sites

Let's not overlook the number of properties bought via oversees with no clear indication of where the money came from (i.e. profit from crime laundered in London property market).


Coupled with tax free profits, there are many oversees buyers forcing up prices (able to pay higher costs) and reducing demand.


Property - not JUST new builds = should be prioritised to UK owners as other counties do.


There is new legislation afoot to challenge buyers to prove their cash is clean if oversees money, but will this actually force sales?

Link to comment
Share on other sites

We have a two tier property tax system.


One Benefits foreign investors and large corporate landlords

The other Is disaster for JAMs and the average British tax payer and SMEs




James Barbers logic is typical of the political classes.. Who have no understanding of how business works and they pander either knowingly or blindly to the corporate world which is supported by the economic "intelegencia" who work for the corporate capitalist system.



As I said above its Idiocracy The movie now today in 2016





Trump Brexit Corbyn all point towards idiotic population and idiotic political leaders...


Bizarre

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Latest Discussions

Home
Events
Sign In

Sign In



Or sign in with one of these services

Search
×
    Search In
×
×
  • Create New...