Wrong landlords getting targeted!

[Guiltydilemma]

I know as a landlord I'm unlikely to get much sympathy but feel that myself and my husband are in that bracket that always end up giving to the economy but never getting anything out of it and the the new tax rules for landlords are just the icing on the cake!
We both work and earn just enough not to be eligible for any tax credits and live in a very expensive city which is where we grew up. Average house price for 2 bed flat is about £300k!
We inherited a little money and decided to invest in property as this is the only way I can foresee us being able to help our kids on the ladder, help them if they want to go to university etc. without our help to live in the area they've grown up it will be impossible. we don't earn much and don't get any help from the government apart from child benefit despite our small flat costing 9 times what our combined salary is. We have high mortgages on our rental properties and residential home and now the government is going to screw us over taxing us to the hilt on these! On the other hand my friend who has several buy to let properties mortgage free is going to be unaffected by the new tax rules! How is that fair!!! For this that aren't aware of the way the new rules are going to work the government are going to decrease over the next few years the amount of mortgage interest you can offset as an expense! Grrrr

[wasonthelist]

This government is all about really wealthy people, not the sad aspirants who voted for them.

[whois]

Yeah it's bullshit. If you took out a loan to buy, say, a tractor - and leased that, you can offset the interest as a business expense. It makes no sense to say that interest is tax deductible, apart from if you are a BTL landlord.

[tootsietoo]

Hmmm. I think perhaps they are trying to reduce demand from buy-to-let landlords to help the housing market but it seems to me that there is only a small number of btl purchasers who have such large LTV ratios that the tax will affect them.

Have you actually done the figures? There is a 20% relief (don't ask me to explain, I am not a tax person!) but when I plugged our figures into an online calculator the restriction of relief on the mortgage interest payments actually didn't impact on us at all, and we are mortgaged at about 65% on properties worth around £100k. Have you got an accountant who could help you with this?

[thecitydoc]

the upsurge in BTL properties is fuelling the huge increase in house prices. The Govt/BoE is trying to take the heat out of the housing market before it explodes. I agree with next to nothing this shower in Govt does but this is one area - the housing market needs to be controlled. BTL landlords currently receive tax relief on mortgage payment - residential buyers do not - that is unfair.

[Owllady]

The rest of us aren't all claiming benefits either you know
Surely this was the risk you took? I'm not meaning to sound so unsympathetic but it's a risk you take with any investment, they can be subject to loss and tax changes.

[Pradaqueen]

The reasoning is to make the system equitable between those landlords who cannot claim relief as they have no mortgage and those who have chosen to borrow. And as a pp said to slow down the BTL demand which is skewing the market. The introduction was not overnight, it was announced at last year's budget so you could have disposed of the property and invested elsewhere. I think you are unlikely to find any sympathy OP given that you are complaining about being in a better position than most but I understand that you might not like it.

[suzannecaravaggio]

If you had borrowed to buy stocks and shares you would not be able to offset the interest on the loan against your tax liability
Its only rational to apply the same rules to property investment

Borrowing for the purposes of speculation is usually regarded as foolhardy in the extreme...you made a bad decision in borrowing to invest, your friend made a better one by investing money that she already had

[suzannecaravaggio]

Lamblords to the slaughter
I'd get out now before the real throat slitting starts

[Guiltydilemma]

Thank you. We have already paid out about £20k in stamp duty and legal fees and would need to folk out more to dispose of the property. My friend is older than me and is fortunate that she's had more years to pay off mortgages and benefit from mortgage interest relief. Surely the extra 3% the government is going to be enough to deter more buy to let purchases without shafting those with buy to let mortgages.

[suzannecaravaggio]

Stitched up good and proper innit

[Guiltydilemma]

Owllady- when you say the rest of us aren't claing benefits are you talking on behalf of everyone??

[londonrach]

Tbh as someone who struggled to buy just the house im living in due to buy to let market in my area pushing prices up i think its a good thing. One less property owned by a buy to let landlord is only a good thing. If its a struggle to afford both properties sell your buy to let.

[BumbleNova]

erm why dont you sell it and invest the money? its not the only way to get capital gain and/or income?

sorry - but really I think BTLers need to stop whinging.

[CockacidalManiac]

This government is all about really wealthy people, not the sad aspirants who voted for them

Well, exactly.
I'm sorry, but if you want to play the casino economy, then you take the risks.

[Guiltydilemma]

To be honest I go against the stereotype and I'm a nice landlady that would feel guilty having to kick out a couple of single mums and their children from my properties.

[Guiltydilemma]

Not wanting to play casino and make loads of money for myself...
I want to try and provide for my kids as they otherwise won't be able to live in the city they were born in.

[EssentialHummus]

We have high mortgages on our rental properties and residential home

Why? Can you remortgage at least the rental properties, as there are very good deals about? Or is it that the interest rate is fine but because of the property price your payments are high? If you paid £20,000 in stamp duty I assume the properties were not cheap.

I don't know OP - as a landlord of one house, I'm struggling to understand why you bought what you did (it sounds expensive). Can you say more?

I don't see the government's fiddling so far having much effect. Yes, LLs pay more stamp duty and get less interest relief, but rents seem to be rising along with property prices, and it looks like a lot of LLs are buying through companies / shifting things between spouses and families to avoid getting caught. I think the government is trying to placate voters, and yes, small landlords will be disproportionately affected, but there's so much hatred to landlords that for the proverbial baying mob that will be enough, even if the net effect is harmful to tenants too.

[Owllady]

No I wasn't talking about 'everyone' but surely most families aren't claiming anything either, we've never claimed tax credits at all. I get it, We've always put in and not got much out, but that's life. Welfare should be there to support the poorest and most vulnerable

[JeanneDeMontbaston]

I do think it is fair to feel bitter that there is such a huge gap between the very, very wealthy, and people in your situation.

But in some ways, you are fortunate. You get help such as child benefit. Your children would, if they went to university now, be eligible for a loan and a subsidised degree (and we don't pay the full whack of what university costs, in this country). You have been able to offset some mortgage interest as an expense.

There are a lot of couples like you, where both people work - and work very hard - but live somewhere more expensive, or didn't inherit money. God knows that's not your fault, but IMO the only solution is to try to get a government who are not primarily in it for the rich.

[Guiltydilemma]

mortgages are a lot but so are the rents so the figures added up. The properties are local so can be managed by ourselves rather than paying agents.

Am being unreasonable then? Should it just be the newbies to the markets like me that get shafted tax wise rather than those that are mortgage free??

[BumbleNova]

sigh. OP - the person who receives income and does not have a mortgage on a buy to let is still getting taxed on the income. the only change is that now the mortgage interest is not tax deductible - it would not have affected their income in the first place.

since you have more than one BTL and are holding FTB properties out the market, yes I think you should stop complaining.

If you hate the new taxes - sell and invest in something else.

[icklekid]

It depends where you live, I couldn't afford to live in the town where I grew up in as a graduate on a good salary. I've never claimed benefits and neither have my parents but then neither of us have ever been in a situation where we could afford a btl either. I'm sure somewhere in the country you could buy mortgage free but instead you've used it on a property you have a large mortgage on. I'm afraid being a landlord is a luxury and whilst the tax benefits were good they are unfortunately changing

[BarbarianMum]

Despite what the headlines tell us, making money (ethically, not as a slum landlord) out of buy to let is difficult in many parts of the UK. It certainly isn't a short-term investment where someone else buys a house for you.

Forget all the 'we only wanted to help out our children' emotional stuff. BTL is a business decision. Do the sums and stay in or get out as the market dictates. You presumably costed in the potential for interest rate rises, so you must know the cost/income parameters of your property.

[MissWimpyDimple]

In the city I live in, as soon as a property comes on the market which would be in any way affordable as a first home, it is snapped up by buy-to-let investors. This has to stop.

They also clog up the property ladder as they are unlikely to sell up and upgrade.

Sorry but I think you are very fortunate and not typical of the "squeezed middle". I don't know many people with a property portfolio.

Suck it up. And if you don't like it, then sell the properties to families to actually live in and better their own situations rather than paying off your mortgage. I love it when landlords try and claim philanthropy.

[Bearbehind]

You're not comparing like with like though.

In the example you quoted your friend would currently have being paying tax on the full profit without offsetting interest costs as there were none as the properties are not mortgaged.

All that is happening now is you will no longer be able to off set the interest but this is only relevant as your property is mortgaged - the friend is unaffected by this change but they aren't gaining from it.