Extra tax for landlords

[Another2356]

Here is the rub, I earnt my money through PAYE and paid tax, I then invested what I earnt into property and now my investment is being taxed again but at a higher rate of tax! This does not feel fair and whilst in the past I’ve provided property at below market rates, moving forward I will not. Adjustments will now be made and hence again tenants will be impacted. Over the last 9 years, any rent increases I have made have simply covered the extra cost of managing a rental (tax, regulation & maintenance) my net profit has not increased, although the rents have. It’s the government who are creating the rent increase problems.

I get you. I obviously don’t know your situation but would it be better selling? We left the UK last year (after labour got in) and couldn’t decide if we should sell or keep our house but ended up selling it because it was just too much up in air and with husband having to pay tax already on earnings it just wasn’t worth it.

Poster, it’s much to your credit that you’ve provided your property at below market rates but not many landlords are so generous! It is my understanding that the disproportionate use of property as investment has distorted the market and contributed to the housing crisis so I do understand why the gov have taken this decision.

@SarkyMummy , I don’t believe this will apply to corporate landlords as the additional 3% stamp duty does not. People will always need to rent so landlords are supplying a service. Why penalise small landlords and not the big corporations?

You own multiple properties. Half the country can't afford to own one. So yes, it is appropriate that you pay more tax. That's how society works. Spend a bit of time counting your blessings instead of the rent your taking in.

They only want corporations to own rental properties.

They want everyone renting as well. It's ideological and also meets the demands of the banks and corporations. An ongoing, guaranteed source of income. It's their wet dream.

Tenants are going to suffer even more because of this. There will be fewer rental properties available and the ones that stay on the rental market will become even more expensive.

I'll do what other LL's do each time government increases the burden on LL's increase the rent to cover new NI payments. It will just mean my rents are no longer slightly under market values. Once other LL's also increase rents I'll probably still be under market values.

I am a landlord, and in principle, I agree with the change. That said, I don't make enough on my rentals, so will either have to increase rent, or sell. With the other impending changes, selling is the best option for me.

If there will be fewer rental properties, what is going to happen to those other properties that were previously rented out? Will they go 'poof' and vanish?

The original money you invested in property is not being taxed again. The only part that is being taxed is your gains. I'm in the same position and I think it's fair.

No, they’ll be bought up by corporate landlords who will hike rents and with whom tenants will have minimal contact when there’s a problem 🤷🏻‍♀️

Institutional and/or overseas investors will hoover them up. Arm's length management and increased rents will follow.

We have a couple of rental properties, we charge 15% below market rent. Money I will be losing following the budget today, will be passed on to our tenants. Harsh but that’s reality and is what the majority of landlords will be doing.

agree, it will be a huge problem and will have an horrendous impact on renters.

So there won't be fewer rental properties.

My tenants have decided to move out, so I'm selling up. The only reason we kept out btl was because I couldn't face eviction. I needed to keep my foot on the property ladder while we rented for work ourselves. The choices are to get into a business mindset or leave. If we did re let it, the rent needs to go from £1100 to £1500. If we didn't move to market rate asap we would be in big trouble come the renters reform changes. That's the brutal reality. If your not brutal ( we arent) it's really really time to get out.

I doubt there will be fewer but the cost of rent will increase significantly as they will be wanting a higher return on their investment as these will be very large companies controlled by very wealthy shareholders wanting their big slice of the profit pie.

It’s the same with cash.
The cash you save outside an ISA, which earns interest at a rate above your savings allowance, is now subject to an additional 2% tax.

Rinse & repeat for dividends tax.

It’s being professionalised. Being a landlord can no longer be a side hustle.

You can sell your properties presumably at more than what you paid for them. . All is not lost

No but they will be occupied at a lower density rate so overall less homes will be available.

And unless measures are taken to force lenders to grant mortgages to people many people who used rent won't be able to buy and could risk being homeless.

I have thought about selling and leaving the UK but my mum is really poorly AND honestly I feel a responsibility to my tenants. When i do finally sell in the next 8 yrs, I plan to give any long term tenants the opportunity to purchase by giving them a 5% equity share of the property as a deposit (depending upon tax rules at the time), & no this is not just being ‘kind’ it avoids estate agent fees, void periods during the sale & I don’t need to prepare the property for sale…. Therefore, i’m more than happy to pass this cost saving onto the tenant to give them a chance of owning the property.

I rent out below market value and this cost will be phased in on to the tenants when I renew next year so I have fully covered the extra by April 2027 when it comes in.

or I’ll sell not sure yet.

You are NOT being taxed twice. This is a fundamental misrepresentation of the tax system. You are being taxed on your gains

Yes there will
Its my job to help people find rentals and its HARD, my clients have good salaries and no adverse credit so are good prospects for a Landlord and its STILL hard.
They are mostly moving here from overseas and from what they tell me the UK seems to be the hardest place to secure a Rental.
Even getting viewings is a challenge - in some places if I arrange viewings on a Friday for the following week up to 50% will cancel on Monday so even if you do find somewhere you have to move quickly.
Renters Rights are great but no good if you can't find somewhere to rent.
I have certainly seen a move to larger more corporate landlords and they prefer not to rent to families if there are other options