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.

Oh how are you going to magically make it possible for people to get mortgages??

they'll just get bought up by faceless corporates who will put up the rents.

I believe that the RRA becomes effective 5/26. Until
then your current tenancy agreement will apply so I would check if it allows rent increases. Even if not and if you do not agree with a proposed increase your L/L can serve a s13 for an increase. This is the tool that your L/L would likely have used if you had objected to the previous annual increases and your contract didn’t provide for increases.

Under the RRA, it doesn’t matter what your contract says, all
increases are triggered by a s13 notice. The tenant can challenge the increase but the tribunal will consider market rents in its decision which will be lower than or the same as the proposed rent but not higher.

This 2% increase is bad for
tenants
and
local councils
Tenants because landlords will have to increase the rent to cover it
Councils because they will need to top up rents via UC ( if within local threshold calcs)
Landlords because they could lose good tenants if they still can’t afford the increase rent if councils don’t cover it

Its quite mad

Nevertheless OP I would say that currently you do not pay national insurance on rental income

Savers also have been hit with this 2% increase making planning for the future almost impossible these days

Some are
They are buying from desperate sellers that can’t shift older rental stock
They buy at a reduced price and build their portfolios

Standard houses, flats etc

They wouldn’t have to sell to a corporate landlord.

Yes you’re being taxed on income generated from an investment - why is that outrageous and making you want to leave the UK? If you had invested the money into shares then you’d get taxed on the dividend income too.

You’re not being taxed twice, you’re being taxed once on the new income that is generated.

Here is the rub, because of people like you house prices have rocketed. Pay your way.

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!

No - the only thing being taxed is new income or gains on the investment, the not the original investment itself.

You're only being taxed if the money is making you more money. The money you invested, that has already been taxed, isn't taxed again.

Why should you be allowed to deduct mortgage interest? No one else buying a house is.

Mortgage interest deductions allow landlords to lever up more than owner occupiers and enables landlords to outbid owner occupiers. Its obvious why it should be removed, its to remove the advantage from landlords over owner occupiers.

Corporate landlords do pay additional SDLT. I have a company that owns properties and I pay the additional charge. Why do you think they don’t?

Why? The income is the same whether the property is financed or not. The profit may vary, but that’s the same in any business. Why should someone be penalised for not financing a property by effectively paying more tax than someone who doesn’t? A non-financed property also means less pressure to raise rents, less chance of upending tenants because the mortgage rates have risen etc. I realise I’m in a fortunate position not to need to finance, but these properties have been purchased from earned income, I’m not an accidental landlord and I haven’t inherited anything. The buy to let boom was fuelled in part by the fact mortgage interest payments were deductible.

This

Yep. Big miss from the government on this one. No idea why this loophole wasn’t closed.

You’ll have to post some evidence that Grainger, Lloyd’s or Blackstone own Victorian terraces in Hartlepool or Stockton or Derby.

But it will be worse and more expensive for the renter!

What loophole? Section 24 introduced in 2016 disallows mortgage interest to be claimed as a business expense.

It’s mad because for all other purposes, landlords are treated as if they run a business.

For some small landlords, it means 100% plus of their profits are paid in tax. So they sell and rents go up.

If people want homelessness while the government sits in its arse not building social housing then fine. Because that’s what we’ve got.

This government has taxed us into lack of productivity. A friend who rents out a property is now going from five days a week to 4 days a week in her job because she makes more money with her job and the rental property that way.

Now let’s all watch rents get even higher. And the Turkeys who voted for this Xmas complaining even more profusely without realising what they’ve done to themselves.

I am making a loss on my rental but still pay tax on the rental payments. Mortgage payments don’t count towards costs that are deducted. I’m selling and also paying capital gains tax. It’s not a wise investment anymore

Rents will go up, that is the one certainty in all this. Lots will be evicted before then though, before they introduce an end to ‘no fault’ evictions. Well done, Labour.

Yes - mine goes on at the market rate every time a tenant leaves. But once the tenant is in, I don’t raise the rent. So the longer they stay the better value it is.

This means I hope my tenant leaves when this AST is up next year as otherwise I’ll have to break my rule and increase it and it pisses me off.

The license (that our genius Chancellor “forgot”), the increased buildings insurance plus various other fees (the other fees I don’t mind), new floor because she (tenant not Rachel Reeves) left the bath running on a phone call, the ceiling for the downstairs flat being repainted etc etc.

I keep the flat in case I divorce. But it’s not the money spinner people think.

This budget was the final nail in the coffin for the BTL business. You are better off investing in shares through a SIPP and ISA now.

There is a reason I sold up my BTL* a few years back. The writing has been on the wall for about a decade in my view. I am in Scotland, so we already had much tighter rules about lettings.

I know a good few landlords, including one with 10 student properties in a city, who have over the last few years when it was clear Labour were going to win, have slowly been selling up and investing elsewhere.

I'm selling up. It's just not worth it anymore. My BtL mortgage is double what it was. Regulations are incredibly onerous. I've had bad luck with tenants not paying or trashing the place. As soon as this tenant leaves I'll sell, at auction if need be.

Oh and my property would make an excellent HMO, well located for commuting, ample parking, so likely a company will buy it and move 6 people in, that will piss the neighbors off. I’m making a loss due to BTL mortgage rates, I pay all taxes due on rent payments and I will have to pay 26% capital gains tax.

No idea where the family that rent the property will live because there’s very few rentals in the area and they have DC in schools here.

The winners will either be the banks through mortgage interest if people buy to live in or the corporations. The corporations will have email address for reporting issues and every thing will be basic.