Another BTL lender changes criteria ahead of new portfolio rules

By Graham Norwood

Accord Buy To Let is the latest lender to change its lending criteria for portfolio landlords with four or more investment properties, in accordance with stricter underwriting standards being introduced in the autumn.

Accord will assess the financial strength and competency of a portfolio landlord by taking into consideration their experience in the buy to let market, their full property portfolio and any outstanding mortgages along with their assets and liabilities.

All background properties must collectively meet a minimum rental calculation of 135 per cent interest coverage ratio at a stressed rate of 5.0 per cent.


This brings it in line with Bank of England Prudential Regulation Authority requirements for more thorough underwriting standards for ‘portfolio landlords’ with four or more mortgaged properties. All buy to let lenders must implement the new standards by September 30.

There will be no changes to Accord’s loan to value limits, maximum loan size or minimum income criteria, while stress rates and the number of properties accepted will remain the same.

Last week we reported on similar changes introduced by Paragon Mortgages.

https://www.lettingagenttoday.co.uk/breaking-news/2017/7/another-btl-lender-changes-criteria-ahead-of-new-portfolio-rules

Tax rises targeting landlords end up hurting tenants, says ex-BoE policymaker

By Marc Da Silva

The government’s decision to increase taxes for landlords over the past 18 months or so have been described as ‘profoundly wrongheaded’ because they will push up costs for tenants, according to ex-Bank of England policymaker, David Miles.

The government has attempted to create what the former chancellor George Osborne described as a “level playing field” between landlords and those buying homes to live in, by increasing taxes for landlords such as hiking duty costs, cutting mortgage interest relief, scrapping the ‘wear and tear’ allowance, among other measures. But Miles points out that this has left many landlords with little alternative but to pass costs onto tenants by pushing up rents.

The economist, who is now a professor of financial economics at Imperial College London, fears that fewer people will be willing to invest in the buy-to-let sector as a consequence of the tax changes, which will have a negative impact on housing supply in the PRS.

“I think these measures were introduced in order to try to help make housing more affordable for people who want to buy them, I think they are almost certainly wrongheaded,” said Miles at an event hosted by New City Agenda.

“I suspect that they will have a negative impact on the ability of young people to become homeowners, because those people are in the rented sector already.


“Making rental property more expensive, as is very likely if you reduce the attractiveness to suppliers of rented property, if a side effect of that is to make rents even higher, it is very hard to see that as helping the people who you are trying to help become homeowners.”

https://www.landlordtoday.co.uk/breaking-news/2017/7/tax-rises-targeting-landlords-end-up-hurting-tenants-says-ex-boe-policymaker

Landlords selling up as buy-to-let tax changes begin to hit

By Marc Shoffman

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Evidence may be emerging of landlords selling up as their profits dwindle.

In April, the phasing out of relief on mortgage interest was introduced.

A survey by insurer Cover4LetProperty found that 11% of tenants have had to move as their landlord had sold up.

This was the first time this has been quoted in the annual survey as a reason for tenants moving.

Overall, almost half (49%) of 100 tenants surveyed said they have moved in the past five years, with 27% citing the cost or wanting to live in a different area.

The number of tenants complaining about the condition of the property declined from 19% in last year’s survey to 14%.

Another 8% wanted more space, while 5% did so because they were not allowed pets or did not get on with the neighbours.

Just 3% blamed poor relations with their landlord, down 3% from last year.

Richard Burgess, director at Cover4LetProperty, said: “Our survey this time highlighted two standout results for us.

“Firstly, that tenants moving due to bad property conditions has decreased, suggesting that let properties are being improved and invested in.

“For the first time, we see that tenants are moving because landlords are selling up.


“While this could be simply due to landlords realising profits in their property, it could also be that increased legislation and fees are making it much more difficult for landlords to make a sustainable profit. Only time will tell if this trend continues.”


http://www.propertyindustryeye.com/landlords-selling-up-as-buy-to-let-tax-changes-begin-to-hit/

Number of UK landlords who believe tax change will affect them rises

More landlords than previously thought now believe that they could be pushed into a higher tax bracket due to changes to mortgage tax relief which is being phased out in the UK.

Some 16% think they will pay more tax, an increase of 7% compared to the fourth quarter of 2016, according to the latest research from the National Landlords Association (NLA).

By the time the changes are fully implemented in 2021 landlords’ mortgage finance costs will count towards their taxable profit. The current average annual mortgage finance costs for a single property landlord is £5,600.

The NLA says that this means that those currently earning just below the upper limit of the basic income tax threshold of £43,500 could be pushed into the higher bracket of 40%, and therefore exposed to significantly more tax liabilities.

Individuals who only let out a single property are by far the most prevalent type of landlord, representing approximately 62% of the UK’s landlord population, around 1.5 million.

The NLA believes that as landlords may end up selling rather than continuing for financial reasons, this could affect 368,000 homes, with young couples and families potentially at the greatest risk if landlords sell.

The NLA also says that any single property landlords forced up a tax bracket would need to increase the rent by more than 11% in order to continue to make a steady yield from the property, which equates to as much as £116 per calendar month more for the average rental property.

‘Single property landlords are responsible for providing a huge proportion of the UK’s private rented homes, and these findings show that, slowly, more and more are waking up to the fact their tax bills could be significantly higher in the coming years,’ said Richard Lambert, NLA chief executive officer.

He explained that 21% of landlords with just one property do not make a profit, and over the next few years those bumped up a tax bracket will find that their ability to continue to provide good quality housing will be seriously affected.

‘More and more families and young couples are making their home in the private rented sector because they cannot either access social housing or afford to buy their own home. Affected landlords will have the choice of either increasing rents or selling up, so either way it’s the people they currently home who look likely to suffer the most as a result of this damaging tax change,’ Lambert added.

http://www.propertywire.com/news/uk/number-uk-landlords-believe-tax-change-will-affect-rises/

Buy-to-let landlords contribute £15.9bn a year to UK economy, study finds

By Marc Da Silva

Buy-to-let landlords currently contribute £15.9bn per year to the British economy through pre-tax spending on running their portfolios, which is more than double the estimated £7.1bn in 2007, owing to the rapid growth of the private rented sector and rising cost of acquiring property, according to a new report from Kent Reliance.

But as their tax burden increases, more than a third - 36% - of landlords surveyed by BDRC Continental on behalf of Kent Reliance are looking to cut their annual spending, a move that could reduce overall spending by more than £500m in total, which would hit the tradesmen and professionals that support the buy-to-let industry, the study by the specialist mortgage lender, which forms part of OneSavings Bank plc., shows.

Property upkeep and maintenance was the most popular area identified by 17% of landlords for potential cost cutting, followed by letting agent fees and mortgage costs - both 10%.

Those landlords anticipate they will reduce spending on letting agent fees by 28%, property maintenance and servicing by 21% and mortgage costs by 15%.

The new ‘Tracking landlords’ costs and economic contributions’ report, part of the lender’s ‘Buy to Let Britain’ research series, states that spending per property stands at £3,632 before tax or mortgage interest - a third of rental income - with the cost of property upkeep, maintenance, and servicing the largest outlay at a combined £5.5bn.

Landlords typically spend £2bn in service charges and ground rent, £963m on insurance, £904m on utilities, and a further £1.1bn on other associated costs of letting a property.

Spending on letting agents’ fees totals £4.7bn each year, with £644m spent on legal and accountancy fees, and £218m on administration costs. Altogether, landlords provide £5.5bn of revenue for these sectors.

John Eastgate, sales and marketing director of OneSavings Bank, commented: “Landlords may seem like an easy target for political point scoring, but they play a vital role in the economy. Not only do they house a huge proportion of the country’s workforce, bridging the housing demand and supply gap, their spending supports thousands of jobs - whether builders, cleaners, lawyers and accountants or letting agents.

“Trying to tackle the housing crisis by targeting landlords with punitive taxes is very simple and politically highly palatable, but has unintended consequences. Either it means less work for all those who support the property industry, or it means tenants will have to foot the bill for the government's tax raid, or both.


“One side effect of the recent changes, and rising running costs, will be the professionalisation of the sector as amateur and accidental landlords leave the market. There is nothing wrong with having fewer, bigger landlords, but that alone will not help more young people get homes.”

https://www.landlordtoday.co.uk/breaking-news/2017/5/buy-to-let-landlords-contribute-15-9bn-a-year-to-uk-economy-study-finds

Landlords, get receipt savvy for the new tax year

By Mike Parkes

With the new tax year upon us - it’s time for some of you to start getting into better habits to help ensure you only pay the tax that you owe and not a penny more.

Whilst small receipts for fixtures and fittings seem minor at the time, losing multiple receipts like these can accumulate to affect your tax bill in the long run.


Keeping, storing and filing receipts has to be one of the most tedious jobs for the self-employed and SMEs. And let’s face it, many of us are guilty of losing receipts (or putting them in the wash in our jeans pocket). But did you know that for every £100 of lost or damaged receipts you will lose around £29 in reclaimable tax? That figure soon adds up over the course of a year.

So, what can you do to be more receipt smart?


Scan receipts as you receive them

The new tax year starts today, presenting an opportunity for a fresh start in how you manage receipts.

Lots of self employed people and SMEs sit on paper receipts, allowing just a few receipts to become an out-of-control mountain. This can prove to be a paper-based nightmare when submission deadlines arise. Rooting through drawers, pockets and folders is the last thing you want to be doing for your self assessment tax return. It’s far better to go digital, choosing a platform that ideally scans and uploads receipts as you receive them.

2. Re-check every expense

Tax breaks on business expenses are vital for the self-employed and SMEs, so make sure you’re not missing out on what’s rightfully yours. It’s worth checking again to see what expenses are allowable.

Double check all your receipts and look back to HMRC’s expense claim guidelines to reveal where you could be claiming back money. Consider everything: hardware, office space, stationery and printing costs… there are dozens of avenues to a legal tax break, providing it helps your business succeed.

3. Use online software


There have been huge advances in technology, and the established financial institutions aren’t too happy about it. That’s because the hole an accountant might fill has been plugged with real-time, automated software.

https://www.landlordtoday.co.uk/breaking-news/2017/4/landlords-get-receipt-savvy-for-the-new-tax-year

Tax reform will ‘put many agents out of business’, warning

By Marc Shoffman

http://taxprosfortaxreform-com.webs.com/TAX%20REFORM%203.jpg

The rolling back of mortgage interest relief is just days away but campaigners are still having a stab at raising the unfairness of the changes dubbed the tenant tax.

An “awareness week” – so far little publicised – is being run by the Tenant Tax coalition with a website calling on supporters to contact their MP. It also provides a calculator so landlords can work out how much their costs will increase by in the coming years.

Highlighting why lettings agents should be concerned, a message on the Tenant Tax website warns: “With rents increasing, it is likely that rent arrears will rise too.

“However, the longer-term consequences are likely to put many agents out of business.

“In the first instance landlords will perhaps question whether they can afford to continue paying the agent’s fees and consider taking the properties under their own management.

“Many landlords will be forced to sell their properties or they may be repossessed, leaving the agent with much reduced stock, and therefore income.”

The website also warns that activity could fall in the sales sector, adding: “Estate agents will initially be affected by the serious downturn in the buy-to-let market.

“Currently 15% of mortgage approvals are for buy-to-let and this market is set to disappear. That will lead to the house builders scaling back production, thus there will be far fewer new-builds to market.”

There hasn’t been any major publicity and no press releases have been issued for the ‘awareness’ campaign but you can view a video interview by Vanessa Warwick of Property Tribes with the campaign founder Steve Bolton.

Watch https://www.youtube.com/watch?v=PgADRPNSjvI

Meanwhile, ARLA Propertymark has raised its head above the parapet to highlight the latest change to face the private rental sector (PRS).

David Cox, chief executive of ARLA Propertymark, said: “It has been a year since the Government inflated Stamp Duty costs for landlords to 3%, and it has already made the Treasury £1.3bn.

“That is more than changes to mortgage interest relief are expected to make in its first three years. This will only further squeeze the sector and make buy-to-let a less attractive investment for landlords.

“Our monthly PRS report shows that since the Stamp Duty reforms came into effect last April, letting agents have seen the supply of rental stock decrease. In February, 44% saw supply fall as a direct result, while only 9% saw it increase.”

He also warned that the impending letting agent fee ban will make buy-to-let investment less attractive as costs are passed on through “inflated agents’ fees which landlords pay”.

Cox added: “A quarter of landlords are expected to stop increasing their portfolios as a result and a fifth plan to sell some of their properties.

“We’re facing a severe housing shortage at the moment, and if the supply of rental stock falls any lower relative to demand for housing, we’ll find ourselves in the midst of a real crisis.”

Even lenders are predicting a decline in activity. The Council of Mortgage Lenders (CML) said remortgaging rather than purchase lending is currently boosting buy-to-let activity.

An article on the CML website said: “Over a relatively short period, we have seen the introduction of a raft of fiscal and regulatory measures that bear down on landlords and buy-to-let lending.

“The combined effects have resulted in a significant reduction in new property purchases by landlords, which can be clearly seen from our data. Some of the measures have also encouraged landlords to sell existing rental properties.

“It is still too early to predict long-term effects of all these measures on the balance of tenure. But we may already be beginning to see the reversal of a long period of expansion of the private rented sector.”

The article also highlights its own research from last June showing that a net 5% of landlords expected to reduce their holdings over the next year, with the proportion rising to 11% over the next five years. Just over one-third said that higher taxes were a motivating factor.

However, separate research among 200 landlords by Paragon Mortgages suggests there isn’t yet a rush to the exit.

The lender’s PRS Trends Report for the first quarter of 2017 shows landlords are taking on less mortgage debt, with the average loan-to-value decreasing by 2% to 35% since the end of 2016.

Two thirds of landlords now have borrowings of less than half the value of their investment property portfolios and average gearing has dropped from 42% in the second quarter of 2012.

However, the survey found no evidence yet of a large-scale sell-off.

The size of the average portfolio is 13 properties, unchanged from the end of 2016, while 46% of landlords believe tenant demand will increase over the next 12 months.

John Heron, managing director of Paragon Mortgages, said: “Average gearing is low and getting lower, and this long-term de-leveraging demonstrates just how financially conservative buy-to-let landlords are.

“Looking ahead, it’s realistic to expect this downward drift in gearing to continue as the Prudential Regulation Authority’s new buy-to-let underwriting standards take effect.

“Our report indicates a resilient sector but as the mortgage interest rate tax changes filter through between now and 2021, landlord confidence may be eroded further which could well result in a reduction in the supply of property to the sector and, in turn, higher rents.”

http://www.propertyindustryeye.com/thanks-george-industry-prepares-for-introduction-of-osbornes-tenant-tax-on-thursday/

Buy to let specialist gives upbeat forecast, despite tax changes

By Graham Norwood

Specialist buy to let lender Paragon Mortgages has given an upbeat forecast for the private rental sector, despite the arrival of new tax burdens for landlords.

Paragon says gearing amongst landlords remains low so far this year with the average loan-to-value ratio decreasing two per cent to 35 per cent in the first quarter of a year, according to the firm’s survey of some landlord clients.


Some 68 per cent of landlords now have borrowings of less than half the value of their investment property portfolios and, since the second quarter of 2012, average gearing has reduced significantly.

On average, landlords spend 30 per cent of their rental income on mortgage payments, with almost half suggesting they spend less than a quarter.

Although buying intentions remain subdued, there has been no large-scale sell off by landlords of buy-to-let properties. The size of the average portfolio is 13 properties, unchanged from the autumn, and Paragon insists the forecast is stable as landlords indicate they do not expect their portfolios to change in size over the next 12 months.

Twenty five per cent of landlords expect the value of their portfolio to increase in the next 12 months, whilst just eight per cent think it will decrease. Some 38 per cent of those questioned said tenant demand was ‘growing’ or ‘booming’ and 46 per cent believe tenant demand will increase over the next 12 months.

https://www.lettingagenttoday.co.uk/breaking-news/2017/4/buy-to-let-specialist-gives-upbeat-forecast-despite-tax-changes

Landlords at risk of non-compliance due to buy-to-let tax changes

By Marc Da Silva

Landlords are under mounting pressure which is making them vulnerable to non-compliance in their accounting following a raft of changes, including tax measures, in the buy-to-let sector, according to Visionbase Software.

The change to mortgage interest relief, which was first announced in the 2015 emergency Budget, will be introduced gradually from 6 April, restricting relief for finance costs on residential properties to the basic rate of income tax.

However, with recent research from the Council of Mortgage Lenders showing that a third of buy-to-let landlords in the UK do not understand that their ability to offset mortgage interest payments against tax is being scaled back, Paul Oxley, managing director of Visionbase Software, has expressed his concern that many landlords could soon find themselves falling foul of the rules.

He said: “Most landlords will be looking at ways to minimise the tax changes to protect their profits. While the most obvious plan is to raise rents, other options open to landlords include transferring property ownership into a corporate structure, or to a partner who pays a lower income tax rate.

“All these new tax measures, combined with mounting legislation, is putting landlords under huge pressure. It can be overwhelming to keep up and failure to do so, can lead to fines and loss of licence.”


Oxley advises buy-to-let landlords to take advantage of the various advanced property management software products available on the market, including unsurprisingly his firm’s own Decorus for Sage system which offers landlords the ability to easily generate financial reports, forecast future income and expenditure accurately and budgeting for maintenance work, to help them manage the raft of changes for their property portfolio.

https://www.landlordtoday.co.uk/breaking-news/2017/3/landlords-at-risk-of-non-compliance-due-to-buy-to-let-tax-changes

Buy-to-let landlord sentenced for tax fraud and fined £200,000

By Marc Da Silva

A London based landlord has been given a suspended two-year prison sentence for tax fraud, following a Revenue and Customs investigation that discovered £281,000 in unpaid taxes.

Property developer and landlord Michael Charles Waddingham, 44, was sentenced on Friday at Kingston Crown Court after pleading guilty to evading the large sum in taxes and has been ordered to pay a fine of £200,000 within the next six months, in addition to the £281,000 tax he has already repaid.

An HMRC investigation found he had not submitted tax returns between 2008 and 2012; failing to declare rental income, that he had been a director of seven land and property development companies and had income above £100,000 per year due to the directorships.


Waddingham, who lives in Teddington, will also have to undertake 200-hours community work over the next 12 months, honour a six-month curfew between the hours of 8pm and 5am with electronic tag and pay a victim’s support charge of £425.

https://www.landlordtoday.co.uk/breaking-news/2017/3/buy-to-let-landlord-sentenced-for-tax-fraud-and-fined-200-000

Short Lets - government to review Rent A Room tax relief

By Graham Norwood

The Residential Landlords Association has spotted small print from the Budget that may suggest the government is about to review Rent A Room tax relief in the light of the spread of Airbnb short lets.

Currently the Rent A Room scheme allows people letting out rooms in their homes to lodgers can currently earn £7,500 tax free; this also applies to those letting rooms through Airbnb and similar sites.

RLA research shows there are more than 23,000 rooms listed on Airbnb in London alone.


The association says that as Rent A Room was introduced to increase the supply of affordable long term lodgings it would appear the government review is taking place in direct response to the popularity of short term letting sites.

"Promising a consultation on redesigning the relief in the Budget Red Book the government says it will be looking at the way Rent A Room operates to ensure it is better targeted to support longer term lettings, reflecting its original purpose" says a statement from the RLA

The Budget small print does not reveal a timescale for the review.

https://www.lettingagenttoday.co.uk/breaking-news/2017/3/short-lets--government-to-review-rent-a-room-tax-relief

Landlords in last-ditch challenge to get Chancellor to change his mind on new tax regime

By Marc Shoffman

A last-ditch plea  has been tabled to Chancellor Philip Hammond before tomorrow’s Budget.

The Residential Landlords Association wants him to ditch the impending tax change whereby landlords will no longer be able to offset mortgage interest costs against tax.

The RLA has challenged the Government’s reasoning.

In a recent statement in Parliament, a Treasury minister, Jane Ellison, argued that plans to restrict mortgage interest relief for landlords “will reduce the tax advantage landlords have over home owners in the property market”.

But Alan Ward, chairman of the RLA, said this assertion was rejected last year by the Institute for Fiscal Studies, which said that the tax system “is not, and was not, even before the recent changes, more generous to people buying to let”.

Ward said: “We are now weeks away from a tax change that risks investment in homes, and will cause considerable hardship for tenants.

“It is troubling that ministers have not published any evidence to back up their assertions that landlords are taxed more heavily than home owners. This is no way to make policy.

“We call on the Government to use tomorrow’s Budget to halt its planned tax changes which will do little to provide the new homes to rent they claim to want.”

The call comes as analysis by London estate agents Portico shows that despite evidence showing that increasing numbers of landlords are incorporating to mitigate the changes, this may not be the best option.


The agent’s analysis highlights that while the mortgage interest relief will be preserved for landlords operating as companies, commercial mortgages generally have higher rates than buy-to-let deals, while there are also the costs of setting up the business and maintaining reporting obligations such as annual corporation tax returns.

http://www.propertyindustryeye.com/government-challenged-over-justification-for-mortgage-interest-relief-changes/

Council denies MP’s claims it is subsidising ‘slum’ landlords

By Marc Da Silva

Peterborough City Council has rejected a claim that it is subsidising slum landlords with taxpayers’ money following an accusation by the local MP.

Stewart Jackson, the Conservative MP for Peterborough, last week accused Peterborough City Council’s of using £1.2m of public money from the capital budget to help “slum landlords” in Peterborough with repairs.

But cabinet member Councillor Irene Walsh has rejected Jackson’s claims.

In a letter to the Peterborough Telegraph, Cllr Walsh wrote: “The taxpayer will not be footing the bill as any loan to improve a property must be repaid in full to the council before the landlord receives any future rent.


“This is not a subsidy for ‘slum’ landlords. The policy clearly states that an applicant for funding must not have been the subject of any Housing Act enforcement action or convictions.”


https://www.landlordtoday.co.uk/breaking-news/2017/3/council-denies-mps-claims-it-is-subsidising-slum-landlords

RLA urges landlords to lobby MPs over tax changes

By Marc Da Silva

The Residential Landlords Association (RLA) is urging landlords to lobby their local MP over taxation changes announced by the now former chancellor George Osborne in 2015.

The Association is campaigning against the government over the proposed changes detailed in Clause 24 of the Finance Bill relating to the proposed removal of mortgage interest relief, which will be phased in from April.

The trade body wants landlords to contact and visit their MP over these changes and explain to them the damage that they will have for both tenants and landlords.

The campaign is timed to run in the days leading up to Chancellor Phillip Hammond’s Budget Statement, due on 8 March.

To highlight the wide-ranging campaign, the RLA has have pulled together the top 10 constituencies where its members have been most active, these even include the seats held by the Chancellor Phillip Hammond, the Prime Minister Theresa May, and the former Chancellor George Osborne.

Top 10 constituencies targeted by RLA members:

1/ Corby

MP: Tom Pursgolve (Conservative)

Majority: 2,412

2/ Warrington South

MP: David Mowat (Conservative)

Majority: 2,750

3/ Peterborough

MP: Stewart Jackson (Conservative)

Majority: 1,925

4/ Eastbourne

MP: Caroline Ansell (Conservative)

Majority: 733

5/ Brighton Kempton

MP: Simon Kirby (Conservative)

Majority: 690

6/ Tatton

MP: Rt Hon George Osborne (Conservative)

Majority: 18,241

7/ Runnymede and Weybridge

MP: Rt Hon Philip Hammond (Conservative)

Majority: 22,134

8/ Maidenhead

MP: Rt Hon Teresa May (Conservative)

Majority: 29,059

9/ Liverpool, Riverside

MP: Louise Ellman (Labour)

Majority: 24,463

10/ Gower

MP: Byron Davies (Conservative)


Majority: 27

https://www.landlordtoday.co.uk/breaking-news/2017/2/rla-urges-landlords-to-lobby-mps-over-tax-changes

UK landlords call for March Budget to address concerns over tax change and stamp duty

The UK Government is being urged by landlords to use the upcoming Budget in March to reassess its policy on stamp duty for buy to let properties and mortgage interest relief tax change due to be introduced in April.

Alan Ward, chairman of the Residential Landlords Association (RLA) believes that the Budget provides an opportunity for the main issues concerning landlords to be addressed as it is tenants that will ultimately suffer through higher rents.

The RLA is calling for the planned changes to mortgage interest relief to be halted, or at the very least only applied it to new borrowing for new homes to rent and for the 3% stamp duty on additional homes to be reviewed.

The association believes that the current situation means that landlords in the UK face ‘one of the most hostile tax regimes in the western world’. Ward explained that the phasing restriction of mortgage interest relief to the basic rate of income tax along with other recent measures will make renting a much less attractive investment option for many.

‘At a time when increasing numbers of people rely on the rented sector, which will account for 25% of all housing by 2025 according to forecasts, this will only reduce the growth in supply, driving up the cost of rents,’ he said.

‘Retrospective taxation cannot be right. This is in effect a tax on new homes which is nonsensical when more homes, of all types, are desperately needed. Instead this levy should not be applied where landlords are investing in housing which adds to the overall number of homes available,’ Ward pointed out.

‘Help could also be given to tenants wishing to buy by applying the new lower 20% rate of capital gains tax where a landlord sells a property to an occupying tenant. The Budget provides an important opportunity to support a thriving rental market that is good for tenants, good for the economy, and good for Treasury revenue,’ he added.

The RLA looked at what happens in other countries. It said that in Germany, seen by many as the model to follow when it comes to the private rented sector, landlords are able to deduct all mortgage interest from their property income, deduct rental losses against other income and claim depreciation costs. Capital gains tax is also not paid on disposal of property owned for more than 10 years.

In Australia, mortgage interest relief is allowed in full and investors can discount rental losses from their other income and gain a 50% deduction on capital gains tax when they sell a property owned for more than one year.

In the United States, landlords are able to deduct mortgage interest from their rental income as well as offset a certain amount for depreciation each year. The amount of capital gains tax also falls depending on the length of ownership.

‘The list goes on, but the point is that no other comparable country has a tax system that is so hostile to private rented housing provision,’ said Ward who argues that many of the recent policies were based not on evidence but ‘played to the myths that have too often dominated debate around the sector’.

He claimed it is a myth that landlords are taxed more favourably than home owners and that there is no evidence that the tax changes will benefit first time buyers or that landlords are crowding home owners out of the market.

Ward said there is some anecdotal evidence of competition between landlords and buyers in specific cases but a report by the London School of Economics last year concluded that only a ‘minority’ of house sales involved bids from landlords and first time buyers.

‘These tax changes will inevitably place upwards pressure on market rents that can only make life more difficult for the Prime Minister’s so-called JAMs, those who are just about managing, and those tenants wanting to save for a deposit,’ Ward added.

‘If we are to secure the new homes to rent we need the Chancellor Philip Hammond in his forthcoming Budget should get behind the majority of good individuals that make up the country’s landlord population and who supply the overwhelming majority of rented housing,’ he concluded.

http://www.propertywire.com/news/uk/uk-landlords-call-march-budget-address-concerns-tax-change-stamp-duty/

Buy-to-let ‘remains resilient’ despite tax changes

By Marc Da Silva
October 24, 2016

Buy-to-let property remains an attractive income investment at a time of low saving rates and stock market volatility, according to Together.

Despite the introduction of higher stamp duty purchasing costs, the recent scrapping of the wear and tear allowance, and the pending removal of landlords’ mortgage interest tax relief from next year, the specialist lender reports, based on its own lending activity, that investors continue to be drawn to the buy-to-let market as the returns routinely outperform those of other investments.

“Buy-to-let has proved to be a resilient sector this year, despite the tax changes introduced by the government,” said Together’s commercial CEO, Marc Goldberg.

He continued: “Buy-to-let lending continues to perform well for us here at Together, and we’ve been able to grow whilst maintaining a high quality customer base. Given this growth, we want to ensure that we offer a variety of products to meet the continued demand.”

Together has just introduced a new five-year fixed buy-to-let mortgage to meet the demand from this growing market, with the maximum loan size increased to £500,000, while offering landlords and property investors the opportunity to fix their costs.

Goldberg explained: “Our new fixed-rate product, as well as bigger loan sizes, will help us deliver more funding to property investors, through our network of broker partners.

“We offer both interest-only and repayment options, with loan-to-values of up to 75%, and we’ll accept projected rental incomes, so landlords don’t need to have a tenancy already in place to secure the funding needed.

“We also lend to limited companies, and have seen an increase in applications from limited companies for buy-to-let funding, as a result of the various tax hikes.”

Together recently announced record trading results, with annual new lending for the year to 30 June 2016 surpassing £1bn for the first time in its 42-year history, and a current loan book in excess of £1.8bn.

https://www.landlordtoday.co.uk/breaking-news/2016/10/buy-to-let-remains-resilient-despite-tax-changes

Landlord mortgages plummet by 85% after stamp duty changes

Surcharge on second homes that came into effect in April led to fewer buy-to-let loans, figures show.

The number of mortgages taken out by landlords buying new properties plummeted by 85% in April, following the introduction of a new stamp duty rate on second homes.

Figure from the Council of Mortgage Lenders (CML) showed 4,200 buy-to-let loans were taken out for purchases during the month, worth £600m.

Borrowing by landlords purchasing properties spiked in March as investors tried to complete deals before new rules on stamp duty came into effect on 1 April. Since that date, buyers of any kind of residential property other than their main home have had to pay a three percentage point surcharge.

The CML’s data shows that there were 28,700 loans for buy-to-let purchases in March. The figures show a 51% year-on-year fall in activity, from 8,600 loans in April 2015, suggesting that landlords brought forward activity to beat the new tax rate.

The value of buy-to-let purchases loans was also down by 50% year-on-year and by 86% month-on-month.

Paul Smee, director general of the CML, said: “There is a sense of calm after the storm this month, as lending eased back, following thesignificant rises in activity in March as borrowers looked to beat the second property stamp duty deadline.

“We expect the market to take several months to return to its previous levels after the lending surge.”

The CML said the numbers of first-time buyers and movers taking out mortgages had also fallen over the month, although first-time buyer loans were up on April 2015’s figure.

Some 25,100 first-time buyer mortgages were advanced during the month, a fall of 9.1% on March’s figure, but up 6.8% on the previous April. Movers took out 22,200 loans, a 46% drop on March and 15% below April 2015.

In total, owner-occupiers borrowed £8.1bn for house purchases, down 40% month-on-month and 4% year-on-year.

“The stamp duty change on second properties that came into effect on 1 April resulted in activity across the market being brought forward into March causing an expected slowdown in April’s lending figures in the aftermath,” the CML said.

Howard Archer said the slowdown in lending “clearly reflected a marked waning of interest from the buy-to-let and second home sectors” following the rush to beat April’s stamp duty increase, but may also reflected “heightened concerns” over the economic outlooks.

“The strong suspicion is that housing market activity will be pressurised in the immediate term by a combination of weakened interest from the buy-to-let and second home sectors as well as heightened concerns and uncertainties over the UK economic outlook, particularly in the run-up to June’s referendum on EU membership,” he said.

“Consequently, house prices are likely to be soft for the next few months.”

https://www.theguardian.com/money/2016/jun/15/landlord-mortgages-plummet-by-85-after-stamp-duty-changes