Blogs from landlords and buy-to-let professionals.
Saturday, March 19, 2016
Have Tories knifed us landlords?
Landlords may be feeling rightly aggrieved over latest Government changes to the tax system. After many of us have voted for the boys in blue to keep the red peril out with their crazy talk of rent control and landlord licences we instead feel the cold metal between our should blades as the Telegraph put it that we have been knifed in the back!
Higher CGT rates for landlords
The latest Budget has announced a hike in the relative capital gains rate paid by landlords. In effect it is not quite so bad. The latest changes actually reduce the CGT rate significantly from 18% to 10% at the lower rate. However, this reduction in rates does not apply to property and therefore landlords.
Cumulative impact of Government policy
The cumulative effects of the penal stamp duty rate, higher relative CGT rates for property and the removal of interest rate relief for higher rate paying landlords has felt like a thorough beating for landlords over the last couple of years after the election rhetoric indicating no or little action in the private rental sector.
Stepping back from my slight sense of betrayal by the latest Government action. If landlords look at what the Government are trying to achieve. Having lost control of the economic lever of interest rates (they can't raise them because of the threat of putting the entire economy into a tail spin) they are attempting to poor a dampener on the overheating property market particularly in London and the South East with more direct fiscal measures. The measures look to reduce the amount of investment by landlords through making it fiscally less attractive and at the same time raising additional revenue from landlords who are largely making record profits. If these tweaks around the margins of property taxation ensure that the economy stays on an even keel then reluctantly it is something that I may have to accept. In my mind it is far less restrictive and divisive than rent controls and a pointless mandatory licensing scheme #hobsonschoice.