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  • Community

    Government responds to SDLT & S24 petition

    Higher SDLT on additional dwellings and restricting finance cost relief seeks to support first-time buyers and level the playing field for homeowners. Neither measure is expected to impact rent levels

    The Government introduced changes to finance cost relief as part of a package of measures at Summer Budget 2015 to help reduce the deficit and rebalance the economy. By restricting landlord’s finance cost relief to the basic rate of income tax we are helping to reduce the advantage landlords may have over homeowners in the property market. Income tax relief for finance costs is not available to ordinary homebuyers. It is also not available to those investing in other assets, such as shares, so we’re helping to reduce the distortion between property investment and investment in other assets.

    Previously, landlords could get relief on their finance costs at their marginal rate of income tax. By restricting finance cost relief to the basic rate, all individual landlords will receive the same rate of income tax relief on their finance costs. 

    Landlords can still claim income tax relief at their marginal rate of tax on day-to-day running costs incurred in letting out a property, such as letting agent fees and replacing furniture. Finance costs are different to other expenses as having a mortgage allows the landlord to purchase a more expensive property and incur larger gains on the investment than they would have done without it.

    Using actual self-assessment data, HMRC estimate that only 1 in 5 landlords will pay more tax on their property income because of this measure. We appreciate that some of these landlords may face difficult decisions.

    This is why the government has chosen to act in a proportionate and gradual way. Basic rate income tax relief will still be available on all landlord's finance costs, and the government announced this change almost two years before its implementation. The restriction, introduced in April 2017, is being phased in over 4 years. This gives landlords time to adjust to the changes.

    Given that only a small proportion of the housing market is affected by this change, the government does not expect it to have a large impact on either house prices or rent levels. The Office for Budget Responsibility (OBR) also expect the impact on the housing market will be small. 

    In April 2016, the Government introduced higher rates of Stamp Duty Land Tax (SDLT) for those purchasing additional properties. While it is right that people should be free to purchase a second home or invest in a buy-to-let property, the Government is aware that this can impact on other people’s ability to get on to the property ladder. The higher rates are part of the Government’s commitment to support first time buyers. Since the higher rates have been introduced, over 500,000 people have bought their first home, and first-time buyers make up an increased share of the mortgaged property market.

    At Autumn Budget 2017, the Government announced further changes to permanently increase the price at which a property becomes liable to SDLT to £300,000 for first time buyers, with first-time buyers purchasing homes worth between £300,000 and £500,000 saving £5,000.

    This relief means that 80% of first-time buyers will not pay SDLT, and 95% of first time buyers who pay SDLT will benefit from the change. Since its introduction, 69,000 people have benefited from the relief. Over the next five years, this relief will help over a million first time buyers getting onto the housing ladder.

    The Government has also taken wider action on housing to help renters get a fair deal and to address homelessness and rough sleeping.

    At Autumn Budget 2017, the Government committed to £2 billion of extra funding for affordable housing, including for social rented homes, bringing total investment in the Affordable Homes Programme to more than £9 billion. The Government has also allocated over £1.2 billion by 2019/20 to help reduce and prevent homelessness and rough sleeping and is implementing the Homelessness Reduction Act, which will ensure that more people get the help they need earlier to prevent them from becoming homeless in the first place.

    The Government aims to halve rough sleeping by 2022 and eliminate it by 2027, and has set up a Rough Sleeping and Homelessness Reduction Taskforce to develop a cross-Government strategy to work towards this commitment.

    HM Treasury

    Source

    It is clear from this response that the Government is still not listening. 

    If you have not already done so, please SIGN THE PETITION.

    SEE ALSO  -      Dramatic fall in supply of rental stock

    UP NEXT -          What causes homelessness in the UK?
                
    DON'T MISS -     England facing record housing shortfall

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    same old same old

    this is not going to change a thing any time soon

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    Indeed - this is the same copy and paste response they have been giving for ages.

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    _________________________________________________________________________


    My posts are not financial advice, just a rambling guy passing time on a coffee break.
    The team at Bespoke Finance offers advice, including Limited Company Buy-to-Let , HMO Conversion and Cheap Life Insurance.

    _________________________________________________________________________

    It’s not going to change and more will follow Adam the BTL gravey train will be over unless govt want us in the prs

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    Same stock reply as given to the Steve Bolton campaign over two years ago.Sadly the petition is a waste of ink

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    "It is also not available to those investing in other assets, such as shares, so we’re helping to reduce the distortion between property investment and investment in other assets."

    A ridiculous statement

    If I purchase an additional leveraged residential property in my own name, I am subject to additional SDLT and S24. If I purchase it through a company I am exempt from S24 but subject to additional SDLT. If, instead, I choose to purchase a commercial property, either sole trader or incorporated, there is no additional SDLT or S24.

    This legislation is increasing the distortion in property investment. Being cynical, it appears to impose taxes on the small landlord whilst at the same time create exemptions for the larger corporate investors.

    I am yet to be convinced that S24 is either causing or reducing homelessness. Is this, or any other legislation, causing homes to sit empty or empty homes to become habitable?

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    A good teacher must know the rules; a good pupil, the exceptions.

    Martin H. Fischer


    This is where the Govt have us over a barrel

    they look upon BTL as a simler  investment to shares ect

    We have never been a business and we don't pay NI

    We are sitting ducks and they are far from finished with the Private Landlord

    We are sitting on assets that the Govt would prefer a FTB to own

    Read my Blogg on Foundation's in BTL

    we only operate because the govt allows us they can pull the plug anytime

    they cant do it quickly but the drip drip effect will end leveraged BTL

    You and I are not wanted by the govt




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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    How does BTR taxation compare to BTL?

    It seems to meet current social needs in that you are creating additional housing but I'm not aware of any tax incentives to do so.

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    A good teacher must know the rules; a good pupil, the exceptions.

    Martin H. Fischer


    There are no tax brakes in property investment

    Most Landlords buy excising stock I call it Homes under the Hammer stuff

    so we are not adding stock we are in fact taking stock away in the eyes of the Govt

    If your converting or Building to rent you are adding stock

    IMO this is the new market for property investors who have deep pockets

    and if an investor has a good Build to Rent Project there leverage will end up being low prob under 50% LTV with next to zero Stamp Duty

    The home under the hammer is not the govts plans for property investors





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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    S.24 will cause homelessness because the poorest tenants will be replaced by more affluent ones.

    The poor will be forced to the bottom of the pile with few landlords willing to consider them.

     Landlords will be under more financial pressure so tenants that default or go into arrears will not be tolerated.

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    The whole campaign and this one have been completely misguided - no government likes to see a major policy reversal especially when the lobbying groups are so powerful & united, a amendment to it was the only plausible change that could have been anticipated based on the primary condition of it being retrospective for all purchases prior to the implentation date - if this point was the only primary point of contention raised, it would have been palatable for the government to make the change without causing undue loss of face and embarrassment - thus any landlord buying after that implementated date would do so knowingly of these MIR changes.

    They say any publicity is better than no publicity - so i suppose some have benefited through these petitions - the sad part is that only 13000 landlords warranted signing it - hence no cohesive union there for the government to be unduly worried about - thus they carry on adopting the stance they have 


    My 2p piece worth - Maz

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