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Private landlords faced with significantly higher costs, as a result of recent tax changes, are being left with little alternative but to pass on costs to tenants or exit the buy to let market altogether, according to new research from the Association of Residential Letting Agents.
31% of letting agents surveyed saw rents increase for tenants in July, up from 27% in May as a result of landlords struggling to meet rising costs, a year on year increase from 28% in July of last year.
David Cox, ARLA Propertymark chief executive, commented: “Landlords really are stuck between a rock and a hard place.
“All the tax increases they’ve incurred over the last 18 months have meant they either need to sell their properties and exit the market, or increase rent payments to plug the deficit.
“Neither of these outcomes benefit tenants; if they exit the market, supply is even more strained and matched with growing demand, rent prices will increase anyway."
At Landlord Debt Advisory, we are helping clients affected by recent tax changes impacting the buy to let sector, including Section 24 and the hike in Stamp Duty.
One of recent clients from Durham said; "When I read about the buy-to-let tax changes for 2017 I panicked and went to see my accountant. When we did the numbers keeping my houses was a complete waste of time. This tax is totally unfair and squeezes people like me who have a decent day job as well.
"My Accountant recommended Landlord Debt Advisory. They completed a report on my situation with information from me and my Accountant and it was clear selling up was the way forward. The problem was I had no equity. Landlord Debt Advisory negotiated all eight of the sales and a settlement plan for the £57,000 shortfall. I ended up paying back £17,000 which got me out of the nightmare. Very approachable and helpful."
Contact Landlord Debt Advisory on 0161 222 4311 or go online to landlorddebtadvisory.com.
What an appalling situation to be put in
Forced to sell up due to a bonkers tax
A perfectly viable business before S24
Effectively bankrupt after it with many homeless tenants
A perfectly viable business? Do me a favour. Does it not occur to you that if there was no equity then borrowings might just have been excessive? Aperfectly bonkers business more like.When are people going to accept that it is poor business models like this that result in landlords being forced to exit, not S24
Of course it is a viable business model.
Taxing profits is correct
You simply don't tax debt interest which causes the assets to be available in the first place.
Few LL will voluntarily subject themselves to S24.
They will be investing via companies which tells you everything that is required that S24 is a bonkers tax.
With S24 it makes little sense to invest in your own name if a mortgage is required.
But of course idiot Osborne never gave existing LL the chance to convert to corporate status for free.
He knew what he was doing.
S24 LL were perfectly viable as any other business dependent on debt to be in business.
That is most business in the UK.
Only now LL are to he the only business not allowed to offset their costs of doing business before arriving at a hoped for taxable profit.
S24 kills a perfectly viable business model.
If UK businesses were taxed on their finance costs there would be a depression far worse than the 20's!
But it is apparently OK to put out of business mortgaged sole trader LL!!
Its too simplistic to say no equity = borrowings might be excessive
I had 100% borrowings for several years and my business model was and is very viable
I was building a business. That takes time.
Lots of businesses borrow and are in debt for several years before they show a profit
S24 is very much responsible for causing many LL`s to now exit as it is uniquely punitive
Jonathan Clarke. http://www.buytoletmk.com
Unless you have a very good yield and a plan Landlords will go out of business
The vulnerable are the working Landlord who is leveraged over I would say 70%
We are only just starting to see the effects and this will get worse and worse as the PRS moves forward
My Guess is we still have a large percentage who don't understand or really care about S24 because they don't treat BTL as a business
Its just a bit on the side for the kids or a pension ????
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.
I long for the day my local LA has blank spaces in his windows where once properties for letting were advertised.
None to offer now as the accursed FTB have bought up all the LL stock!!!
Means my properties which have never appeared in a LA window become even more valuable.
Roll on S24!!
Helping to make my rental properties even more valuable
Pity the poor tenants.
Oh please Mr LL won't you let me pay almost all my income for somewhere to live.
Sorry mate there is a big queue in front of you and they can all afford to pay more rent than you.
Don't know how such a queue had occurred.
Somebody said something about a S24 tax!!
Apparently it forces certain LL to sell up.
Seems a bonkers policy to me.
Well not to worry, just got to sort out from the tenant queue who is prepared to pay the most rent
My local 'Leaders' already have got blank spaces - 3 on their front window when I last looked. There's a lot of LA's (most combined with EA's) in my vicinity - not sure how many of them will survive.
Adam what is a My local 'Leaders' haven't got a clue sorry
Leaders is I believe a LA/EA.
Oh its the name of an estate agents lol got it now lol