© G Chilvers 2016
And why an additional clause is urgently required.
It is unlikely that the Government will change their mind over the implementation of this tax. What needs to be added to this tax is a clause so that it is applicable only to properties that have three bedrooms or less, are also described on an individual Land Registry Title, and are also in tax band F or lower.
The Government has said the purpose of the new “Landlord Tax” is to reduce the tax
incentive from the “BTL” market and thus make it fairer for first-
When a first time buyer purchases a house or an apartment it is with a mortgage and requires a unique Land Registry Title exclusive to that dwelling also, generally, it has a maximum of three bedrooms, and is a lower than band F tax banding, therefore this new tax should only apply to properties that fit that description.
That is: That Mortgage Tax Relief is limited to the basic rate on a property that is three bedrooms or less, on an individual Land Registry Title and lower than band F tax banding.
It should not apply to properties that are not, and never will be, available to first-
The reason this tax is fundamentally wrong is that the UK needs professional working Landlords to convert redundant buildings into rental homes, be they bedsits or apartments, or to build new rental homes on brown field sites and to professionally maintain and manage these single LR Titled multiple home properties. They are specifically designed for the needs of the UK rental market.
Unlike any other business Landlords can’t rollover the gains on one venture to buy another, they are restricted in selling by having to pay Capital Gains tax, each time. A Landlord’s Portfolio is also subject to death duties.
If a Landlord with a much needed HMO has a £250K mortgage, leaving a gross income of £150K, today he pays £50K in tax. Net income is £100K at cumulative tax rate of 31%. Under the new Landlord Tax law he will pay £92K tax. Net income is £58K at cumulative tax rate of 61%
How can it be right that a Professional Footballer such as Wayne Rooney earning £13m per year, or those in the Times rich 100 list pay tax at a maximum of 45% and yet a small Landlord providing cost effective homes with a £150K gross income can be taxed over 60%?
If all the accommodation owned and provided by UK Landlords were made available to
purchase, from hostels, HMO’s, bedsits, studios, flats to million pound detached
houses, only a relatively small proportion are potentially mortgageable to a first-
If this law is implemented as proposed, the professional Developer come Landlord
will have the rewards for converting, renovating and running rental homes penalised
in an exclusive new very high tax bracket. This will cause a seismic shift in the
focus of money, time and enterprise away from the rental sector. Buildings will
If the Government is set on this tax to make first-
Graham Chilvers. (Professional Landlord)