NEWS FLASH!!! GOVERNMENT WAR ON LANDLORDS CAUSES BUYING FRENZY BEFORE April 1 st 2016

Cap on Mortgage Tax Relief – look up tables to gauge the effect on you. All Landlords are affected, the wealthy (may end up financing their tenants if the interest rates go above certain percentage), older landlords protecting their pensions, and accidental landlords Scrapping of Wear and Tear Allowance – Allowing of repairs 3% Stamp Duty Land Tax surcharge for Buy to Let borrowers from Some landlords are already selling, some buying to beat the 3% deadline. New powers of Control by the Bank of England over a certain Loan to Value, Barclays is already 135% Do we form alliances to buy 15 plus properties at a time? – Unlikely Do we become limited companies, and have great difficulty in getting mortgages – likely. Will exemptions now attract investment such as commercial property, houseboats, caravans and mobile homes?

David Cox, MD of the RLA “Stamp Duty Change is catastrophic” ARLA Members expect the supply of Private Rented Property will dwindle as the mortgage tax relief reduces. The RLA Survey shows that 10% of landlords plan to exit the market. RLA and NLA are lobbying the Government concerned about these changes resulting in : - Rent rises to cover the additional costs that landlords will have to cover. Older properties which landlords traditionally buy being left empty and not repaired, as first time buyers do not find them appealing. Diminishing number of rental properties Less money spent on repairs Lobbying for changes to be delayed by a year to give time for the proper consideration these decisions deserve.

DEFENCE STRATEGY Look at your own position and decide what the challenge is, each Loan to Value and the Capital Gains due if you sell.

Target increasing your after tax profit to the same value as the tax changes are reducing it by. Consider: - business profit and loss, Sales agency expenses monthly operating costs finance cost gross profit non- property specific expenses before tax profit Tax see how you can improve on them right across all the properties Check: - all your mortgage terms and position with your broker discuss with your accountant to make sure they are claiming fully for your trading income, changes to wear and tear and repair claims. Look at agreeing deals with others who may value your expertise, Look at your capital allowances, pensions and raising capital by selling or bringing in others. Discuss incorporating your properties, it is probably easier than you think.

THE BIGGER PICTURE The Government is determined to reduce house price inflation so is : - Making it harder for owner occupiers to obtain high levels of debt. Dis-incentivising landlords from taking out high debt. Relaxing planning to encourage a higher supply of housing. Increasing the Bank of England’s control in restricting lending banks in the amount of debt they can lend. ANY OPPORTUNITIES (mostly for the big boys as the little ones will not get the cash) Huge exodus of landlords and lack of new entrants will provide a supply of properties. Lower property prices will increase the yields for the survivors. Relaxed planning laws enabling easier change of use in brownfield sites.

CHANGE BRINGS OPPORTUNITY - SO PROTECT YOURSELVES FROM THE NEGATIVE AND PRACTICAL ASPECTS AND FOCUS ON THE OPPORTUNITIES – ( which may be to exit gracefully). KEEP FILLING IN THE RLA and NLA SURVEYS AND PETITIONS SUPPORT LEGAL ACTION through LOBBY YOUR MP JOIN SEAL AND BE PART OF OUR COLLECTIVE VOICE Edited from an article in the RLA January February issue pages 8-10 based on the forum Property Tribes