Ranty Friday — George Osborne


Buy to Let

Well it was only a matter of time really.  Though I swore I would never discuss politics on my blog because it always divides opinion, gets heated, and well, earlier this year I lost friends over politics so I am not prepared to open myself up to that again.

This week though George Osborne said something that made me rage more than any other, and with one fell swoop he has pretty much killed the industry I have known for 12 years with his decisions surrounding buy to let landlords.   He seems to think that buy to let landlords are cash rich fat cats who have nothing better to do with their money than buy a second, third, hundredth house in order for somebody else to live in.  Ergo (ooh look at me using ergo in a blog post.  My English teacher would be thrilled.  Well she would if she liked me. We locked her in the stationery cupboard once so she probably still hates me) they have enough money that to slap more taxes on them won’t matter.

Well Mr Osborne it does matter.

It matters alot.

The majority of buy to let landlords are not multi millionaires, they are hard working people who are trying to make a living.  Albeit by owning property.  They might be “rich” on paper, but that does not mean they are rich in relative terms.   This portfolio is likely to be their pension.   Tied up and needing to earn it’s keep in order for them to have a rental income when they retire, or assets to sell to fund their care home bills.

Take for instance the house that my eldest daughter and her boyfriend live in.   It is their landlord’s second home, rented out as they had to move away from the area.   That rent now pays them a steady monthly income.   Taxed of course.   As was the income used to buy the house they moved into in the south of England.    The rent Caity and Dan pay is almost double what they would pay if they owned the house and had a mortgage, but they cant save enough for a deposit to buy, and we can’t afford to help them out.   They have good jobs and work hard but they have to rent.

Thank God for somebody being in a position to have a second home to rent out.

Landlords are not going to buy these homes anymore, or if they have to move as this landlord has done the stamp duty they have to pay could be ten fold so they won’t bother.    What does that then mean?  Landlords will sell.   They won’t hang on to their houses and rent them out to hard working individuals like my daughter and her boyfriend.  So where do they live?

When we bought our house we were in the enviable position of both owning our own homes and decided to sell them in order to buy one together.    The idea of selling two houses AND buying was too complicated and the chain too complicated and liable to collapse.   So we sold Mr B’s, rented mine out, and then bought the one we now live in, selling my house once we were in this one.    So technically when I bought this house it was my second home,  how would that have worked?     Would I pay the higher stamp duty on my half?   Or would we have bought in Mr B’s name and not mine too?   Had we done the latter what would have happened if we had split or I had died?  We weren’t married at that point so my children would not have automatically inherited or been entitled to anything.  He could have put my three kids under 10 on the street.

Thanks George

Ultimately my dream has been to get involved in property development.   I don’t want to make millions, I want to do one project a year, a small one and turn a profit of about £20,000 on each one.  Just enough so I can earn a decent amount of money but stand back and feel proud of achieving something.    I was involved in a property renovation when my parents moved my granny down to Hampshire from Lancashire a few years ago and the buzz I got from helping to turn that house around in six weeks was fantastic.   It is what I want to do.   And is partly why I set up a company a year ago, so I could do just that.    Maybe keep one or two of the houses if I could make the finances work  as my own buy to let properties, or sell them on and use the profits to fund the next purchase.   I don’t know but I wanted the option.   It was going to be my pension as I don’t have one.

I can’t do that now.  I will get clobbered and can’t see the point when any potential gains will just be paid in stamp duty.

And I won’t be alone.   Thousands of landlords will no longer be able to afford to expand their portfolios, to provide housing for those that can’t afford to buy.    And if they do decide to pay the hiked stamp duty how will claw back the money?  By raising rents of course.   Great.  So rents around here of around £800 for a two bedroom flat are going to be closer to the £1000 mark.   Brilliant.    That means that tenants will need to be earning over £35,000 a year to be able to rent them.    And whilst paying off their landlord’s mortgage they will be even less likely to be able to save up and get their own.

Well done George.  Well done

< slow hand clap forever more >

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  • A touch premature perhaps?
    The ink’s hardly dry on the newsprint
    and, because it’s Friday, rockets are
    being fired in all directions!
    It’s well known that “The devil is in
    the detail”
    There could be an Angel in there
    as well maybe.
    Give the lad a chance – he’s my MP!