PROPOSED TAX CHANGES TO BUY TO LET INVESTORS COULD DO SERIOUS DAMAGE TO THE ECONOMY

 

Message to all landlords, business owners and managers

We need to get this very serious issue properly debated in parliament.

We also need to put pressure on our duly elected MP's -whether you voted for them or not - to make sure they understand the detail of the proposals and the potential havoc it might cause

 

Please read the letter below and, if you are as concerned as I am , I have suggested below what you might do urgently 

Here are some suggestions :

 

1) Go here and find out who your MP is if you don't already know 

http://www.theyworkforyou.com/mp/

 

2) Once you know who your local MP is, email them directly from the same site my letter below  (Please edit it to sound like you but I would recommend you use the general phrasing and stance)

Suggested letter

Subject:

PROPOSED TAX CHANGES TO BUY TO LET INVESTORS COULD DO SERIOUS DAMAGE TO THE ECONOMY

 

Dear XX (add name of MP)

I wish to raise my very deep concerns about the proposed new tax regulations on residential investment property suggested by George Osborne and his team. 

I believe the tax changes that the chancellor is proposing are detrimental and will significantly impact my business leading me to have to sell my properties.

 However my concern is not purely about my own personal situation - far from it - as a business advisor , I am only too aware how much importance the values of property play in business confidence both with businesses and also lending institutions 

I believe that many landlords will choose to sell their properties, and the very real danger is that this will lead to a drop in confidence and a fall in house prices - if we start creating negative equity situations again the economy runs a good chance of stagnating and our recovery will be stopped.

 I know you will be tempted simply to forward this letter to David Gauke at the Treasury who will in turn return with one of his standard arrogant replies dismissing my concerns.

I really do implore you not to hide behind this official channel to deal with letters like mine and  to understand what is happening and form your own conclusion, so you are able to ask the appropriate questions, because the arrogant disregard for good honest citizens, who have chosen to invest in property as part of their planning for the future, is mind blowing. 

If people are to invest over decades to provide retirement income or to finance children's education, etc, they need a stable tax backdrop in which to get on with it. 

 Investors can undertake their own research and draw their own conclusions about risks relating to asset prices or interest rates, for example - but what they can never make provision for are sudden RETROSPECTIVE changes to a tax regime. 

For a conservative government to do this is astonishing!

Such tax changes are destabilising and damaging to all savers, because they introduce uncertainty. But when they are retrospective , they are extremely unfair and could cause some people potentially to go bankrupt .

 If the changes had been introduced from 5th April going forward then investors would be warned in advance and would be able to decide .

 However, to introduce measures that apply  to investors who, as ordinary unsophisticated citizens of this country, had quite legitimately arranged numerous loans and mortgages on properties that had been accumulated over a considerable period of years ,  means the powers are effectively retrospective, and this represents in my opinion a gross abuse of power, and is criminally unjust.

This objection is a matter of principle, about a human right.

It is a general objection to governments' tendency to alter the taxation backdrop in a way that prevents individuals and families from making long-term financial plans. They should be allowed to make decisions based on the rules that exist at the time, and to know that the fundamental rules will not change so drastically that they will put the investment at risk. This surely is a fundamental human right?

With respect, please can I ask you to think of this issue by using some common sense. 

Let me describe this another way

The tax as conceived will effectively apply to "business turnover", not "net profit", as is normal across the world 

 The implication of this is little understood, but what it means is that a landlord, unable to deduct the full cost of his mortgage interest from his rental income, could easily be in the position of being taxed on zero net income or indeed on a net loss.

So they make a loss or a minimal profit on their rents and yet will have to pay a big tax bill.

If such a tax were applied to any industry - not just buy-to-let - its effects would be ruinous. 

It would be the equivalent of taxing a cab driver on the basis of the passenger fares he received, and not permitting him to deduct the cost of petrol.

I can't find any precedent for such a tax, which I suppose is not surprising: trying to raise tax from someone with zero net income is an absurd tax policy - if it can even be called a policy.

It is, in effect, less of a tax than a backhanded way of the Government closing down a business or an industry.

Many in this position are going to be faced with paying tax at an effective rate of 140% or more, which means they will have no alternative other than to sell, and if there is a groundswell of motivated sellers , they might end up selling at a loss and going bankrupt - surely you must agree that this is extremely unjust?

 Landlords like me provide good quality accomodation at a reasonable price to people who cannot afford to buy their own homes due to the banks not lending.  

What is the government doing to solve this problem - absolutely nothing - and now they might create a property crash which will make people even less confident about buying their own properties for a long time ahead - ludicrous.

I hope you can see that this tax specifically - almost exclusively - attacks smaller, modest buy-to-let investors.

Very wealthy individuals or large landlords - those who can incorporate their properties and run them as a business - will effectively escape the tax. A growing breed of institutional landlords, including insurers, asset managers, pension funds and other vehicles, will also not be touched by the tax. In fact they will continue to enjoy the tax breaks which are being withdrawn from smaller, "cottage" landlords under these proposals.

 In other words the people clobbered by this tax are the hundreds of thousands of small-scale investors who own one or two properties as part of their wider savings plan, or because they want to help house their children, or for a range of other reasons.

That is grossly unfair. 

The question I'd want to put to Government is: why should these less-wealthy property investors pay more tax than their wealthier counterparts?".

If this tax goes ahead, I believe I only have two choices - sell or go bankrupt.

What do you suggest I do?

I would like to meet to discuss my concerns with you at your next surgery - can you please advise when this is so that I may make an appointment?

Your sincerely

 Your name and address

 

3) Once you've done this, forward this email onto 5 of your friends who you know are in property - whether this be via social media or internet.  

 

WE NEED TO GET THE MESSAGE OUT THERE!

 

 

4) IF YOU DO NOTHING ELSE THIS YEAR - PLEASE PETITION AGAINST THIS, WRITE, CALL AND MEET WITH YOUR MP TO DISCUSS THIS AND CIRCULATE AROUND AS MANY PEOPLE AS YOU KNOW TO GET THIS ISSUE RAISED!

 

 

 

Yours - extremely concerned

 

Mike Ogilvie

 

 

 

 

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