UK 05:19 Saturday, 17 October 2026
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MPs on the Treasury select committee want George Osborne to reverse changes in the tax treatment of Buy to Let. They lie about why they are bleating and they lie about the consequences. As a dyed in the wool capitalist, I explain in this podcast why, for the good of the economy, the Chancellor must stick to his guns
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Comments
BlueFrew
If you looked at any of the landlord forums, I doubt you’d describe them as articulate. A lot of them don’t even seem to be numerate. A glance at the register of members’ financial interests is probably a better guide to why some members of the committee aren’t keen on the changes.
If there are any criticism of Osborne it’s that the reliefs should be removed completely. Buy to let is an investment. It’s ridiculous that you have tax relief for that investment, but not others like share buying. It should also be withdrawn immediately. However I’m sure GO has seen the way demographics are going. The oldies might still decide the 2020 election, but the under 40s will hold sway come 2025.
Maurice Waldman
Buy To Laugh,
Basically agree; but basically disagree too.
Running a BTL is running a business; with a traditional business, say a shop or factory; the interest on the company loan is allowable against profits. Therefore if the Landlord business model is to change then why allow interest relief on all other businesses? This is unfair.
I have sold off a portion of my BTL because I had a ten year plan.
Disagree with the point that BTL only satisfies the greed of Landlords & is not industrious because en course of the business we needed a whole spectrum of workers & professionals to run the model & comply with a thick tome of regulations:
Agents
Surveyors
Cleaners
Plumbers
Electricians
Carpenters
Builders
Decorators
Key & security firms
Fire alarms
Carpet & Furniture suppliers
Accountants
HMRC
Solicitors
Banks
Yes, we do create a lot of employment. it is a business and for that reason only we should allowed to offset the mortgage or business loan interest.
I do agree that property prices are crazy and that rents can be too high; personally I always negotiated with the tenant for affordability; rather that than inability to pay. But I never associated the property value with the rent anyway.
Ishfaq Ahmad
You are very careless and misled about your comment “ greedy junior doctors” you don’t know the lies by Mr Hunt, he is coward liar and refused to face junior doctors on tv – if contract imposed , there will be exodus of doctors and NHS will collapse broken and privatised which will be good for doctors anyway- Enjoy the collapse of NHS
Tom Winnifrith
Isfaq
Listen to my podcast on why junior doctors are greedy. Will they quit the UK in droves when just a couple of years away from being GPs on 105k average wage for a 40 hour week Sadly they will not
http://tomwinnifrith.com/articles/7913/tom-winnifrith-podcast-juniordoctorsstrike-lazy-bastards-lying-about-their-greed
Ishfaq Ahmad
Tom
I will listen to your podcast and agree with you those who are in specialist training called specialist registrars , they won’t leave UK. But after finishing their training the easiest place to get £15k / month tax free job would be Middle East – I am NHS employee since 1992 , never seen so low morale and unity in medics- you have not seen anything yet
Tom Winnifrith
I
So we the taxpayer train doctors up for 10 years then you say lots will sod off to ME for 180k pa tax free. What are you asking> that taxpayers match that – pay Drs 250k pa.
Sorry but you make the case yourself, doctors are greedy motherfuckers motivated by money
Tom
Drunken Sailor
BTL is a very hard business to make money out of, if you just look at the rental income. If you can get enough rent to cover all the expenses, including when the tenants smash the place up and stop paying and you have to go to court to get them evicted, and have enough to pay the interest you are doing well. Where the money is made is on the Capital Gains on the property. But only if you buy at the bottom and can get your tenants out and sell at the top.
You might be right that pricking the housing bubble will, over time, allow a whole new load of BTLers to come in at the bottom, but it will take time. In the meantime those who have high LTV borrowings will end up having the properties repossessed and these may well sit vacant for a long time if the market is awash with such properties.
I tried to pick up some bargains in Greater London after the 2008 banking crisis, however the prices were not low enough to make the business model work. Eventually I bought 3 three bed properties in Florida for a total of £135k, which at the time had tenants in and were yielding 17% gross. I made a cumulative loss of £8k over the ensuing years when interest payments on the mortgage (taken out on a UK property my brother was living in) were taken into account. Most of this loss was down to tenants stopping paying, smashing the place up and eventually being evicted. I have had a good run this year as the mortgage got paid off when my brother moved out of London and have had a much better run of tenants, who are actually on the US equivalent of housing benefit, which is extremely generous and I get much higher rents than previously. The benefit gets paid direct to my management company (largely useless, but got to have them as I can’t do it myself) and the social services inspect the properties every 6 months to make sure the tenants are not smashing them up and that the management company is keeping up with fixing things that are my responsibility to pay for.
I hope one day to sell the properties for at least twice what was paid, but at the moment house prices in that area have not increased much, as the US banking system is still not in a position to start lending to the sort of people who might want to buy them, even though the size and standard of the property, if in UK, would be attracting affluent middle class families.
Drunken Sailor
My 14 year old daughter went to a careers speed dating evening and has decided she no longer wants to be a teacher but now wants to be a paediatrician. I don’t care as long as she earns enough to stop being a drain on my wallet when I want to retire.
BlueFrew
If a landlord doesn’t pay NIC, file accounts at companies house, pay corporation tax or comply with any of the other rules and regulations for running a business, then they aren’t running a business. It is an investment plain and simple.
As for the idea that BTLers somehow keep people in work. Any walk through an area of town will show just how much is spent by landlords on maintaining the fabric of their buildings. As little as they can get away with. Besides, if people had more money in their pocket, from not paying money to middlemen for shit banks, they’d spend that money with other businesses.
Bring on the house price crash.
Mike McKindley
Whilst there are some good points made in this podcast (some of them again, and again and again) there is a complete misunderstanding of how much of the BTL market works, and also what would actually happen to the economy if there is a mass sell-off of rented housing. Most people agree that we would likely be tipped into another recession, which we’re teetering on the edge of already. That would have a terrible impact on so many things, and whilst house prices may well drop, there will be a stark lack of mortgages as a result, particularly for first time buyers. Plus of course many people will lose their jobs and struggle to pay mortgages, meaning they would lose their homes and wealthy cash buyers would benefit as they snap them up in auction. This is not fiction, it is what happened in the last downturn. Still, it’s the way this tax will effect tenants and home providing I wish to briefly comment on, though I could write a book on it.
Many full time landlords (including myself) keep our rents well below market rate and don’t increase them on a tenant in situ. That means when someone rents a place, whether it be a room in a shared house or a complete family unit, then they know their outgoings for as long as they wish to stay, and I’d quickly add that as long as they are good tenants they can stay as long as they like in my homes.
Now I am forced to raise rents due to the tax changes and have already begun to do so. Whilst the tax changes won’t hit till 2017/18 by 2020 I am aiming to have increased by 30% so I need to start now. Linking a tax to an interest rate makes it impossible to plan accurately, so you have to plan to be safe. 30% may be safe but if interest rates start rising considerably then the rents will have to rise more.
What Mr Winnifrith is ignoring is that even if houses are sold off, there is still demand, and demand continues to rise as our population rises, so rents will not drop at all. The tax is another cost the tenants will bear. It’s not just me that is putting up rents already, I know lots of landlords. That is a straight fact so it doesn’t matter whether you argue that the Chancellor is right or not, rents are rising and tenants are losing out. How is that helping them to buy a house then?
Unless the root cause is addressed which is too much demand for the supply, then you can argue all day but achieve nothing.
We need more houses, pure and simple. The Government’s claims of 400k new builds by 2020 is woefully inadequate and until that situation is resolved, rents will be driven up by demand and taxation.
I should also add that the BTL market is responsible for keeping house prices down and is not the driver for them going up. Demand is the upward pressure and that’s come mostly from immigration. We have seen a 10% growth in population in the last 16 years and 85% of that is through immigration. Landlords have brought back disused properties into use, put deposits down ‘off-plan’ so that builders have cashflow to continue with their developments, we’ve converted office accommodation into residential, and various other things, BUT probably one of the biggest factors BY FAR is that thousands and thousands of people are housed in HMOs across the country. This has taken enormous pressure off the first time buyer market and helped to keep prices down by more efficient use of large houses, disused pubs and so forth. All these factors are now put at risk by Osborne as people decide it’s not worth the hassle (and there is plenty of that as a landlord).
So Mr Winnifrith, whilst you clearly mean well, your arguments do not address the root cause of the problem and do not take into account the hugely positive effects that BTL has had on the economy and for home providing. I would respectfully suggest that your efforts would be better spent on coming up with a plan for building homes that are affordable for youngsters.
Mike McKindley
@ Bluefrew. You say any walk through an area of town shows how much is spent by landlords on the fabric of their houses – as little as they can get away with. What a load of rubbish! Your prejudiced views have no basis of fact and you speak as though you have intimate knowledge of which properties are rental, and which are not, across the country.
As for NIC, most landlords I know (possibly all of them) do pay NIC at appropriate rates. You say that unless someone files accounts at companies house they are not a business. Try telling that to every self-employed person in the country then, like plumbers, electricians, cleaners and the list goes on. Sure some of them will have incorporated but mostly they don’t. Yet according to you they are not running businesses??? Oh boy will they set you straight!
Drunken Sailor
Bluefrew,
Most small businesses are not incorporated as Limited Companies. My father in law runs a bookshop it is a business, he pays Employers NIC on his employees and he pays tax and complies with all relevant rules. He does not file with Companies House because his business is not a Ltd. I run my properties in Florida as a business and have to comply with all their rules. If I made a profit I would have to pay US tax and there would be UK tax to pay too. Tax returns still have to be filed every year in both US and UK, even if there is no profit and therefore nothing to pay. I do not directly employ anyone in UK, so do not pay NIC. I do not directly employ anyone in US either as that is what my management company skims 10% of all rents and charges me 10% on top of all repairs for.
I do not like having to fork out when scum tenants trash the property and I find some of the things the Inspectors pick up on their visits that are mine to pay for really annoying, but I have no choice but to pay. Ultimately, as I want to sell the properties when prices pick up, it is in my interest to keep them in good order.
Graham
Good points here made by all but ultimately Osborne is making a terrible mistake here (no surprise).
What this does is reduce the demand from BTL investors which means lower house prices (some people like the sound of this) but also necessarily higher rents (not so good). It’s not true that if BTL house prices fall, then those BTL investors who remain will be able to charge lower rents – rent is determined by the supply and demand for rental property, nothing else, and the supply of rental property will undeniably fall as a consequence of this measure.
The fall-off in the supply of rental property won’t be fully offset by a fall-off in demand, either, as it’s not true that every BTL investor who goes away will be replaced by someone who would otherwise have rented. Those first-time buyers trying to get on the ladder are also competing for property with cash-rich families and foreigners buying up their 2nd and 3rd and 4th properties in the UK.
Finally, what I’d consider to be the critical point is the one Mike mentions above – the overall supply of housing. That supply is artificially restricted by the Green Belt around London, by a multitude of planning regulations and by the distorting effect of the taxes already in place. Adding another tax into the system will only reduce the supply of housing as, in this case, marginal BTL investors leave the field of play. With them out of the picture and an artificially lower overall housing price level, housebuilders will find that it is not in their interests to be in such a rush to build, even where they can get the permission to do so, and that helps nobody.
MARYMARY
Interest only mortgages should be available to good tenants who have no arrears over a five year period, no complaints from neighbours and who keep their property in good condition as long as the repaymenrs are no higher than their rent. Landlords should be able to give long term tenants a discount if they buy, in place of the upper rate of C.G.T. housing benefit should pay the interest if the mortgagee falls ill or loses their job, this would save millions on housing benefit as rents rise. Future foreign nationals should lease and not be able to own british property unless they are full time residents and pay full british tax. Foreign property companies should also be based here for tax purposes. We should not be selling large chunks of land to foreign speculators. Too much money leaving the country does not help the balance of payments.
J P Spaghetti
“the hugely positive effects that BTL has had on the economy and for home providing”
Sorry MM but you’re clearly hardly impartial, and, although you personally seem to epitomise most or even all that a good landlord should be, the hugely +ve effects over the last two or three decades, whatever they might have been, seem outweighed by the even more hugely (what does that leave – colossal or gargantuan maybe?) deleterious associated effects on society as a whole. I concede that development of abandoned commercial premises is a good thing, but – c’mon – this is but a drop in the ocean in the scheme of things. For the sake of brevity, the absurd and now seemingly ubiquitous phrase “students or professionals” goes a long way to symbolising the issue.
And the notion that BTL suppresses house price increases – in the long term, at least – is surely absurd as it can only eventually increase demand for property. Well it can hardly decrease it, can it? Demand is demand and counterarguments that do not recognise this are sophistry. I was going to qualify that by making the assumption that the vast majority of people don’t and wouldn’t want to rent for all of their lives – not that there’d be anything wrong with that – but I think the statement is valid without it. I speak as one trying to actually buy a property without having to take out an humungous loan (i.e., mortgage), by the way. And why not?! Look at the problems that caused. But you can bet your bottom cupboard (suitable for one of smaller stature – bucket for a toilet) that if you were to show up at a residential property auction tomorrow hoping to bag something remotely affordable IN WHICH TO LIVE you’d be thwarted by a plague of parasitic BTL landlords looking for another ‘project’ and hiking up the price. If they want to make wonga the should do something truly useful. Train for an age – learn a skill – design drugs – build bridges – innovate…
The fact that so many people are now housed in HMOs is a SYMPTOM, not a cure. It’s symptomatic of a society where unbridled private landlord greed and opportunistic exploitation of landlord (i.e., housing) benefit has resulted in many on whom societal functioning ACTUALLY DEPENDS being unable to afford anything approaching suitability. I feel for those with a duty of care (e.g., bus drivers) who work whilst sleep deprived. There’s more to this issue than just a lack of suitable property, though that clearly exists (as, however, do many unoccupied buildings throughout the land).
Society would function perfectly well without landlords, at least those of a serial nature with bloated portfolios (I’m not taking a general swipe at decent ones – and I’m still grateful to one or two – especially if they own only a single extra property to supplement their income). 4 × 4 anyone? At least investing in companies (in theory) creates employment, and, depending on the outfit concerned, can even help some of them make useful stuff.
(Wee bit jaundiced there as still waiting for my last deposit to be returned in full as there was no good reason for almost half of it to be retained, the property having been in immaculate condition when I vacated it!)
filthy lucre
Winnifrith is economically illiterate (not news). Rents are not a function of
house prices. During the housing crash of the late eighties, prices fell far more than rents. Rents did not fall as much as house prices during the financial crisis either.
Rents are a function of supply and demand. House prices are a function of interest rates
and sentiment. Until inflation returns and it looks like interest rates will rise substantially, to
blah on about earnings ratios is nonsense. The man is an idiot. Why is he writing a financial blog?
I suspect that a lot of this is driven by wishful thinking, as he alleges that he only owns a ‘Greek Hovel’
Mike McKindley
Thank you Graham. Perhaps you’d be interested in something a good friend of mine published on his website – saynotogeorge.co.uk. His blog entry for the 28th Jan actually puts forward a plan to address the enormous shortage of housing we have, which seems to be a lot more than the Government has done. As far as I can see they have no plan, just claims that housing is a priority and that they’re going to build a completely unsatisfactory amount of houses by 2020.
My friend’s plan could be expanded considerably but it isn’t meant to be detailed on such a site. Have a read and see what you think….. http://saynotogeorge.co.uk/how-to-solve-the-housing-crisis/
Mary Mary – absolutely.
As for the spaghetti man, you do not understand the market do you. You talk about auctions and parasitic landlords but I wonder how many auctions you’ve actually been to. Any??? Probably not, but suppose you have, who would you expect to find there? Not commonly a place owner occupiers frequent but if they do then they will almost certainly outbid a landlord. Good luck to them. Someone is selling that house and wants as much as they can get for it. Owner occupiers are emotional and pay whatever they feel they can, which usually sees a landlord off well below the OO reaches their limits. However as I said the sight of OO’s and especially FTBs at an auction is rare.
You dismiss the HMO accommodation as being a symptom. Well if I accept that as an argument then it is a symptom of the terribly inadequate house building that we have seen in this country. We’ve seen the population expand by 6 million since the turn of the century and the worst housing output since 1920, ignoring the war years. You put down HMOs as such a bad thing but they have made efficient use of large houses by housing thousand upon thousand of people. So if you got your way and BTL disappeared all these individuals would be out looking for their first home. Just what do you think would happen to starter home prices then??? Open your eyes and see the reality of it instead of taking the normal negative approach that your sort of people do.
I see you’re on the Housing Benefit wagon as is so often brought out when someone has no vision of what has gone on by preceding Governments, and indeed is again happening with this one. Have you looked at the number of houses built for the social sector since the 80s? It’s appalling! And now what we have can again be bought for a song by people that have lived there a few years. I’d be quite happy for there to have been a significant social house programme over the last few decades, and even one now. However the simple reality is that Government has pushed this out to the private sector to do their job for them. So tell me where will these people live because the problem is about to grow substantially thanks to Osborne. We have the worst situation ever with families with dependent children living in emergency accommodation (inc B&B) and now it’s about to get a whole lot worse. So look at the drain on the public purse that will cause. Fine you don’t want landlords to take HB, and I have no problem with that – believe me it’s a market which I personally hate because it is fraught with issues, BUT where do you propose these people live? If you have the answer let’s hear it because the problem is right around the corner.
Society would function perfectly without landlords? OK so where do you want all the foreigners to live then? They cant get mortgages so rent – simple fact. I have lots of foreign workers in my houses. Perhaps you think they should all be sent home? I suspect that you do. And if that happens it stores up enormous issues for the future because we need those younger people to bring down the average age in this country. Angela Merkel was spot-on by allowing so many refugees in, it’s just a shame it backfired on her.
You know, it is generally impossible to make a blind man see. I shall leave it there.
phil
Mike McKindley
I think your posts are about as stupid as Filthy Lucre
Are you seriously trying to convince me that Britain’s housing stock can only work to a free market demand curve, if and only if BTL landlords get a tax subsidy.
Why should you be given a tax subsidy at all, do you really expect me to work in a business that has no tax subsidy just so you can work in an industry that does.
Isn’t it quite extraordinary when a government, any government, tries to get a better deal for the tax payer, a whole raft of tax subsidy from a spoilt brat doctor to a BTL landlord, fesses up and says it will bad for for the very same tax payer that is being screwed.
Where you come up with the case that Britain’s BTL industry is altruistic and benign is beyond. While I accept there are good guys in it, like you, you are in the minoriy.
Despite that if you think I’m going to carry on giving you a subsidy and guaranteed margin when I have a chance to have it stopped and get better value for my tax paid, I’ll take the better value.
If you cannot run a business without subsidy, that is your problem, not mine and you should sort that out rather than expect me and other tax payers to do it for you.
MARYMARY
Adding a few million extra people to hide the fact that state pensions are a ponzi scheme solves nothing. Malthus will be proved right in the end. War torn countries are always places where the population doubles every couple of years because they run out of food and water and space, and the environment becomes too degraded to support them, so they have to find an excuse to start a war and kill some people to make room for the next lot. There has always been a housing shortage because there is never enough space where people want to live for everyone who wants to live there. World Health Organisation figures show than every extra thirty people into any population will put twenty five of the native population into poverty. The Chinese are the only people who accept that the smaller a population is, the larger amount of land and produce they each have and when robots take over most work, they will have fewer people to support. Being nominally communists, they are not bothered about creating mega billionaire fat cats at the expense of everyone else, although it still happens, which proves politicians are fairly irrelevant
. Social housing for normal working families is an abomination, costing us all billions in subsidies, and assorted quangos while charging their tenants as much per month as an interest only mortgage, which would not keep going up the way rent does. Who cares if tenants/borrowers are on benefits? Its cheaper to finance a starter home than put families in a b&b with all the social disadvantages it puts on the children who did not ask for it and who will cause problems as soon as they are old enough.
J P Spaghetti
MM – re.
“FTBs at an auction is rare”,
of course they are as so few have the cash in the bank to outbid those who’ve made a packet by serially buying, ‘doing them up’ and selling them on at a significant mark-up for years!
I’m sure that society would indeed function perfectly well without serial landlords with “bloated portfolios” (I did qualify this by the content of the quotes – as I said, I wasn’t taking a general swipe), and your reasoning seems positively astigmatic to have surmised anything resembling xenophobia from my post. To address this, though, and – having lived and worked abroad myself and merely making what I consider to be objective statements – I’m sure that UK society would also function perfectly well without those from abroad (as perfectly pleasant, decent and industrious as they may be) who need to rely on such landlords (just as overseas societies would function perfectly well without those who hail from these shores). Such individuals, of course, would not include the likes of NHS staff. In fact, British manual workers whose wages have been undercut by foreign labourers housed twenty to a small (rented) terraced house who send every penny they can to the folks back home (where the cost of living is much less and houses are affordable) would no doubt agree. I don’t wish to sound like a poster boy for UKIP there but you raised the issue, and it’s only in the interests of balance that counterarguments are presented.
I don’t have an issue with HMOs per se. I was going to say that my gripe is with excessive BTL activity, but on reflection I think it is actually the fundamental concept of BTL mortgages. Turning up the heat a little, let’s consider the essence of this. It boils down to tenants buying their landlord’s property for him or her. Actually, I’ll just shout that back – IT BOILS DOWN TO TENANTS BUYING THEIR LANDLORD’S PROPERTY FOR HIM OR HER! Not only is it wasted money from the tenants’ viewpoint, then, but they are being charged to actively worsen their prospects by helping to reduce further the number of available properties with nothing invested in return!
Although obviously of relevance, the lack of suitable housing in the UK – exacerbated, I suppose, by the tendency these days for people to remain single in their own ‘pad’ for longer even if in a long-term relationship – is a separate issue in itself.
(As an aside, the glut of BTL properties has clearly helped facilitate the ridiculously gorged higher education numbers. Without them we’d perhaps revert to sane levels of maybe no more than 10% of school leavers going on to it by way of an added bonus.)
MARYMARY
This is why all the reliable renters should be allowed an interest only mortgage that costs no more than their current rent. Social housing should be for vulnerable or problem tenants who should be able to withold rent without penalty if the property is not of an acceptable standard, with easier rules regarding transfers to alternative social landlords, if they have been let down by their landlords. Quangos and regulators should be scrapped in favour of small claim court style tribunals where landlords would not be allowed to spend a fortune on legal fees or develop cosy relationships with regulators or pursue the tenant into higher courts if the ruling doesnt suit them.
Landlords should be able to sell to tenants at a discount, and be exempt from high rate C.G.T. and also be exempt on a sale to purchase another flat for a tenant that needs to move and wants to carry on renting from the same landlord. Ideally, most renters would choose to buy as soon as they had the qualifying five years rent record, and after any upswing in property prices, a lot of landlords would put their money into something else. At the moment C.G.T. stops a lot of landlords from doing that, and forcing a sale on many small landlords will cause a lot of the older ones to end up dependent on the state.
The extra tax is financially illiterate along with a lot if other unnecessary legislation. When did making the cost of something higher make it cheaper?