On the 21st March at the National Landlord Investment Show, the Rt Hon Iain Duncan Smith MP joined a panel of experts, including Less Tax 4 Landlords founding director Tony Gimple, to discuss Government policy, intervention and the future of the Buy to Let market.
Chaired by BBC politics presenter Andrew Neil, the panel also featured Paul Mahoney (Nova Financial Group) and Sarah Davidson (Knowledge and Product Editor at the Mail Online’s money section, This is Money).
The debate ranged over a wide variety of pertinent topics, such as Brexit and house-building, as well as the obstacles homeowners and landlords currently face.
The three expert panellists were unanimous in voicing optimism for the UK housing market over the next five years, with some of them believing market fundamentals to be strong and supportive, despite apparent political uncertainty in the present.
In this video Tony Gimple was asked the following questions:-
Q1) What impact have you seen the Brexit process have on the property market?
On the BTL business sector actually very little. Nature abhors a vacuum,so whilst demand exceeds supply in the rental sector, those running high quality housing and those who have the ability to recycle capital are continuing to do so. It’s working really well.
Q2) Tax relief cuts, higher stamp duty pressure on margins, is it serious?
It’s only serious if you don’t do anything about it. Over the last 3 years we’ve seen a lot of ‘head in the sand’ attitude. Landlords who are jumping to incorporate are making a huge mistake. Companies get taxed in every conceivable way. Stamp duty is transactional, what comes around goes around, whether it’s window tax, clock tax or shop front tax, it’s nothing new. Section 24, the capping of mortgage interest relief at basic rate, is however starting to have a significant impact. We’re seeing a lot of highly geared less profitable landlords and social landlords who work de facto who are also having to pay taxes in advance, these are the landlords that will be forced out of the market unless they act. Will it have an impact if people do nothing? Absolutely, but it will have a negative impact not only on the people in this room but on the tenants of the people in this room. Where is the money going to come from as a result of having to re-house?
Q3) So what should they do?
Look at what their options are. Are they truly an accidental landlord? If they have one, two or three properties with no intention of growing then maybe in these circumstances they should pay down their mortgages, go for the longer term better quality tenants, maximise the rental yields and maintain the properties so that in these circumstances Section 24 won’t affect them because it only affects mortgage payments. They also need to look at other ways of dealing with inheritance tax. Don’t sell if you can help it. Why on earth would you want to sell an income-producing asset if you’re beyond that point?
If however, you are beyond that point and you’re looking to run this as a proper business, which is exactly what George Osborne’s reforms were allegedly about i.e. professionalising the sector, then they really need to start taking specialist advice and make sure that the people they’re talking to are effectively selling advice that they don’ t already know.
Listen to the full episode for more comments from Tony and the other panellists and to hear why Mr Duncan Smith, former leader of the Conservative party, believes former Chancellor of the Exchequer George Osborne’s economic policies led to “landlords scaling back or even leaving the sector entirely”.
If you missed the debate, you can now watch the full 86 minutes here.
Less Tax 4 Landlords also exhibited at the event, and we were thrilled to meet so many landlords and aspiring property investors on the day. If you connected with us at the event, either at our stand or at one of our Tax Talks, we’ve put together a short article explaining what to expect next.