Oxford Landlord’s £23.4m Tax Bill

I am asking Anneliese Dodds the Labour Co-op MP for Oxford East and Layla Moran the Liberal Democrats MP for Oxford West and Abingdon to remind the Chancellor Sajid Javid and Prime Minster Boris Johnson to use their persuasive skills to highlight and take a more holistic approach and attitude to the private rented sector and tackle issues which affect an Oxford landlords’ capability and capacity to strategically run an effective buy-to-let business.


For the last thirty years, the Government have passed responsibility of housing the masses from local authorities (i.e. council housing) to the estimated 1.5 million British buy-to-let landlords.


However, since 2015/16, Oxford landlords have faced increasing tax burdens as each year goes by, with the removal of mortgage interest rate relief on income tax (Section 24), the introduction of the 3 percent surcharge on stamp duty, and the reduction of the letting relief on capital gains tax. 

My research has calculated the total income tax contribution by 6,146 Oxford private landlords in the tax year 2015/16 was £16,041,462

However, the eradication of higher rate mortgage interest relief (also known as Section 24) announced in 2015 by George Osborne has been estimated to add a further £1.9 billion nationally to landlord’s tax liability. Whilst raising money from landlords is an easy target, and the tax receipts attractive, it does make the landlords financial burden even heavier.

And by 2021/2, when the full extent of the Section 24 relief kicks in, that income tax liability will rise to £23,420,534

for those Oxford landlords

This doesn’t even take into account additional liabilities such as Capital Gains Tax, the 3% additional duty on top of the prevailing Stamp Duty Land Tax and VAT.

Ambiguity and a lack of certainty is the foe of all investment, which has been seen with Brexit. Now, just as things are starting to get rosy in Q1 with the pent-up demand released with the ‘Boris Bounce’, the last thing we need as a ‘collective’ property industry is for the Government to see us landlords as a constant cash cow. This new Tory government must acknowledge the value the majority of private landlords offer by housing in excess of 9.45 million people in the country.

Westminster needs to take a balanced approach to the significant issues of possession (especially with the impeding removal of section 21 evictions), taxation and all rental properties needing to be at least an ‘E’ energy efficiency rating, to connect the value the private rented sector offers the country by effectively housing over a fifth of the population and avoid unintentional consequences by making renting a private rented property harder for tenants … because, it’s not financially viable to buy (or retain) a buy-to-let property with the way things are going against the landlord.

Tristan Batory | Associate 

Fine & Country Oxford 
267 Banbury Road, Summertown, Oxford, OX2 7HT 


E: tristan.batory@fineandcountry.com
T:   +44 (0) 1865 953243
M:  +44 (0) 7879 407697

www.fineandcountry.com

Banbury Landlord’s £5.7m Tax Bill

I am asking Victoria Prentis the Conservative MP for Banbury to remind the Chancellor Sajid Javid and Prime Minster Boris Johnson to use their persuasive skills to highlight and take a more holistic approach and attitude to the private rented sector and tackle issues which affect a Banbury landlords’ capability and capacity to strategically run an effective buy-to-let business.

For the last thirty years, the Government have passed responsibility of housing the masses from local authorities (i.e. council housing) to the estimated 1.5 million British buy-to-let landlords.

However, since 2015/16, Banbury landlords have faced increasing tax burdens as each year goes by, with the removal of mortgage interest rate relief on income tax (Section 24), the introduction of the 3 percent surcharge on stamp duty, and the reduction of the letting relief on capital gains tax. 

My research has calculated the total income tax contribution by 1,508 Banbury private landlords in the tax year 2015/16 was £3,937,085

However, the eradication of higher rate mortgage interest relief (also known as Section 24) announced in 2015 by George Osborne has been estimated to add a further £1.9 billion nationally to landlord’s tax liability. Whilst raising money from landlords is an easy target, and the tax receipts attractive, it does make the landlords financial burden even heavier.

And by 2021/2, when the full extent of the Section 24 relief kicks in, that income tax liability will rise to £5,748,14

for those Banbury landlords

This doesn’t even take into account additional liabilities such as Capital Gains Tax, the 3% additional duty on top of the prevailing Stamp Duty Land Tax and VAT.

Ambiguity and a lack of certainty is the foe of all investment, which has been seen with Brexit. Now, just as things are starting to get rosy in Q1 with the pent-up demand released with the ‘Boris Bounce’, the last thing we need as a ‘collective’ property industry is for the Government to see us landlords as a constant cash cow. This new Tory government must acknowledge the value the majority of private landlords offer by housing in excess of 9.45 million people in the country.

Westminster needs to take a balanced approach to the significant issues of possession (especially with the impeding removal of section 21 evictions), taxation and all rental properties needing to be at least an ‘E’ energy efficiency rating, to connect the value the private rented sector offers the country by effectively housing over a fifth of the population and avoid unintentional consequences by making renting a private rented property harder for tenants … because, it’s not financially viable to buy (or retain) a buy-to-let property with the way things are going against the landlord.

Will There Be a ‘Boris Bounce’ For the Oxford Property Market?


The Halifax announced in early January that there was a Boris Bounce in the national property market as they stated national property values soared 1.7% in December 2019 - the biggest rise since the 1.9% month on month rise in February 2007 (a few months before the Global Financial Crisis aka the Credit Crunch).

Get the flags out - all hail Boris as the Conservatives gain their landslide general election triumph - the Boris Bounce is here … or is it?

The Halifax (as well as the Land Registry and other house price indexes) use data of property that has sold and completed (completion being when monies and keys of homes sold are transferred). The Halifax data was based on properties that completed in December 2019, and as anyone who has sold or bought an Oxford property in the last 10 years knows, the time it takes from agreeing a buying price to handing over the money is many weeks. In fact, the average length of time between sale agreed and completion in the country is running at 19 weeks, meaning the figures mentioned by the Halifax are for sales agreed in July / August 2019. This growth relates to what was happening to the property market in Summer 2019.

One of the most important things for the property market is confidence. Interestingly, Rightmove reported a 28% surge in buyer enquiries between the 13th December and 18th December. After a couple of years of Parliamentary hold-up, the confidence following this general election is unquestionably a much needed boost for the economy (and ultimately confidence), so much so, shares in the new homes builders Barratt jumped 14% and Persimmon 12% the day after the election, showing a property sector anticipation that the property market is about to move forward as suppressed demand for people moving home is liberated. 

Looking at the previous elections, I decided to look at what happened to property values in Oxford in the 12 months after each election, with some interesting results.

So, with past experience, a general election generally has a good effect rather than a worse effect on the Oxford property market.

Looking at the rest of 2020, my intuition tells me in the better areas of Oxford, it will likely be a seller’s market, as they will have more influence to ask for higher asking prices from Oxford property buyers that have placed plans to move on hold for far too long - and this could push up Oxford property values more promptly in the short term.

Yet, as more Oxford properties come on to the market in the usual spring rush, we could see Oxford home buyers having more choice and thus, as supply increases yet demand remains the same, buyers will get more power to negotiate a better deal. Irrespective of that, there is still the all-encompassing issue that I have spoken about many times in my blog of not enough homes being built to keep up with the number required, meaning negotiating power and prices being inflated.

The bottom line is, the Oxford housing market will get a slight boost from the general election. The threat of a Jeremy Corbyn government obstructed some Oxford landlords to build their buy to let portfolio in the later parts of 2019, so as long as sellers remain realistic with their pricing and present their properties in the best light, 2020 in the Oxford property market should be a year of ‘steady as she goes’.

P.S .One final thought - remember what I said about the Halifax price Index being 5/6 months behind the times - don’t be alarmed when they announce in the March/April/May a reduction in property values - like I said before - this will be the prices achieved in the later parts of 2019 i.e. not what is happening right now.

Tristan Batory | Associate 

Fine & Country Oxford 
267 Banbury Road, Summertown, Oxford, OX2 7HT 


E: tristan.batory@fineandcountry.com
T:   +44 (0) 1865 953243

M:  +44 (0) 7879 407697


www.fineandcountry.com

Will There Be a ‘Boris Bounce’ For the Banbury Property Market?

The Halifax announced in early January that there was a Boris Bounce in the national property market as they stated national property values soared 1.7% in December 2019 - the biggest rise since the 1.9% month on month rise in February 2007 (a few months before the Global Financial Crisis aka the Credit Crunch).

Get the flags out - all hail Boris as the Conservatives gain their landslide general election triumph - the Boris Bounce is here … or is it?

The Halifax (as well as the Land Registry and other house price indexes) use data of property that has sold and completed (completion being when monies and keys of homes sold are transferred). The Halifax data was based on properties that completed in December 2019, and as anyone who has sold or bought a Banbury property in the last 10 years knows, the time it takes from agreeing a buying price to handing over the money is many weeks. In fact, the average length of time between sale agreed and completion in the country is running at 19 weeks, meaning the figures mentioned by the Halifax are for sales agreed in July / August 2019. This growth relates to what was happening to the property market in Summer 2019.

One of the most important things for the property market is confidence. Interestingly, Rightmove reported a 28% surge in buyer enquiries between the 13th December and 18th December. After a couple of years of Parliamentary hold-up, the confidence following this general election is unquestionably a much needed boost for the economy (and ultimately confidence), so much so, shares in the new homes builders Barratt jumped 14% and Persimmon 12% the day after the election, showing a property sector anticipation that the property market is about to move forward as suppressed demand for people moving home is liberated. 

Looking at the previous elections, I decided to look at what happened to property values in Banbury in the 12 months after each election, with some interesting results.

So, with past experience, a general election generally has a good effect rather than a worse effect on the Banbury property market.

Looking at the rest of 2020, my intuition tells me in the better areas of Banbury, it will likely be a seller’s market, as they will have more influence to ask for higher asking prices from Banbury property buyers that have placed plans to move on hold for far too long - and this could push up Banbury property values more promptly in the short term.

Yet, as more Banbury properties come on to the market in the usual spring rush, we could see Banbury home buyers having more choice and thus, as supply increases yet demand remains the same, buyers will get more power to negotiate a better deal. Irrespective of that, there is still the all-encompassing issue that I have spoken about many times in my blog of not enough homes being built to keep up with the number required, meaning negotiating power and prices being inflated.

The bottom line is, the Banbury housing market will get a slight boost from the general election. The threat of a Jeremy Corbyn government obstructed some Banbury landlords to build their buy to let portfolio in the later parts of 2019, so as long as sellers remain realistic with their pricing and present their properties in the best light, 2020 in the Banbury property market should be a year of ‘steady as she goes’.

P.S .One final thought - remember what I said about the Halifax price Index being 5/6 months behind the times - don’t be alarmed when they announce in the March/April/May a reduction in property values - like I said before - this will be the prices achieved in the later parts of 2019 i.e. not what is happening right now.

The £2.6 billion mortgage debt of Oxford homeowners

Irrespective of the shenanigans and political goings on in Westminster recently, the housing market (for the time being anyway) shows a striking resilience, fostered by the on-going wide-ranging monetary policy by the Bank of England. With interest rates and unemployment low, UKplc is heading into 2020 in reasonable condition. Additionally, despite the UK’s new homes industry improving its year on year new build figures (building 173,660 new homes this year to date - notably 8% more new homes than at the same time last year), there has been an unequal increase in demand for housing, especially in the most thriving areas of the Country.

With the discussion on whether the younger generation can afford to buy, it is true the average cost of a UK property in the early 1970’s was 3.8 times the average salary yet, nationally, it now stands at 8.4 times. On the face of it that doesn’t look good in anyone’s books – yet that isn’t the full story because it doesn’t reflect inflation and interest rates when it comes to the cost of borrowing money in relation to a mortgage for property.

The current level of mortgage interest rates has not been seen for many generations, meaning there are whole cohorts of the Oxford home-owning population who have no appreciation of the pandemonium that will eat into their household budgets should we ever return to the average historical cost of borrowing (interest rates jumped to 15% in 1992 – which wasn’t that long ago and between 2003 and 2007 they were on average 4.9%).

Now, once first-time buyers have jumped the hurdle of saving enough for a 5% deposit, which is hard with rents and many carrying loans of personal debt (unsecured loans), first-time buyers are currently spending an average one sixth of their salary on their mortgage, meaning mortgage arrears are at historical lows. However, on the other side of the coin repossessions have started to grow, with 6,180 repossession orders made in the last quarter, a 55% jump from 2017, yet nowhere near the 2009 high of 29,145 in the first quarter of 2009.

Therefore, this week’s discussion on the Oxford property market is – where are we with lending (mortgages and unsecured loans) and how is it affecting the Oxford, and national, property market?


One vital measure of the property market (and economy) is the mortgage market. If all the mortgages were added up, they would total £968.1bn; a lot when you consider the UK’s GDP is only £2,190.1bn. Mortgages are important as uncertainty causes building societies and banks to curtail lending (remember what happened in the Credit Crunch) and that seriously affects property prices. Then we have unsecured personal loans; interestingly the average Brit owes £991.42 in unsecured loans, a total of £36.1bn.

Lending is the lifeblood of our economy. Go back to 2007, and the phrase ‘Credit Crunch’ hadn’t been invented, yet now the term has entered our everyday language. In the autumn of 2007 it took a couple months before the crunch began to affect the Oxford property market, but in early 2008, and for the following year and half, Oxford property values dropped each month like a stone.

Mercifully, after a phase of sluggishness, in 2011 the Oxford property market started to recover slowly as certitude returned to the economy as a whole and in 2012 Oxford property values started to rise as the economy sped upwards. Happily, the Bank of England recognised the start of another boom and bust cycle, so in Spring of 2015, new rules for mortgage lending were introduced and for the following few years we have seen a reappearance to more credible and steady medium-term property price growth.

Oxford Property Values are 63.3% higher since the Credit Crunch

And what of the other side of the coin in terms of excess lending in Oxford?

Since 1977, the average Bank of England interest rate has been 6.65%, making the current low rate of 0.75% very low indeed. Yet the issue isn’t the amount of lending, as much as the persons ability to pay. Therefore, whether a person’s mortgage is fixed or not is more important than the amount owed.

Thankfully, the proportion of borrowers fixing their mortgage rate has gone from 31.5% in the autumn of 2012 to the current 70.2%. If you haven’t fixed your mortgage – maybe you should follow the majority? 

The total cost of mortgages owed by people in Oxford is £2,620,308,244

In my modest opinion, if things do get a little rocky and uncertainty seeps back in the coming years (and nobody knows what will happen on that front), interest rates can only go one way from their current ultra low level of 0.75% ….and that is why I consider it important to highlight this to all the homeowners and landlords of Oxford. Maybe, just maybe, you might want to consider taking some advice from one of the many qualified mortgage advisors in Oxford?

Tristan Batory | Associate 

Fine & Country Oxford 
267 Banbury Road, Summertown, Oxford, OX2 7HT 


E: tristan.batory@fineandcountry.com
T:   +44 (0) 1865 953243

M:  +44 (0) 7879 407697


www.fineandcountry.com

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