Finance Bill

Written evidence submitted by Steve Parsons (FB 55)

   I am 32 and have worked extremely hard to get to a position where I rent out 3 properties in the north somerset area.  I pride myself on being a good landlord, providing good housing and for existing long term tenants below market rate rents.  This is to provide myself with a pension which my current company pension has done so badly will likely only give me £3000 a year when I come to retire.

   You asked for alternative proposals for the mortgage tax relief, it has not been made clear exactly what the aim of any change is intended to do, with many comments being made for the reasoning, I have provided some suggestions that I believe to be a much fairer and more effective and faster solution to the given intended outcomes.

1. Raise more tax – It seems the fairest way is to make a levy on rented residential properties as a percentage of the rental income aka a rental tax, this hits all landlords proportionally the same regardless of mortgage or not, ltd company or privately owned. This would of course still not be fair as it would target income rather than profit but at least would target equally all of the PRS. (This option could affect the number of houses being built which is the most important factor in this current housing crisis)

2. A fairer playing field between FTB and BTL, the clearest unfairness is the availability of the credit, in this instance I think the best way is to withdraw all new and remortgaged (remortgaged phased in by 2020) interest only mortgages but keep the same criteria used by banks of 125% of rent but to mortgage cost not just interest. This in my opinion is the only way to level the playing field and address the real issue which is availability of credit.

3. BoE worried about over leveraging. Cap the LTV rate to say 70% for all new borrowing and do not allow and existing borrowing to extend the mortgage beyond 70%, this will mean if there is any crash it will be rightly landlords that take the hit and not the banks.

4. Too many people getting into the BTL market. Its a known fact that for most landlords its as an alternative to pensions because people don’t feel their money is safe with pensions, create more tax intensives to put money into pensions or other investments, alternatively do any of the above measures.

There may be multiples of the above objectives and that means one or more of these ideas could be implemented to get the desired result.

September 2015

Prepared 14th October 2015