Don't Panic Mr. Mainwaring, are you nuts or what? – Stop letting Rishi Sunak’s tax tail wag the planning dog!
By Tony Gimple – 11th September 2020
In a recent post on a well-known social media site catering for the needs of private landlords, one contributor was considering selling a number of their rental properties in order to beat Rishi Sunak’s much publicised threat to bring the CGT rates in line with those levied on income. Here’s what I posted in response: – Perhaps it’s because I’m of a certain age that I remember one of the most famous lines from that BBC classic sitcom ‘Dad’s Army”, wherein Lance Corporal Jones (Clive Dunn) said ‘Don’t Panic Mr. Mainwaring’. Likewise, and of a similar time when the nation as a whole was under threat from a much more visible enemy, was the motivational poster produced by the British government in 1939 in preparation for World War II. It read ‘Keep Calm and Carry On’ and was intended to raise the morale of the British public threatened with widely predicted mass air attacks on major cities. Swap widely predicted mass air attacks on major cities for widely predicted tax attacks on the PRS, and the same Don’t Panic (Mr. Landlord) – Keep Calm and Carry On message applies as much now as it did then. So to all those doom-mongers and naysayers both on said social media site and elsewhere being panicked into putting their hard-earned rental properties on the market in a futile effort to perhaps save a bit of capital gains tax (CGT), let me ask you this question: – After taking into account all of the transactional costs, any early redemption charges if the property is mortgaged, CGT at current rates, potentially making your tenants homeless and having to find new landlords who may not be as good as you (and by doing so playing into Shelter’s hands), the long-term loss of rental income and then having to find a replacement asset class that will perform anything like as well (or substantially better if you ever want to recover all the money that you’ve just thrown down the drain) – are you nuts or what? The one thing that everybody seems to forget in their blind panic to divest themselves of income generating rental property is that CGT is only paid at disposal. So why crystallise a wholly unnecessary tax bill plus a shed load of other costs that you’re unlikely ever to recover, simply because you’re having a senior moment? Better still, find yourself a new set of professional advisers who don’t pander to your every whim but instead sell (advise) that which they know and you don’t, and who have bothered to turn the telescope round the way its makers intended it to be used i.e. to look forward and not back. Either that or make an appointment with your GP for the chill pills :). Lastly, for now at least, despite tenants and toilets being significantly harder work than the landlord bashers imagine BTL is a fantastic investment and until such time housing supply actually catches up with demand (something that is unlikely to happen unless the Luftwaffe get another go), not only will you continue to make a damn good living but you’ll be doing your bit for Queen and Country to boot whilst showing those Islington champagne socialists at Shelter that landlords are not the money grabbing parasites they make us out to be. Maybe the PRS should form a pressure group called Landlord Rebellion :). Rant over for the moment, and you know where to find me if and when you come to your senses.