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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

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Original poster

Housing

83 replies

titbumwillypoo · 29/05/2023 20:21

If you look at most of the problems in the country at the minute the root cause is housing. Rents are too high, wages haven't kept up, not enough houses being built and mostly a finite resource being used as a basis for our economy.
I think there's a simple solution, a two pronged system. Option 1: If you rent out one house you pay 20% on income and then for every house after that an addition 1 percent up to 80%. So couples who have got together or people who've inherited etc and have a spare house (and don't want to sell yet) can make some money but they'll not get massively rich and are more likely to want long term tenants that will look after the place. What it will do is dissuade people buying up lots of houses who then get rich off the backs of other people working without having to contribute much to society.
Option 2 is if you do have lots of houses then you can become a charity. You don't pay income tax BUT you cannot earn more than 10 times minimum wage (£216,736 a year) and you cannot charge more than 10 times minimum wage per week rent. (Say for a 2 bedroom house) Obviously there would need to be some tweaks for bigger houses and HMO's but you get the principle.
Finally, housing benefit should be reduced to a flat rate across the country (over a period of say 5 years) of 10 times minimum wage per week. The money saved could be used by councils to build more social housing under the proviso that it cannot be sold off and to pay more housing officers to inspect bad landlords.
Basically my plan allows people the freedom of choice. If you believe in unfettered capitalism that allows you to set market rates that squeeze people until the pips squeak then you can have it but in doing so you will be giving back to society. Or you can make a decent living that positively helps vast swathes of society.
YABU: Market forces and the profit motive are what makes this country great.
YANBU: Secure housing should be accessible to all for a functioning society and not a way for a minority to get rich(er) off the hard work of others.

OP posts:

bijouxtt · 30/05/2023 04:17

I'm not a resident of the U.K.

Larner · 30/05/2023 01:21

It's difficult to get a property to rent because there are lots of tenants. Owner occupancy is dropping like a stone. But there are more dwellings than households, and more dwellings being built than new households appearing. This has been the case for twenty years.

When people talk about supply and demand in the housing market they're not talking about demand being caused by people being born and needing a place to live. They're talking about investors wanting to buy housing. That's what demand is. And demand is high because demand for all asset classes is high due to printing money and, now, latterly, stagflation.

SueVineer · 30/05/2023 01:14

Larner · 30/05/2023 00:45

@MyYoniSaysNoni there isn't a housing shortage anywhere. Year on year for two decades there have been thousands fewer households than there are dwellings.

There's a shortage of affordable housing. But there's no shortage of housing.

You want affordable housing? You and all the other investors in this particular asset class need to cash in your investments.

Then we'd have affordable housing.

That is completely untrue. The market rate for rent would be lower if there were more properties and less tenants. The reason it is high is because there are few suitable properties and many tenants clamouring over the few properties. This is the case in most cities in the uk but especially in places like Edinburgh and london where it can be difficult to get a property to rent at all.

SueVineer · 30/05/2023 01:11

Housing costs are high including rent because there is a huge under supply of properties in the uk. Over regulation will just drive landlords out of the market and put prices up even more as they have in Scotland.

Larner · 30/05/2023 00:55

Fascinating

SausageMonkey2 · 30/05/2023 00:52

I rent out the house I lived in before I met my husband. It’s a 3 bed house for £575 a month. I pay 40% tax on it under the current system. I’d pay less tax on your system than I do currently.

Larner · 30/05/2023 00:45

@MyYoniSaysNoni there isn't a housing shortage anywhere. Year on year for two decades there have been thousands fewer households than there are dwellings.

There's a shortage of affordable housing. But there's no shortage of housing.

You want affordable housing? You and all the other investors in this particular asset class need to cash in your investments.

Then we'd have affordable housing.

Sunnyeverday · 30/05/2023 00:42

Nevermind31 · 30/05/2023 00:06

They need to stop selling nee housing to landlords in China and Hong Kong. A lot of new housing in London is first marketed there before it comes onto the UK market. Charge overseas landlords horrendous tax to make it not worth their while

This exactly is the issue.
British residents generally speaking have no choice but to live in the UK and will own their home. They're made to pay additional stamp duty on second property bought in the country. However, non-residents/foreigners are "exempt" as their first home is in their country but their first purchase in the UK is usually a second property. The govt makes policies that to those who don't analyse further sounds good but doesn't deal with the issue.
Just over a year ago they initiated the non'resident stamp duty surcharge but it's very little and very late.

MyYoniSaysNoni · 30/05/2023 00:38

Im a landlord. Live in the SE where there is a real housing shortage. My local city council has nearly 3000 families on their waiting list for housing. County wide it's 20,000.

What i would do if i were in power is build masses of good quality social housing. With affordable rents. Masses and masses of it. And change some of the right to buy criteria.

Our local council keeps selling off pockets of land it owns to developers. Who then build luxury flats or executive 4 bed homes which sell at insanely high prices to people koving here from London and make the house builders loadsa dosh. Why can't the council use these bits of land to build their own housing for the residents on the waiting list?

The issues with your solutions is that the landlords in my area would just pass the tax hike onto tenants by increasing rents. Currently lots of landlords are selling up due to changes in mortgage tax relief, epc legislation, etc - some of these homes are being bought by families but lots are being swept up by venture capitalist type housing companies who's main concern in the long run will be profit above all else. So there will be fewer btl landlords with one or two houses, instead there will likely be massive corporations (who will then use theur might to lobby the govt).

Larner · 30/05/2023 00:32

I agree that housing costs are a problem, massively so. We're all spending far too much on housing and we don't have money for anything else. But it's a problem because property is an asset and all assets are uber-valued now because money isn't worth the same as it used to be due to quantitative easing. This is a global issue but it is hitting the UK harder because we have a sewn-up wealth/class system and we've invited all comers to buy up our assets each year successively since 2010 and especially since brexit. Who owns our prime real estate, our utilities, our transport infrastructure, the companies that the constituent parts of the NHS have been hived off out to? Investor mates of the government specifically of the cabinet. For over a decade.

I admire your initiative but fiddling around with little bits of tax won't cut it. We have been sold. And - unlike 2008 - now there really no money.

DiscoBeat · 30/05/2023 00:21

From a personal point of you that wouldn't work for us. We've bought property to help out a family member for half the market rent, and wouldn't be able to if we got stung for the tax you suggest. Not everyone does it for profit!

DiscoBeat · 30/05/2023 00:17

And not enough housing being built? Well I don't know about official stats but it seems like there's new build estates springing up everywhere
We've had a lot of building in the villages near us recently, but most are 3/4/5 bedroomed houses rather than the affordable housing that is needed.

YetMoreNewBeginnings · 30/05/2023 00:13

It doesn’t have to be that complicated

There has been a bundle of housing association building here over the last couple of years. Not enough, but enough to make a large impact on the rental market.

LL’s with decent properties at not obscene prices haven’t had any impact. My tenant got a SH place, I got a new tenant in for the same rent, no big dramas.

Shit landlord downstairs (their property normally rents for £340 a month more than mine) stuck his on the market as he couldn’t get someone willing to pay over the odds for his shithole.

Build the affordable places and the impact on the rental market will be knock on.

Nevermind31 · 30/05/2023 00:06

Whatevergetsyouthroughthenight · 29/05/2023 23:50

bijouxtt · 29/05/2023 21:57

I rent out my house for £50 more a month than it costs for the mortgage. I put the £50 towards insurance and repairs. If I was taxed 20% then I would have to put the rent up 🤷🏻‍♀️ it's my only property and I rent another property due to relocating for work

Landlords already pay tax at least 20% on the rent, rent is treated as income. There is some tax relief on the mortgage interest. If you are a Landlord not paying tax then you are potentially breaking the law.

https://www.gov.uk/renting-out-a-property/paying-tax

Renting out your property

Landlord responsibilities when renting out your property, including making repairs, health and safety, increasing the rent and changing regulated tenancies.

https://www.gov.uk/renting-out-a-property/paying-tax

MillicentTrilbyHiggins · 29/05/2023 23:36

and you cannot charge more than 10 times minimum wage per week rent

Do you mean 10x 1 hour at minimum wage? Yes please. I'd save a fortune!
But realistically landlords would sell up. And people like me who can't get a mortgage would be homeless.

SwedishDeathClearance · 29/05/2023 23:35

bijouxtt · 29/05/2023 21:57

You are already taxed at 20% but get it (mostly)back through a tax allowance assuming you are a basic rate tax payer
If you are a higher or high rate tax payer then you already pay more than 20% in tax on rental income?

Letsallthinkofaname · 29/05/2023 23:16

ContinuousProcrastination · 29/05/2023 23:12

It would also help if we actually encouraged young people into trades so that we had enough builders and roofers and scaffolders and plumbers & electricians

This. We've encouraged so many kids into university we have a significant lack of tradespeople

ContinuousProcrastination · 29/05/2023 23:12

It would also help if we actually encouraged young people into trades so that we had enough builders and roofers and scaffolders and plumbers & electricians

ContinuousProcrastination · 29/05/2023 23:10

All your complex rent controls and tax disincentives are sticking plasters over the imbalance of supply vs demand, which is what causes the prices to be high.

Your solutions, whilst well intentioned, probably just shuffle around who the landlords are, there are always people who can game those rules to generate a profit.

The single best solution is mass government/Council backed building of homes for rent, as in the 60s & 70s. The increased supply meets demand and pulls prices down. However, doing it too quickly could kill our economy through shock of lost value. It needs to happen gradually, so that there's time for the positive economic effects (of people having more disposable income to spend) to trickle through and offset the falling asset values.

Swrigh1234 · 29/05/2023 23:02

OP, why the intellectual contortionism and convoluted tax systems that are more complex than quantum physics?

This is a supply and demand problem. Too many people, not enough houses. Either reduce the population through migration controls or build more houses.

Original poster

titbumwillypoo · 29/05/2023 22:48

bijouxtt · Today 21:57
I rent out my house for £50 more a month than it costs for the mortgage. I put the £50 towards insurance and repairs. If I was taxed 20% then I would have to put the rent up 🤷🏻‍♀️ it's my only property and I rent another property due to relocating for work

Bijouxtt, This is the problem in a nutshell. You chose to borrow money but you're getting someone else to pay it back and in the end you'll have an asset paid for by someone else. No other investment would work like this. A bank wouldn't lend an individual £200000 to buy shares and then expect the taxpayer to make up the monthly repayments so why is it ok with housing? It's a broken system that impacts society as a whole.

CoreyTaylorsSoggyTshirt Option 1 means they pay 29% on 9 house or 30% on ten and they can charge what they like. Option 2 means they can buy as many houses as they like, but they can only charge a capped rate like a housing association and will still get a VERY good income for their work.

MayBeeJuneSoon The housing crash that is likely will just mean those sold houses being snapped up by people who already have the money which will make the situation worse. The minimum wage is £10.42, so how many hours a week do you think should some people have to work to keep a roof over their heads?

OP posts:

Original poster

titbumwillypoo · 29/05/2023 22:26

The point is the numbers aren't ridiculous. At the minute the Government are distorting the market by paying market rate in housing benefit, and encouraging private ownership of a limited resource to be concentrated in the hands of a minority. If a private individual wants to take a risk by say buying 5 houses 25% tax on their income is reasonable because at the end of the day that individual will eventually own 5 houses they can sell. That person could equally invest their money in Tesla but they may not see the same return. The difference is the "market" is being propped up by taxpayers to the benefit of private individuals. In 2021 the government spent 16.5 billion British pounds on housing benefit compared to £1.27bn on affordable housing. That's the root cause of the problem.

OP posts:

bijouxtt · 29/05/2023 21:57

PuffinsRocks · 29/05/2023 21:49

Ten times minimum wage? Dear God what do you think rent costs and how do you think anyone pays it?
The numbers here are ridiculous and don't address the root causes of the problems.

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