to think we need new taxes on Buy-to-Let

[AgaPanthers]

Over the last 15 years the number of new homes built in Britain is equal to the number of new homes under private rental. In other words, buy-to-let is in effect taking all new homes (though obviously some existing homes are going into btl and some new ones into owner occupiership so it's not a 100% match).

But there have been vast rises in the number of private tenancies, sharp falls in the number of owners with mortgages, and the consequences are many, from tattier streets (landlords don't spruce up homes with sitting tenants, the tenants don't want to plant the gardens because they might be kicked out next year) to families having to move house mid-school year because the landlord is kicking them out.

Today it's announced that the number of people made homeless from private tenancies has trebled in five years, and that private landlords are now the leading cause of homelessness. www.bbc.co.uk/news/uk-27940701

AIBU to think that this has resulted because of all the people piling into buy-to-let because it is deemed as more attractive than the alternatives (bank accounts, shares, small business, etc.), and that therefore we need new taxes to make buy-to-let far less attractive, given the social problems it causes?

I'd rather see more social housing provided than buy to let taxes.

Surely all it will actually do is push up the price of private rentals because a lot of people don't actually have many other options for housing.

There are a lot of different factors at work, resulting in tenancies being ended and people being rendered homeless. Sensible landlords in it for the long-term don't need the hassle or the expense of a constant churn of tenants, although it's in a letting-agent's interests for that to happen. But with rents rising this could be a serious temptation for some.

If you impose additional taxation on properties not owner-occupied this could leave some landlords with even less funds to repair and maintain, and that's not in a tenant's interests either.

Tenants these days have no security of tenure, and that's the main issue as I see it. Thanks, Thatcher government.

i would love to be a landlord ive had so many i know exactly what they are doing wrong i just don't have the cash

If you tax it then you'll also have to cap rents. Otherwise landlords will just pass the cost of the tax onto the rent.

I'm not sure landlords can pass rent increases on necessarily. If you make it less attractive then hopefully they would sell up, to an owner occupier. You could change the rules for new houses being purchased today, to encourage them to be owner occupied.

I mean there is a market, and people have a finite budget, and I don't think it's the case that landlords can simply increase rents, unless everyone in the market does.

What about higher stamp duties on 2nd homes?

I think rent capping is the only way forward with the current housing situation

I agree re capping.

I would be more inclined to go for some sort of minimum requirement for training/education for landlords. I think a lot of people go into buy-to-let with an idealised view of how they will be making easy money, pay of their second mortgage and then have an asset to sell when they want to. They don't necessarily consider issues such as maintenance, costs associated with bad tenants and the problems encountered with trying to ensure that they don't end up out of pocket.

I would also be in favour of more publicity for buy-to-let properties being made available for council tenants. A couple of my friends do this as it gives them a guaranteed rent and the council take responsibility for the admin and maintenance. It seems like a win-win scenario, but I don't know if many people know it is an option (or even if it is an option in every district).

"I'm not sure landlords can pass rent increases on necessarily."

It's fairly straightforward but you can't impose a rent-increase during the fixed-term. Otherwise they can charge whatever they like. As a lot of landlords and their agents offer only six month ASTs they have plenty of opportunity to increase the rent.

you can certainly ask for £100,000/month if you want, it doesn't mean you'll get it in a competitive market.

"I would also be in favour of more publicity for buy-to-let properties being made available for council tenants. A couple of my friends do this as it gives them a guaranteed rent and the council take responsibility for the admin and maintenance."

They're not council tenants. In fact some councils use privately rented accommodation for the kind of people they are obliged to help with housing but don't want as their own tenants with security of tenure.

Some landlords' properties have been left semi-derelict after enjoying the benefits of guaranteed rent and the council washing their hands of the damage at the end of the tenancy. In one case I know of the landlord was left with over ten grand's-worth of damage to fund out of their own pocket.

Better rights for tenants is key.

We need to look to the Continent where renting is far more common and see how we can improve things for renters.

Do these same social problems exist in countries where the proportion of people owning a property is equivalent or lower? eg France, Germany?

I am a landlord (don't shoot me). Higher stamp duty on 2nd home would have put me off, for sure. Higher capital gains tax on the sale would also put me off to an extent, but less so.

If you make it less attractive then hopefully they would sell up, to an owner occupier.

I will never be in a position to buy my own home, so have to rent privately.

If there was a disincentive to let properties out, that would restrict my choice of housing even more.

Actually, in a lot of areas it has purely been B2L landlords keeping the housing market afloat.

Scenario:
Young couple purchased a starter home 10 years ago. Now the family has increased they need a bigger home, so the house goes on the market. As house prices have increased but wages haven't, it is harder for the next wave of first time buyers to get mortgages, especially after the Review which has just happened with all lenders decreasing the amount you can borrow.
That means no-one can buy the house EXCEPT a B2L landlord. He buys it, so the current home owners can move on - keeping the housing market moving and allowing someone further up the chain to move.

Also Buy to let has been fairly closed to new Landlords for the last year at least, if not the last 2 years as the restrictions have become tighter on mortgages. It is VERY difficult for inexperienced landlords to get mortgages.

Being a landlord really isn't the cash cow that many people think. There is much red tape and regulation and costs can be high. There is also the ever present risk of getting a bad tenant who doesn't pay rent and / or trashes the property.

A lot of people now are buying rental properties as a pension after so many lost so much in the financial crash, bricks and mortar are seen as a much safer investment.
Buy house on large mortgage, put tenants in, rent house out for 30 years, rent pays majority of mortgage, retire aged 60, sell house to fund retirement (or live on rent now mortgage is paid off).

There are already deterrents such as capital gains on selling the place, higher mortgage / insurance rates for buy to let.
Despite the costs and hassle, it is still a good long term investment if you get some good long term tenants who look after the place. Many people rent very nice houses which they could never hope to afford to buy and are very happy.

Yes. Buy-to-let taxes earmarked specifically for proper regulation of the sector. Limit on proportion of buy-to-let in certain areas too. There are too areas of my city that have turned into rundown ghettos in the last 15-20 years because of the buy-to-let tatty factor (I sold my much-loved first house because of this - including the buy-to-let next door being left empty for long periods and attracting all kinds of nastiness). Puts off owner-occupiers and the downward spiral continues.

I think there should be a buy-to-let licence that requires training to achieve and needs renewing every 3-5 years.

p.s. I know there are some great l/lords. My experience is the not-so-great congregate at the cheaper end, exacerbating existing problems in those areas.

I think managing agents also need closer scrutiny...

A simple one would be to abolish stamp duty altogether on people's main homes and hike it up on buy to let properties.
The higher tax would have be factored in as a business cost , but a few grand over the 30 years you keep a B2L property would be insignificant. This would keep the B2L market (which is an important part of the housing market) moving but also allow first time buyers and families trying to buy a family home to buy their homes more easily.

Really? Why's that? Many landlords already pay 40%. Some small investors look on it as a pension (who can blame them) and run at a loss. Particularly when you take into account damage caused by tenants.

Perhaps we should also educate people on how to live independently, how to look after their home, the consequences of not paying rent, etc.?

There are already controls on the number of rental properties in some areas, annual licences and requirements of change of use planning permission for larger HMOs as well as some of the most stringent rules in Europe. You may wish to educate yourself as to the full ambit of UK buy to let tenancies OP.

BitterAndOnlySlightlyTwisted

Sorry - using incorrect terminology due to only have a sketchy idea of the actual process, but I do know a few people who have let their places through the council and it has worked really well for them. I believe in their cases it is more to do with the lack of appropriate properties available from the council's housing stock i.e one bedroom places, so they have had no trouble with the tenants themselves and no issues after tenancy has been completed. I do know that they have had work done where modifications have been made, which was all made good at the council's expense at the end of the tenancy. Perhaps we are just lucky to live in an area where the terms of this kind of tenancy are more favourable than in others.

I don't know what can be done - but it very much seems to me that unless you already have property equity (or some that can be used by you i.e. your parents have it) then it is virtually impossible to buy a home.

(Most) BTL people have property equity and are very good at using it to get more.

I do this that this is a massive part of out housing problem.