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?

dreamingofsun Mon 23-Jun-14 16:13:17
"homehelp - i don't think many LL's think or want to be doing some kind of social good. For most its a business arrangement."
Well, there's plenty on this thread who seem to think they're doing a social good.

"However"
Does this mean that you're now going to argue that LLs are providing a social good?

"for prices to fall enough for our tenants to buy, they would need to drop by 50% at least. I doubt this would happen even if all LL's sold, and even if it did, it would cause hardship to many - the property crash of the 90's was bad enough and that reduced prices by about a third"
...why, yes, it does!

You are deluding yourself. One of the reasons house prices are as high as they are is because LLs are competing with owner-occupiers to buy property. If LLs didn't do that, prices would fall, and housing would become more affordable. It may not mean that it would become sufficiently affordable for your tenants to buy, but it would become more affordable for lots of others. And while a housing crash would be a very painful economic adjustment, our current housing bubble causes hardship to many. Just not you.

I mean, really: it's one thing to crap on the economic chances of the next generation, but to do so while pretending (to yourself or others, I can't tell which) that you're somehow doing someone a favour while you do so....I'm calling you out on that particular hypocrisy.

homehelp - i have teenagers so house price inflation is not a total win for us. I don't believe i'm doing anyone a favour, as i said previously this is a business arrangement. I provide what the contract says, and i abide by the regulations - its a shame that all LLs dont and that not all tennants do either

I think you are also forgetting that those LL's with property to sell to pay for care have had that property paid for by private tenants/tax payers.

I didn't forget that, if you read my post properly I referred to that.
In more blatant terms as you obviously missed it:
I referred to the fact that the landlord has his house paid for by HB money (the state) but then might be forced to sell that property to pay for care fees in old age (hence he benefits from state funding once) but the HB tenant gets rent for free and then gets care for free as well in old age (he benefits from state funding twice). I didn't include privately paying tenants in what I said as they do not benefit from having their rent funded from the state and the landlord won't benefit from HB from them either. The only winner in those cases is often the state when the landlord is forced to sell to fund his care.
Obviously commercial landlords are a different kettle of fish altogether as they have many many properties.

My user name is pants: just because somebody is laying for their care doesn't mean that they can afford the best. Some care homes cost £1000 a week so if somebody sells a house to fund their care they won't necessarily bed able to afford to go wherever they like. Some people sell their houses to pay for their care and end up in the same care home as somebody who is fully funded by the state.

I referred to the fact that the landlord has his house paid for by HB money (the state) but then might be forced to sell that property to pay for care fees in old age

It's still not a bad position to be in is it? The BTL has the mortgage paid by someone else and may have to sell it to pay for care home fees. So they're not really that hard done by are they? It's not like they've had to sell their family home that they paid for for 25 years.

but the HB tenant gets rent for free and then gets care for free as well in old age (he benefits from state funding twice). I didn't include privately paying tenants in what I said as they do not benefit from having their rent funded from the state and the landlord won't benefit from HB from them either.

You do know that a hell of a lot of private tenants in receipt of housing benefit are low paid workers don't you? The reason is because private rents are so high. Believe me, if you are entitled to housing benefit you're on a pretty shit income and your circumstances are pretty dire. Not every HB recipient is lounging around on their arse.
The only winner is the BTL. The tenant might get some rent paid for with HB, but it's not a fun position to be in.

Also, the state will fund the rest of your care when the proceeds from the house sale runs out.

here come the landlord haters.

mumsnet rules; how dare you be a landlord. You should give people housing for free. You never worked for the money. You couldn't possibly have a house you can't sell and need to move for WORK. etc etc.

playground jealousy and nursery logic.

Who sold off all the council houses? Who bought them?

Landlord here. I pay 40% tax on my share and DH pays 50% tax on his.

So we are already paying through the nose.

In three of the 4 areas we own rental property in, you need a licence from the local authority to let it and its renewed annually!

OP you're living in a parallel universe.

Tenants have extensive rights. We have suffered greatly from bad tenants who have faked references, ID documents to get in and then fail to pay. And it then takes months to evict them and costs thousands not to mention the inevitable clean up!

We also have tenants who failed to pay and wanted to be evicted so that they could get a council property. These are people who are happy to do this with children to they could get a council house/flat. Clearly there were then the inevitable death threats to us when the Council asked whether they had deliberately made themselves homeless in order to go to the top of the list.

And we have also had plenty of lovely people.

We carry out regular maintenance and upgrades as required because these contribute to our income and are our investments and we can't afford to let them fall into decay and a property in top condition attracts better rents and you can choose better tenants.

We pay more than our fair share of tax and nobody lives in Dickensian squalor in our properties.

To suggest we should pay even more tax or in fact be limited to how we choose to invest the money we have earned and already paid tax on once, is utterly ridiculous and would only serve to make even more people homeless and create a larger social housing shortage.

OP you seem to think others owe you a living and a home.

Landlord haters? No, just amateur/shoddy LL hater here.

Who said you should give houses to people for free? Haven't seen it on this thread.

MrsFlorrick, despite all your hardships, you still apparently own BTLs in no less than four separate places. So the rules obviously aren't strict enough, because I pointed out we have a plague of BTL landlords - numbers are rising.

MrsFlorrick, the fact that 3 of your houses need a licence and you can let them out shows you must be a decent LL. It's not like that in many parts of the country. In my area any clown can put their house up for let.

We would need to improve/reform pensions to have any chance of halting the btl increases...we have to see btl in the context of the wider social and economic scenario

If the market performs well my portfolio will fund our retirement, get the gcs on the ladder and earn a lit more than leaving it in other investments. Our tenants are happy in their homes, which we maintain well as they are our investment. Everyone seems happy

AgaPanthers

There are people who cannot get a mortgage and can't get social housing. What are they expected to do?

The housing market outside London is very different to London. Newham already has a tax on landlords (by having an expensive licence) and it has not lowered rents one bit.

Rentals in London are stupid and will remain at stupid prices as long as people want to live there. We need to look at ways of actively encouraging people to live in different parts of the country.

Maybe immigrants should be restricted from settling in certain over crowded parts of the country for the first five years. This would act as an incentive to businesses to open up offices or offer home working if they want to employ immigrants. Controlling where immigrants live would prevent schools becoming over crowded like london where there are 5 form primaries.

Aga - I am interested to know your circumstances as you regularly rail against landlords, especially btl landlords, on here and in this thread have said you can afford to buy, but won't because prices are too high.

Do you rent? If so is it social housing, a private rental, are you a lodger or do you live with a relative?

I rent privately.

I'm puzzled as to why posters think setting up a company to buy properties to let suddenly qualifies a landlord more. Particularly with regards to limited companies simply being able to wind up and go bust if things go wrong.

As for more state control over the activities of landlords - I refunded my tenant's deposits in full over a month ago. The tenancy deposit protection scheme still hasn't refunded them. Goodness knows what its doing with their money. Can't get anyone to speak sense on the phone. They also insist on refunding to one tenant only instead of the five individually like I always did. A recipe for disaster if ever there was one.

Aga would mortgage repayments be more than your rent? If not why not buy? You stop a btl landlord from buying another property .

Have you had problems with your landlord? I was happy to rent for years, but there came a time when I wanted my own space and had had enough of sharing with other tenants.

Mortgage payments would be more, yes. Plus if you spend/borrow the money, it's forever isn't it?

No it's for a fixed period with owning the place outright the end goal.

Very much depends what you want to do. You could buy somewhere and rent a room to a lodger, potentially providing someone with a nicer place than a room in a HMO.

You may get a higher paid job in the future - who knows what might happen, things change. You might find yourself in a situation where you can pay more off the mortgage and reduce the term.

The rent money you are paying out now isn't doing anything for you for the future and you probably don't know how long you will be living there.

If it was made more difficult to get funds to buy to let then foreign investors would buy all the homes and would buy them outright with cash. This is already happening a lot in London. The uk and especially London property market is a good bet for any investor.
As for the Newham property licence for landlords - I have one of these, I think it cost about 1 weeks rent so it is not enough of a disincentive for landlords.

Good point here:

"I could have paid the rent out of my wages for social housing without any HB, but because I had to rent privately I had my rent topped up by £280 pcm.
So not only was I funding someone else's mortgage, so was the tax payer. "

another poster

"i have teenagers so house price inflation is not a total win for us"

These posters are starting to look at the bigger picture - while a single individual making a bomb on a house is just a lucky / clever person, a significant chunk of society doing this are taking part in a process of transferring money from some sectors of society to others. Which to which? Do we like it like this? If not, how would we prefer it to work? What can be done about it?

I would guess that a significant proportion of those falling into benefit-bashing rhetoric are those who also like to rub their hands over rising house prices, and get gloomy if the rise slows down. These two factors are hand in hand: the high proportion of working people in receipt of benefits is a direct result of high prices of property -> rents too high to be covered by low / normal salaries.

So the tax payer, in the case of HB, isn't putting money into the pockets of the unemployed or low waged "scrounger"; but into the pockets of the owner of the house. Do we like this? If not, can we look at that head on and do something about it?

And of course into the pockets of the old at the expense of the young. The old may think they need it for security, pension etc - fair enough. But what chance will the young ever have to make equivalent provision for themselves?

PS

I checked "gifting" - here is a whole page on tax and gifts

www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm

which never uses "gift" as a verb once. It's wrong - you make a gift, or receive a gift. Gift is always a noun