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'm a landlord and a tenant.

Had very bad landlords and very bad tenants.

But I agree that the system is very unfair on tenants.

We need much much more social housing.

Base rate and mortgage rates history can be found on the link below. It certainly shows that mortgage rates are much lower now than 15 years ago
www.housepricecrash.co.uk/graphs-base-rate-uk.php

There should have been a clause forbidding the letting out of ex council houses.

There is a clause which lasts the first five years of ownership. You cannot rent it out during that period and if you sell it you have to repay the discount that you benefitted from.

I also agree that the incentive for BTL ought to be reversed or reduced.

Also re Ladyface and letting agents, what a bleedin' racket that is!
these parasites need to be kept in check!

Aga Well actually if people choose to invest their money in ways that are bad for society, then I will criticise them

So I suppose you are investing your large amount of capital in ethical companies so as to pay more tax on it to benefit society as a whole? I do wonder whether your blinkered and rather strange view is causing you to waste this capital. Perhaps you choose not to work in such a way that you have been turned down for mortgages? I have no idea how you gained your capital but not having benefitted from private education or inheritance myself, and still having managed to buy property, I do not simply believe your line that it is impossible.

To me, the main problems in this country with property are:-

• the planning system which prohibits much self build as in other countries in favour of big developers
• the same big developers put up mass new builds relatively cheaply, making people think the minimum they need is a 3/4 bedroom semi detached as a ftb
• people's increasing inability to do anything for themselves, such as redecorate an older property or do repairs
• the misunderstanding that if you don't have a reasonably well paid permanent job (and set out in life to achieve that) there is and never has been any magical wand easing your path into home ownership unless mummy and daddy give you a leg up

Before I owned property and when I was a student and later on building up my career, I didn't want to live in social housing. I wanted to stay in privately owned house shares. I did not want these taxed out of existence so I would have had no option to stay with mummy and daddy or shack up with some man who already had a house.

I don't think those figures are accurate, inthedark. Don't think you can get 2.5% now (Nationwide now offering 4.59% for a 90% mortgage), and as you can see from articles like these

news.bbc.co.uk/1/hi/business/290446.stm

people were fixing at lower rates than the SVR back then, e.g., in 2006 the average fix was 4.34%. www.telegraph.co.uk/news/uknews/1961356/Housing-crisis-Mortgage-rates-at-8-year-high.html

I occupied six rental properties over 13 years (renting from 19 years-old to the age of 32 when I bought my first house). I had two really great landlords. The rest were quite poor. Lack of a professional attitude was the biggest issue, followed by a (possible understandable) desire to spend as little money as possible on property maintenance. A classic was being left with heating or hot water for 18 days at the start of December 2009 because it was a "very busy" time for the landlady because she was expecting lots of family over for Christmas. I also liked it when the husband of a landlord couple solved a severe window gap issue throughout the house (the windows desperately needed replacing) by sealing them ALL shut with an unsuitable sealant.

I have NO problem with BTL or landlords in general. Just those the operate as per the examples above. And I maintain that this is concentrated a the cheaper end of the market, where renters - for all sorts of reasons - are less able to take action.

I think most of this is just ignorance rather than malicious, money-grabbing behaviour though. This is why I suggested a licence underpinned by training up-thread (for agents and owners).

I think there needs to be a big overhaul of the BTL sector for the benefit of renters and landlords. There has been piecemeal legal developments over the years, alongside various initiatives, and it all seems a bit of a mess really.

Aga 2 things I don't understand.
The bit where you say buying is not a fixed price. How is this different than your rent? Rents go up they rarely come down they are not fixed for life unless you are a sitting tenant then like the guy who rented the room upstairs from us in a London suburb who was paying £100 per month fixed for life it was a poison chalice. At the time a 1 bed flat was around £15k. Having spent his while life guarding his £100 per month room (by now he could have bought a flat with his own toilet and bath 3 times over) he has realised too late that he missed out on a life. He never married because the woman wanted her own bathroom and looking to the future wanted children and living where he did meant these would not be on the cards if he stayed in his rented room.

Also what do you mean by over inflated house prices? What do you think house prices should be and when do you think they are going to fall. You might think they are over inflated but 10 years from now I can guarantee that the price to day will look very cheap.

You remind me of a friend who laughed when she saw mine and dp's tiny flat compared to her 3 bedroom council house which she was paying £30 per month more for. That was 30 years ago but apart from a brief period in the early 90s we have never paid more on our mortgage than she has on rent on any given month. She is at the moment paying over £900 per month for the same house whilst we after buying and selling 4 properties are just about to sell and buy a house with no mortgage.

You can get an initial product offer rate of 2.5% or less but a variable rate is more than that. The cost over a whole term is more than 2.5%.
www.spf.co.uk/mortgages/residential/

Here there are also some variable ones at 2.5%.
moneyfacts.co.uk/mortgages/variable-rate-mortgages/

My own mortgage rate isn't anywhere near that low because I opted for a medium term fixed rate.

Rents are correlated to incomes, prices are related to interest rates. If interest rates rise, prices fall. So you can buy more house for the same number of pounds when interest rates are higher.

I completely disagree. I think that the councils are passing the buck for housing onto private landlords, because previous governments sold off all the housing stock.

The govt. should own ALL of the houses that it lets to council tenants and should not depend on the availability/inclination/disinclination/abilities of private landlords, who have a VERY mixed experience depending on where the house is. It would be like your child's nursery just having whoever happened to be passing by caring for children, rather than trained, securely employed childcare workers.

There are no criteria for being a landlord beyond owning a house. There is no training on any level, and tenants are at the mercy of a very mixed bag of landlords. It's doubly unfair on vulnerable tenants or people with young children.

If the government housed ALL council tenants in wholly state-owned properties, and private landlords could only let to private, self-funding tenants, then the number of private (and shoddy) landlords would necessarily drop off sharply. They would simply not be ALLOWED to take people on benefits.

But to arbitrarily tax existing landlords would be ridiculous. They already pay income tax on their meagre profits from the enterprise.

There is effectively a tax on btl in many areas anyway, at least with regards to houses in multiple occupancy. Where I am, these not only require an annual and expensive licence, but also all sorts of safety features that social and council housing let to families just does not require to have. For instance, there is no danger of an HMO here being let without a working fire alarm (as was the case in several recent fatal fires involving family homes let by councils), because every room, even cupboards, must have a mains operated smoke alarm (a special heat sensing one in the kitchen), carbon monoxide alarm, and battery back up. They must be tested every month and the results logged in a log book. Some flats on two levels or with more than 5 bedrooms must have sprinkler systems. Doors need to have intumescent seals and be self-closing. There needs to be a fire extinguisher and fire blanket, changed every 3 years. Cookers must be chained to the wall in case they fall over. Exterior doors cannot be locked from the inside in case a tenant locks themselves in. There must be illuminated signage of the fire escape (the front door). Windows must open fully. Properties are inspected annually and all of these tested. Landlords must prove they are a fit and proper person and be registered. This is on top of gas, electrical and energy efficiency tests. There is far more, but its too much to list here!

Its ironic that none of this applies to social housing let to families with small children!

It's hardly ironic, given that the most acute issues of overcrowding and slum conditions are found in HMOs (sheds with beds and the like), that they have the heaviest regulation.

This is a reaction to landlords' behaviour, and doesn't constitute a tax.

The reason HMOs exist at all is because landlords can get better yield by letting out houses by the room.

The reason HMOs exist is because not everyone has a family or wants to live with them. Its because people, especially when they are young, want to move from one place to another, often because of work.

Do you think everyone has the choice of living in the family home until they get married? Or even wants to?

I really object to HMOs and people sharing accommodation being labelled as slum dwellers and overcrowded. Having lived in them myself when younger. Who would have thought being a university graduate moving to a new city for a good job would classify me in the minds of some as some kind of scum who lived in a slum?!

Well they exist for many reasons, but fundamentally if you can buy a rundown terrace in Slough for £180k and turn it into a 6-bedroom HMO and rent them out room-by-room for £420/month to the council, then it's a good income. It's got little to do with young people (sharing makes more sense) wanting this, and rather more to do with exploiting the market.

www.standard.co.uk/news/london/thirteen-deaths-across-london-as-more-people-found-living-in-beds-and-sheds-9541239.html

Well I don't live in Slough or anywhere near it and funnily enough neither does the majority of this country. I deal in high end properties and even when I was renting a room myself, the rooms were in period properties with massive room sizes, authentic cornicing and marble fireplaces! Not everyone is the same. I don't actually know anyone who lives in a slum HMO, I have read about them in the papers as I'm sure you have done.

When I moved to Germany for 8 months with work, I really struggled to find a property to rent and the standard was lower, and more dangerous - because tenants are expected to do more things for themselves and look after their properties better without constant landlord intervention.

Its the same in most of Europe. I really think some people on these threads must have led very limited lives if they really think there is no demand for renting rooms in shared properties and all the tenants are being exploited.

Why on earth would a graduate trainee for example want to rent an entire house long term when moving to a new city. Flat and house shares are how you meet people and share costs. Its pretty standard really.

"
If the government housed ALL council tenants in wholly state-owned properties, and private landlords could only let to private, self-funding tenants, then the number of private (and shoddy) landlords would necessarily drop off sharply. They would simply not be ALLOWED to take people on benefits. "

Very few landlords take people on benefits and a lot of landlords do not even want families. Where are all the state owned properties going to come from? Or are you going to complusory purchase all rental properties for £2.50.

Life is a captialist society is unfair, but redistributing wealth on that level has never worked in other countries.

If the government housed ALL council tenants in wholly state-owned properties, and private landlords could only let to private, self-funding tenants, then the number of private (and shoddy) landlords would necessarily drop off sharply. They would simply not be ALLOWED to take people on benefits.

I think you are totally confused between housing benefit and council housing. Plenty of people live in council housing and pay full rent without welfare assistance.

aga - sorry but i think you've got a bit confused here -

Rents are correlated to incomes, prices are related to interest rates. If interest rates rise, prices fall. So you can buy more house for the same number of pounds when interest rates are higher.

Rents on the private market are not correlated to incomes - or i've never heard of a LL doing this. Interest rates often rise because the money markets are becoming overinflated as a result of people having too much money in their pockets. In the ST this is quite likely to increase prices because people have money to spend. once the interest rates reach a certain level then this makes housing less affordable so can hold back the prices. however, lots of other things affect house pricing - the job market, demand, confidence in the market.

i am interested in where people think all the cash is going to come from to build all this social housing? And remember we won't just be doing this for the present population - as more housing becomes available it will attract people from the rest of europe who will have to be treated fairly. As I understand it, this is already causing a lot of the pressure on housing

I'm not confused in the slightest, I can tell you that the place I rented 10 years ago for £850/month is now about £1000 (roughly in line with wages) whereas the capital value has doubled.

Landlords don't have freedom to set their rents, they must fall in line with the wider market. Flats will tend to earn better yields than houses, cheaper areas tend to have better % yields than pricier ones.

You can rent places worth millions for pennies on the pound, because most millionaires don't want to rent. E.g., at £3k pcm this is much cheaper than buying www.rightmove.co.uk/property-to-rent/property-42815204.html because that's by far the most expensive place on the market. But in London £3k pcm is nothing special and this isn't cheaper than buying www.rightmove.co.uk/property-to-rent/property-46236803.html

I would change 2 things.

1. Imbalanced length of tenancies for tenants. Say, tenants can give 6 months notice (1 month for first year), whereas landlords need to give 10 year's notice. This would make being an accidental landlord very unappealing and ensure landlords are in it for the long term and make being a tenant massively more secure.

1. High rates (higher than current) of CGT on sales of all second homes (allowing for rpi indexation on purchase price). This would deter investing for capital gain and would provide a lot of income into the treasury to invest in new social housing.

Aga - I rented a house out 12 years ago for £300pcm. The same house is now rented out ( by the person I sold to ) for £650pcm. Both me and the current owner charged rent in line with similar properties nearby. So your example is not representative of all properties in all areas.

Handsoff7
"1. Imbalanced length of tenancies for tenants. Say, tenants can give 6 months notice (1 month for first year), whereas landlords need to give 10 year's notice. This would make being an accidental landlord very unappealing and ensure landlords are in it for the long term and make being a tenant massively more secure."

If a landlord had to give 10 years notice then the tenant would simply stop paying rent. The landlord would do zero maintance and the property would simply become a slum.

If a landlord chooses to its really easy to make a tenant's life hell in subtle ways that stay within the present law. For example my poor tenant had to put up with property viewings 3 times a week for six months at any time of day from his previous landlord. He was left without electricity for 3 days because his landlord would not send out an electrican and went I took over the property it was a complete death trap.

Tenants do not fit into nice categories. A lot of private tenants are reasonably well off and have good jobs. They want to rent short term. One of my tenants is over in the UK on a contract and plans return to South Africa. People's relationships change and it would be cruel to make them give 6 months notice.

I also believe that the ablity to evict a tenant is a deterrant against anti social behaviour. Even councils evict unruly tenants. Do you want your council to have to give ten years notice to evict the Klux KLan member who are terrorising a little old black lady or a sex offender who has flashed his genitals at your three year old?