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?

Yes indeed anecdote doesn't make good data, but thankfully we do also have good data, which says that rents are barely rising (i.e. reflecting incomes), whereas prices are soaring in some areas.

www.thisismoney.co.uk/money/mortgageshome/article-2592354/House-prices-race-ahead-rents-bubble-market-grows.html

Aga: Nottingham is very cheap to buy or rent which is why you can rents that huge house for £3k per month.

Handsoff

point 1 would deter decent LL's as there's no way you would want to have a bad tenant who was either trashing the place or not paying rent for the next 10 years.

pint 2 would deter people from selling which isn't what i think many of you are aiming for.

perhaps you should also be looking at other ways of sharing/using the housing stock:

discouraging people from living alone (eg stop the single adult's rate reduction)

Inthedark: they were asking £2m for that house. www.rightmove.co.uk/property-for-sale/property-22171591.html

Compared with £2m, £3kpcm is very cheap indeed

"perhaps you should also be looking at other ways of sharing/using the housing stock:"

Why?

People aren't homeless in great numbers, there doesn't seem to be a shortage of housing as such, it's just that it's in the hands of the wrong people (i.e. not the occupiers, families who want to have children, etc.).

Aga plenty of millionaires rent. Millionaire style properties of course. Its a very big market sector for upmarket estate agents.

You seem to think that everyone is almost the same and does the same things. I'm not being funny, but have you led a very limited, sheltered life or something? And why on earth do you associate illegal immigrants living in garages and sheds with young graduates and executives renting rooms in shared properties or short term lets?

And for a socialist, you don't seem that keen on paying tax yourself, but seem to spend a lot of time and effort telling other people how much more tax they should pay.

Round here, as well as HMOs, the big earners are serviced executive company lets. You would be shocked because a one bedroom serviced flat can go for £1200 a month quite easily. Its good for landlords because it means their property is less likely to get trashed (although a friend doing them regularly reports theft of all sorts of items). When I say companies, this isn't the magic wand that makes someone setting up a company suddenly qualified and guaranteed to pay - many of them are single person private companies set up to avoid tax, ie well paid contractors, and the executive let itself is a tax write off. Hence better to include all your bills in one go for your property, to make them tax deductible.

Its just that you keep getting things wrong when you discuss property Aga. I find it both annoying and insulting, because I've worked very hard to supplement my already quite difficult career through property (not just letting) and I do know what I'm talking about. Neither have I had a bundle of cash behind me to do so, so your failure to buy a property with that sort of advantage really is quite exceptional.

But you consistently get things wrong. Your ideas are utterly hopeless and I can only think would produce some kind of housing situation as in the Soviet Union in the long term, with state controlled housing, families sharing one room and a bathroom and a kitchen with other families.

And of course capital cities are more expensive. If you object to it, why not emigrate to a country which doesn't have a capital city that is expensive. No-one is making you stay here.

There are indeed plenty of millionaires who rent, but it depends on the area. As I said. You can find a tenant for a million-pound property in many parts of London in days, but in Nottinghamshire you might struggle.

I don't know why you think I am a socialist. Tax does not equal socialism.

£1200 pcm for a serviced flat is cheap around here.

As I explained in my OP it is not a case of graduates and executive on the main, the figures show a swing from mortgage-holding owners to private rentals. They aren't all (or mostly) executives and thrusting young graduates.

Being a landlord really isn't the cash cow that many people think

Yes it is. I'm a private landlord and don't think I've been particularly lucky with tenants, I just haven't been unlucky.

I agree, things need to change, although I may have benefited personally even I can see the damage btl has done. I have tenants who would love to buy their own house, they can't afford to, instead they are buying me a house. This really isn't right.

families sharing one room and a bathroom and a kitchen with other families.

Yes, because we really don't have that in the UK do we.

I haven't read the whole thread but absolutely yes! The housing crisis should be a real worry for EVERYONE'
I have a few ideas:-
Buy to let properties should be classed as commercial property and VAT charged accordingly. Incidentally you pay stamp duty on the price and the VAT, so you pay tax on a tax.

Tax revenue raised in this way is ring fenced for housing. If you want to rent your house out after living in it for a year or so means that the VAT charge is levied at the Open Market Value at that time. If you can't pay it you either have to sell it or a charge be registered against the title for that sum with interest accruing.

Mortgage rules need to be changed. If someone has paid rent for years (usually higher than a mortgage) they are good for the money but just can't save a deposit. Paying rent for 5 or more years should mean that you can qualify for up to a 100% mortgage to enable you to buy a house.

The only sensible way to stem the housing is to introduce capital gains tax on all sales, not at the levels it is now but perhaps something similar to SDLT

It's nonsense in any case to talk about socialism in the housing market, given that we already have £25 billion of government money (Housing Benefit) going into the pockets of landlords (almost half to private landlords), along with nationalisation (very socialist) of failed banks, and hundreds of billions of pounds spent on underwriting their failed bets on the housing market.

Socialism is here, whether you like it or not.

As I explained in my OP it is not a case of graduates and executive on the main, the figures show a swing from mortgage-holding owners to private rentals. They aren't all (or mostly) executives and thrusting young graduates

And what is the problem with that? Its the norm in most of Europe, other than in countries where young people tend to stay in their parents' homes.

If the government isn't going to encourage self build and reform the planning system to do so, most people will find funding big developer's profits out of their reach.

There has only been a relatively brief time period in the UK when property ownership has been within the reach of the majority. Otherwise, a large and varied rental sector has been the norm.

In other words, unless you have a reasonably well paid job and live a sensible life, you have never been guaranteed to afford to buy.

And tbh inheritance is behind pushing up property prices far more than btls. If inheritance tax was set at 80% or similar, property prices would become far more affordable. I have never understood why socialists are more in favour of taxing income inc rental income than inheritance. After all, its due to none of your own doing and an accident of birth. But then I didn't inherit anything and had to work to make my deposits (borrowed one as a "car loan" once).

You would be astonished at the number of young people who are bunged a couple of hundred thousand or more by a doting parent to buy their ftb. Usually it is one of those overpriced swanky urban flats with wall to wall tvs and sound systems included in the price. When I see young people who actually work hard in good jobs priced out of the market, I would focus more on personal responsibility and IHT than btls if you want to solve the "housing crisis".

No I wouldn't be astonished at that, and I am in favour of higher IHT. I think people are against it in part because of inflated house prices. In other words they see inheritance as their only route to success, but that is only because the 'success' comes only because an ordinary family home (disproportionately owned by the elderly) is now outrageously expensive. So the assets of the elderly (land) are overvalued relative to the assets of the young (their labour), and eventually the young are pathetically grateful when they inherit their little patch of ground, but don't realise that it's basically a confidence trick.

As a matter of fact home ownership grew continually over the last century, it's a new trend that it's in decline. Perhaps you see the last century of progress and an aberration and we need to return to a feudal system of land owners and peasants, but I doubt most in this country would agree with that.

As for self-build, its long been a way for people who cannot afford a big mortgage to achieve a decent standard of home. But not in the UK. A poster up-thread gave the example of the Belgian letting market (without mentioning the sub-letting sector, but anyway), Belgium is the heart of self-build. It is perfectly possible for the average Belgian worker to eventually end up living in a detached luxury style property before retirement. Now I'm not saying that I would want to see the British roads lined with luxury detached villas with swimming pools for miles on end, but self build is positively discouraged here. The rare plots attract a premium, planning for one house takes forever (as opposed to a mass development of concrete boxes) and is expensive, with council inducements contributions required, and building regulations and standards are extremely strict.

Yet the emphasis, as usual, is on blaming the people in the middle who try to better themselves, for successive governments' failure to achieve a decent planning system.

I know anecdotal examples are fairly worthless, but round here, various new housing developments have been built, along with a garden centre, new superstore, hotels and restaurants. New roads have been built linking them, but is there a bloody pavement, never mind a pedestrian crossing or two? No. So instead you have people walking from one to the other along the side of the roads, chancing death when they need to cross over. Its like the third world.

I actually think by this obsessive blaming of one sector of society, you are harming society, because it deflects attention away from things that only government can do. mind you I'm pretty sure our local councillors gets bungs from developers for granting pp so the system seems unlikely to change

Perhaps you see the last century of progress and an aberration and we need to return to a feudal system of land owners and peasants, but I doubt most in this country would agree with that

I don't agree with that either, so why would you say it? How odd - feudalism is a Norman system of landholding which initially guaranteed soldiers for private armies.

I think its pretty much accepted that the preceding generation to ours had it very good, with affordable house prices, more jobs, no university fees and student grants, final salary pension schemes, etc., so funnily enough since I'm not God and cannot wind back history, I don't see what that has to do with me personally.

I do agree that it is sad that there is a growing recognition that the current generation in many ways has a lower standard of living to look forward to than the previous, but there are many reasons for that - some would say it is the prolifigacy of the previous generation at least partly to blame.

1. Most people have always rented. In the 1901 census my grandfather lived in a house with 26 young men !!! - not ideal of course. He had to wait until he was 40 to afford to marry. My parents were married 13 years before children as they in the 1950s and 60s were saving up to buy a house. It has never been easy for many people.
2. The Rent Acts removed most private rented property in the UK as rents were kept very low. There was nothing to rent at all. It was awful for potential tenants who still had to wait 20 years for a council house.
3. The assured shorthold tenancy really changed things for the better - suddenly you could get a tenant out although only as now after 2 months of no rent and paying masses of legal fees to evict them after a court hearing. It meant suddenly there were properties to rent to the extent that now private landlords -

"The data shows that for the first time since the 1960s, there are more people in England who are renting homes from private landlords than from local authorities and social housing landlords. The figures are almost equal, but private rents are now marginally ahead, with numbers standing at 3.84 million compared to 3.8 million for social housing rentals."

So if you look at that 60s as many as now - relatively free market. Then we brought in the awful rent acts to protect tenants and the numbers slumped and tenants had no where to rent as we have never had enough cheap council housing - then back to where we were now.

Companies do not want to let out properties as the returns are pretty low for landlords so that leaves the average landlord with one property they let out and they provide nearly 4m lettings - if they did not 4m people would need to be housed. Thank goodness for the private landlords.

To those responding to my 10 years notice for landlords idea, you'd still be able to evict for damage or non-payment of rent (but not on a whim or if you wanted to sell - the property would have to be sold with a sitting tenant). Sorry that wasn't clear.

The examples given of landlords making life difficult for tenants are already illegal. The other illegal offences mentioned by tenants are matters for the police, not the landlord to enforce.

Perhaps criminal offences performed within the home could be a third reason to evict alongside damage and non-payment of rent.

if they did not 4m people would need to be housed. Thank goodness for the private landlords.

Maybe those 4m people would be able to buy the home they're currently renting? Or do you think that 4m properties would just be sitting empty?

aga - well at least i can put your mind at rest about housing benefit. I, like many LLs prefer not to take tenants with housing benefit. Admittedly one of our current tenants does, but this a one off - and was only because her circumstances changed after she had moved in.

so no-one can say i've creaming money off the government and using it to pay my mortgage (well only at the moment but i don't want to evict her as she's a decent tenant)

fakenow - our tenants couldn't unless the property prices reduced by at least 50%, which would cause a lot of pain to anyone thats bought in the last few years

And do you think those 4m properties would just be sitting empty then?

fakenow - my tenant is on about 15k tops. that means she could get a mortgage for about 45k. even if my flat halved in value she couldn't afford it. it would have to drop by 75%. that sort of price drop would have massive repercussions for the wider economy.

dreamingofsun, the housing benefit still represents a subsidy to the sector as a whole, regardless of whether you accept it, housing benefit levels are still underwriting rents.

And do you think those 4m properties would just be sitting empty then?

A lot of then would be because not everyone currently lining in them would want to buy them and not everyone would be able to buy them.
Some people like renting.
Some people don't want to be tied to a 25 year loan.
Some people like the security of knowing they will get help with their rent if they become unemployed for any reason.
Some people need to move around frequently and prefer to rent so they can move easily.
Some people have adverse credit histories and won't get a mortgage.
Some people are unable to save a deposit because they earn too little, have too many overheads or are spendthrifts.
Some people don't want to own a property because they don't want to be responsible for maintenance and repairs.
Some people have never worked and therefore can't buy a property.
So, yes, some of those 4m properties would be empty or families who can buy them will do so and the current tenants will be homeless.