to think that banning 'buy-to-let' would go a long way to solving the housing crisis?

[carlajean]

It seems so obvious to me that there's sure to be some flaw in the argument, but it would be easy to enforce (i.e. one family, one house) and there would be a large number of houses/flats released onto the market, forcing the price down (to a rational level) so that people could afford the newly-available housing.
Because interest rates are so low, housing is a good investment, particularly with older people who might have pulled down their pension early, resulting in private landlords buying up cheap housing a letting it out.
I await flaming, but am interested to hear what people think.

I was responding to the post that some people need social housing and others don't. I was hoping to get the profile of a person who needed one over the other.

im not sure what you are asking - do you think that either social housing should be for all or nobody? Do you want me to list all the situations where somebody might need a council house?

I don't think the views on here are particularly well balanced. Those who need to relocate for work, who need somewhere to move to when they leave the family home, are not really represented. Because they will be too busy at work to post on sites like mumsnet. Whereas those families who have a SAHP will be much more likely and able to post. I don't know whether some posters assume that everyone immediately moves out of the family home into living with a partner or something. I certainly didn't, most people I know didn't, most of us rented a room and then moved onto renting a flat with a partner. I certainly wouldn't have wanted to be tied to a long lease or to rent social housing. I'd choose renting in the private sector over social housing any day. One big reason being the lower likliehood of being stuck next to troublemaker neighbours.

Again, the comments about money don't really stack up either. Buy-to-let is an extremely inefficient use of your money, compared to stocks and shares or other investments. If a landlord works, they will need to pay tax on any profit out of money already taxed. Effectively, that money is taxed twice, once through income tax and once through self assessment. If they are a higher rate taxpayer, they will only be able to claim tax relief on lower rate tax on mortgage interest (ie not the whole profit).

Then the landlord has all the responsibilities of maintenance. Now I've always thought that social landlords are pretty shoddy on maintenance.

Again, its a mistake often repeated on here that buy-to-let landlords are responsible for pushing up house prices. That is not the way markets work. Neither do markets work well by increasing supply. The housing market is based on a fine balance between affordability, desirability and (relative) scarcity. Two ways it could be genuinely improved are:

• increasing competition on the market - removing the virtual monopoly that large housebuilders have on new build and increasing the prevalence of self build as in other European countries - self build is generally 1/3 cheaper than other new build. To achieve that, the zoning system which encourages land banking and big developers would have to be reformed. But who wants to see large sections at the ends of villages covered in housing estates anyway? Is this really supposed to be good town planning?

• increasing inheritance tax, perhaps to 95% plus. Having large deposits is what distinguishes buyers able to out-compete others on the market, and those large deposits come from either inheritance or profit built up over the years in originally cheaply bought property. Increase inheritance tax, and over time you tackle all problems of inequality of effort, you tie ability to buy more closely to income and desire to work, and it will eventually lead to more affordability.

I have never understood why its acceptable to tax people less on unearned income from luck of birth than on income gained from employment.

DeoGratias The changes by the way do not affect 20% rate tax payers or non tax payers who borrow to let as they don't pay upper rates of tax on rent now and won't when the interest rate changes come in.

There is certainly the argument that some landlords who have jobs might decide to reduce their working hours or stop working, as it will no longer be tax efficient. Then of course it may become more desirable to have another rental property, and so on.

So the policy might create more members of a class of professional landlords, and less landlords who work and have one or two properties.

Increasing regulation does that too.

Increase personal taxation on rental income enough and it becomes more efficient to create a company and to pay corporation tax and write off more expenses for tax purposes.

yanbu

It doesn't seem logical to claim that the deduction of ordinary business expenses from revenue to arrive at profit is a 'tax break' for land lords (because they are involved in investment rather than trade); when landlords do have to pay capital gains tax when they sell their investment.

If investment properties are the problem, why not adjust CGT?

it it would be easy to enforce
No it wouldn't, HTH.

im not sure what you are asking - do you think that either social housing should be for all or nobody?

Yes. And explain why then people who don't get council housing don't need those things.

Like I said strawberry, they are one factor

it's not.

How do you explain the existence of BTLs in a falling market? yes, housing markets fall, but people forget that.

And explain why then people who don't get council housing don't need those things.

Because rather than taxing myself more so that the government can provide me with a house, I'd rather just cut out the middle man and pay for my own house.

Unless you also think that all incomes should also be equal?

Screm, yes the new interest rules don't apply to companies although if you hold residential property in a company where the house is worth over £500,000 there is the new annual tax on enveloped buildings of £3k a year which might well apply brought in by the Coalition so holding within a limited comany isn't always right for everyone and a landlord who makes say £100k from their rents and has no other income I presume would not get full interest rate relief even though they have no other sources of income. Anyway the tax change is certainly going to have a bit of an impact - for your professional couple in London who hook up and both own flats, rent one out and move into the other and both earn say £40k they will be hit with extra tax and in some caes will make no profit particularly if there are no capital gains.

Letting is not a great way to make money though so not everyone is falling over themselves to tak on the massive hassle of dealing with tenants rather than just sticking their cash into BP shares or whatever.

merrym, I agree although I think the interest relief changes are quite complex and also if you borrow to buy shares you cannot get the interest off. In my view the old distinction however was right - letting a property invovles week in week out effort, I have sat there for 8 hours a day with a paint brush painting the place over the years, you're mending stuff, fixing leaks and all sorts. It is not the same as sticking money into ITV shares and hoping for the best. It's more like running a corner shop so the deduction of expenses rightly was similar too.

Because rather than taxing myself more so that the government can provide me with a house, I'd rather just cut out the middle man and pay for my own house.
Me too, please. I would not like to get my housing from the government.

(Obviously council tenants are not just given free houses, but affordable housing does require expenditure by government/ charity/a benevolent employer at some point in the proceedings)

YABU
I rented happily in the private sector for over 10 years as it gave us loads of flexibility and this was during the 90s when house prices were static. I was also a BTL landlord of my student flat at that time. The economics were very different as interest rates were 10% + but our gross rental cover was generally about 50% more than our interest cost.

I agree with the changes to offsetting interest which will make high levels of gearing in the BTL sector unattractive. I think the changes will have a bigger impact than some realise as income tax bracket is determined after adding gross rental income.

I think there will be some property ownership swapping between couples to minimise tax and this should help in balancing arrangements where one partner is a lower earner or sahp.

I agree with the change to allow actual expenditure rather than a 10% allowance as the costs of maintenance will be more visible to all.

I also agree with comments about the fragility of the housing market and although I could argue for full disallowance of mortgage interest as an expense I think it would lead to a housing price collapse.

I don't invest in property as I prefer the tax advantages and risk diversification of ISAs and pension funds and I can confirm that the returns are better and a lot less effort.

howabout I rented happily in the private sector for over 10 years as it gave us loads of flexibility and this was during the 90s when house prices were static. I was also a BTL landlord of my student flat at that time. The economics were very different as interest rates were 10% + but our gross rental cover was generally about 50% more than our interest cost.

Same here. I worked out that I could rent a far better property than I could afford to buy. I've lived in a wing of a Georgian house, a country lodge cottage and a period city apartment, all rented, maybe all a little scruffy and two of these without central heating (solid fuel), but suited me.

I don't know what the OP thinks would happen if buy-to-letters were forced out of the market. Less competition, less availability for one thing. Would people moving for work not be able to and be forced into a low paid local job, because they couldn't transfer their social housing let? Or maybe they would just have to live at home with their parents until they got a council house off the waiting list or met a man?

What would happen to single people who didn't want/couldn't afford to rent a whole flat/house? Or if couples got together and one wanted to keep their home as security for future tits up scenarios, they would just have to pay to keep it empty? What if you transfer somewhere for work for six months, or a year? What if you want to work abroad for a year or two?

Maybe the OP has the solution - only those who inherit vast enough sums to pay for properties outright, and hence don't need a btl mortgage, will be allowed to rent out property.

Incredible.

Because rather than taxing myself more so that the government can provide me with a house, I'd rather just cut out the middle man and pay for my own house.

I don't know why that is a reply to me. I agree with that.

What I am asking is why the rental sector should be broken up into two separate markets - one with proper tenant protections and one without.

We do already have some tenant protection. You need a court order to get people out and it costs thousands and takes at least 2 - 3 months. You cannot just go in and change the locks if the tenands don't pay nor can you cut off the heating even if their failure to pay means you lose your property and default on your mortgage. So it is not that we do not have protections.

On the issue of whether a working man should be allowed to change things around so his non working wife gets the rental income of their property to reduce their tax bill (due to the impending interest rate changes) well that might be seen by some as morally repugnant tax avoidance.

On the issue of whether a working man should be allowed to change things around so his non working wife gets the rental income of their property to reduce their tax bill (due to the impending interest rate changes) well that might be seen by some as morally repugnant tax avoidance.

Or a way of making efficient use of 2nd PA and basic rate income tax allowance while providing some sort of insulation against relationship breakdown which would benefit the State as well as the otherwise non-earner.

We do already have some tenant protection. You need a court order to get people out and it costs thousands and takes at least 2 - 3 months. You cannot just go in and change the locks if the tenands don't pay nor can you cut off the heating even if their failure to pay means you lose your property and default on your mortgage. So it is not that we do not have protections.

of course we have some protections, but those are the wrong kinds of protections. The current system protects bad tenants instead of good ones. It shouldn't take 2-3 months to legitimately kick someone out.

I am saying that if tenure is good for social housing, then tenure is good for private lets too. Rent rises for tenants in situ should be indexed to inflation.

What I am asking is why the rental sector should be broken up into two separate markets - one with proper tenant protections and one without.

Because there are different rental markets. E.g.

• People who need long term housing support and have no choice but to rent. They need long term tenancy, legislation to protect their rights, a house that is suitable for their family and enforcement of minimum living standards.

• short term corporate tenants who are happy to pay for the right number of bathrooms, a smart kitchen and good local schools. They don't want a council house where they can live for the next decade or two. The company lawyer will be in touch if the landlord's service is not up to scratch.

• students who want basic, cheap accommodation but short term commitment.

The council does not need to be responsible for checking that every rental property is up to scratch and many people want short term tenancies.

your second group isn't that big, and are catered to by temporary rentals.

Most people, including many students, are in group 1, yet the private rental sector takes up most of the market.

where are you finding your figures strawberry?

what figures?

there simply isn't enough social housing to go around, so those who are in your first group aren't getting the protections they need. My guess is that most people want what you described as the first group.

I am not saying we need more social housing. I think the protections we give to social housing tenants should be extended to private tenants.

yet the private rental sector takes up most of the market.

And maybe the private sector is not the best option for providing housing to the people in group 1.

The figures you are referring to when you are assessing what the private sector should be providing.

And maybe the private sector is not the best option for providing housing to the people in group 1.

what portion of the population, in your estimation, is in group 1? I would say most? You other groupings sound relatively tiny.