To think people who own more than 3 properties should have a special tax applied to them?

[Calltheguards]

I'm just thinking with the housing crisis, should people really own more than 3 properties? I would assume it's a property portfolio and used to exploit renters. AIBU to think there should be a special tax applied to property owners who own more than 3 properties? Maybe tax them at a really high rate to discourage people from hoarding property.

Plus i'll get no call from my fund manager at 2am telling me that a roof tile has blown off, or his neighbour is smoking weed in the garden

Never had that call as I paid someone else to take those calls.

Oliversmumsarmy through an agent? If you have one that is good value for money then good stuff.

My friend was an accidental land lord as she had to move for work. Agent fees were best part of 5% of the rent, reducing the yield considerably. Imagine a financial planner or stock broker levying fees of 5% per month!

SB74
I agree with you totally but people like us will always be vilified. How dare we want to better ourselves and work hard for what we have.

Losses are only losses on a share if you sell when the price is down, likewise a property

But if you had invested your money in Enron or Kodak or any other bankrupt company you would have been left with nothing.

You can’t move your family into your share certificate to save on housing costs.

Yes housing might go up and down but ultimately it is an asset that doesn’t disappear.

Dp worked for a company a few years ago that managed to invest in a lot of companies that went bankrupt one after the other.

As their assets and dividends disappeared virtually over night (within months) the company had to declare itself bankrupt so maybe I am a bit sceptical about shares.

"people like us will always be vilified"

Boo hoo. If it's so awful, sell your properties.

Oliversmumsarmy agree, you would be screwed if you invested your life savings in one company. It is a massively high risk strategy. However spreading the risk among different companies in different sectors, in firms across the globe reduces the risk of this.

Ok you can't move your family into a share certificate, but i'm pretty confident that you could redeem shares in a pooled fund that could pay for accommodation much quicker and more cheaply than you could evict a tenant in your property, and move in.

Plus, how illiquid is a property?! So, your car dies. You need a new one. You only need 5% of your property value to buy a new car, but hey, you can't sell one of your bedrooms, can you? Assuming no cash emergency fund you'll have to sell the lot. It will take months, agency fees, CGT and so on. On the other hand, even the most inefficient platforms will be able to surrender as many units as you need. If you utilise ISAs and your tax allowances, chances are there won't be any tax either.

Hey, I'm not saying BTLs are completely wrong, however I feel strongly that they should only be considered by those who's property assets represent a small proportion of their wealth, and have a good knowledge of the industry. Ordinary investors should stay well clear due to: 1. Tax. 2. Lack of liquidity 3. Lack of expertise 4. Lack of diversification 5. Tenancy risk. From by perspective I'd add 6. Moral obligation to give FTB buyers first dibs and buying advantage but i realise this is an opinion. The first 5 are facts.

If the owner of these properties is renting any of them out, they just add the tax into the rent price. LOL

Nice try though.

I think this falls under the rule of: "Everyone who makes more than me should be taxed into debt, everyone who makes less than me is poor. I'm alright!"

The truth is that in many first world countries, the lower half of taxpayers often get returns and end up paying very little - if any - income tax at all. And the whole time they are wanting to soak the rich even more, thinking that they pay so much and the rich pay so little.

*Losses are only losses on a share if you sell when the price is down, likewise a property.

The principles of both are exactly the same.*

No, the principal isn't exactly the same at all.

What if the company you buy shares in goes bust? It happens, and shareholders loose all their investment.

I only own the house I live in

but say I owned 8 flats in a tenement in Glasgow ( 2 flats either side a central staircase so 4 floors equals 8 2 bedroom flats)
if I rent all of them out to 8 families at reasonable rents how is that depriving anyone of a home in fact it is housing 8 families, they may prefer to buy but at present can't afford to
I can easily see if I own 8 flats and keep them empty waiting for the price to rise I would be depriving 8 families of a home that I would agree with OP is property hoarding
also if I decided to airBNB them for on average 20 weeks a year that is forcing 8 families to live elsewhere and commute further and while this might be more financially advantageous for me it is not for the area and is possibly just being greedy
I could also as so close to Glasgow university let them to students and use living room as a bedroom and so house 24 students for the academic year, the students need somewhere to rent they are not interested in buying really, students may pay more rent per room but probably also do not care for property as well as a family so more maintenance and upkeep and would probably be rented furnished rather than unfurnished

There are some problems

1. Some people will want to rent as like students maybe only doing a job in the area for 1-2 years it is not worth buying
2. some want to buy but can't afford to
3. Some speculate on housing and keep it empty
4. house prices vary tremendously across country 2 bedroom terraces can cost as little as 40K in one place and 500k in another

Selmababies true. However my subsequent post deals with this. I used a single share as an analogy to explain how a property is similar in principle to a property in terms of return, i.e. income and appreciation.

Agreed, a single share is a high risk strategy that carries a high potential of total loss. But most people wouldn't buy shares directly but units in a pooled fund, or even a range of funds providing diversification across company types, sizes, industries, geographical locations, currency, capitalisation and so on. The risk of all of these failing is considerably lower than a nightmare tenant rendering a btl worthless.

There should be more regulation of landlords I do not really care whether they have 1 property or 100 they should all meet reasonable living standards, repairs should be done asap, they should be inspected regularly to ensure standards meet in terms of function not modernity of decor

1. working central heating and hot water with gas/ electric safety certificates and adequate insulation

2, kitchen safe and secure with space for a fridge and cooker with suitable plumbing for washing machine not necessarily in kitchen

1. wind and watertight and secure with decent locks, no mould, double glazing (unless listed building)
2. bathroom fully working with a shower or bath
3. no safety hazards broken tiles, doors that don't shut, broken banisters etc etc
4. to replace promptly anything broken or damaged that is a result of wear and tear or age boilers showers etc, they can not make tenant wait longer for a preferred supplier if it costs more to get it done quicker so be it
5. landlords contact details must be given to tenant and any correspondence must be answered promptly for emergencies they or their agents must be contactable within 24 hours

Tenant protection
1 no evictions for raising problems
2 security of tenure after 3 months so can not be evicted unless non payment of rent, wilfully damage to property, nuisance to other residents ( as defined by a court) the landlord has died and property needs to be sold or the landlord needs to move in themselves in which case it can not be placed back on rental market for 2 years to stop this being used as a get out clause

1. reasonable rules re decoration ( ie no painting in dark colours or damaging fabric of the building ie removing tiles or lino or wooden floors changing kitchens or bathrooms without permission) it should be fine to paint a room pale colours or to add non offensive wallpaper hang pictures) and keeping of pets, no obligation to decorate before leaving unless reasonable rules broken
2. to be allowed quiet enjoyment of property only needing to let landlord in for repairs and a landlord/ council inspection on a annual basis to be arranged with 2 weeks notice at a mutually convenient time
3. the landlord should not let themselves into the property for anything other than a dire emergency ie flooding gas leak etc
4. no deductions from deposits for wear and tear or for cleaning unless left in a very poor state, deep cleaning between tenants is landlords responsibilty
5. no stopping tenants getting superfast broadband, sky, changing energy or water suppliers
6. if a tenant is unable to get hold of landlord and hass to arrange emergency repairs themselves they must be reimbursed swiftly

tenant responsibilities

1. to pay for things they have damaged and keep things in decent order cleaning regularly, not allowing pets to urinate etc inside or to damage permanent fixtures if they do it should be put right at tenants expense over and above deposit
2. to keep the property aired and heated to stop condensation and mould developing through inadequate heating and use of ventilation
3. to pay rent promptly
4. if there is a garden to keep it reasonably ie not turn it into a 10ft high blackberry patch
5. to not behave anti-socially as defined by local bye laws

6 not to sublet

more could be added but the law needs updating asap

Everanewbie

Dps previous company had a portfolio of shares in different companies.

It didn’t stop them all going bust taking down dps and many other people’s jobs with it.

I don’t get the car analogy.

Why would you need to sell. If there was money in the property wouldn’t you just get a bigger mortgage or another loan against the property.
Only if you had shares would you need to sell them.

Well - I’m in my hampshire holiday home at the moment, main home in London.
That’s how we’re for a long time until recently we inherited a flat and a house in London. We rent them out - I hated my job and now I don’t have to do it because we get rental income from both.
Neither sets of tenants are in a position to buy and they are very happy with the service we provide as landlords - now we have 4 properties to leave to our 4 children. Furthermore I believe that if such property fell into the laps of others as it did in to ours then they wouldn’t be quite so sanctimonious and they would do the same. DH still works but this is my income now and I like it.
PS - yes we are heavily taxed on the properties but it’s still financially beneficial for us to keep them.
I don’t give a damn if you don’t like it Op, I really don’t.

Oliversmumsarmy

a proper legit investment firm holds your investment through a third party custodian meaning that your assets are separate from the investment companies' assets, therefore protected in the event of insolvency. If your funds invest in a hundred companies from across a vast spectrum of profiles and companies, that by the way the fund manager selects based on their health in terms of price and dividend payments (not infallible, but as good a filter as you'll get) a total loss scenario would only be a possibility in economic conditions that will probably mean your BTL would be pretty much screwed also, i.e., wars, natural disasters etc.

In terms of liquidity, the point is that you cannot sell part of a property. It is the whole thing or nothing. If you invest in a fund you can sell units in that fund to the value of the sum you need, leaving the rest of your money invested. You can remortgage, yes, but that is the same as borrowing more money, just with the property as security. You'll then be further leveraging your investment. No real difference in doing this to getting a credit card or a bank loan. Madness when you have possibly several hundred thousand in theory.

@tsteele937

If the owner of these properties is renting any of them out, they just add the tax into the rent price. LOL

Do they? The tax liability of any one landlord will vary significantly to the next-so tell me why market rent is driven by the type of the house and isn’t sporadic to meet the tax demands of the landlord?

I’ve had years where I’ve made a loss. You’re not giving my tenants much credit if you think I can just drop them a line and say “soz can I have some more money. Tax man took too much LOL”

In answer to the original question, the government could bring in an unearned income tax.
That would do something to stop this situation where property and shares, for example, can earn more than say a hardworking nurse or builder.

@oliversmumsarmy just read your point on ftbs and could not agree more.

My first property was quite honestly vile but it was all we could afford but when then at 18 knew it would be better to buy long term than rent somewhere flashier.

A very large proportion of today's ftbs simply don't understand they can't have their dream property in their dream location right away, but when they can't afford it they claim its all the bastard landlords and their btls pricing them out of the market. The reality is as you pointed out, a lot of btls are such because ftbs have turned their nose up at them, or at the prospect of having to get their hands dirty turning it into something they would like.

London has always been too expensive for normal people to realistically buy, it's not a new revelation. So if people want to live in London it's a compromise that most have to rent.

Another interesting point to note is that just 100 years ago, only 8% of people owned their own homes. The current level of home ownership was only topped on the 80s, and we all know what happened then...

The current perception that people have always owned their own homes is quite simply incorrect.

If owning your own is more important to you, then maybe you should consider where you live. There is always affordable housing available, just not where you may want to live.

The high cost of housing in some areas purely driven by demand so if you want to live in popular locations, expect to pay a higher price.

You think rental income is unearned??

Wow. Your ignorance on the amount of work involved in being a landlord is breathtaking.

Haven't read the whole of this but am really intrigued as to why owning several properties is bad for the environment. Is n't the environmental effect just the same whoever owns it.
My partner and I own several properties - we pay income tax on the rent we charge, we spend a small fortune sometime the whole of that months rent attending to problems with the properties. They are rented out on the whole long term and I would hate to think I am exploiting anyone. We live near a large teaching hospital and army camp so many are rented out to people who are only here for a few years and then they move on. If they had to buy then the overheads for doing that would be huge.
Maybe OP should look at the bigger picture before making sweeping, offensive comments about house owners.
My impact on the environment is pretty minimal i'm vegan, drive an electric car, recycle everything I can and grow a lot of my own veg in the garden or buy from local shops rather than big supermarkets as that way you can avoid packaging, air miles etc. Oh and I don't fly anywhere.(mainly because I don't like it)
Hows your carbon footprint looking OP ?

Some good points among that lot, TeacupDrama; as a LL - even with just one property - I could certainly live with most of it, and in fact I already do

I'd add, though, a requirement for LLs to pay into some kind of bond against future repairs, so tenants could be sure they'll be done without excuses and delay ... and also a much quicker, more streamlined way to get rid of genuine problem tenants

Sorry to post again but have just read through again and seen that there are suggestions that if someone has paid off their mortgage then they should be taxed more - I may be being really naive but why should this be? My partners parents have scrimpted and saved all their lives and in their 60's paid off their mortgage and now have a little bit of extra money that they have never had before to treat themselves to days out and take their grandchildren to the zoo etc. How is it fair that people like this should be taxed again having worked all their lives because they have managed to pay off their mortgage. I think again people who post things like to make sweeping generalisations about situations and don't stop and think about how it effects most people.
There are of course people who have a vast amount of money but I think you also need to stop and think about how they came about this money - there are very few cases where they were just given it. Most have had to work really hard for it probably making sacrifices along the way.
Theres always a bigger picture - all ideologies are not that simple and one sided.

If it's large enough to be a HMO then it's hardly likely to be a cheap starter home for a FTB is it?

These ARE the cheapest houses, average 2/3 bed houses with a reception room converted into another bedroom. They are the cheapest starting at £250-300 in a less affluent area but close enough to a better area. They have been snapped up by greedy people and are selling with tentants in-situ, so ftb don’t really have a chance do they if the house is being advertised with tentants.

Teacher22 your answer is subprime lending? Are you for realz? Why? Because this would drive up house prices and youd benefit? Do you seriously think subprime lending is good for those who wouldnt ortherwise be eligible? I take it you have observed the mess that subprime lending led to???? But clearly those people took the risk and they deserved their negative equity, bankruptcy and homelessness? And yes quant easing has also helped keep house prices high. This was not accidental. Politicians are terrified of the grey vote.

We’d nose dive into another recession if the well meaning on here got their way!!

Jealousy is very unattractive. As home-owners by DH and I have already begun looking for a second home as income / future investment for our DC's.

If you can afford to own more than 1 home good on you!