To think rent is so bloody unfair

[Tar19891]

My rent is 800 per month. A mortgage on the same value flat would be 450 per month. Not in London obviously. It’s not fair is it?

[quote SwanBuster]**@LardyDee* - tax evasion* by landlords was trivial thoughout the early 2000s. HMRC's systems have got better, but they've moved onto avoidance now by incorporating.

I don't need to look it up, because the figures aren't there. HMRC don't publish the data. But fag packet arithmetic should tell you that the tax revenue gained on landlord profits is likely to be a trivial amount Vs the benefit bill.[/quote]
I'm not really sure what your criticism is, but of course any taxpayer will choose the most tax-efficient vehicle, and if incorporation is it (as it is for many businesses) then that's what they do. HMRC provoked that by introducing a differential treatment for interest on borrowings between companies and individuals. But in doing so will have got a fair old take in SDLT as flats were transferred to corporate entities.

I'm a bit baffled by the reference to the benefit bill. Why should there be any relationship, beyond the usual percentage take in tax? Are you saying that landlords should foot the bill for providing housing to benefits claimants? Maybe their landlords should pay 100% of the rent in tax?

And none of this seems to have anything to do with your original claim that the landlords pay only miniscule amounts of tax

@mumda

House prices are insane. Houses being chopped up into horrible HMO and charging per room what a whole house was 5 years ago. All insane.

Lending continues at silly rates.

How to deal with it? Govt doesn't want to crash the housing market. Too much money lent on houses. But it's almost the whole economy (almost, that and coffee shops)

This is one of the main reasons I do not buy.

New Builds of the size I am looking for (4bdr) are massively over-valued, and with shoddy construction to boot (so many horror stories from coworkers with spending ££ fixing snags and defects because builders cannot be bothered).

The whole thing feels poor value to me.

DH & I are lucky in the sense that we have high incomes, and we choose to rent in the UK as mobility is still important to us.

It's just thag the country also feels increasingly like a sinking ship.

I don't want to plunk down hundreds of thousands of ££ on four walls and a roof that has been constructed poorly.

These issues are far less of a problem in Europe. Housing stock quality tends to be more modern, and renting is completely fine.

@Jobseeker19

I have yet to meet a landlord who pays insurance.

Of course they will pay for structural insurance!

Yes, UK rent is too expensive.
When DH and I left Uni in 2006 we really pushed the boat out with our budget and our rent on a very fancy one-bed flat with massive wrap-around balcony was £750 a month. Our next rental was £625 a month. Decent prices.
When we bought with a 10% deposit in 2010, our mortgage payments were £510 a month. 12 years later of paying off the mortgage and we're in a big 4 bed detached for £650 a month.
Meanwhile young people we know think they've got a bargain if they're paying £950 a month for a one-bed flat in a decent regional city.
Madness. We need rent control.

@Theo1756

Ok let's do the maths.

ONS site had 2018 data saying this.

The number of households in the private rented sector in the UK increased from 2.8 million in 2007 to 4.5 million in 2017, an increase of 1.7 million (63%) households.

The latest rental data says average rents are around £1000 p/m in the Uk.

Let's say that on average, a landlord owns 1.5 houses. There will be plenty of portfolio landlords with many, but this seems like a reasonable average. So 4.5m households and dividing that by 1.5 Gives 3 million landlords.

So that means the average landlord makes 12000 X 1.5 = 18000 in revenue per year. Let's say their costs, on average because some landlords will own outright are half that for mortgages etc.

So that's £9000 per year profit. That's generous but let's use it.

Let's assume everyone pays 40% tax. Complete hogwash because many will be avoiding legally (put house in lower earners name etc, or incorporating but let's use it).

9000 3m 40% = £7.2 billion in tax receipts. I reckon this is a gross over estimate.

And yet ...

The ifs says housing welfare payments are 22 billion. So there's a 15 billion shortfall there. Paid out of printed money or other revenue.

I do think the scarcity in housing that successive governments have allowed to develop means that landlords can profiteer, and have been able to do so for several decades.

@NumberTheory
I agree totally. Landlords are not the problem. They are just taking advantage of a failing in good government. We need more housing. Then those with capital would invest it elsewhere instead.

@Blossomtoes

Once I factor in expenses I earn around 3k a year on my investment of £100000. That's 3 percent

Sell up now. My shares are doing far better than that.

Yes, and many landlords are doing just that, resulting in rents increasing . . . it's supply and demand. There is very low supply and high demand at present. Blame the government for an incoherent housing policy and shortsightedness of restrictions on mortgages, an after effect of the 2008 crash, neither of which are the responsibility of landlords.

@LardyDee - I ran the numbers above. I think there's - charitably - a £15bn shortfall in housing benefit / UC payments Vs revenues raised.

Indeed - my maths was just too charitvale based on the figures we see in this thread. I wouldn't be surprised to find if the numbers were more like < 2 billion in tax revenue on landlord profits. And thus it covers less than 10% of what is paid out in benefits - which are funneled to those landlords.

[quote SwanBuster]@Theo1756

Ok let's do the maths.

ONS site had 2018 data saying this.

The number of households in the private rented sector in the UK increased from 2.8 million in 2007 to 4.5 million in 2017, an increase of 1.7 million (63%) households.

The latest rental data says average rents are around £1000 p/m in the Uk.

Let's say that on average, a landlord owns 1.5 houses. There will be plenty of portfolio landlords with many, but this seems like a reasonable average. So 4.5m households and dividing that by 1.5 Gives 3 million landlords.

So that means the average landlord makes 12000 X 1.5 = 18000 in revenue per year. Let's say their costs, on average because some landlords will own outright are half that for mortgages etc.

So that's £9000 per year profit. That's generous but let's use it.

Let's assume everyone pays 40% tax. Complete hogwash because many will be avoiding legally (put house in lower earners name etc, or incorporating but let's use it).

9000 3m 40% = £7.2 billion in tax receipts. I reckon this is a gross over estimate.

And yet ...

The ifs says housing welfare payments are 22 billion. So there's a 15 billion shortfall there. Paid out of printed money or other revenue.[/quote]
But so what? Accommodating people who can't afford to do it themselves is expensive. We live in a country where we choose to do that.

It's also expensive providing the health care. Are we saying that the cost of the NHS should be covered by the tax taken on the salaries of its staff?

Your rent also covers building maintenance , insurances etc and the risk eg risk that tenant does not pay, cost of holding an asset etc

It's also expensive providing the health care. Are we saying that the cost of the NHS should be covered by the tax taken on the salaries of its staff?

The lack of logic in that is staggering. Did you really mean to say that?

I don’t have people on benefits in my property. I think many won’t.

But so what? Accommodating people who can't afford to do it themselves is expensive. We live in a country where we choose to do that.

But we could do that differently, retaining the asset for the government or the person.

@Blossomtoes

It's also expensive providing the health care. Are we saying that the cost of the NHS should be covered by the tax taken on the salaries of its staff?

The lack of logic in that is staggering. Did you really mean to say that?

I can be a little bit dim, but please explain.

I do think rent is ridiculously unfair particularly as for many they are stuck paying high rents simply because they were born later.

@Blossomtoes

It's also expensive providing the health care. Are we saying that the cost of the NHS should be covered by the tax taken on the salaries of its staff?

The lack of logic in that is staggering. Did you really mean to say that?

Indeed. I also didn't even mean to say I care if the bill was covered or not by revenue raised. That's what the poster took from it entirely disingenuously - because I was replying to their and another posters statement that my assertion that tax revenues would be peanuts wasn't backed numerically.

It is still public money funnelled to landlords whether theres a shortfall or not.

The fact that there is almost unquestionably an enormous shortfall makes the situation even sicker.

But clearly, thats unimportant 😂🤷🏻‍♀️🤦‍♀️

@LardyDee

And as the owner you'd have to pay for maintenance. And be exposed to the possibility of falling prices.

Show me a landlord who actually does maintenance. I have had both penetrating and rising damp for years, and now even the floorboards are starting to rot.

And when did prices last go down, with the exception of flats with flammable cladding?

The issue is that a bank wont give a mortgage with repayments of £800 a month to a person who has been paying £1500 a month in rent and can prove it.

It IS insane!

My daughter is in this situation, I am not in a position to help and she is paying more per month in rent than a mortgage on the same place would cost her but she is turned down due to Affordability!

Its not right, its not ok and it is directly contributing the housing shortage, the poor getting poorer and the rich getting richer.

@TizerorFizz

I don’t have people on benefits in my property. I think many won’t.

This is another problem.

Causes immense problems as social housing then gets over-subscribed.

And those people then get angry at the lack of housing, and are then manipulated into blaming immigrants for all of their problems.

All of this favours Conservative politicians.

And they absolutely manipulate the emotion of the housing problems for their own benefit.

I'm not sure what the answer is tbh we just don't have enough good quality housing stock at a fair price . I can see the only home owners of the future bring those who inherit .

Locally we have a new garden village ( more of a town) that planners have agreed . There are supposed to be some affordable houses / flats . What I'm struggling to understand is that with the costs of building materials and labour skyrocketing the developer can't sell at a loss so those properties won't be available for average earners .

I was totally shocked seeing the ITV news report on housing stock , seeing families living in squalid flats with water pouring through the ceiling was heartbreaking.

I just don't know what the answers are , it just seems unrecoverable tbh .

I agree with you. I pay £800 mortgage and to rent my place would be more like £1800. The landlords round here mainly inherited their properties so it's free money every month. Yes there are maintenance costs but you don't see all that much evidence of that, or the landlords, ever.
They rinse the property for all it's worth.

If you can afford to get together a deposit you will often pay less on a mortgage and are also not tipping money away. It's a nasty cycle.

That seems fair to me. I need a new boiler & roof & have all the insurances. £800 fixed price is cheap compared to house maintenance costs.

@MrsTerryPratchett

But so what? Accommodating people who can't afford to do it themselves is expensive. We live in a country where we choose to do that.

But we could do that differently, retaining the asset for the government or the person.

I totally agree, but expecting the PRS to foot the entire bill for benefit claimants' housing costs, and for no other taxpayers to chip in (in other words for that sector to provide free housing) does not seem sensible or fair to me (and certainly is unlikely to be sustainable).

The cost of publicly provided services is usually spread across the entire tax base.

@PyongyangKipperbang

The issue is that a bank wont give a mortgage with repayments of £800 a month to a person who has been paying £1500 a month in rent and can prove it.

It IS insane!

My daughter is in this situation, I am not in a position to help and she is paying more per month in rent than a mortgage on the same place would cost her but she is turned down due to Affordability!

Its not right, its not ok and it is directly contributing the housing shortage, the poor getting poorer and the rich getting richer.

This. When it comes to affordability the amount of rent someone’s currently paying should absolutely be taken into account for a mortgage. It’s insanity.