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Housing market

stevec67 said:
Conversely you could buy 10 houses in a former mining town for the price of a London flat and let them for £400 pcm each. £4000 a month, £48k a year. Great. Every month one would get trashed, no rent paid, used as a cannabis factory and a week's work and £1000 to put it right. Zero capital growth. Meanwhile your London places are, or were, gaining 10% a year. Swings and roundabouts.
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Absolutely. Which is why I do what I do and leave others to do what they do. Where I have a problem is amateurs who have to pass on any slight increase in input / operating costs to a tenant or they go bust. That’s not running a business, it’s speculation. I suppose they could argue that the govt don’t treat them as a business (eg not allowing full interest costs against profit, which all other businesses are). Of course the current increase in interest rates is going to bring this to a head. I can certainly see why the govt would ideally like to flush out small landlords and allow the sector to be operated by big business / pension funds etc.
 
Tony Lockhart said:
Is there a source that shows how much of ‘our’ land is owned by direct descendants of the Norman invaders?
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Despite coming from Normandy the 'Norman invaders' were essentially descended from Vikings too. Just like many others in the North and East of UK are descended from Scandinavia and northern Germany.
 
Ponty said:
I can certainly see why the govt would ideally like to flush out small landlords and allow the sector to be operated by big business / pension funds etc.
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Indeed, it doesn't look like a coincidence that Rupert Harrison, then Chief of Staff to George Osborne, joined BlackRock in August 2015, a month after the interest deductibility rules for buy-to-let changed for non-corporates in July 2015. Wikipedia says of Osborne: 'In February 2017 he started a new role as a part-time advisor to BlackRock, the world's largest fund manager, for a salary of £650,000 for a one-day a week.'

In whose interest are these people acting?
 
Some interesting calls on LBC. One landlord has had to serve notice on a family who’ve been perfect tenants for 8 years because it’s basically costing him £7,200 a year to house them, with a combination of rising interest rates and lack of tax relief on interest (which any other business can claim). Another chap was selling up, said landlords are either selling or renting as holiday lets, air BNB etc. God knows where these folks are going to live.
 
laughingboy said:
Indeed, it doesn't look like a coincidence that Rupert Harrison, then Chief of Staff to George Osborne, joined BlackRock in August 2015, a month after the interest deductibility rules for buy-to-let changed for non-corporates in July 2015. Wikipedia says of Osborne: 'In February 2017 he started a new role as a part-time advisor to BlackRock, the world's largest fund manager, for a salary of £650,000 for a one-day a week.'

In whose interest are these people acting?
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Corruption. With a capital C.
Behaviour that would be condemned in the corporate world now all over our government.
 
Ponty said:
One landlord has had to serve notice on a family who’ve been perfect tenants for 8 years because it’s basically costing him £7,200 a year to house them,
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He must be very heavily leveraged then (as the Yanks say). Of course, he could also have outlandish service charges or whatever but that does strike me as extreme, as he'd pay no tax on the income and might be able to carry forward a loss (esp. if he has more than one property or income).

Surprised he hasn't sought to advertise it as a going concern; after all, it would save a BTL purchaser a lot of money and aggro. As it takes 2+ months to convey title, he could market it on an and/or basis. Of course, we don't know the details, so that it a simplistic evaluation.
 
Mike Reed said:
He must be very heavily leveraged then (as the Yanks say). Of course, he could also have outlandish service charges or whatever but that does strike me as extreme, as he'd pay no tax on the income and might be able to carry forward a loss (esp. if he has more than one property or income).

Surprised he hasn't sought to advertise it as a going concern; after all, it would save a BTL purchaser a lot of money and aggro. As it takes 2+ months to convey title, he could market it on an and/or basis. Of course, we don't know the details, so that it a simplistic evaluation.
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Many are highly leveraged and the interest isn’t fully allowable. Double whammy when rates increase. Doesn’t take much for the pendulum to swing from profit to loss. Trouble is, if the numbers don’t work now for a long term landlord, they probably won’t work for another, unless the house price drops of course.
 
Mike Reed said:
He must be very heavily leveraged then (as the Yanks say). Of course, he could also have outlandish service charges or whatever but that does strike me as extreme, as he'd pay no tax on the income and might be able to carry forward a loss (esp. if he has more than one property or income).

Surprised he hasn't sought to advertise it as a going concern; after all, it would save a BTL purchaser a lot of money and aggro. As it takes 2+ months to convey title, he could market it on an and/or basis. Of course, we don't know the details, so that it a simplistic evaluation.
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If he had a £5000 a year interest only mortgage . that payment is not eligible for tax .

so rental income 7200 a year income

expenses building insurance 200
plumbing cover 150
boiler and gas safety checks 100
repairs 350 plus
total £800 allowable expenses

mortgage 5000

total 5800 costs

he is taxed on 7200 -800 allowable expenses

7200 at 20% tax = 1440 [ much higher if higher rate tax payer ]

so total costs 5800 plus tax at 1440 = 7240 meaning he is making a loss and nil money for contingency repairs which can be £££

[ this is for non company letting as they can claim tax on mortgage costs ]
 
hifinutt said:
If he had a £5000 a year interest only mortgage . that payment is not eligible for tax .

so rental income 7200 a year income

expenses building insurance 200
plumbing cover 150
boiler and gas safety checks 100
repairs 350 plus
total £800 allowable expenses

mortgage 5000

total 5800 costs

he is taxed on 7200 -800 allowable expenses

7200 at 20% tax = 1440 [ much higher if higher rate tax payer ]

so total costs 5800 plus tax at 1440 = 7240 meaning he is making a loss and nil money for contingency repairs which can be £££

[ this is for non company letting as they can claim tax on mortgage costs ]
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Surely he is taxed on £6400
 
Ponty said:
unless the house price drops of course.
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Or it's a cash buyer, as I have been for a number of BTLs and own dwellings. I vowed not to have another mortgage when my first wife and I split up a marriage and the house proceeds and have managed that for a number of BTLs and own dwellings. Guess I missed out on a very few years when I could have claimed tax on the interest but that was a very low interest mortgage period anyway.
 
hifinutt said:
If he had a £5000 a year interest only mortgage . that payment is not eligible for tax .
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Interesting synopsis, Phil, but you assume a hefty mortgage and over 5% interest. Trying to get my head around your hypothetical but illustrative figures but don't forget the £1000 auto. allowance. T.b.h., that seems useful, but I find, unless expenses are below £600 p.a., this doesn't help a great deal. On your £800, he'd save £200 x 20%; drop in the ocean.

Yes, I can see this scenario happening but as I said upthread, he must be quite leveraged. If so, this starts to look a bit like gambling in my book; at least, more than life's normal gamble !;)

Yes. Bob, only the £6400 is taxable, and another £40 off that for the 1K allowance (unless he has multiple properties in his name as he only gets one allowance per person, not property).
 
Bob McC said:
Surely he is taxed on £6400
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well thats a good question Bob . I am assuming the guy has other properties i didnt think you could claim that 1000 if you had several properties

Property allowance
The property allowance is a tax exemption of up to £1,000 a year for individuals with income from land or property.

If you own a property jointly with others, you’re each eligible for the £1,000 allowance against your share of the gross rental income.

If your annual gross property income is £1,000 or less, you will not need to tell HMRC, unless you cannot use the allowances. If it’s higher, you’ll need to declare your property income.

You cannot deduct more than the amount of your income and create a loss.

You must tell HMRC if you have:

If you have two businesses and claim the property allowance in one business you may not claim actual expenses in respect of the other business.

https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income#:~:text=The property allowance is a,of the gross rental income.


most landlords deduct allowable expenses like 45p mileage , stationary costs , phone use etc etc .

My tax return says You can choose whether or not to deduct the property income allowance . You might decide that if your allowable expenses for tax are less than 1000 . However i guess for most people it may well be much more than that if you have more than one property
 
Mike Reed said:
Interesting synopsis, Phil, but you assume a hefty mortgage and over 5% interest. Trying to get my head around your hypothetical but illustrative figures but don't forget the £1000 auto. allowance. T.b.h., that seems useful, but I find, unless expenses are below £600 p.a., this doesn't help a great deal. On your £800, he'd save £200 x 20%; drop in the ocean.

Yes, I can see this scenario happening but as I said upthread, he must be quite leveraged. If so, this starts to look a bit like gambling in my book; at least, more than life's normal gamble !;)

Yes. Bob, only the £6400 is taxable, and another £40 off that for the 1K allowance (unless he has multiple properties in his name as he only gets one allowance per person, not property).
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Not a substantial mortgage . a modest 100k interest only at 6% will cost 6000 interest a year now as far as i know . this will make many properties loss making . certainly in august i am preparing for a rise from about 2.97 to 6% which will make it pretty uneconomic
 
mmm bad news for tenants . Here many families get turfed out for no reason so they can be turned into HMO . 3 years ago i renovated a fairly big house [ 4 bed ] for a charity and we tried to rent it at 750pcm with zero success . Now its an unofficial HMO with people living in nearly every room [ only one bathroom in house ] and no doubt the landlord making far more than renting to families in a family house
 
hifinutt said:
well thats a good question Bob . I am assuming the guy has other properties i didnt think you could claim that 1000 if you had several properties

Property allowance
The property allowance is a tax exemption of up to £1,000 a year for individuals with income from land or property.

If you own a property jointly with others, you’re each eligible for the £1,000 allowance against your share of the gross rental income.

If your annual gross property income is £1,000 or less, you will not need to tell HMRC, unless you cannot use the allowances. If it’s higher, you’ll need to declare your property income.

You cannot deduct more than the amount of your income and create a loss.

You must tell HMRC if you have:

If you have two businesses and claim the property allowance in one business you may not claim actual expenses in respect of the other business.

https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income#:~:text=The property allowance is a,of the gross rental income.


most landlords deduct allowable expenses like 45p mileage , stationary costs , phone use etc etc .

My tax return says You can choose whether or not to deduct the property income allowance . You might decide that if your allowable expenses for tax are less than 1000 . However i guess for most people it may well be much more than that if you have more than one property
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I was questioning the taxable figure you quoted. If he could deduct £800 from his taxable income of 7200 your calculation failed to do it. You calculated tax on £7200.
 
Hundreds of Scottish university students have been begging letting agents to accept their bids on flats amid a major accommodation crisis.

One firm told the BBC it was being inundated on a daily basis with people crying, unable to find somewhere to live.

Some students have been using hostels and sleeping on common room floors, while others face long commutes.

NUS Scotland said the crisis was forcing people to quit courses.

Universities Scotland said "a significant contraction in the private rented sector in many Scottish cities" meant that higher education institutions were seeing "unprecedented demand for university accommodation".

https://www.bbc.co.uk/news/uk-scotland-63206999
 
Ponty said:
Let’s face it, this is a total mess whichever side of the fence you’re on. If the govt is determined to smash small time landlords, the least they can do is allow them to gain possession in order to exit the market.

https://www.bbc.co.uk/news/uk-politics-63215265
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The suggestion is that they will speed up the eviction procedure in the event of a fault (like anti social behaviour or significant arears), and more importantly, they will allow no fault eviction if the landlord wishes to sell. The latter for me is not negotiable, if there is any sign that the tenant could refuse to quit when I want to sell, the business is no longer real.

In Scotland there is already a precedent, though it's not clear to me how long the eviction process takes up there in the event of a fault. And more importantly, it isn't clear to me whether the tenant can argue that his need to stay in the property is more urgent than the owner's need to release the capital, and thereby stop an eviction order on the grounds of the landlord wishing to sell. Maybe @TheDecameron, who likes to interest himself in the politics of property, can cast some light about the situation there.

This is something to watch like a hawk. The situation is exacerbated by EPC C. There situation to avoid is that you are legally obliged to make the property EPC C to continue letting, it is too expensive to do the work, and you are legally obliged to do the work because you cannot stop renting, because you can't evict the tenant.
 
hifinutt said:
My tax return says You can choose whether or not to deduct the property income allowance . You might decide that if your allowable expenses for tax are less than 1000 . However i guess for most people it may well be much more than that if you have more than one property
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When we had 2 flats it was still useful to have that allowance, as with the council being the landlord, overheads were only occasionally exceptional (gnd rent £10, e.g.). As we get £1000 per person, that's £2000 allowance on the combined expenses. However, now there's only 1 flat, we still get £2000 and we're in an odd situation as this one is 80/20 (wife doesn't have other income), so whereas I claim the grand, her 80% may well be over that figure, as it was on the recent return. I still ticked the £1000 box as her income still comes well below the (reduced) income allowance. Left me with a feeling of loss, somehow ! :D

One of the silliest gov't marketing (?) slogans has to be 'tax isn't taxing'. It was only doing the CGT forms that I realised just how unrepresentative that was !!!!!!
 
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