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Tories.. (again).. they're very confused...

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Tories.. (again).. they're very confused...

Well as if cracking down on the most vulnerable wasn't enough, they're now cracking down on those making money out of them too.
From 2017, George Osborne is phasing in a tax that may see buy to let landlords paying 150% tax on their turnover - not profit.
This obviously means a lot will start selling up.. the market will start flooding with properties and prices should fall a bit.. if not a lot.
More here:
http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/11816720/Death-of-buy-to-let...
(Yes it's a telegraph link).
Apparently 14k signatures against it... I wonder how many people would sign to keep it?
Something about our out of control property market must be done.
I need a new signature... i'm bored of the old one!
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Re: Tories.. (again).. they're very confused...

Well, it's good that they're trying to free up housing for people wanting to buy-to-live-in, but, for people like myself, it's a bit of a worry if our landlords sell up and leave us without a house as we rely on the rental market as there's naff all chance of me ever owning a house...
If they set limits on how high rents can be, that would be preferable, as there's plenty of houses out there that are not worth the rent they set, even the house my uncle is in was too high a price for the area, and it wasn't 'til they dropped it (a few times!) that it became reasonable enough for the average rent in this area, and even now it seems a bit on the high side, but it does come with a huge garden that I look after, but if this tax comes through, well, we could be in the brown stuff...
nanotm
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Re: Tories.. (again).. they're very confused...

chances are its a strategy to have housing associations enlarge their portfolios on the cheap, any B-T-L owners are going to be offloading at below market value in a hurry to the nearest cash buyer to evade the taxation hike before it takes effect.
and its about time something was done about the crisis that's been caused by a limited few tying up huge chunks of the market with masses of properties all on tick bought on the cheap given a lick of paint and the lowest grade fixtures and fittings and rented out at a premium more befitting a Kensington address in a lot of areas
besides those same B-T-L owners will make money out of the sales and be left with a nice big chunk of cash they can invest in state bond schemes that will doubtless open up for everyone with nice investment returns of 10+ % on bonds over 5+ years instead of the not so nice pensioners only bond schemes currently in place
or he could just be telling the pensioners to stop raking it in and play safe with their cash with the pensioner bonds and the working age folks can get a real job instead of playing roulette with peoples lives with ever increasing prices (despite zero cost increases for them) for over a decade!
just because your paranoid doesn't mean they aren't out to get you
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Re: Tories.. (again).. they're very confused...

@7up thanks for the link, I've voted. Now 23,000 signatures  Smiley
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Re: Tories.. (again).. they're very confused...

The previous Labour Government and the current Conservative government have enforced an artificially low bank interest rate as a result of the banking crash. This "cheap money" has led to a situation where savers seek an alternative method to protect their savings. It has also provided an avenue for "investors" to borrow cheap money to buy assets like property for rental to others. Those people also gain in that the interest payments can be deducted against income tax.  It is a patently unfair situation when compared with home owner buying their own property on a mortgage who have to pay mortgage interest out of taxed income. It has also cause inflationary pressures on house prices. This has made life very difficult for first time buyers; in effect this inflates home rental prices as there are more people competing for rented property.
Government action to equalise tax relief on mortgage interest payments is long overdue to correct this market anomaly.
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itsme
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Re: Tories.. (again).. they're very confused...

Agreed.
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Re: Tories.. (again).. they're very confused...

Quote from: PeterLoftus
@7up thanks for the link, I've voted. Now 23,000 signatures  Smiley

You would. Stuff the poor eh? I'm surprised artmo hasn't dived in gloating about it too...
Personally I think this will be a very good move. Yes it might make life a bit difficult for tenants temporarily but overall this will hopefully bring the runaway "cash in at the poors expense" housing market under control.
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nanotm
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Re: Tories.. (again).. they're very confused...

It will also have the very necessary effect of bringing rental prices back down to earth which will save the taxpayer money year on year instead of funneling it through the welfare system into private landlords pockets 
just because your paranoid doesn't mean they aren't out to get you
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Re: Tories.. (again).. they're very confused...

I am not sure about "stuff the poor" as this new policy will hurt a chunk of the "buy to let" market and may cause the house price rise to stall or reverse in some areas at the expense of those poorer members of society who want to rent
Note that the obvious side effect will be to limit the available properties available to rent and hence drive the rental costs up
This must the only business where expenditure can't be set against income which effectively means that they are being taxed on turnover which can't be correct
I see that there is a post from nanotm claiming that restricting the buy to let market will reduce rents - I can't see the logic to that as supply and demand will surely have the opposite effect
itsme
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Re: Tories.. (again).. they're very confused...

Quote from: nanotm
It will also have the very necessary effect of bringing rental prices back down to earth which will save the taxpayer money year on year instead of funneling it through the welfare system into private landlords pockets 

or it could push rents up as landlords recoup the tax that they have to pay on interest only loans.
Quote from: Oldjim
This must the only business where expenditure can't be set against income which effectively means that they are being taxed on turnover which can't be correct

Are Buy to Rent a business or an investment. Can I borrow money to invest and be subsidise by the tax payers?
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Re: Tories.. (again).. they're very confused...

Any business is allowed to offset expenditure against income and would be taxed on the profits
This is actually old news which the Telegraph has just jumped on
http://www.theguardian.com/uk-news/2015/jul/08/osborne-buy-to-let-tax-relief-limit-budget
http://www.bbc.co.uk/news/business-33447991
The thing which is very unclear is what happens if the buy to let landlord sets up a limited company to handle it rather than doing it as a private individual but this indicates that it could be better but that transferring the existing properties could land you with a one off tax charge http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/11221498/Im-a-buy-to-let-inv...
http://www.mortgagesforbusiness.co.uk/news-insight/2015/july/buy-to-let-from-personal-to-limited-com...
nanotm
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Re: Tories.. (again).. they're very confused...

if you pay 15% of your turnover as taxation your paying 50% more to have that turn over than your getting, if that applies to all buy to lets property owners across the board (which is what was announced in the last budget speech) then the taxman is getting repaid for years of excessive rentals
it will force cheap offload sales of masses of properties which will reverse the excessive price hyperinflation for houses that was fraudulently created in 2003 and allowed to continue without regulation ever since, house ownership is something most people strive to achieve but are prevented from because the average wage is still below £30k/yr yet the average house price is over 8 times this and mortgage's are limited to 3.5 x earnings which means instead of getting your first rung on the ladder by 25 your going to struggle to afford one before retirement, reversing that by making those "investment packages" worthless will drop the housing market prices like a rock, this will enable two things, more buy to live buyers and more properties available for social landlords (which have controlled rents way below "market levels") that will make only those people who buy outright and let the properties operate as landlords increasing the numbers of social properties and thus force private landlords to decrease rental prices to compete.
it might allow them to increase due to lack of rentals in the private arena but the extra owners and larger numbers of social association properties will mean a greater choice for renters and buyers alike.
it will upset and disadvantage those who thought they were getting in on a good income driver but they have other investment options (many of which are safer) that offer similar if not greater average returns in the medium to long term, look at the government deposit bond scheme, they are paying out double the amount for zero effort on long term bonds.
it will disadvantage my dad (he co-owns a couple of B-T-L's) but only if he doesn't cash in on the current price before the market crashes and only for a short time (he will make 50% on his initial price even if the housing market falls by 25%) so chances are like many others who utilised multi property portfolios he really only has loss exposure on a single property /
the other major plus side of this change in fortunes is that it will get rid of hundreds (if not thousands) of slumlords across the country and rid many areas of the scourge of illegal multi occupancy dwellings which can only be a good thing for the general public!
just because your paranoid doesn't mean they aren't out to get you
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Re: Tories.. (again).. they're very confused...

There are many things people with money can invest in to make a profit (or loss) but I wonder if housing should be took out of the equasion ?
At one time most rented accommodation was owned by the local authority which I now understand has been passed on to housing associasions.
If you compare the rent charged by a housing association to that charged by a private landlord for a similar type of property there is a considerable difference, so is this fair ?
Housing Associations are non profit making whereas a private landlord has to make a profit hence the difference in the rent charged, perhaps we should restrict the number of properties a person can own and stop completely people from overseas who simply invest for profit in accommodation they will never use or even see.?
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Re: Tories.. (again).. they're very confused...

It isn't often I do this but for once i find myself agreeing with nanotm.. and hoping that he's actually right.
Something MUST be done about this buy-to-screw business. It is wrong and hurts the vulnerable AND the hard working who can't afford a home.
I've known people with £35k+ earnings who can't afford to buy because they're paying so much in rent - it's wrong. Why would you want to work hard and earn good money if you cannot have the reward to go with it? - and they wonder why so many people choose to live on benefits  Crazy
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Re: Tories.. (again).. they're very confused...

The problem with this is that it will hit the private landlord with only a few properties and a reasonable income which takes them into the 40% bracket
Note that the gross income less expenses from rental will be taxable not the net profit so that a private landlord with a couple of properties is liable to be hit
The big landlords will almost certainly have done it through a limited company and they won't be affected (there are a few notable ones down here and they are the one which specialise in low standard properties)
Equally those who don't have large mortgages won't be hit which leaves the small investor who perhaps is using it as a pension pot and will really suffer
From one of my previous links
Quote
Graham Davidson, the managing director of Sequre Property Investment, a firm which specialises solely in buy-to-let investments, said about half of its customers were cash buyers, meaning they would not be affected by the move.
But he said those that were affected were likely to increase their rental fee to compensate for the higher tax bill.
"The single biggest impact will be to tenants rather than landlords," he warned.