Will the plan work to turn generation rent into buy?

[98elise]

moles said:

Do any hobby btl landlords declare rent to hmrc?, I know none of my mates do or ever have

What's a hobby BTL landlord?

Most BTL landlords declare it to HMRC. There's a simple electronic paper trail. The owner isn't the occupier, the mortgage is a BTL product etc.

All it takes is a few simple queries across databases and you have a list of people to investigate.

[InitialDave]

Not declaring rental income for tax sounds like a good way to get yourself a severe legal and financial buggering.

[austinsmirk]

as said, I'm a BTL landlord also. of course I pay my tax. at higher rate too. my works for HMRC, I could hardly not- she could be convicted- HMRC don't mess about. all these people not declaring, what do they think they're going to do when they need to sell and have to declare its been a rental for 20 years ??


anyway back to LM's point. check this out

https://simonbarnett.exp.uk.com/property/main-stre...


This is (a) in Bradford. (b) although for sale, its actually one of our ex houses, now bought. clearly internal spec will be higher than a rental- but there you go. a near to £400k house in Bradford. it's nice, but I wouldn't live there. no external space/land. roadside parking and its a bit out of the way.

IF the one next door/same street etc was empty, it'd be rented for £82 a week.

[Oakey]

How much did they pay for it via right to buy?

[romeogolf]

Ilovejapcrap said:

Interesting read all this.

I don’t feel easy with BTL, I kinda feel it helps the rich get richer and keeps house prices high. Now I’ve not given this a huge amount of thought, I’m not saying I’m right . it’s just how I feel.

Would tax on BTL be a good thing ? If it didn’t exist will we have less rentable props for people ? I suppose house prices falling then affects those already on the ladder ?

What’s people’s view on stopping BTL ?

I say this next bit as a landlord, but yes, in response to your first line, it does help the "rich get richer" in so far as you need capital to buy your first property, but from that point forward each property can fund the next, allowing you to grow richer (in broad terms) - Although of course capital gains tax will take up to 28% of that profit away from you when you sell.

But to understand it in more detail we really have to go back 30 years. The interest-only buy-to-let mortgage market started in the late 90s. In 1996 when the first mortgages which used rental income rather than salary/pay as a factor for approval the average house price was under £60,000. Two years later, by the time the first 125% mortgage was announced by Northern Rock they'd increased by 30% to £78,000.

Of course, this wasn't the only thing happening. Right to buy had been rolling on for decades and in 1999 councils only built 50 new homes themselves. A shortage of homes was/is as much a factor as who's buying them.

Landlords do pay a not inconsiderable amount of tax. There's stamp duty when buying, capital gains when selling, and mortgage interest is no longer the tax deductible freebie it used to be. It is now much harder (read: Expensive) for a new landlord to get into the business, but not unprofitable for an established landlord or one with a healthy deposit and long-term goals. It's not a "quick buck" as it was 20 years ago, but essentially, back to my first point, if you've got money to start with you can make more of it. Like most things, really!

The next question is what would happen if landlords were "taxed out of the market". This is my rough guess and again others may have their views, but as landlords' profits are squeezed their first choices are to raise rents further and/or to sell up. As they start to sell, property prices are likely to be depressed slightly in areas with high numbers of rented properties, but this is likely to make these homes, with existing tenants, most attractive to other landlords with larger portfolios or more capital rather than straight to the first-time buyers. Some buyers who were on the cusp of being able to buy may get themselves a good deal, but equally mortgages are likely to be tightened to require larger deposits if property values are falling (as is happening right now with the disappearance of the 90/95% mortgage market for newbuilds and flats).

So it's not going to help the renter-without-deposit to buy their home. With fewer properties available, rental prices lift, and renters struggle further to save a deposit. If anything, it could increase demand for socially rented homes as the private sector shrinks and more tenants become homeless.

Stopping new landlords entirely is likely to cause new/different issues, and won't fix the core problem: A lack of available homes in general.

hotchy said:

They should allow 100% mortgages for renters who have a record of rent for 2 years with no missed payments. Yes the interest will be higher than those without a deposit but it will still be less than they pay in rent. Ones with deposits should then get access to lower interest rates. Then nobody can complain they never got enough help etc etc.

My mind goes two ways on this... neither are positive.

Firstly security of the loan if home values drop which, as above, is possible if suddenly the rental market becomes less profitable. In the above post this was because landlords were being more heavily taxed, but what if all their good tenants were suddenly moving out and landlords were looking to sell? Would the bank still want to lend 100% of the value in a volatile market?

Alternatively, with a sudden influx of tenants buying, prices of smaller homes could skyrocket. Suddenly the tenant who could afford to pay rent realises that their rent is lower than a potential mortgage payment at a higher interest rate and again we're back to the stage when only tenants who have been able to save a deposit can buy, because those without one simply cannot afford the repayments.

My next question on this was how many renters default? According to this (https://www.ons.gov.uk/economy/inflationandpriceindices/articles/ukprivaterentedsector/2018) pre-pandemic report by the ONS only 5% of private renters had even been in default in the last year, which suggests that these mortgages would essentially be available to almost everyone. That sounds like a runaway market to me.

[anonymous-user]

InitialDave said:

Not declaring rental income for tax sounds like a good way to get yourself a severe legal and financial buggering.

My wife was obsessed with doing things by the book when she had a BTL, and rightly so, but a couple of her work colleagues had a BTL each, and they were practically mocking her for declaring it. One of them went round every month and collected the rent in cash, and the other just had a separate bank account for collecting the rent.

Neither of them thought HMRC would ever find out, or be particularly interested. "All I'm doing is renting my old house. It's no one else business. I pay tax on my salary. This isn't a salary" etc.

Must be tens of thousands, or hundreds of thousands, of people across the country doing the same.

We all know that HMRC are steadily ending all manner of loopholes and blindspots, and no doubt after Covid they will be under instruction from the government to go after everyone they can. It would not surprise me if they had a big push on undeclared BTL.

Edited by anonymous-user on Monday 19th April 12:46

[okgo]

I doubt that it's THAT common. The other side of the coin is the person living there. I would want far more security than just bunging someone cash each month, perhaps if I was renting a room I'd be ok with it, but nothing more.

I've rented a number of properties and never had that arrangement.

[austinsmirk]

well with over 30 odd years exp of renting, I can tell you loads of people do it cash in hand. go far enough back and landlords would hold onto their benefit books, take them to the post office, "cash" it with. ditto for loans.

rents normally have a benefit cap on them........... so you might get £450 in UC to cover it, but the landlord wants £550. they have a difference to pay which often will be undeclared.

the fraud and scams are endless............. every woman is a single parent- there's always some rotation of random blokes living there..... "hidden households"

anyway, we're derailing the thread.

[stitched]

Bacon Is Proof said:

stitched said:

The point was really that anyone with the stamina to work 120 hours in a week, even on minimum wage, should have no issues buying houses.
It was a ridiculous statement and deserved calling out.

100+ hour weeks are not that uncommon in care work (or hospitality for that matter), but they are unsustainable and the 120 hour example was given as the upper limit, not the typical amount worked that one could use to buy a house.
That would be a silly thing to say, only a dimwit would come to that conclusion.

Edited by Bacon Is Proof on Monday 19th April 12:29

As stated previously, I have worked 84 hour weeks.
That is 12 hours of 24 working for seven days.
Anyone claiming to have worked more hours than this is either a superhero or a bullstter.
I presume they mean they were signed in to work and asleep but on call? If so say so.

[mikewilliams79]

stitched said:

As stated previously, I have worked 84 hour weeks.
That is 12 hours of 24 working for seven days.
Anyone claiming to have worked more hours than this is either a superhero or a bullstter.
I presume they mean they were signed in to work and asleep but on call? If so say so.

Offshore workers routinely work 12 minimum for 3 weeks and often 14+ per day, so no, not bullst

[stitched]

mikewilliams79 said:

stitched said:

As stated previously, I have worked 84 hour weeks.
That is 12 hours of 24 working for seven days.
Anyone claiming to have worked more hours than this is either a superhero or a bullstter.
I presume they mean they were signed in to work and asleep but on call? If so say so.

Offshore workers routinely work 12 minimum for 3 weeks and often 14+ per day, so no, not bullst

Yes
Bullst.
You have never worked the rigs.
Try sticking to things you know about.

[hotchy]

mikewilliams79 said:

stitched said:

As stated previously, I have worked 84 hour weeks.
That is 12 hours of 24 working for seven days.
Anyone claiming to have worked more hours than this is either a superhero or a bullstter.
I presume they mean they were signed in to work and asleep but on call? If so say so.

Offshore workers routinely work 12 minimum for 3 weeks and often 14+ per day, so no, not bullst

17+ per day for 7 days... I smell lies.

[stitched]

hotchy said:

mikewilliams79 said:

stitched said:

As stated previously, I have worked 84 hour weeks.
That is 12 hours of 24 working for seven days.
Anyone claiming to have worked more hours than this is either a superhero or a bullstter.
I presume they mean they were signed in to work and asleep but on call? If so say so.

Offshore workers routinely work 12 minimum for 3 weeks and often 14+ per day, so no, not bullst

17+ per day for 7 days... I smell lies.

The smell, it is not lies.
It's bullst from someone who has probably never worked more than an 8 hour day in life.

[mikewilliams79]

hotchy said:

17+ per day for 7 days... I smell lies.

I never said 17+ but 14+ is not uncommon.

[mikewilliams79]

stitched said:

Yes
Bullst.
You have never worked the rigs.
Try sticking to things you know about.

You said people who say they routinely work more than 84hr weeks are lying, I am telling you for a fact there are hundreds of people that do this. You have no clue.

[Bacon Is Proof]

stitched said:

As stated previously, I have worked 84 hour weeks.
That is 12 hours of 24 working for seven days.
Anyone claiming to have worked more hours than this is either a superhero or a bullstter.
I presume they mean they were signed in to work and asleep but on call? If so say so.

I've done more than 84 this week running a pub.
You simply don't know what you are talking about, and are blind to the privilege you enjoy.

Take a step back and have a little think about things, about other people's differing circumstances and why your life has been easier than others

[Bacon Is Proof]

mikewilliams79 said:

You said people who say they routinely work more than 84hr weeks are lying, I am telling you for a fact there are hundreds of people that do this. You have no clue.

Could be worse, at least he didn't suggest that we stop caring for our dependables until wages go up.
That would be really nasty if it wasn't just simply stupid.

[jagnet]

Bacon Is Proof said:

I've done more than 84 this week running a pub.

I used to work 100+ hour weeks as the norm when I had a pub/hotel. Up at 6 for breakfasts, to bed at midnight and try to catch a couple of hours shut eye in the afternoon.

[hotchy]

mikewilliams79 said:

hotchy said:

17+ per day for 7 days... I smell lies.

I never said 17+ but 14+ is not uncommon.

You said 120 hours a week. Thats 17.1 a day. Make up your mind.

[mikewilliams79]

hotchy said:

mikewilliams79 said:

hotchy said:

17+ per day for 7 days... I smell lies.

I never said 17+ but 14+ is not uncommon.

You said 120 hours a week. .

Nope, I didn't. Learn to read.