Boomer life according to the economist

[98elise]

BandOfBrothers said:

98elise said:

BandOfBrothers said:

Paddymcc said:

98elise said:

Why wasn’t it applied to all landlords then, including housing associations? What was special about private landlords?

if you hold the properties in a LTD company you can still claim the mortgage interest as a cost, like any business related loan, because its obviously a cost.

But then you're liable to corporation tax/income tax + national insurance contributions etc, etc.

If starting out today you would be better off Ltd if you pay 40% tax and have loans. The reasons existing landlords don't is because it would trigger CGT when you sold them to your Ltd Co.

I suspect the taxation difference between personally owned and through a corporate is minimal?

Not forgetting you then have to file a corporate tax rerturn each year plus a set of accounts.

And on top of that, you have the hassle of getting a BTL mortgage through a newly incorporated company.

It can't be minimal because Gove says it raises a lot of tax revenue. Its not hassle doing a corporate tax return. I used an accountant both times I had a Ltd co and it was about £1500 a year all in (deductible of course!). That included running my payroll, and giving tax advice.

[BandOfBrothers]

98elise said:

It can't be minimal because Gove says it raises a lot of tax revenue. Its not hassle doing a corporate tax return. I used an accountant both times I had a Ltd co and it was about £1500 a year all in (deductible of course!). That included running my payroll, and giving tax advice.

I'm no tax expert, but can do some basic maths.

Assuming your corporate costs of £1,300 p.a., tax corporate tax relief on the mortgage interest at 20% and equivalent personal taxes between corporate and non-corporate property ownership, I make the break even point for owning in a corporate £6,500 of interest, which at 5% mortgage rate gives a mortgage of £130,000.

That is the break even point before you start considering the additional hassle. I'd want to be much closer to the £200k of mortgage before bothering to switch to a corporate.

[98elise]

BandOfBrothers said:

98elise said:

It can't be minimal because Gove says it raises a lot of tax revenue. Its not hassle doing a corporate tax return. I used an accountant both times I had a Ltd co and it was about £1500 a year all in (deductible of course!). That included running my payroll, and giving tax advice.

I'm no tax expert, but can do some basic maths.

Assuming your corporate costs of £1,300 p.a., tax corporate tax relief on the mortgage interest at 20% and equivalent personal taxes between corporate and non-corporate property ownership, I make the break even point for owning in a corporate £6,500 of interest, which at 5% mortgage rate gives a mortgage of £130,000.

That is the break even point before you start considering the additional hassle. I'd want to be much closer to the £200k of mortgage before bothering to switch to a corporate.

130k mortgage is bugger all. A single house in my area would cost £300k. I currently have 250k, but peaked at 500k.

[Steve H]

VeeReihenmotor6 said:

Yet my Dad managed to procure, on his own as both wives never worked and he had no handouts either (well none from his parents, plenty from the "economy" though), 2 x £1.5m+ houses (one for my mum, and one for his new family) in "today's money" and go on to produce another 3 kids too. He has been public sector PAYE all his life. Retired this year at 66 with a pension of £140k per annum.

Are we really pretending now that six figure pensions are in any way typical for boomers?

[havoc]

98elise said:

All that means is they don't have shareholder dividends. Our local HA makes a big profit (surplus), and of course pays salaries to all its staff and provides company cars etc.

What does their charter say they need to do with the profits?

...because my understanding is that they get ploughed back, either in reduced fees, lower rent rises or improvements to service.

[Portia5]

Heroic social housing provider stories Part 99,542:

https://www.dailyrecord.co.uk/news/politics/nearly...

https://www.dailyrecord.co.uk/news/scottish-news/m...

Many Housing Associations and most councils are pretty ste at property letting and management.

In fact Glasgow City Council were so useless at it that they had to have their housing stock removed from them years ago and spread amongst housing associations instead. That's admittedly an improvement but some of THEM are pretty dire too.

Actually I work with HAs frequently on buildings where the dwellings are split between private owners and Housing Associations. Usually sorting things that, following multiple attempts, they aren't successful in dealing with. Last week it was a roof issue which was causing my tenants a water ingress drama. Admittedly it was tricky, but after 3x contractors and 6 months of timewasting they gave up on it and said "you do it". Which my roofer did. One phone call, 2 roofers, one morning, £780 materials and labour. BOOM!! Neeeeext!

Edited by Portia5 on Wednesday 24th April 17:23

[Panamax]

Let's not beat about the bush,

• Are BTL landlords in it because they believe they're doing a great favour to society? No.
• Are local authority housing committees (or whatever) subject to far more scrutiny and public criticism than BTL landlords? Yes.
• Is there an easy answer to "affordable housing" in UK? No.
• Is the problem exacerbated by 500 migrants a day arriving in small boats? Well, it certainly doesn't help.

[jasonrobertson86]

Panamax said:

Let's not beat about the bush,

• Are BTL landlords in it because they believe they're doing a great favour to society? No.
• Are local authority housing committees (or whatever) subject to far more scrutiny and public criticism than BTL landlords? Yes.
• Is there an easy answer to "affordable housing" in UK? No.
• Is the problem exacerbated by 500 migrants a day arriving in small boats? Well, it certainly doesn't help.

Problem solved

[Panamax]

jasonrobertson86 said:

Problem solved

Your brief point is well made. The "problem" is a real world, physical problem and moving taxes around makes very little difference to anything on the ground. Housing in UK ain't going to become "more affordable" anytime soon. If the government's decided it's had enough of subsidising private BTL then so be it.

[Michael_B]

Panamax said:

• Is the problem exacerbated by 500 migrants a day arriving in small boats? Well, it certainly doesn't help.

So far this year 58 migrants a day have arrived in the UK on small boats. Last year it was an average of 80.

Perhaps the UK should look a bit more closely at these figures being part of 1’840 people per day of total net migration, the vast majority apparently being ‘legal.’

UK business people addicted to cheap imported labour? Lack of skilled indigenous workers due to an ineffective education system? Brexit causing a mass exodus of skilled EU workers? Vast numbers of UK workers long-term sick? Boomers retiring early having sold over-priced property? Lack of innovation, productivity and entrepreneurial spirit? QE and fiscal mismanagement leading to the Gordon Brown Peso continually falling in value on international markets?*

*[delete as appropriate]

Edited by Michael_B on Wednesday 24th April 21:44

[98elise]

havoc said:

98elise said:

All that means is they don't have shareholder dividends. Our local HA makes a big profit (surplus), and of course pays salaries to all its staff and provides company cars etc.

What does their charter say they need to do with the profits?

...because my understanding is that they get ploughed back, either in reduced fees, lower rent rises or improvements to service.

After all the staff have had their share, the company cars paid for, the shiny office bought, the expenses paid, and a budget for the christmas party, yes it gets reinvested.

I'm happy to invest in more property once I've taken my cut. That was my plan until prices went mental and yields dropped.

Edited to add...

I just checked my local HA for what they charge.

They have 1 bed flat in Rochester is £1100. That's what I would expect a 2-3 bed house to rent for. They aren't using their surplus to keep rents down!

I let my places for less than that, but they get a tax break on their properties.

Edited by 98elise on Thursday 25th April 11:45

[NRS]

98elise said:

havoc said:

98elise said:

All that means is they don't have shareholder dividends. Our local HA makes a big profit (surplus), and of course pays salaries to all its staff and provides company cars etc.

What does their charter say they need to do with the profits?

...because my understanding is that they get ploughed back, either in reduced fees, lower rent rises or improvements to service.

After all the staff have had their share, the company cars paid for, the shiny office bought, the expenses paid, and a budget for the christmas party, yes it gets reinvested.

I'm happy to invest in more property once I've taken my cut. That was my plan until prices went mental and yields dropped.

Edited to add...

I just checked my local HA for what they charge.

They have 1 bed flat in Rochester is £1100. That's what I would expect a 2-3 bed house to rent for. They aren't using their surplus to keep rents down!

I let my places for less than that, but they get a tax break on their properties.

Edited by 98elise on Thursday 25th April 11:45

That's not a problem, HA are just providing a service and if they have to sell up the rental prices will increase as the houses vanish from the rental market. If it wasn't for HA the rental prices would rocket, we should be doing all we can to support them.

[OoopsVoss]

Michael_B said:

So far this year 58 migrants a day have arrived in the UK on small boats. Last year it was an average of 80.

Perhaps the UK should look a bit more closely at these figures being part of 1’840 people per day of total net migration, the vast majority apparently being ‘legal.’

UK business people addicted to cheap imported labour? Lack of skilled indigenous workers due to an ineffective education system? Brexit causing a mass exodus of skilled EU workers? Vast numbers of UK workers long-term sick? Boomers retiring early having sold over-priced property? Lack of innovation, productivity and entrepreneurial spirit? QE and fiscal mismanagement leading to the Gordon Brown Peso continually falling in value on international markets?*

*[delete as appropriate]

Interesting list, but don't think the UK is any different to many other countries in suffering from the same problems hobbling its economy.

Just seen the US do a whopping miss on GDP expectations. Ouches. Expectations 2.4% - actual 1.6%. That's a big stagflation problem.

Look at US immigration numbers - makes ours like insignificant (especially illegal which is a comedy rounding error).

Whilst we DO have a serious investment problem, this weeks PMI data suggest an economy set to expand (despite all the doom and gloom). Whilst we are NOT similar to Germany with a different manufacturing intensity - its interesting that we both saw confidence improve - but both needing to rebalance a bit (in opposite directions).

Fiscal management poor, but arguably worse elsewhere. France is on the block next couple of weeks with rating agencies - likely to be downgraded and decoupling Germany. The US medicare and social security systems are bankrupt in 10 years. Sure we lag Germany and other fiscally prudent countries; but far from bottom of the barrel.

On QE / GBP - look to the USD strength. The CBs have to act in step otherwise you start to get problems. Of course its painful and inflationary when your commodity buying CCY is going up in value - but arguably we are no worse off than others. What do you think is going to happen to the EUR - if the ECB does what the IMF says it needs to (6 cuts by June 2025). Its going through parity. We also might have a situation by 2026 where the BoE has cleaned its sheet (even if I think that Bailey is the worse of the 3 main Central bankers).

I mean I get its a bit rubbish here, but everyone is eating a st sandwich. I still come back to our biggest issue being wealth / opportunity inequality gaps.
.

[havoc]

OoopsVoss said:

I mean I get its a bit rubbish here, but everyone is eating a st sandwich. I still come back to our biggest issue being wealth / opportunity inequality gaps.

I think I broadly agree.

Brexit, in the medium-term at least, is still a big economic own-goal (long-term who knows...agree with your perspective on the EU), and our current government is putting political dogma ahead of economic pragmatism as they're woefully out of their depth and doing what cheap politicians do - focus on headlines, soundbites and their voter base.

...but the devaluation of Sterling has at least given us a sporting chance, IF we can reinvigorate some bloody investment / improve our productivity-per-capita (i.e. the opposite of what this bunch of clowns has been pursuing).



Ultimately - going back to the OP - the Western land of milk and honey which the Pre-War generation presided over, Boomers enjoyed and Gen-X assumed was normal / what they had to look forward to is definitely coming to an end. It's just unfortunate that it's creating a bunfight over shrinking resources rather than a sense that we need to look after everyone's future.

[Panamax]

havoc said:

OoopsVoss said:

I mean I get its a bit rubbish here, but everyone is eating a st sandwich. I still come back to our biggest issue being wealth / opportunity inequality gaps.

I think I broadly agree.

+1

The UK "minimum wage" level is an offence against all decency IMO. Equally I have to recognise there are plenty of illegals working in UK who are lucky to see even that level of pay. It's not a proper basis for a modern economy IMO.

I'm equally opposed to priority Council housing for "essential workers". I'd much rather see those essential workers paid enough to be able to live without state housing subsidy.

[Panamax]

havoc said:

it's creating a bunfight over shrinking resources rather than a sense that we need to look after everyone's future.

I think the problem is the very large elephant in the room - population growth.

There's no shortage of anything. There's an excess of people.

[turbobloke]

Panamax said:

havoc said:

OoopsVoss said:

I mean I get its a bit rubbish here, but everyone is eating a st sandwich. I still come back to our biggest issue being wealth / opportunity inequality gaps.

I think I broadly agree.

+1

The UK "minimum wage" level is an offence against all decency IMO. Equally I have to recognise there are plenty of illegals working in UK who are lucky to see even that level of pay. It's not a proper basis for a modern economy IMO.

I'm equally opposed to priority Council housing for "essential workers". I'd much rather see those essential workers paid enough to be able to live without state housing subsidy.

That would require the same job to have different pay in different regions with different housing and food costs, which brings all sorts of complications and (unintended) consequences...being able to live in London or in Grimsby for example.

[BandOfBrothers]

Panamax said:

havoc said:

it's creating a bunfight over shrinking resources rather than a sense that we need to look after everyone's future.

I think the problem is the very large elephant in the room - population growth.

There's no shortage of anything. There's an excess of people.

I don't think that's true at all - population growth can lead to more than proportionate economic growth, i.e. everyone getting wealthier, if it's managed appropriately.

The issue is wealth inequality and in the UK the housing market plays a big part in that.

[Mr Whippy]

Panamax said:

havoc said:

OoopsVoss said:

I mean I get its a bit rubbish here, but everyone is eating a st sandwich. I still come back to our biggest issue being wealth / opportunity inequality gaps.

I think I broadly agree.

+1

The UK "minimum wage" level is an offence against all decency IMO. Equally I have to recognise there are plenty of illegals working in UK who are lucky to see even that level of pay. It's not a proper basis for a modern economy IMO.

I'm equally opposed to priority Council housing for "essential workers". I'd much rather see those essential workers paid enough to be able to live without state housing subsidy.

It’s because the entire system is a neo-socialist proxy for capitalism which became cronyised long ago.

True enterprise is now squashed in favour of established interests… innovation or efficient growth can take a walk.

[Panamax]

Mr Whippy said:

It’s because the entire system is a neo-socialist proxy for capitalism which became cronyised long ago.

True enterprise is now squashed in favour of established interests… innovation or efficient growth can take a walk.

Just two sentences, yet containing a great deal of meaning. I don't disagree.

This is the era of "the individual", with almost no "individuality" whatsoever. It's become a cookie-cutter world of box ticking and standardised opinions.