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I think for cgt to work you'd have to value every house in the country on a given date (tricky, but not impossible) and count it as gains as of x date. There's not necessarily a need to trend it to zero - in doing this if your house went from (say) £200k now to £300k in 20 years, there's tax due on £100k of it - typically you can deduct costs from improving it, but not from maintenance (ie extension counts, new roof/kitchen doesn't).
the idea behind the approach is that if you (and all your competition) only have £280k of equity to play with (if you whacked a 20% tax on the £100k profit) the next house you buy would simply only be worth £280k - so instead of the extra £20k being pushed up the ladder with house prices into some OAPs hand-me-downs its taxed out and re-invested in the economy.
if you were sensible you'd take a higher percentage of gains compared to base inflation - so say 60% of profit after RPI? This means if everythings going up the house doesn't get suckered
I don't think anyone actually does this on primary residences, so no idea if it would actually work. There's probably some unintended consiquence we're missing that'd trip us all up
I don’t think the fixation on being a landlord being a bad thing is a useful one or correct viewpoint. When our last government introduced rules to make being a private landlord more difficult it lead to a sell off of rental properties, the then inevitable shortage of rental properties coupled with supply and demand lead to the increase in rents. At the moment it’s a landlords market.
I don't think that's true. When the landlord sells up some FTB buys the property, thus reducing both the supply (landlord houses) and demand (tenants) by 1. The same is also true the other way around - if more landlords buy houses it doesn't shrink the overall housing stock, it just reduces the stock available to purchase.
The problem is not with who owns the stock, its with how much stock there is
I’m assuming if he was to sell he wouldn’t pay tax on 444k?
A great example of how a simple solution “CGT on main residences” becomes complex and can have unintended consequences.
In principle your dad will have made about £400k capital gains on his house (allowing for purchase cost and cost of improvements) so should pay 20% tax on it. (Or even 40% tax.)
But should there be an annual untaxed CGT exemption on primary residences? If so should it be the same in places where prices rise faster vs places with a stagnant market? How do you allow for costs of improvements, especially if they were a long time ago, or a lot of the labour was you as a DIY house extender rather than paying a builder to do the same thing?
And of course if the tax is seen as at all punitive, a Tory promise to abolish it would pretty much guarantee them a return to power at the next election.
Problems like this may not be insoluble, but they make an apparently simple solution very complex in practice.
Yes but purchasing has more significant barriers to entry than renting. Where/how are these first time buyers going to achieve a deposit (edit: without first renting while they save)? Deposit free mortgages are likely to drive up the lower end of the market
I know the 1960s style blocks of flats are eyesores, but that is the sort of thing thats needed. Stacked high, simple affordable starter homes. Keep the 3-4 bed family homes as family homes so there are more available and stop them being converted.
People generally want houses not flats and its perfectly possible to build affordabilish houses. Again Edinburgh has done a lot of this in the last few years with both Niddrie and the worst bits of Granton having the towers knocked down and small houses built instead. Mixed developments and housing associations IIRC
People generally want houses not flats and its perfectly possible to build affordabilish houses.
not without concreting over the green belt.
Maybe, maybe not. But to get affordable housing you need to force developers to build decent, future proofed starter homes in large numbers, with decent quality, energy efficiengy and yes vehicel charging etc...
You're also going to need to make property less attractive as an investment via taxation of multiple home ownership , and to try to limit price growth, again via taxation. Neither of these are going to be popular with a certain group of the population, but without you've no hope.
Out of curiosity what's the logic of refusing large bank loans to people to fix this, bar starving the market of buyers?
- Use it or lose it planning permission to stop land banking
- Encourage medium density building eg. 3-4 bed apartments in mansion blocks near transport hubs
- End automatic right to buy and resource councils to build social housing
- Encourage eg. empty space above shops to be repurposed - if people are living in town centres they will at least in theory be more attractive places.
nope - the issue with houses is geometry. For the numbers needed to catch up with a century of underbuilding, at a typical suburban density you are going to need a looooooooot of space.
so build at urban levels of space. Hundreds of houses replaced the Hulme crescents in Manchester. Hundreds built in Edinburgh. Yes they are small houses with handkerchief gardens but its perfectly possible. Homes for 160 000 IIRC built on brownfield sites in Edinburgh with a lot of houses not flats. I don't think ( but someone here might know) that they didn't lose many dwellings in either case
Edinburgh also has suburban sprawl on greenfield sites - they are a much larger footprint per house as they are bigger houses with garages and gardens
People generally want houses not flats and its perfectly possible to build affordabilish houses.
Houses will always be more expensive than flats, and there's really no reason for most people in cities to have a house instead of a flat.
If you look at many european cities they have many residential blocks with much higher density than housing, even tiny ones can achieve.
Sure many want a house later in life, especially as they settle with partners / pets / kids etc... but those in the early careers a relative nice one bed flat in the city centre is perfect. Its what I wanted as a grad in my first decent paying job, but no chance i could afford it, so I was stuck renting rooms from landlords in shared houses, paying their mortgages until I met my now wife and we clubbed together to afford our first house after years of saving. We missed out on the free money equity boom many of our friends surfed to financial security
In my experience so far rent in my area has always been at, or more than the mortgage would cost to buy the place. Potentially with higher interest rates that may change as mortgages make a big jump, however I think it will stay larger the same as the landlord will just pass on the cost to the renter and rents will jump in line with increasing mortgages.
Every one of them is 3 and 4 bedroom detatched ‘Executive’ houses with starting prices that are absolutely out of the reach of all but a tiny minority
Don't forget developers when providing a small percentage of so called affordable housing did so with tiny units, bedsits and the like, which were still unaffordable. Not suitable for anything other then single occupants/couples and just went into rental portfolios of the over 50's who could afford them.
Rebuild the government housing stock.
It really is this. Everything else is just pen pushing (mostly).
Oh, and Reeves the private sector are not gong to do it. And you're sending mixed signals about who is going to do it.
Jesus, it really shouldn't be hard to learn from ideological Thatcherite mistakes or shouldn't be.
I'm curious what interest rates do to people - very soon as they come off medium term fixes.
In my experience so far rent in my area has always been at, or more than the mortgage would cost to buy the place.
thats the norm for sure
Fairness doesn’t screw landlords, jealousy does that.
there is a good few landlords that make a fortune out of screwing tenants.
As someone who's a landlord I'd personally be in favour of rent caps. The post Truss behaviour of Landlords has been disgusting. I haven't increased the rent since before Lockdown (in fact as lockdown started - faced with the uncertainty of what that was going to mean I gave the tenants a free month to help them face that). I've not increased the rent and I've been clear that the rent won't increase. Its a house to me, its a home to them to enjoy in peace and privacy.
A rent cap would do everyone a favour, not just tenants. If landlords can't charge fair rents they either can't afford to be, or don't deserve to e landlords. Landlords that are borrowing to rent and have to pass the cost of their borrowing to the tenants (or just choose to) are just arseholes. Landlords rent houses they own, not houses they are buying, interest rates are an irrelavance to the situation because tenants aren't borrowing money. The landlords should just ell up and **** off, they won't be missed.
Last month we had to reorganise the tenancy agreement following a relationship breakdown. The tenant was a bit slow responding to some of the paperwork so the agent told me that they could give them two weeks to quit the tenancy and they'd find me a tenant who would pay more.
I told them I'd keep the, tenant, keep the rent as it is, and employ a cheaper agent and gave them 2 weeks notice to quit the management contact.
Make a percentage of all newbuilds not allowed to be rented out.
Maybe, if you have enough capital (pro footballer, etc), you can only rent properties. The money from the rent could be ploughed back into the local community.
Brownfield sites require decontamination. Cultivating the hemp plant on brownfield sites may be the most effective way to decontaminate them..
Instead of the UK’s universities investing in the arms industry, invest it in land, and run some studies.
Theres still a north/ south divide in the uk, and taking some heat out of the south is a matter of priority.
Id have a limit to population density.
Too overcrowded? Move north.
But where?
Loads of empty moorland. Realistically, we need to build on areas that won’t flood easily, and that won’t impinge on agriculture.
Cut/gate. Pop. 40,000?
As long as you’re not trying to plan an equivalent number of cars in to the equation, anything’s possible.
Most of the agricultural fields in the uk, look utterly shagged, tbh.
Too much emphasis on meat and dairy production. Quantity over quality.
Incentivise farmers to grow hemp (most nutritious food?), and the other parts of the plant can go into building and insulation materials.
Henry viii had no qualms, selling off the monasteries.
Most of the highland estates could be transferred back into public ownership, to accommodate the cities less fortunate and encourage them to cultivate hemp.
Seeing that most of these estates are part of someone’s hedge fund, how do you redistribute them, without the markets going berserk?
It has to be done globally, in the name of child welfare.
rent in my area has always been at, or more than the mortgage would cost to buy the place.
If rent were less than the mortgage then it probably wouldn't be worth the landlord renting it out.
depends how long you have owned it. Bought it 20 years ago your mortgage on it now is probably a lot less that it would be if you bought it now.
Political decisions have delivered the private sector effectively providing public housing (terraced house and flats for rent) in a similar fashion to how it was pre-war/Victorian era. You'd have thought we had learnt from the resultant widespread poverty, ill-health and exploitation, which working class people of the time objected to and demanded change! It was begrudgingly adjusted post-war up until the 70's, winding down in the 80's and into reverse from the 90's to date.
If rent were less than the mortgage then it probably wouldn’t be worth the landlord renting it out.
Why is the landlord paying a mortgage?
You’d have thought we had learnt from the resultant widespread poverty, ill-health and exploitation, which working class people of the time objected to and demanded change!
Something that has changed since the time when public housing and a national health service were introduced is that at the time of that introduction health and housing were the same government department and the issues were seen as two sides of the the same coin. At the time poor housing was a leading cause of ill health so the NHS was there to cure those illnesses but housing was a tool for preventing them
We've since disconnected those two government departments. One of the major strains on the NHS isn't so much ill and injured people arriving at hospitals and people being unable to leave again because their housing isn't suitable for them to be able to return.
When I was admitted to hospital a few years ago half the questions when I was being admitted weren't about me - my health and history - but my house. Are the stairs to get to the front door, is there a downstairs bathroom and so on - they were assessing my needs on on admission and the criteria required for me to be able to get back out again.
So theres something more than just the number of houses - the houses have to be planned and designed for whole life of the people who are going to live in them, the ups and the downs. One of the reasons you may have to wait longer for an ambulance, or at A&E or wait longer for a surgical appointment is because not only have we not built enough houses, but we haven't built enough houses with downstairs loos and accessible front doors.
BTL mortgages have affordability checks that mean your (interest only) payments can't be more than something like 70% of the rental income. With current interest rates that limits a landlord from borrowing more than around 60% of the value of the property anyway.
On the continent there are plenty of large, family apartments. For them location beats a garden. It's only us who have the obsession with 4 walls and a roof that are all yours. A 2 or 3 bed flat is fine to make up affordable housing stock
so creating ghettos? T^hat worked really well with the post war tower blocks of council housing.
In Canada* they’ve introduced an empty homes tax, which is 3% of the property value, per annum. To avoid paying it, you have to have long term renters (short term is banned).
that's had no effect on house pricing though. Its still staggeringly unaffordable.
Mostly of the foreign speculation money in these empty BC lower mainland homes doesn't event register on their balance sheet
Override town planners and nimby crap
So you’ll be fine with developers bulldozing your favourite riding spots, or environmentally sensitive areas to build a bunch of flimsy, cheaply built boxes, just to satisfy government numbers, then?
There are loads of houses being built along the A350 in Chippenham at the moment - the land they’re using is productive farmland; in one place, the farmer is still working the field. :scratch:
Oh, and town planners are far more familiar with the local needs, and where the land is that’s most suitable, than some twonk in an office in a city 100 miles away. Which is the actual distance from here to London. B-)
T^hat worked really well with the post war tower blocks of council housing
The majority of the council housing was decent and to at the time unprecedented standards of size and provision of outdoor space. As is usual in this country, it was later interpreted differently, intentionally undermined, subjected to endless budget cuts and in some areas there was an element of ****-em it's for poor scumbags so any old shit will do!
So you’ll be fine with developers bulldozing your favourite riding spots, or environmentally sensitive areas to build a bunch of flimsy, cheaply built boxes, just to satisfy government numbers, then?
Bit of a leap from what I said there but whatever floats your boat. Of course not environmentally sensitive areas and why add flimsy, cheaply built boxes as I haven't suggested that at all?
Yes town planners know the local needs but that doesn't stop planning offices being deliberately resistant to things and nimby people can be resistant to stuff just because.
You give the town planners the instruction that n,000 houses are required in their area and leave them come up with the best place(s) and most suitable houses to meet the needs of the people in the area. If they fail to deliver on that then override them.
Why is the landlord paying a mortgage?
1) because not many investors are paying 100% cash for rental properties
2) because even if they're not paying mortgages, if rent is below the amount the mortgage would be, it's probably a bad investment.
An BTL mortgage is about 5% atm and savings pays about 5% too. If the rent isn't producing a 5% return, then I'd be better off selling the property (or not buying the property) and just sticking the money in a savings account. Actually considering the fact the landlord needs to pay tax and there are some costs associated with being a landlord and they want a profit, it needs to be a chunk above the amount required just to pay the mortgage.
Yes, there are exceptions (there's a certain stickiness, you can get people that don't consider the cost of capital esp if they inherited the property or have an emotional attachment to it, or if property prices are rising so quickly that it's worth suffering a short term loss) but for the market as a whole, rents should always be higher than mortgage payments, otherwise why would the landlord bother?
I'm not sure I have anything useful to add but I have been wondering lately if this kind of conundrum isn't something that AI will be good for. Us humans don't seem very good at 'gaming out' the plus's/minus's of decisions and those ripples in the pond keep catching us out. If AI decisions are less influenced by politics it might be good.
And it would be the ultimate Big Hitter...
As an aside, I am 53 with 2 BTL's (was 3). It was never the plan but we rolled with opportunities. We are the opposite to slum landlords, like TJ we charge way too little and are just happy to have nice tenants. We also chose not to buy a holiday home so as not to be part of the problem. Instead we visit these places in our tatty old campervan.
We will roll with whatever comes next, if that means more CGT then so be it, we will have had plenty of rent over the years.
Brownfield - long story but I had a large Victorian mill that I was going to make into 8 nice sized town houses. Good location, no issues - could never get it passed planning. The whole valley is 'owned' by two big development companies and as a small fish I got eaten up. I flipped the buildings to a large nationwide builder who are based locally - he hasn't been able to do anything with it either.
Its stuff like that needs sorting - big local developers with Planning in their pocket.
As an aside, I am 53 with 2 BTL’s (was 3). It was never the plan but we rolled with opportunities. We are the opposite to slum landlords, like TJ we charge way too little and are just happy to have nice tenants. We also chose not to buy a holiday home so as not to be part of the problem. Instead we visit these places in our tatty old campervan.
We will roll with whatever comes next, if that means more CGT then so be it, we will have had plenty of rent over the years.
You might try to kid yourselves but unfortunately you are still very much part of the problem.
And I think a little bit of honesty is needed, nobody has a BTL either acquired by purchase, inherited or won in a raffle without the "profit motive".
Let's not forget the important bit of every episode of 'homes under the hammer' where Dave and Julie find out from three little oiks what the valuation and rental potential is.
If you're not doing BTL in order to be able to ride that equity wave, have someone else cover the mortgage or provide you a bit of passive income, so you can ultimately cash out and retire a decade or so early then why are you doing it?
The lack of housing stock, the demand driven price rises, the locals unable to buy where they grew up... That's your* fault I'm afraid.
Don't get me wrong, the way things are configured, if I had the spare cash I'm greedy enough that I would do the same probably, which is why I think we should have a fundamental change that makes landlording difficult to actually make meaningful profits from and places pressure on excess property owners to sell up.
*The "Asset owning class"
And I think a little bit of honesty is needed, nobody has a BTL either acquired by purchase, inherited or won in a raffle without the “<em style="box-sizing: border-box; --tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; --tw-rotate: 0; --tw-skew-x: 0; --tw-skew-y: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgb(59 130 246/0.5); --tw-ring-offset-shadow: 0 0 #0000; --tw-ring-shadow: 0 0 #0000; --tw-shadow: 0 0 #0000; --tw-shadow-colored: 0 0 #0000; font-family: Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, -apple-system, BlinkMacSystemFont, 'Segoe UI', 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 16px;">profit motive“.
Can't sell mine, it has a non-standard construction so can't be mortgaged on. Shall I give it away, do you think?
Shall I give it away, do you think?
If you're past the point of breaking even why not?
Let’s not forget the important bit of every episode of ‘homes under the hammer‘ where Dave and Julie find out from three little oiks what the valuation and rental potential is.
HutH is a crap show. These are people spending £200,000 on a property, spending £30,000 doing it up over 9 months, selling it for £255,000 and then reckoning they're geniuses.
The lack of housing stock, the demand driven price rises, the locals unable to buy where they grew up… That’s your* fault I’m afraid.
Landlords don't affect the supply of housing stock and they certainly don't affect demand for housing! If there was massive oversupply you'd be able to rent for €400 like in rural Italy or France.
in our city is older larger family homes get turned into crappy bedsits and student lets (though it has got better as the uni has started building dedicated blocks to cash in on student rent)
Worth pointing out that a big chunk of student housing demand is driven by foreign students. They've gone from 12% to 25% of student numbers in the last 20 years, and in recent years there's been a large growth in the number of dependents brought with them (which also increases housing demand, obviously).
The massive drive for foreign students is great in the short term for people that sell education, because they get to keep the fees. How are the costs distributed across society? (I should say that I personally have gained massively from a similar policy).
https://migrationobservatory.ox.ac.uk/resources/briefings/student-migration-to-the-uk/
I'm sure it would sell, just not at a price you are comfortable with! unless its a massive liability and costing you thousands for some reason, in which case, yes you'd be better off giving it away....
The thing with BTL landlords is for them it is an investment, to yield a return, and to date has been a pretty easy investment to make significant amounts on. Its why my stepfather retired at 59 and I have friends that will be in the same position in their 50s. These aren't people with property empires, they are normal people who have or had 1 - 3 starter home properties mostly bought through releasing equity in their first home
The impact of so many people jumping on the BTL bandwagon has meant starter homes are hard to find / unaffordable and rents are so high.
There are obviously a few charitable landlords out there not squeezing the maximum they can from their tenants, but, you are still making a fair amount of passive income and part of the overall problem
The whole market and approach is broken. I do think massive council housing (whether its blocks of flats or whatever) with rent control, not allowing councils to rinse tenants either, is what is needed. Bring that in and make it a much harder decision to become an BTL landlord
Cookeaa
Rental properties are needed.
The flat was never bought with being a rental in mind. Mrs TJ lived in it for years - indeed the two flats are next door ( yes I know its weird) and for a decade we had them knocked together into one flat. We started renting it at cost to friends who needed somewhere to live and found we no longer needed the space. the mortgage has NOT been paid in total by the rentals indeed on some of them we made a loss.
Now its mortgage free of course its good money for me. without it I would be reliant on benefits
I am indeed going to sell it in the next year or two and I have asked the tenant if she wants to buy it. ~She is looking to see if she can afford it given owning it will cost her around £500 a month more than renting it. I will NOT sell it so long as she wants to rent it
We bought it from the landlord - and he said "make it worth my while so we paid over the odds and meeting the two mortgages we had pushed us close to the financial edge at times
So here is the moral dilemma. Its obviously cheaper and easier to sell to the tenant particularly as I would NEV ER evict her to sell. so do I sell it on the same deal as I bought it? ie 5% over value or at value or do I give her a discount for the rental I have had from her?
I'm inclined to the 3rd 🙂
The impact of so many people jumping on the BTL bandwagon has meant starter homes are hard to find / unaffordable and rents are so high.
Rents would fall if everyone was piling in on BTL and everything else stayed the same. It's 20 years of cheap interest rates, constraints on new construction, and massive increase in demand that are the problem, not BTL.
(I only own the house I live in, and with a huge mortgage. I seem to be the only dickhead in my generation that hasn't made a squillion quid by buying 4 BTLs.
Before I bought my current place, I rented from a BTL landlord who was a really nice guy and kept the property in immaculate condition. The landlord before that was renting out the house he grew up in. The landlord before that was renting out the house while he worked overseas.)
Here's what the think tanks are going for:
https://ukdayone.org/briefings/fast-wins-on-planning-for-housing
PCA - BTL acts as a mechanism to transfer money from poor to rich.
PCA – BTL acts as a mechanism to transfer money from poor to rich
Which in a lot of ways is public money (via housing benefit) being transferred to the rich.
We need more social housing, which keeps the money in the Governments pocket
My tuppance;
1. 100% inheritance tax, you want the house your parents own? Then buy it on the open market. I may relax this to a couple of generations if the hoi polio revolt too much, but generationally hoarded wealth is never useful.
2. Build higher density in cities, go to any European city and there are endless rows or good looking large apartment blocks of 4-5 stories, make them cheap and attractive with large rooms and plenty of folks will get over their need for a house as opposed to a flat. Covenant the mortgages on them to make them owner occupier only.
3. Revitalise the council owned sector.
4. Build more houses where there is work to support them. Everyone turns into a NIMBY when housing estates are being built near them, but pretty much every suburb that's existed post-war was one at some point and now those houses are often the most desirable.
We will have to build on the Greenbelt. Most areas (especially outside cities) do not have sufficient brown field sites (or even greybelt). We won’t like it, but there will be no option. Means huge changes to the planning system to power through the NIMBYs
We must not build on greenbelt. It's land that keeps down pollution, home to wildlife, insects, flora and trees, reduces flooding, provides places for leisure and well being. It's not just about pretty fields. It stops cities and towns converging into one big sprawling concrete area (look at LA). Greybelt is new to me. A Labour spokes person was saying it's land that doesn't have purpose and isn't attractive and should be built on, mmm that's green belt in my book and as for building on Moorland (mentioned above), that is land that catches carbon, is full of wildlife, fauna and flora and definitely isn't suitable for building on.
Rules on brownfield sites need to be changed. Also more affordable housing on these smaller brownfield sites.
A local 'canal marina' site near us (brownfield) has recently been built on, providing 5 houses, these are outrageously priced for a North West small town. The developers should have built 6/7 smaller properties that were affordable.
Mentioned somewhere above is the fact that many people are still living in their (sometimes large) family homes on their own, without a chance to downsize. Also there are too many empty properties.
Signed: A not really BIG HITTER 🙂
Unfortunately Labour have borrowed a tune from the Tory playbook, blame the planners. Planning, the proper sort that takes in the whole picture is vital and should include infrastructure (hospitals, schools, doctors, shops, sewage), transport - including proximity to work - and also the type of housing being built, including the carbon/climate change footprint. Unfortunately as there’s very little money for the treasury to spend this attack on planners is a diversion, there are permissions for thousands of houses around the country but unfortunately the Government doesn’t control the supply. The control for this is in the hands of the Tory contributing house builders who at the moment have cut back on supply as they can’t make as much profit at the moment. They managed to delay some of the sensible regulations (heat pumps, insulation, sewerage) and have been very much in control.
One answer is to take that control off the builders, borrow money and start building council housing again. These could be for rent or on joint purchase schemes. Scrap the help to buy scheme as all that did was help builders keep prices high whilst we all paid for every fourth house.
MY tenant pays £500 a month LESS than it would cost her if she bought it from me
TJ - I think you know that you are the exception though? Any legislation will always have some unintended consequences - I’m not sure the 1:10000 landlords who rent at far below market rates is a useful thing to worry about v the others.
presumably your statement above is only actually true if you sold it to her at market value - if you are willing to rent at 1/3rd below market, why not sell at the equivalent…
(not that I think you are doing anything wrong).