timebandit

Budget 2012 Btl Tax Breaks

34 posts in this topic

Thanks to 'Priced out' on Twitter for the story. Don't you just love this cr*p

[url="http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/9150618/Budget-2012-Government-to-offer-tax-breaks-on-property-deals-to-draw-money-into-buy-to-let-sector.html"]Budget 2012: Government to offer tax breaks on property deals to draw money into buy-to-let sector[/url]


[quote]George Osborne, the Chancellor, is expected to confirm in the Budget this week that the Government will significantly loosen the regulations for Real Estate Investment Trusts, which do not pay capital gains tax on property. [/quote]

You could try and send Grant a message on his [url="https://twitter.com/#!/grantshapps"][b]twitter page[/b][/url].

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[quote name='timebandit' timestamp='1332106511' post='3289091']
Thanks to 'Priced out' on Twitter for the story. Don't you just love this cr*p

[url="http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/9150618/Budget-2012-Government-to-offer-tax-breaks-on-property-deals-to-draw-money-into-buy-to-let-sector.html"]Budget 2012: Government to offer tax breaks on property deals to draw money into buy-to-let sector[/url]




You could try and send Grant a message on his [url="https://twitter.com/#%21/grantshapps"][b]twitter page[/b][/url].
[/quote]

It just puts them on a level playing field with small landlords in terms of tax. Personally, I would rather rent from a professionally run REIT than an individual with one or two properties like we have at the moment.

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[quote name='Pent Up' timestamp='1332106746' post='3289092']
I've already forwarded your tweet. Not that it will do any good I'm afraid.
[/quote]

Thank you Pent up, it's good to see you on twitter, we could do with a few more HPCers.

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Bringing REITs into residential property could actually make a lot of sense. A big company will employ professionals to run their properties, and can be better regulated than $random-wannabe. It has no excuse to want a tenant out under a section 21 or similar, so REITs as landlords would have no problem with losing section 21 and having to give much longer notice - e.g. a full year - to get tenants out. In other words, it offers the prospect of professionally-run tenancies with much more security.

That's the optimistic view. No guarantees it'll work out like that!

Oh, and since REITs are publicly listed companies, we're all free to buy their shares and thus buy into property ownership. So wecan get that foot on the property ladder without binding ourselves to a house when, for example, we anticipate moving.

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Why should rich landlords be exempt from tax?

It should be a higher rate than working for a living, not less.

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[quote name='timebandit' timestamp='1332106511' post='3289091']
Thanks to 'Priced out' on Twitter for the story. Don't you just love this cr*p

[url="http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/9150618/Budget-2012-Government-to-offer-tax-breaks-on-property-deals-to-draw-money-into-buy-to-let-sector.html"]Budget 2012: Government to offer tax breaks on property deals to draw money into buy-to-let sector[/url]




You could try and send Grant a message on his [url="https://twitter.com/#!/grantshapps"][b]twitter page[/b][/url].
[/quote]

Half of the problem with BTL is that the landlords are all amateur morons (or at least the ones I've had contact with). REITs in the US have created a much more professional, stable rental sector where rents are lower and security of tenure is higher. This move, if true, would help a lot in the UK. Edited by RichC

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[quote name='24gray24' timestamp='1332108472' post='3289109']
Why should rich landlords be exempt from tax?

It should be a higher rate than working for a living, not less.
[/quote]

REITs are not exempt from tax. In the US at least, the structure removes the double taxation of having the income taxed first as corporate tax and then again as ordinary income to the owners of the shares in the REIT. Without the REIT structure, it makes very little sense for professional organizations to become residential landlords.

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[quote name='timebandit' timestamp='1332106511' post='3289091']
Thanks to 'Priced out' on Twitter for the story. Don't you just love this cr*p

[url="http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/9150618/Budget-2012-Government-to-offer-tax-breaks-on-property-deals-to-draw-money-into-buy-to-let-sector.html"]Budget 2012: Government to offer tax breaks on property deals to draw money into buy-to-let sector[/url]




You could try and send Grant a message on his [url="https://twitter.com/#!/grantshapps"][b]twitter page[/b][/url].
[/quote]

This is no good. What they need to do is what labour planned to do around 2005 and let individuals hold residential property in their SIPP. Have made some nice gains in my SIPP on shares / gold in the last 2 years and it would be great if 2 bed houses in nice areas dropped back to £100k mark and I could buy one for cash with the money in my SIPP then rent it out for £500+ a month, adding the rental profit back into the SIPP.

There are probably 1000's of personal pension holders in their mid 40's with pots around £100k+ who would love nothing more than to transfer them to a SIPP and buy a house for cash within it it prices dropped enough?

M

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[quote name='markyh' timestamp='1332111279' post='3289157']
This is no good. What they need to do is what labour planned to do around 2005 and let individuals hold residential property in their SIPP. Have made some nice gains in my SIPP on shares / gold in the last 2 years and it would be great if 2 bed houses in nice areas dropped back to £100k mark and I could buy one for cash with the money in my SIPP then rent it out for £500+ a month, adding the rental profit back into the SIPP.

There are probably 1000's of personal pension holders in their mid 40's with pots around £100k+ who would love nothing more than to transfer them to a SIPP and buy a house for cash within it it prices dropped enough?

M
[/quote]

It is widely accepted in most countries that making residential property investment work economically for corporate investors raises the availability and quality of rented housing stock creating a stable high quality rental market that can compete with home ownership rather than being a poor relation. The economics of residential property investment sit poorly with the UK corporation tax system. REITs do not ultimately give a tax break to companies over private investors. They do put corporates on a level playing field with private individal investment in rented property. Its a good thing and should be applauded. I understand all parties would adopt residential REIT rules - the original commercial REIT rules were insufficient to enable residential REITs to be viable and so are being amended.

I would not want to rent off an individual long term - its too unstable - what if you get run over - what happens to my idea of living in the house for a few years then. I would consider renting from a large investment company that is not reliant in the whims (or indeed road safety) of one individual.

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[quote name='markyh' timestamp='1332111279' post='3289157']
This is no good. What they need to do is what labour planned to do around 2005 and let individuals hold residential property in their SIPP.
[/quote]
For me personally, that would be a huge advantage, as I have enough in my SIPP to buy quite a nice house, tax free.

At a time of bubble, as in 2005, it would've been disastrous, as it would've poured in a tsunami of new money, pushing house prices up and starving the productive economy of investment.

Right now it would be less catastrophic than in 2005, but still very dangerous, and for the same reasons.

Much safer just to buy shares in a REIT in your SIPP. I expect I'll buy some myself some at some point.

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[quote name='AndyAndy' timestamp='1332111952' post='3289167']
It is widely accepted in most countries...
[/quote]

..but wrong. The economy cannot ever be efficient until landlords pay for the services they receive.


The conservative party, party of [s]business[/s] [s]enterprise[/s] [s]work[/s] [s]families[/s] rent seeking. Edited by (Blizzard)

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[quote name='markyh' timestamp='1332111279' post='3289157']
This is no good. What they need to do is what labour planned to do around 2005 and let individuals hold residential property in their SIPP. Have made some nice gains in my SIPP on shares / gold in the last 2 years and it would be great if 2 bed houses in nice areas dropped back to £100k mark and I could buy one for cash with the money in my SIPP then rent it out for £500+ a month, adding the rental profit back into the SIPP.

There are probably 1000's of personal pension holders in their mid 40's with pots around £100k+ who would love nothing more than to transfer them to a SIPP and buy a house for cash within it it prices dropped enough?

M
[/quote]

PS If you want to invest in residential property your SIPP can invest in a REIT - you spread your property portfolio risk around a large number of houses.rather than getting lucky or unlucky with just one.

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[quote name='(Blizzard)' timestamp='1332112289' post='3289175']
..but wrong. The economy cannot ever be efficient until landlords pay for the services they receive.


The conservative party, party of [s]business[/s] [s]enterprise[/s] [s]work[/s] [s]families[/s] rent seeking.
[/quote]

I'm sorry if you are going to reply to me you are going to have to put up some sort of properly constructed reasoned argument. Not some random sentance and what appears to be a dig at the conservatives; although in itself your second paragraph is so obtuse as to render it useless. I'm a floating voter by the way.

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[quote name='AndyAndy' timestamp='1332111952' post='3289167']

I would not want to rent off an individual long term - its too unstable - what if you get run over - what happens to my idea of living in the house for a few years then. I would consider renting from a large investment company that is not reliant in the whims (or indeed road safety) of one individual.
[/quote]

Thinking about it If they allowed Residential property into a SIPP I could use the six figure funds locked in my SIPP to clear the mortgage on our family home and then the family can live mortgage free and I could put the vAlue of the monthly interest and capitial payments into the SIPP to invest in equities rather than give the interest to a bank.

That would be cool, having your family home in the SIPP, as long as you where sorted and didn't need to move! I wonder how many overstreatched peak buyers actually have enough pension savings to clear their mortgage, stop being repossed and secure their family home if this was allowed?

M

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[quote name='jonb' timestamp='1332106818' post='3289094']
It just puts them on a level playing field with small landlords in terms of tax.
[/quote]

Surely this could also be achieved by removing the tax advantages currently enjoyed by small landlords. I would rather see that approach personally.

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[quote name='AndyAndy' timestamp='1332112313' post='3289176']
PS If you want to invest in residential property your SIPP can invest in a REIT - you spread your property portfolio risk around a large number of houses.rather than getting lucky or unlucky with just one.
[/quote]

I have thought about this but I would still rather own a property outright in my home town, where I know the market and areas and keep all the rental income ans capital gains over 20 or more years to myself in my SIPP. I could easily manage and repair one property and voids would be an annoyance rather than a worry as no mortgage on the property.

A REIT will have wages and running costs to pay and Managers making decisions on properties I know nothing about the areas they chose to invest in. I would never put more than 10% of my pot into a reit but would happily put 100% of by SIPP pot into one good house locally.

M

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[quote name='Quicken' timestamp='1332113202' post='3289193']
Surely this could also be achieved by removing the tax advantages currently enjoyed by small landlords. I would rather see that approach personally.
[/quote]

To be specific small landlords don't really get a taxbreak. Rather corporate investors get a punitive rate of tax now. What you would need to do is put up tax rates for profits and gains of individuals holding one or more btl properties. That is more or less like house rationing. Moreover the result is a decline in property available for rent not an increase. Now that is not really that good. It does not fit with lots of people to buy a house to live in. It didn't fit with me until I was in my mid 30s. I moved around alot with my job and enjoyed that. I did not enjoy living in the grotty sheds offered up by private landlords nor the extraordinary and unprofessional behaviour of most of them. I would have loved to go to ABC plc and rent a something from them. Alas that was not available to me then.

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[img]http://www.housepricecrash.co.uk/forum/public/style_emoticons/default/tongue.gif[/img] Edited by sleeping dog

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There was a thread about it last May
http://www.housepricecrash.co.uk/forum/index.php?showtopic=163790&st=0

There was another one about REITS also paying less stamp duty.

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[quote name='markyh' timestamp='1332113597' post='3289199']
I have thought about this but I would still rather own a property outright in my home town, where I know the market and areas and keep all the rental income ans capital gains over 20 or more years to myself in my SIPP. I could easily manage and repair one property and voids would be an annoyance rather than a worry as no mortgage on the property.

A REIT will have wages and running costs to pay and Managers making decisions on properties I know nothing about the areas they chose to invest in. I would never put more than 10% of my pot into a reit but would happily put 100% of by SIPP pot into one good house locally.

M
[/quote]

Yes but as a former tenant, I would not want to rent it from an individual and nor would most people if they had the choice. They would rather rent from a large company in a clear and regulated market. I think this is a good thing for tenants. They are less likely to be confronted by the idiots of landlords I used to rent from who turned up 3 days late to fix boilers unblock the drain, were too tight to employ a professional heating engineer or plumber and then have the cheek to assume I was in some sort of servile relationship for renting the house and was somehow responsible for the boiler breaking down in their crumbling wreck.

Its not all about you. I think this policy is designed to help tenants.

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[quote name='markyh' timestamp='1332113597' post='3289199']
I would never put more than 10% of my pot into a reit but would happily put 100% of by SIPP pot into one good house locally.
[/quote]
Which is precisely why it would drive up house prices, hard and fast.

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[quote name='AndyAndy' timestamp='1332112770' post='3289180']
I'm sorry if you are going to reply to me you are going to have to put up some sort of properly constructed reasoned argument. Not some random sentance and what appears to be a dig at the conservatives; although in itself your second paragraph is so obtuse as to render it useless. I'm a floating voter by the way.
[/quote]

That was a properly reasoned argument. I suspect you were confused by its simplicity, but the truth is often simple.

This proposal has no basis in economics and therefore entirely discredits any suggestion that the Conservative party believe in or understand free-market economics. This is true whether you voted for them or not. Edited by (Blizzard)

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[quote name='sleeping dog' timestamp='1332114053' post='3289210']
[img]http://www.housepricecrash.co.uk/forum/public/style_emoticons/default/tongue.gif[/img]
[/quote]

What element of it is a tax break over a private landlord. There isn't one. Therefore your conclusion to your statement is in effect you favour lots of small scale private landlords over larger corporate investors. Would not the corporate investors be easier to regulate. Would not the corporate investor be more likely to fix the bolier in a way that does not gas the tenant. The private landlord can invest in the corporate.

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Why not? Once gilts fall off investment grade, the pension funds will need somewhere to put their money. They buy our houses in the crash, and the our rents turn the house into a perpetuity on the books of the pension fund. If we like the place then we continue to rent it after retirement, and at some later point, they carry us out feet first.

Dampens the boom/bust cycle in housing, solves the pension crisis.

What could possibly go wrong?

I'm assuming that they'd want that crash before they kicked it all off.

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