Btl Scum Regrouping And On The Offensive. -- Merged

[Venger]

36 minutes ago, Barnsey said:

Amateur hoarding landlords pay tax? Cash in hand in much of London I hear...

Anyone actually know of an HMRC estimated figure/percentage of landlords not declaring their finances or is this just far too difficult to figure out?

Tenants paying the rent in no-trail cash.....?

Even on lower-end place, that's a lot of cash for tenants handle, walk around with, to kick up to the BTLers.  

Middle ending type house and it's fortunes of cash to have to handle... tenant side to the kicking up to the landlord.

Section 24.

The authorities know.  They are plugged in.

 

BTLers/LLs spent 2 years trying to overthrow Section 24, for they know it's not a tenant tax, but where they have less favourable tax treatment.

 

 

Section 24... the clock is ticking BTLers....

 

 

Section 24 is days away... BTLers.  

HMRC's knows...  they know just about everything.

 Connect, and all the agents with it, are okay-to-go.

 

 

 

[Bland Unsight]

1 hour ago, Barnsey said:

Amateur hoarding landlords pay tax? Cash in hand in much of London I hear...

Anyone actually know of an HMRC estimated figure/percentage of landlords not declaring their finances or is this just far too difficult to figure out?

It also completely ignores the realities of revised BTL underwriting rules. How are you going to refinance your mortgages if you can't show rental receipts on your bank account? If someone just had tens of thousands of pounds of cash turning up which they claimed were rent then it would ring Know Your Customer alarm bells and other protections against money laundering. Which major lender is going to risk being complicit in money laundering for the tiny returns they make on a £150k BTL mortgage lent to a muppet?

If you can't refinance your lending you're going onto the SVR which may be twice the best 2 year fix rate available in the market. The cost of not declaring that results from shutting yourself off from cheapeer finance far exceeds the taxation expense. That was also true before section 24.

I accept that there are a lot of amateur landlords not declaring income from let property. I do not accept that there are a lot of London landlords who are requiring rent to be paid cash in hand.

These amateur are leaving an audit trail which HMRC will be able to see from space. Someone ought to FOI the money being raised by the HMRC let property campaign (which appears to be a permanent 'campaign', or to put it more plainly, a shift in policy).

[Barnsey]

I thought I'd touch a nerve! 

I should have been more specific, I only bring it up as I was surprised how much of an argument I had with colleagues regarding tax changes.

They're aware of landlords owning properties outright in grotty areas of West London, obviously massively subdivided and overcrowded, with absolutely no sense of taxation responsibility what so ever. They come to the country with nothing but sure as hell ain't retiring with nothing. I naively assumed it would be an easy argument to win but it got me thinking about just how many owner landlords do declare anything. 

I don't want to drag out the immigration card but having heard about employees of certain food establishments paying no tax whatsoever in the same part of London it doesn't surprise me one bit, a cultural sharing of tax avoidance if you will, relying on the good will of others to report.

Hard to not feel like a mug right now as a tax paying renter.

Edited March 30, 2017 by Barnsey

[Venger]

12 hours ago, Phil321 said:

The property tribes link about transferring mortgages and paying £9k legal, £30k SDLT is really interesting. 

I occurs to me these guys will do ANYTHING rather than sell a couple of properties or repay the debt. I know all the 'reasons' for this some from 118 and some from here....but really if there was ever 'writing on the wall' surely this is it. 

Phil321, 

The reason for linking to the Dec 2016 post was to show those costs and the number of properties Thailand guy involved, the BTLer is renting out.

Quote

 

11 Dec 2016 at 13:02 
I paid something like £1800 admin fee to Paragon to move 10 properties, and about the same to Lloyds to move 5 properties.

plus 9k in solicitors fees, and about 30k in SDLT, but that was prior to aprils 1st, if I were to do it now, SDLT would be about 110k.

 

(And somewhere in the posting mix further back I recall a lot of confidence in his own position going forward vs S24... from position of being out of UK,, although I can't bothered to search for it.  Similar confident themes about his tax-position from outside UK, on UK houses, are in this thread.)

To contrast it to his current position....!   (Someone must have come along recently and given him reason to fear he won't qualify s162 rollover relief....... not sure who.  HMRC?).   And so be in a CGT event position?

From his own post we know he incorporated a lot of properties at some point in recent times, and very recently (from his 26 March 2017 post) he has encountered something which suggests he can't claim s162 capital gains rollover relief. 

Seems wasn't so simple after all, and now he is looking for answers to a complicated tax position.

 

Quote

 

26 Mar at 12:29

 

It appears that I cannot claim s162 capital gains rollover relief on the incorporation of my portfolio due to the fact that I fail one of the the conditions of the relief  " ALL properties of the business must be transferred ".  I did not transfer all the properties in the portfolio, a few I left in my name.

Therefore now I am facing a CGT bill from HMRC based on a massive "capital gain" when going off the "investment values".  But the investment values are high. None of my properties would achieve their respective investment values if they were put up for sale, I'd be lucky to achieve the purchase price I paid + conversion cost.

So where do I go from here...

 

 

What I don't get is why the investment values are so much higher on paper?   Could it be possible that the investment values were disclosed in part of the incorporation in the first place?   It's worth what someone will pay for it, true enough.  That's a basic.   And many a dead-money-in-the-bank party BTLer been doubling down with buy-mew-buy-mew-buy.    

Quote

 

Have you already done your incorporation?

That - missing one of the most basic conditions to qualify for S162 - is a monumental clanger to drop

Were you advised?

 

 

Quote

 

Yes to 1st

No to 2nd

 

 

Quote

 

Also, looking Valuations for calculating CGT.  

As mentioned at the beginning of this post, the investment value is high, the properties would not bring anywhere near the respective Investment Values if sold.  It would be a suprise if they reached the respective purchase price + conversion cost.

----------
typical is :

purchase 120k

spent 50k

investment value 220k

sale achievable between 120k to 150k

 

 http://www.propertytribes.com/incorporation-investment-value-cgt-t-127628946.html

The calls from other PTers to 'don't incorporate' don't help him seeing as he has already proceeded with it.

...although maybe there are options (CGT relief) given he believes he was non-UK resident for many a year back, or maybe not.  

[Venger]

11 minutes ago, Barnsey said:

I thought I'd touch a nerve! 

I should have been more specific, I only bring it up as I was surprised how much of an argument I had with colleagues regarding tax changes.

I should have been more specific, I only bring it up as I was surprised how much of an argument I had with colleagues regarding tax changes.

They're aware of landlords owning properties outright in grotty areas of West London, obviously massively subdivided and overcrowded, with absolutely no sense of taxation responsibility what so ever. They come to the country with nothing but sure as hell ain't retiring with nothing. I naively assumed it would be an easy argument to win but it got me thinking about just how many owner landlords do declare anything. 

[.......] having heard about employees of certain food establishments paying no tax whatsoever in the same part of London it doesn't surprise me one bit, a cultural sharing of tax avoidance if you will, relying on the good will of others to report.

Hard to not feel like a mug right now as a tax paying renter.

 

It may be so - it may be true.   Bubble 1.0 and 2.0.....  values, money flowing to extremes.....

Or it could be partly projection.  All the HMOers not declaring anything taxation side from rents.  Own outright.   (What about claims on other properties not owned ouright.....  many BTLers have not been able to resist moar and moar.)  Or "Not on the system".  "Immune."   Throughout history there have been those who project opposition as so much stronger than they actually are, or weaker... whatever is needed to project a position.

I have read HPCers trying to project all the BTLers are massively ahead of HMRC... and that HMRC won't be able to trace them.

Those who confidently position the BTLers are immune to HMRC/taxation risk, and HMRC won't want to go to the effort anyway... .

Positions based on wishful thinking and projection, imo.   

We have Section 24.  It's a really significant change.  Many a landlord have legitimately arranged their affairs to pay no/limited tax pre S24.

Things change, and with changes many a position.  Market move at the margin even for outright owners.  

 

 

 

Employees in the kitchens and serving food?  Stressful lower-paid work....

Everyone should pay their dues is my position, but I am happy if HMRC go for more important targets first.

 

Quote

Always pay; for first or last, you must pay your entire debt.  Persons and events
may stand for a time between you and justice, but it is only a postponement.  You
must pay at last your own debt.  If you are wise, you will dread a prosperity
which only loads you with more.

-RALPH WALDO EMERSON

Although it's not exactly true when your read of a big bubble property 1.0 guy who skipped abroad, went bankrupt, got lawyers throw out the case of bankers chasing <£10M loan, and still lives the total high life, back in business.   Some slip through.  Someone has to pay, and renters have carried so much of it, imo.  Perhaps others will have to pay in time ahead.  Losses to make good.  The Government needs taxation revenue.

Onto another landlord..... given you went onto HMOs.....

 This landlord (so many of them share same/similar names... millions of landlords) picked up somewhere by the system.  If they can be picked up for breaches like this, they can be picked up for taxation.  Easy to find.   They are not way ahead of HMRC.  And Section 24 changes everything.

Quote

 

8 December 2015

....for four breaches of licence conditions in three properties, including exceeding the maximum number of occupiers permitted.

A £17,500 fine was awarded which is currently subject to appeal.

...‘This case should act as a warning to those who are operating illegally and refuse to co-operate with the Council that we will prosecute when needed’. From 23 November 2015 new legislation has been introduced that requires all landlords operating in Wales to register and for landlords and agents who undertake letting and management work of rental properties in Wales to become licensed. 

http://www.wrexham.gov.uk/english/council/news/landlord_prosecuted_15.htm

 

 

[MonkeyPuzzle]

Hardcore BTL LL friend of friend with portfolio of 17 South London ex council dumps has admitted defeat and is very grumpily putting two of them on the market. Blames S24 entirely for taking away his 'tax advantage'. Bought or should I say "bought" them eight years ago IO. Yesterday was lamenting loudly that the 'crooked estate agents' won't let him put the flats on at his preferred asking price. He says 'they just want to put my flats on at ridiculously LOW prices so that they can turn around and sell them to their mates!" boo hoo, boo hoo.

Someone very wise on this board said recently 'think you know the value of your property?? Try selling.' 

This BTL creepazoid is surely not the only one facing up to the horror of it all over the coming year. 

[jfk]

6 minutes ago, MonkeyPuzzle said:

Hardcore BTL LL friend of friend with portfolio of 17 South London ex council dumps has admitted defeat and is very grumpily putting two of them on the market. Blames S24 entirely for taking away his 'tax advantage'. Bought or should I say "bought" them eight years ago IO. Yesterday was lamenting loudly that the 'crooked estate agents' won't let him put the flats on at his preferred asking price. He says 'they just want to put my flats on at ridiculously LOW prices so that they can turn around and sell them to their mates!" boo hoo, boo hoo.

Someone very wise on this board said recently 'think you know the value of your property?? Try selling.' 

This BTL creepazoid is surely not the only one facing up to the horror of it all over the coming year. 

[Neverwhere]

8 hours ago, Venger said:

What I don't get is why the investment values are so much higher on paper?   Could it be possible that the investment values were disclosed in part of the incorporation in the first place?   It's worth what someone will pay for it, true enough.  That's a basic.   And many a dead-money-in-the-bank party BTLer been doubling down with buy-mew-buy-mew-buy.  

Quote

Also, looking Valuations for calculating CGT.  

As mentioned at the beginning of this post, the investment value is high, the properties would not bring anywhere near the respective Investment Values if sold.  It would be a suprise if they reached the respective purchase price + conversion cost.

----------
typical is :

purchase 120k

spent 50k

investment value 220k

sale achievable between 120k to 150k

 

Quote

What do you mean by "investment value"? Is this a value that it was given for e.g. a commercial mortgage (i.e. you converted a house to an HMO and then mortgaged on the basis of rental income)?

----------

yes.

----------

There may a be a bit of a light at the end of the tunnel.

After speaking with my accountant and valuer, the investment valuation figures used when incorporating, were those from the valuations for the lender during the mortgage application process and are in fact ESTIMATED rent and expense figures.  My valuer has advised me to revalue based on ACTUAL figures from the 2 years prior to the incorporation date and use these figures as the investment value to incorporate with.

Having completed this exercise, it brings down my capital gain vastly to a manageable amount.  Early days, but this combined with putting a couple on the market to test and document the response, seems to be A way forward that will reduce the capital gain, and one that will stand the test of time WHEN HMRC come calling.

BONUS is that I can put in a REFUND on the SDLT I have paid. :-)...

still wait and see.

It sounds to me like the lenders' LTVs are completely fantasy.

[Bland Unsight]

11 hours ago, Barnsey said:

Amateur hoarding landlords pay tax? Cash in hand in much of London I hear...

Anyone actually know of an HMRC estimated figure/percentage of landlords not declaring their finances or is this just far too difficult to figure out?

 

9 hours ago, Barnsey said:

I thought I'd touch a nerve! 

I should have been more specific, I only bring it up as I was surprised how much of an argument I had with colleagues regarding tax changes.

They're aware of landlords owning properties outright in grotty areas of West London, obviously massively subdivided and overcrowded, with absolutely no sense of taxation responsibility what so ever.

So, long and short of it you're posting an anecdote about an anecdote (and your anecdote-anecdote is off-topic), and then when people soberly point out that you're full of crap your response is to imagine you've touched a nerve and then begin laughing out loud. 

(source)

Edited March 30, 2017 by Bland Unsight

[lastlaugh]

On 29/03/2017 at 5:40 PM, silver surfer said:

It will be interesting. But if there's not much to report then it still won't change my views.

I'm sensing a growing feeling on the forum that S24 has failed to deliver a meaningful fall in house prices, or at least a rising apprehension that all the hopes invested in S24 might not be realised.

Personally I think that would be a premature conclusion. No landlord, no matter how overstretched and highly leveraged, has actually paid a penny in additional S24 taxation yet, and the landlords I talk to are generally deep in denial, and trusting that something will turn up to make the nightmare go away.

Consequently I'm not expecting much impact from S24 until 2019 or 2020. But when that impact does arrive it'll be both substantial and rapid. It wouldn't be surprising to read a growing ground swell of opinion on this forum throughout 2017 and 2018 that S24 was a damp squib; and then see a game changing avalanche of BTL sales in 2019 and 2020. 

The blindingly obvious thing is that until real, actual tax demands start dropping onto landlord's door mats then we're still in a "phoney war".

Many leveraged landlords are counting on growing house prices to sustain their entire house of cards lifestyles, so they'll cling to the current model until the taxman takes their legs from under them by demanding a cash fee, in the shape of S24 tax, to stay in the game. At that point their bluff will have been called and they'll fold in a chain reaction of distress selling.

But that isn't a scenario that's going to happen this year or next, but happen in 2019 or 2020 it surely will. 

I think this forum has pretty realistic expectations about the timescale of the impact of S24.  There is clearly some excitement about the upcoming date of change, but it's churlish not to allow posters a rare moment of gloating.

There is however a large unknown in the timescale.  It's true that as tax demands arrive in the future there will be significant forced sales.  The increase in supply, and the timescale is predictable.  What we don't know about S24 is the impact on demand. Any landlord contemplating a prospective purchase will find the numbers don't support the current yields.  And that starts now.  

Is this important?  I think so.  I would argue that HPI, since 2002, has been a demand-led phenomenon.  If demand drops off a cliff because of S24, and I think it already has done, then I expect HPI to fall off a cliff too.  Future tax bills and forced sales are simply the icing on the cake, and by then it's too late to get out without losing ones shirt.

Historically, speculators get badly burnt when asset bubbles burst because they wrongly assume that it will be increased supply which bursts the bubble.  Speculators believe that they can ALWAYS get out in time, because they can front run a crash if needed.  The truth is the exact opposit.  Bubbles burst because demand dries up, once that has happened speculators can't get out at any price.  By that time, increased supply changes little.

Time will tell.

[Bland Unsight]

On 29/03/2017 at 4:40 PM, silver surfer said:

I'm sensing a growing feeling on the forum that S24 has failed to deliver a meaningful fall in house prices, or at least a rising apprehension that all the hopes invested in S24 might not be realised.

You've been around the forum for a while so it pains me to have to school you on the comedy thread, but here it is - anyone who professes that they can gauge what the forum is thinking or feeling is 100% absolutely full of shit.

What evidence do you have that anybody active on the forum thought that section 24 would "deliver a meaningful fall in house prices" before it was even introduced?

The value of the forum is as a crucible for ideas. People who knock the forum are entirely missing the point. Knocking the forum is like hating a test tube because experiments performed in the test tube contradict your theory. Post arguments. Find data, graph data. Do something. Spare us this cod psychology bullsh!t wherein you attribute to the forum (i.e. the test tube) both a particular view and an emotional reaction to the view being wrong.

One might as well be hung for a sheep as a lamb so I'll summarise my argument in colourful terms. If you feel you must w@nk off over a straw man then please do it at privately and spare the rest of us the indignity of having to watch as you bring the grim exercise to its pointless conclusion.

 

[jiltedjen]

I always expected the very first of the early bird sellers starting around this April only a few houses to appear at the usual kite flying prices at first.

Slowly ramping up towards next April for the big dump when the tax bills arrive. I still think we will start to see some reasonable reductions in prices towards the end of this year, only takes a few savvy landlords to know they have to sell before April 18.

This winter should be good hunting. Certainly next year. 

[AvoidDebt]

Tax chiefs issue mortgage interest reminder to lettings sector

The Chartered Institute of Taxation has issued a reminder to buy to let investors that the first phase of the restriction of tax relief they get for mortgage interest to the basic rate of income tax begins next week.

https://www.lettingagenttoday.co.uk/breaking-news/2017/3/tax-chiefs-issue-mortgage-interest-reminder-to-lettings-sector

[crazypabs]

5 minutes ago, AvoidDebt said:

Tax chiefs issue mortgage interest reminder to lettings sector

The Chartered Institute of Taxation has issued a reminder to buy to let investors that the first phase of the restriction of tax relief they get for mortgage interest to the basic rate of income tax begins next week.

https://www.lettingagenttoday.co.uk/breaking-news/2017/3/tax-chiefs-issue-mortgage-interest-reminder-to-lettings-sector

one sentence in that article that is truly understated...

"Taxpayers may have to decide whether to continue in buy to lets with reduced profits or simply sell their properties, which may impact on the number of houses and flats available to buy. "

[Ah-so]

On 31/03/2017 at 7:27 AM, jiltedjen said:

I always expected the very first of the early bird sellers starting around this April only a few houses to appear at the usual kite flying prices at first.

Slowly ramping up towards next April for the big dump when the tax bills arrive. I still think we will start to see some reasonable reductions in prices towards the end of this year, only takes a few savvy landlords to know they have to sell before April 18.

This winter should be good hunting. Certainly next year. 

The landlords will not even do their tax return until the January after the end of the tax year, so the first increase in tax does not need to be paid until 31/1/19.

With low interest rates a number will be happy to swallow the first year's worth. We may not actually see any s24 sales until 2020.

Edited April 1, 2017 by Ah-so
typo

[CunningPlan]

Am I right in thinking that those LL's claiming benefits will need to inform the relevant people as of next Thursday?

 

[spyguy]

24 minutes ago, CunningPlan said:

Am I right in thinking that those LL's claiming benefits will need to inform the relevant people as of next Thursday?

 

Yes.

 

[CunningPlan]

1 minute ago, spyguy said:

Yes.

 

Goody. Bet they don't. First lambs to the slaughter.

[spyguy]

9 hours ago, jiltedjen said:

I always expected the very first of the early bird sellers starting around this April only a few houses to appear at the usual kite flying prices at first.

Slowly ramping up towards next April for the big dump when the tax bills arrive. I still think we will start to see some reasonable reductions in prices towards the end of this year, only takes a few savvy landlords to know they have to sell before April 18.

This winter should be good hunting. Certainly next year. 

LLs are expected to sign up t to the electronic tax thingy, ad pay the tax due every quarter.

HMRC will treat them like a small business i.e. gloves off.

[Crowed]

9 hours ago, jiltedjen said:

I always expected the very first of the early bird sellers starting around this April only a few houses to appear at the usual kite flying prices at first.

Slowly ramping up towards next April for the big dump when the tax bills arrive. I still think we will start to see some reasonable reductions in prices towards the end of this year, only takes a few savvy landlords to know they have to sell before April 18.

This winter should be good hunting. Certainly next year. 

Seen this said a couple of times, but the tax bill in Jan 18 will still be at 100% mortgage allowance, the 25%  reduction won't hit until the tax bill in Jan 31st 2019

[CunningPlan]

1 minute ago, crow said:

Seen this said a couple of times, but the tax bill in Jan 18 will still be at 100% mortgage allowance, the 25%  reduction won't hit until the tax bill in Jan 31st 2019

It doesn't seem to get much press but the change in date of payment of CGT kicks in this December. I think that will be a bit of a wake up call for many.

[Crowed]

1 hour ago, Ah-so said:

The landlords will not even do their tax return until the January after the end of the tax year, so the first increase in tax does not need to be paid until 31/1/19.

With low interest rates a number will be happy to swallow the first year'students worth. We may not actually see any s24 sales until 2020.

 

1 minute ago, CunningPlan said:

It doesn't seem to get much press but the change in date of payment of CGT kicks in this December. I think that will be a bit of a wake up call for many.

Is that when it has to be paid instantly? 

[CunningPlan]

Just now, crow said:

 

Is that when it has to be paid instantly? 

30 days. Rather than what could have been 18 months under the old system.

[Lavalas]

41 minutes ago, spyguy said:

LLs are expected to sign up t to the electronic tax thingy, ad pay the tax due every quarter.

HMRC will treat them like a small business i.e. gloves off.

Think that's from April 2018 f they pay NIC class 4 and turnover is above the VAT threshold and April 2019 if they pay NI class 4 and turnover is below the VAT threshold. 

I think

[Dyson Fury]

Richard is still unable to even begin to understand the difference between "investors" (who use and risk their own money) and leveraged IO debt junkies (who "buy" houses with other peoples' money).

http://www.telegraph.co.uk/investing/buy-to-let/buy-to-let-investors-remortgage-homes-pay-landlord-loans-ahead/