Monday, Mar 19, 2007
Petition 10 Downing Street for tax on Buy To Lets
E-Petitions: HousePricing
If you believe that Buy To Lets are contributing to the squeeze on the supply of houses and helping fuel house price rises have your say and petition Tony Blair.
Posted by j tallis @ 02:33 PM (724 views) Add Comment
25 Comments
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1. uncle chris said...
Duly signed - but I have no doubt that it will be duly ignored by the self-serving liar that is Blair.
2. inbreda said...
Responses probably get emailed direct to India, where a team of low paid workers are responsible for printing off each and every response before burning them.
3. harold said...
The government wont bother because they know that there is soon to be a whopping self-imposed tax on the BTLers, called negative equity.
4. Arnric said...
What would be the point? The BTL market is not reducing the overall supply of homes, merely homes for sale. The size of the BTL market will eventually be set by market forces, anyway.
5. Jim Tallis said...
Knowing how found the Chancellor is of stealth taxes, I'm sure a couple of thousand signatures will be enough incouragement to add another new tax to his portfolio of almost 1000 taxes under his watch.
6. financial planner said...
So, we only tax what we're not involved in. That's a good game. I know, let's tax ladies underwear (no comments please about whatever photos you have of me...). BTLers ARE taxed - it's called Income Tax, CGT, Stamp Duty, IHT, VAT on refurb, furniture etc etc
7. Jim Tallis said...
Response to financial Planner: I think you'll find that a large portion of taxable income on rent income has been offset by allowable expenses, the interest of mortgage payments being one of them. As many buy to let landords are in for capital and not income growth, many Buy to Let landlords find themselves in a position where they have no taxable income to pay tax on.
8. paul said...
"BTLers ARE taxed - it's called Income Tax, CGT, Stamp Duty, IHT, VAT on refurb, furniture etc etc"
Not in proportion to their negative social impact. That's the job of government - to levy tax according to social or financial impact. That's why gas guzzlers will be taxed heavily in the next budget - their social and financial impact have been re-assessed to be higher than previously thought. We are proposing that the social impact of BTLs has also been underestimated.
I suspect however that it's not so much underestimated as ignored. Which is exactly what will be done with this petition.
9. paul said...
And by the way, the only way we're going to get anywhere near enough signatures is if this post is moved to the front page to be made "sticky" on the site.
Otherwise it will soon be bumped off the list by jellycaster's missives in the cost of bungalows in the home counties (no offence jelly).
10. rich said...
I have to agree, the PM isn't going to touch this one with a shitty stick.
The government is already trying desperately to prop up the housing market with shared ownership schemes and so-called "affordable housing". If they help topple the market they might get the fickle thanks of the first time buyers but the Mail-reading legions who don't understand the cost of high priced housing would be in open revolt.
11. Jim Tallis said...
That the whole point of petitions. To challenge government to changes policies, irrespective of wether or not govenments favour them. Lets get this petition onto the home page and get to those signatures stats rising. We only need a couple more hundred signatures for this to rank fairly high on the e-petition website. Send this link to all other first time buyers that you know.
12. Rep013 said...
A good idea in principle but .... a certain high ranking member of our current government is an avid BTL'er with a very nice portfolio, 2 hopes Bob & none but if you don't try you don't get!!!!!
Duly signed
13. japanese uncle said...
Ａｓking such a favor of Silky Teflon, the Premier BTLer is just like asking a theif to make a rope to tie him..
14. denzil said...
I really don't agree with this because it just flies in the face of capitalism and the principles of free market economics. I hate the social impact of BTL but I also hate CEOs of large companies who simply crucify tens of thousands of people and families by making them redundant because as far as the short-termism of the money markets are concerned it looks as though the CEO is taking brave decisions and cutting over-heads.
Pension funds in many industries treat their employees appallingly just so they can create some return on investment ROI to the fund. In many low paid industries they employees will not have the luxury of a pension other than what the state may give them.
The point I'm getting at is, No it's not bloody fair.
I'm not a BTL investor and neither do I want to be and I'm aware of the impact of BTL but in many cases people have turned to BTL as a top-up or replacement to their pension. I personally don't like greed but I do respect people who have made the effort to secure their future however misguided in reality they may be.
I've yet to see a social model I really like but even for all it's warts and zits I would not start playing around with the current model.
Will the chancellor conjure a new and painful tax on BTL, yeah right. You think he will create an HPC? Stamp duty thresholds will be raised significantly but my guess this will be little more than a prop to support the market.
Sorry guys, I've got a huge amount of respect for the bloggers on her but for the reasons above I'm out.
15. paolo88888 said...
No! No! No!
I rent privately and I do not want to have to pay any more to fund my landlords tax bill. And I do not want anyone being put off doing BTL which would reduce my choice of properties if I want to move.
The availability of renting gives those on this site who believe that housing is over-valued to exercise free choice. I see no reason why tenants should pay more tax that owner-occupiers. Note that saying that it is the landlord who pays is not true, if the landlord has to pay a tax then it shifts the investment case so that rents have to rise so that BTL equilises with other forms of investment. I would go further than just opposing this petition - taxes on rented properties should be no higher than owner occupation. If the landlord owns the property outright then there is no mortgage to deduct and all the rent is treated as income. The landlord should be able to deduct "notional" interest of the loss of income from his or her own capital that is tied up in the venture. And capital gains tax should either apply to both rental and main residence or to neither.
16. paul said...
denzil, this is not a personal attack, it's an attack of principle. I'm quite sure there are many who agree with your idea.
You're basically an advocate of the idea that "the market will sort it out" - that's good, but consider this. Capitalism works on a pareto basis. You will be productive and useful, but not all your life. So your "marginal revenue product" will not be consistently high throughout your life. Are you planning to work as hard when you're 75 as now? Didn't think so.
So to cater for your unproductive spells, you need a cushion, or at least some certainties. Now I'm not sure what your work contract says but mine says that I'm not allowed to take an evening job to pay for my future unproductive periods, i.e. when I retire. How about you? Can you work part time in the evenings as a taxi-driver to build up a pension?
This same pareto law says that for capitalism to work, there has to be a few winners and lots of losers. In other words, unfortunately, unfettered capitalism does not sustain itself in the long run. After all, if it were left to capitalism, there would be no rubbish collection, no streetlighting, no police, fire or ambulance service. Why? Well, I've spent longer during my life in laundrettes than hospitals so why should I pay for hospitals? I've never had reason to go to the police - again why should I pay? The market can sort it out, right, so that those people who are ill or need the police have to pay for it themselves, right? Of course it'll be expensive for them - really expensive, but that's market forces for ya. Do you think we'll all feel like working this hard when we're fearing for our lives/our health/wellbeing? Didn't think so.
So if unfettered capitalism will not sustain itself, then who is left to make sure that it ensures it's own longevity? Well, its left to legislation to address its inefficiencies.
The BTL phenomenon is a distortion created by unrealistically cheap credit. The market will correct itself eventually, but that may well be too late for people who have foregone equity/job offers/having children/disposable income for a long long time. In other words either the government undoes it's wrongdoing (and by doing so acknowledges it), or the market does it slowly and inefficiently. Is that an optimal outcome?
Didn't think so.
17. Jim Tallis said...
It's great to read some well considered responses on this issue.
However Paolo, I'd like to respond to your comments. I'm not sure that the imposition of a tax on BTL would neccessarily result in increased rents to tenants. Rents are governed by supply and demand. Some landlords might be forced to raise their rents to cover the costs of any new taxation, but a progressive tax (ie a tax based on the number of properties owned) would make some landlords more competitive than other. What this means is that for some landlords, particularly those with extensive property portfolio's it might make more sense for them to offload a portion of their property stock. This in turn would ease the supply shortage, which in turn would ease the pace of property price inflation, allowing more first time buyers break out of vicious rental cycle and unto the first rung of the property ladder.
18. Mikexx said...
I don't understand the point of this petition. We need more housing, not a tax on exisiting housing which will push private rents even higher. I certainly won't be signing. Don't give Gordon an excuse to increase taxes!
19. magnifico said...
I've been saying this for yonks and was only too happy to sign the Petition.
Denzil we are talking about taxing people with more than 2 Properties, which include all those with a home to live in AND one to use as an investment for retirement, this is not hardcore Marxism.
20. holding out said...
Rent is taxable, Mortgage interest payments can be offset against tax. Capital gains on houses which are not your residence are also subject to tax. The question is are these taxes collected. I don't believe that most landlords with a low mortgage declare their rent and as for theCGT I'm almost certain this has never been collected but given that the government has p*ssed all our tax up against a wall it should be a lucrative source of income. What would be interesting to clarify is what happens when the landlord sells his house and moves into his BTL at that point be should be liable to CGT for any gain in the BTL but is he ?
21. magnifico said...
sorry it should read exclude ...doh!
22. Chilli said...
All this fighting over EXISTING stock of houses??? Last year, the government approved houses to be built and NOT all of them were built. They are currenlty ownded by construction companies, that are basically sitting on the land.
The reason is that the construction companies only have to wait a year or so and they are guranteed a profit. It's a case of the longer they wait the more profit they will get. 70% or so of a house's value is the land it is on.
Any tax on BTLs will only redistribute a limited supply of houses. Once the inititial BTLs have sold off their stock and one generation of FTBs have bought those properties; we will be even more short on houses to rent and we will be back to square one. Except this time; the BTLs who have stayed in the market, will be able to charge even more. Thereby negating the tax that is supposed to discourage them.
What is needed is to break the monopolistic controll the construction companies have over land in this country. Add some free market magic to the industry of building houses. Once construction companies start making their money from building houses, rather than investing in land, we will get this issue sorted.
My guesses on the means to do so: investigate these companies for 'unfair trading'. Impose a land tax on this land that grows geometrically over time. Increase the supply of available land to be developed.
I think paul is spot on about capitalism, it gravitates towards abuse, however it is also the best model of government we have so far. So I agree with denzil too.
23. denzil said...
Paul,
Maybe most post was not clear enough I'm not capitalism's biggest fan and neither have I seen a social model think is fantastic.
If I really thought that BTL was the primary reason house prices have increased so rapidly then I would be more likely consider signing it. The problem with the petition is a lack of realism. This statement:
" Increased levies on buy to let owners (without passing rental costs onto a tenant)"
Come on, get real. What are we going to do to prove this? Should we employ a load of civil servants to check whether the rent increases that landlords will enforce to pay for the additional tax is actually to cover the tax or because there is a large new employer moving into the area and supply of rental properties is short. It's completely un-enforcable.
"Not allow an unregistered landlord/agent to have more than 2 owned properties - thus increasing supply."
So the government back down and accept the petition and all of a sudden a new department appears which will be specificly for dealing with registrations which will be about 20 quid a year.
And the best:
"I don't want to buy "affordable housing".
I know what the petition creator meant but an easy retort would be to say, "so you want unaffordable housing then?"
I genuinely feel for the creator of the petition having to commute from the midlands to London so he can buy a house.
Paul, if you don't mind I'll pick up on this point you made,
"In other words either the government undoes it's wrongdoing (and by doing so acknowledges it), or the market does it slowly and inefficiently."
So you think the government will create a crash? No me neither!
24. Skint said...
once you buy your first btl property you can re-mortage fairly easy to release a10% deposit to buy your next btl.keep rolling over and in no time you have a property portfolio worthy of any housing trust.landlords competing with first time buyers,landlords will always have prefrence with lenders because of the nature of rolling over loans its in the lenders interest to keep the landlord solvent.are btl landlords to blame for priced-out first time buyers?you be the judge! A restriction of one or two properties owned by btl landlords wether induviduals or companys might help first time buyers to compete
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