Monday, May 28, 2007
Oh Yeah!!!
Times: Thousands of buy-to-let families face tax shock
HM Revenue & Customs has identified 80,000 landlords who may have claimed too much tax relief or have failed to declare the amount of rent they receive from the property, or a capital gain made on the sale of the property.
Posted by nearly30 @ 11:32 PM (205 views) Add Comment
23 Comments
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1. nearly30 said...
Well - I don't know how important this will be - but if HM Revenue & Customs are involved - must be a worry for all BTLers and will depress inerest.
2. royston said...
Hallelujah!
3. nearly30 said...
Just had a thought - the average number of properties a BTL has is 11.9, so that's 952,000 [80,000 X 11.9] properties/rental incomes/captial gains etc... that could be effected.
No wonder HMRC are interested that's £95,200,000 if you get £100 per property!!!!!
Ave £1,190 per BTLer - totalling £95,200,000 for the whole BTL sector.
GOOD-GOD-ALMIGHTY!!!! Now that's what I call a tax bill!!!
And what if it's more than £100 per property? Say £200, £300 or a crazy £1,000????
4. confused76 said...
I reported my landlord to the Inland Revenue whistleblower line
5. confused76 said...
"some of those who have bought properties to rent or are letting their own home could face tax bills so large that they may have to sell their property"
Yes! Yes! here we go with repossessions!
6. A Gilbert said...
This wont amount too much. BTLers are now an established part of 'middle england' - nu labour's core voters. Policy so far has been to assist this class, and above all not to rock the boat! Brown will make sure HMRC go easy on people
7. confused76 said...
"landlords facing an average bill of £48,600 based on 2006 housing prices"
end of the free money!!! that s great.
Go Gordon go! add a nice windfall tax on top of it and we are done
8. nearly30 said...
Even better - As part of a campaign to tighten up the buy-to-let market, a group of “ghost” landlords who have failed to declare themselves as property owners will also be targeted. - Oh get in!!! Love the 'tighen up' bit - really - oh yes!!!
As the BTLers should have heeded - if it looks too good to be true - then it usually is!!!!
Right - am off to bed with a smile on my face. As should George and S2R1!
9. nearly30 said...
Sorry - found this article - seems the wheels are likely to fall spectacularly off the BTL bandwagon:
Buy-to-let landlords could face further tax hit
Landlords who undertake renovations of buy-to-let properties could be caught by the new construction industry tax scheme.
10. tyrellcorporation said...
Where's old Glorious Sunshine eh? Maybe's he's been obscured by looming black clouds!
Gordon has lured hundreds of thousands of saps into the BTL sector and now he's getting out his clunking fist to squeeze their pips! LOL! :)
11. nopensionnohouse said...
Sorry to laugh at other peoples miss fortune but this is really priceless!
Ha ha ha ha ha ha ho ho ho he he he cough cough!
This is great news.
I love some of the comments at the end!
Barry Holmes says “If it wasn't for people making an effort to improve their financial position by getting rental properties what would the people do whose preference is to rent. Some of the replies are good old socialist envy they always want to drag everybody into the same garbage can.”
Yes Barry, if the BTLers / Speculat’ers hadn’t driven the prices so high in the first place I wouldn’t be renting now and I’d have a better garbage can myself.
Hope you get everything you deserve…. All of you… especially the husband & wife maths teacher BTL’ers that were on watchdog recently putting massive levies and charging people more than their deposits when they leave the property… They have over 700 houses. Thats a tax bill I'd love to see!
I’ll be watching your fall with great glee. Hope you have your sums right!!!
I’ll be sleeping well tonight…. Will you?
Ha ha ha hZZzzzzz
12. sold 2 rent 1 said...
Gilbert,
"BTLers are now an established part of 'middle england' - nu labour's core voters. Policy so far has been to assist this class, and above all not to rock the boat! Brown will make sure HMRC go easy on people"
Not so.
GB loves to find a niche group of people doing financially well for themselves and then hit them with the tax hammer.
Look at IR35 for husband and wife "contractor" companies.
Small business tax is also set to rise for the next few years.
13. Andy H said...
If BTLers have taken out money in mortgage equity release then they will het stung by a capital gains bill they won't be able to pay. Serve 'em right if they have to sell up houses like dominos to keep the tax man happy.
14. Lives In A Cave said...
Brown can't afford for the HMRC to go easy on the BTLers as he needs the cash (UK has the largest budget deficit ion western Europe don't forget because of Brown's policies to waste money on public services). As the HMRC are answerable to nobody, they will pursue this cash with determination. Upside is that is will take a long while for this to filter through into tax demades, so may not see any impac ton the housing sector for 12-18 months. Downside is that when any political (or civil servant) action distorts a market, it exfercabtes either a boom in prices or a crash in prices. Me thinks the latter is now a step closer because of the timing of this action!
15. mike said...
My thought is surely if it becomes more expensive to let a house, surely the rent must increase to accomodate...
16. Ts200010 said...
Mike,
The errant landlords are a minority and probably not of the professional kind. They will be limited in their abiloity to raise rents above the market rate.
17. Samone said...
Good point Mike, However there are a few reasons why you cannot do this. it would be difficult for landlords to work like a cartel and just increase rents. In the long term that means it's worse for landlords who are on 100% BTL mortgages. I've said this before and I'll say it again;
If you're my landlord and simply think you can peg the rent against your mortgage payments then think again. Rent is included in CPI, you increase it, CPI goes up in turn demanding that interest rate to go up. Further more, you increase my rent, up goes my salary demand to my boss. This figure is also included when considering inflation/interest rate.
Unless everything else that makes up CPI compensates for the increase or the government remove rent payments and salary part of CPI (which means people may scream blue murder as mortgages are already not included).
Oh and another thing;
After the dot.com boom, Cisco (one of the companies which in essence provided the picks and shovels of that gold rush) lost 90% of it revenue the next year. Why? - Well all the fancy companies that bought its equipment the year before, went bust and Ebayed the nearly new equipment at knock down prices. They were essentially competing with their own products.
As some BTlers who've been in the game for a few years and are willing to keep prices down to keep tenants compete with 100% mortgaged BTLers massive rent increases will be off the cards, on top of that new BTLers who’ve bought new flats at massively knocked down prices (from builders desperate to get rid of stock) will be able to compete just as aggressively.
18. Orwell said...
Mike, possibly , but there are a finite number of private lets and of course public lets dictate what a market rate is for the council house (Housing Association) rents. Now you may not think this is relevant but, the Local Authority Housing Benefit Tribunal and to a certain extent (even when one is in a rental property (and even as some landlords don't know yet, Assured Shorthold tenancies that can be for over 6 months) the Leasehold Valuation Tribunal), dictate what will be paid to BTL'rs and they will not allow ramping up. So, there is downwards pressure in rental income possible.
19. Skintacademic said...
Mike, some landlords will try to increase rent for sure hoping that the tenants will put up with it, but if there are plenty more houses out there with cheaper rent (because of over supply) then the tenants will just move. This means that instead of a little extra per month, the landlord now has a house that will take a few months to fill with tenants again. And to attract them in the first place the landlord will have to reduce the rent.
Confused: How did you find all the information about your landlord's tax evasions? I would love to do the same to a previous landlord! But for the moment I am just going to sue him for my deposit back.
20. shipbuilder said...
Lots of right-wing whinging in this article, essentially blaming the taxman for not making tax requirements clear - 'how dare the government tax my hard-earned (er...) income?'. Time that foolish and naiive amateur landlords paid their debts.
21. Andy H said...
Increasing rent doesn't work in a market economy. My mate's landlord tried that and my mate moved out. The property was empty for a couple of months (until the landlord dropped the required rent back again) so the landlord lost £1300 in rent. It is a buyer's market in the rental sector due to oversupply and the seller's need to fill a property.
I think that Brown might profit hansomely if a lot of BTLers sell up. Think of, say, 40K capital gains tax (plus a few K stamp duty) on half a million properties. Makes £20Bn tax.
22. Wage Slave said...
Mike,
Like everything in a free market, rents are set by supply and demand. It doesn't matter how big or expensive a BTLers mortgage may be, he won't be able to rent his flat out for £600 if there's one next door going for £500.
23. paul said...
mike it's not quite that simple.
Firstly, a landlord can't cut a tenancy agreement short because he wants to raise the rent - the tenant could sue for breach of contract!
Secondly, what about all of the landlords who haven't overstretched themselves, and who won't be subject to these shocks. They're hardly going to raise rents if there's a possibility that they'll lose tenants and have void periods relative to the long-term rent rate.
Thirdly, any rent rise is more than eaten up by a void period. Think about it, if the average void period is only a month, this is more than a years worth of rent increases! The risk for landlords to try to push the market rate is too high, because tenants are footloose and fancy free.