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Everything posted by dgul

  1. The idea proposed to the ECB in the spring was EUR175 (£125) a month for 19 months. Cash, directly into account. For every citizen (not means tested). That would definitely be stimulative. Only costs £2.5k each. I think they (current conservative gov) wouldn't do that. The current lot might reintroduce miras - as we get closer to the election (2020) and the BTL mortgage tax relief starts to bite, reinvigorate the flagging owner-occupier market by allowing tax relief at 20%.
  2. The original library lasted 100 years. Replacement library lasted 25 before it was regarded as obsolete. Madness. What seems amazing here is that BCC sold the old library 15 years ago partly (mainly) to cover cuts - it seems stupid to build a new library that will suffer the same problem. (and by the way, they don't subtract the monies received from the sale of the old library when discussing the cost (debt) of the new one. They, of course, are different departments...) Funnily enough - who is (part) funding the development of the old library (ie paradise complex) - Birmingham city council. Anyway, BCC budget is around £3bn, so the required savings of £100m are about 3% of budget. Not buying books is meant to save £1m... But library cuts are very emotional and great for rallying public support...
  3. The 'risk' would be that they limit the tax relief (at 20%) to the basic rate - ie, no relief at all over the upper threshold. (or, perhaps, the higher threshold. This would kind of make sense as it would send a strong message, but in reality anyone with that size of portfolio would be trying very hard to exist as a ltd company, so it wouldn't in fact affect many at all). More likely is that they introduce tax relief at 20% for all mortgage holders - but they would only do this if the housing market started to slip. Most likely (imo) is that they stick to their plan-a.
  4. Hmm. Are they trying to set up a cartel? Doesn't sound very legal.
  5. Perhaps they are saving up sorting out the tax relief problem to the end of the 5 years in power - reintroducing miras and tax-relief for rent. At the zero-bound there aren't many options left to stimulate the economy... And it would be an easy vote-winner for most... [lots of countries have at least some tax relief on rent and mortgage, so not anything special]
  6. But at the moment they can't assume that a person who might be a landlord has to fill in a tax return. In the future they can assume that they must. They might just send out 1 million (1.4m landlords, 1m registered with hmrc) penalty fines for not filling in a tax return. Easy £100 million. And they get the tax later...
  7. An interesting part of the new tax rules for mortgages is that it will make it 'more difficult' for landlords to get away with under paying tax - at the moment you don't have to fill in a tax return if your additional income is under £2500. There is a 'you must contact your tax office' if you have extra income under £2500 but it is clear that you don't have to fill in a tax return (the important bit). But under the new rules you can't deduct interest from your rental income so just about all landlords will have to fill in a tax return - and if they don't that in itself is an offence punishable through fines, etc. So - all landlords must fill in a tax return (from 2017). In that tax return they'll have to declare their income and costs from letting. The HMRC will be able to work out what the tax position should have been for previous years.
  8. As I've said in previous posts, I used to live and work in Greece - and I think that there is quite a bit of bias in the news about Greece [eg, the 2012 expenditure on pensions in the graph at the top of the page - of course it is going to be a large % of GDP if the economy of the country has been trashed and gdp slashed... Another aspect is the 13 month pay that civil servants get - they don't get 12 months of pay and then get an extra month - they get an annual pay that they have negotiated (or used as a basis for their career decisions) - the actual form of that pay is neither here nor there. Another is the tax situation - while there is tax avoidance in Greece it isn't in a different league compared to, say, Germany...]
  9. £600 per month - and that is the average pension, not the basic state pension. The average pensioner in the UK gets about £400-500 a week* - say about £2k a month. Averages can be misleading though - I think a significant minority of UK pensioners get quite a bit less (and also quite a few get quite a bit more). I get the feeling that the situation in Greece is similar to the UK in the late 70s / early 80s where many people had relied upon the state pension to give them comfort in old age, but the state had removed the value of the pension so that they were almost destitute (through inflation in the 1970s). * eg, from http://www.gov.uk/government/uploads/system/uploads/attachment_data/file/223182/pi_series_1011.pdf
  10. sorry - 1 in 5 landlords affected, but 1/4 of landlords don't even have a mortgage (so obviously won't be affected) - so about 1/4 of landlords who have a mortgage will be affected (again, according to the government's logic).
  11. Been looking around and found some data... Some useful numbers here - from 2010 but still relevant. In 2010 around 80% of private landlords only had one property. I imagine that many of these will not be too affected by the recent changes. 3% appear to have 5 or more properties. But these 3% appear to have 22% of all privately rented properties. I imagine that these 3% might be massively affected. 9% of long term landlords (in BTL > 3 years in 2010) were full time. I don't know how this can be when the majority of them will have less than 5 properties. Surely these might be affected. 3% of recent entrants (in BTL < 3 years in 2010 which accounted for 25% of all BTLs) were full time. This is an amazing number. Suggests that around 1% of all landlords have lots of properties (otherwise couldn't be full-time), lots of debt (otherwise how could they afford it), but hardly any equity (prices gone nowhere since 2007)... Surely these 1% are bankrupt? 70% of all landlords in 2010, owning 50% of all letted property had been in since 2000. Presumably these 70% (which includes the 25% in since 2007) don't have too much equity... 63% of landlords have no relevant experience or qualifications (not relevant here, but an awful statistic on which to base the country's housing strategy).
  12. The government figures are 1 in 5 landlords (not 1 in 5 with mortgage) around about 25% of landlords are mortgage free, so that leaves about 1 in 4 landlords with mortgage (I know the maths isn't accurate - just an approximation). There is about £200Bn outstanding mortgage debt on BTLs, which is about £10Bn per year in interest. The government figures give an assumed saving of £655m when it is fully in (2021). If you assume 1 in 4 landlords affected, then these 1 in 4 need to all be higher rate taxpayers (ie, 10Bn * 20% = £2Bn ; £2Bn / 4 = £500m). So those 1 in 4 will be losing all 20% of their mortgage payments - quite a large hit even for a smaller BTLer.
  13. The government expects 1 in 5 landlords to be affected. Sounds about right to me. The question, of course, is: what proportion of landlords will be completely broken by this (large debt & large CGT liability)? The other question is: is there likely to be any downsizing of portfolios, and what might this do to the price of their assets?
  14. As should the estate agents. As, indeed, should the Guardian.
  15. oops got < and > wrong way round, so should be 3) is just so that you can't get more interest tax relief than you're actually paying in tax (I think). It looks like it would only affect BTL where there is little other income and high margin. This might include some smaller retired BTLs.
  16. Yes - thinking about it I think that is right. So: 2) Would affect any BTL who had costs (high maintenance costs that year, say) such that (rental income - costs) > the mortgage. 3) affects anyone where (rental income - costs - personal_allowance) > the mortgage. It would look like 3 trumps 2.
  17. Thanks - that link shows an important aspect that isn't being discussed: [was discussed earlier in the thread, but it is a long thread...] In practice this tax reduction will be calculated as 20% of the lower of the: finance costs not deducted from income in the tax year (25% for 2017 to 2018, 50% for 2018 to 2019, 75% for 2019 to 2020 and 100% thereafter) profits of the property business in the tax year total income (excluding savings income and dividend income) that exceeds the personal allowance and blind person’s allowance in the tax year ASAICT, this results in: This is the situation that we've been discussing presumably this means that a 'business' that is only just making a profit (or even a loss) will only be able to claim 20% of the low profit, rather than 20% of the interest. This would be a killer for a low margin BTL. A person with one or two BTL that makes up all of their income (BTL is my pension?) might have an income (after personal allowance) lower than the BTL interest - again, this could hit their income from BTL.
  18. What's more, those will several BTL could be pushed into having tax to pay at the higher tax bracket even if they make a loss... And those who have more than a dozen or so BTL would likely be pushed into the additional tax rate (45%) - again, even with low profits or even a loss.
  19. One point is that at the moment you don't have to fill in a self-assessment if the income from property is less than £2500 (assuming no other complications) Currently the £2500 is profit after deductions - so there might be a fair-few single-property BTL who don't have to submit the info. But as far as I can tell the new system will have the whole rental income (minus actuals) as the income from property - the mortgage tax deduction will be a separate calculation. So the impact would be that pretty much anyone letting a property would have to submit a tax return. Or to put it another way, they can't currently assume that the owner of a letted property would have to submit a tax return - but with these changes that would be a safe assumption.
  20. Thanks - I'd not noticed this... Talk about twisting the knife... As far as I can work out this means: 1 - leveraged so that interest is >75% (rent - costs) and a higher rate taxpayer - you'll be making a loss - screwed. 2 - clever tax efficient set-up where debt & costs are such that the 'business' doesn't make any money - you'll be making a loss - screwed. 3 - leveraged property business makes up all of your modest income - you can't claim more relief than you pay income tax. Screwed. The more I look into this the more it looks like an engineered way to remove all speculative portfolio BTL mini-empires. [leaving the path clear for financial-industry operations to clear up] [but it is still all okay for property portfolio without debt (old money) or property portfolio within ltd company (smart money)] The BTL industry will be reeling from this for years.
  21. interesting though experiment on property tribes: "What if rent income £20k interest £25k Profit -£5k" Their interpretation is no tax to pay as they made a loss... But for a higher rate taxpayer as far as I can tell it would be: tax before interest tax relief = 20k x 40% = £8k interest tax relief = £25k x 20% = £5k Residual tax to pay = £3k... as well as having to cover the loss... bit galling to have to pay tax on a loss...
  22. They have a very strange existence - for such an outwardly successful pair they have odd behaviours, such as the £300k arrears they'd built up in 2009. I imagine they have quite a bit of equity still, even though it pains me to say it- so they'll likely walk away with millions even with a 20% reduction in property values (say). That said: They've been trying to sell for years, and today's announcement only makes it less likely that they'll be able to offload the portfolio. If there are any forced repossessions then they might get less than 70% of their optimistic valuation, which may well wipe them out. They will have created a lifestyle that takes low millions to run and which will have at least some fixed costs (racehorse feed, say) - even halving their income would be difficult. Burberry shares might take a hit. They got in early so might be okay - but those that followed the model (which 'anyone with half a brain could do') will be the victims. I have a friend from school who went into BTL in a big way from 2008. Speaking with him last year he makes about 20% profit. Looking at the numbers he'll be wiped out by 2019. Not a popular chap all told, so I don't think there will be tears. I've run a few businesses (proper ones, not speculative ones) and one of the advice I had in the early days was 'be wary of government funding/largess - so long as it continues everything will be great, but one day they'll change their rules, and when that happens you'll be bu****ed overnight'. I was reminded of that today.
  23. points will be awarded for showing workings out. recent numbers suggest £12m rental income, 60% of this is interest. No numbers for costs, but I'll shove in 10% as a guess. The numbers are big so I'll just assume all income taxed at 45% Before the recent announcement: income = £12m, costs = £1.2m, profit £10.8m Tax on profit before interest tax relief = £10.8m x 45% = £4.86m interest = £7.2m income before interest tax relief = £10.8 - £4.86m - £7.2m = -£1.26m interest rate tax relief = £7.2m x 45% = £3.24m profit after tax = -£1.26 + £3.24 = ~ £2m With the new rules in full (2020 or so, using 2015 pounds): income = £12m, costs = £1.2m, profit £10.8m Tax on profit before interest tax relief = £10.8m x 45% = £4.86m interest = £7.2m income before interest tax relief = £10.8m - £4.86m - £7.2m = -£1.26m interest tax relief = £7.2m x 20% = £1.44m profit after tax = -£1.26 + £1.44 = ~ £180k ... Might have to sell a horse. Got a few years to get rid of it though. ...
  24. Indeed - couple of years to come into effect, so the 'smart' ones will move sooner rather than later - trouble is they all get their advice from the same places, so they'll all be 'the smart ones'... Perhaps we'll see action soon...
  25. Just as likely to be responsible for the decrease in sales of Audi TTs and holidays in the Maldives.
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