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F T: Btl Has "propped Up" Property Market For 20 Years

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http://www.ft.com/cms/s/0/bd439f06-7dff-11df-b357-00144feabdc0.html

Property investors welcome CGT move

By Daniel Thomas and Ed Hammond

Published: June 22 2010 14:47 | Last updated: June 22 2010 15:07

Property investors also welcomed the immediate application of the tax change, which will go into effect from midnight on Tuesday, given fears that second home owners would quickly sell properties prior to any forward date implementation.
“Thankfully, the rate has not been brought into line with higher rate tax levels, but this is something that many will not be happy about.
Particularly, buy-to-let investors, who have propped up the housing market over the last 20 years,
will suffer and this could hit the future supply of rented housing.”

BTL has done far more than "propping up," it has contributed the most to fueling the worst credit boom in history. Aided and abetted by an incompetent fool of a Chancellor it has wrought untold social damage through pricing out of essential workers and the young. It has restricted the supply of affordable homes to FTBs and has had a knock-on effect to fuel HPI up to the top levels. It is a social disease and a very negative factor in our economy which should have been taxed punitively.

Edited by Realistbear

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BTL has done far more than "propping up," it has contributed the most to fueling the worst credit boom in history. Aided and abetted by an incompetent fool of a Chancellor it has wrought untold social damage through pricing out of essential workers and the young. It has restricted the supply of affordable homes to FTBs and has had a knock-on effect to fuel HPI up to the top levels. It is a social disease and a very negative factor in our economy which should have been taxed punitively.

Hear hear!

I'm sure they won't be as pleased when the realise the 30th percentile rule.

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Landlord near me *is* the market. He's the only one buying. He outbid a potential owner occupier for the most recent one...

Waiting to see by how much!

Edited by SarahBell

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http://www.ft.com/cms/s/0/bd439f06-7dff-11df-b357-00144feabdc0.html

Property investors welcome CGT move

By Daniel Thomas and Ed Hammond

Published: June 22 2010 14:47 | Last updated: June 22 2010 15:07

Property investors also welcomed the immediate application of the tax change, which will go into effect from midnight on Tuesday, given fears that second home owners would quickly sell properties prior to any forward date implementation.
“Thankfully, the rate has not been brought into line with higher rate tax levels, but this is something that many will not be happy about.
Particularly, buy-to-let investors, who have propped up the housing market over the last 20 years,
will suffer and this could hit the future supply of rented housing.”

BTL has done far more than "propping up," it has contributed the most to fueling the worst credit boom in history. Aided and abetted by an incompetent fool of a Chancellor it has wrought untold social damage through pricing out of essential workers and the young. It has restricted the supply of affordable homes to FTBs and has had a knock-on effect to fuel HPI up to the top levels. It is a social disease and a very negative factor in our economy which should have been taxed punitively.

Excellent post. I always think of myself and my oldest friend in relation to the whole BTL thing. We are both of the same age, we both went to polytechnic (rememeber those!) together. Over the proceeding 25 years I went into business for myself, I employed (still do) people, paid taxes (still do) and bought a property. He has spent the last 25 years in a standard 9-5, earning a reasonable (but certainly not exceptional) salary, using BTL mortgages he has built up a BTL portfolio of 5 properties...hes been letting now for 15 years and has done very nicely thank you from it: no one has ever enquired about wether hes paying tax on his rental income, so he never has!! Recently he sold his original property bought back in the '80s, pocketing a nce £190,000 profit...a year previous to the sale he stopped letting it and started paying council tax so it appeared to be his primary residence...no enquiries were made as to if this was otherwise and no capital gains tax was paid.

I'm not criticising my friend..I'm simpy using him as an example of what I think a lot of BTLr's attitude to paying tax is and how easy it seems to be to avoid, and I also use him as an example to illustrate another social/economic problem of BTL...besides ridiculously inflating property prices I think it also kills entrepeneurship...not just in the amount of money it sucks from the general economy for property investment but also in the sense that if I could replay those 25 years, I would not have bothered starting a business, I would have done as my friend, get myself a nice little job and then get a series of BTL mortgages, that way I would be financially well off for no real effort, and certainly very little risk, and I'd have lots of assets that it seems nobody cares about wether I pay tax for...

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Excellent post. I always think of myself and my oldest friend in relation to the whole BTL thing. We are both of the same age, we both went to polytechnic (rememeber those!) together. Over the proceeding 25 years I went into business for myself, I employed (still do) people, paid taxes (still do) and bought a property. He has spent the last 25 years in a standard 9-5, earning a reasonable (but certainly not exceptional) salary, using BTL mortgages he has built up a BTL portfolio of 5 properties...hes been letting now for 15 years and has done very nicely thank you from it: no one has ever enquired about wether hes paying tax on his rental income, so he never has!! Recently he sold his original property bought back in the '80s, pocketing a nce £190,000 profit...a year previous to the sale he stopped letting it and started paying council tax so it appeared to be his primary residence...no enquiries were made as to if this was otherwise and no capital gains tax was paid.

I'm not criticising my friend..I'm simpy using him as an example of what I think a lot of BTLr's attitude to paying tax is and how easy it seems to be to avoid, and I also use him as an example to illustrate another social/economic problem of BTL...besides ridiculously inflating property prices I think it also kills entrepeneurship...not just in the amount of money it sucks from the general economy for property investment but also in the sense that if I could replay those 25 years, I would not have bothered starting a business, I would have done as my friend, get myself a nice little job and then get a series of BTL mortgages, that way I would be financially well off for no real effort, and certainly very little risk, and I'd have lots of assets that it seems nobody cares about wether I pay tax for...

Indeed. This is the very point the VI politicians cannot or will not grasp. HPI is NOT an industry--it is a disease.

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Excellent post. I always think of myself and my oldest friend in relation to the whole BTL thing. We are both of the same age, we both went to polytechnic (rememeber those!) together. Over the proceeding 25 years I went into business for myself, I employed (still do) people, paid taxes (still do) and bought a property. He has spent the last 25 years in a standard 9-5, earning a reasonable (but certainly not exceptional) salary, using BTL mortgages he has built up a BTL portfolio of 5 properties...hes been letting now for 15 years and has done very nicely thank you from it: no one has ever enquired about wether hes paying tax on his rental income, so he never has!! Recently he sold his original property bought back in the '80s, pocketing a nce £190,000 profit...a year previous to the sale he stopped letting it and started paying council tax so it appeared to be his primary residence...no enquiries were made as to if this was otherwise and no capital gains tax was paid.

I'm not criticising my friend..I'm simpy using him as an example of what I think a lot of BTLr's attitude to paying tax is and how easy it seems to be to avoid, and I also use him as an example to illustrate another social/economic problem of BTL...besides ridiculously inflating property prices I think it also kills entrepeneurship...not just in the amount of money it sucks from the general economy for property investment but also in the sense that if I could replay those 25 years, I would not have bothered starting a business, I would have done as my friend, get myself a nice little job and then get a series of BTL mortgages, that way I would be financially well off for no real effort, and certainly very little risk, and I'd have lots of assets that it seems nobody cares about wether I pay tax for...

Dob the bastard in to HMRC!

Edited by Pent Up

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I'm sure they won't be as pleased when the realise the 30th percentile rule.

I wonder if there is a bit of recursion involved here. i.e.

- HB set to 30%, causes a reduction in rent achievable

- This then lowers all rents and an even lower 30% point is found in the next financial year.

- repeat until stable

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http://www.ft.com/cms/s/0/bd439f06-7dff-11df-b357-00144feabdc0.html

Property investors welcome CGT move

By Daniel Thomas and Ed Hammond

Published: June 22 2010 14:47 | Last updated: June 22 2010 15:07

Property investors also welcomed the immediate application of the tax change, which will go into effect from midnight on Tuesday, given fears that second home owners would quickly sell properties prior to any forward date implementation.
“Thankfully, the rate has not been brought into line with higher rate tax levels, but this is something that many will not be happy about.
Particularly, buy-to-let investors, who have propped up the housing market over the last 20 years,
will suffer and this could hit the future supply of rented housing.”

BTL has done far more than "propping up," it has contributed the most to fueling the worst credit boom in history. Aided and abetted by an incompetent fool of a Chancellor it has wrought untold social damage through pricing out of essential workers and the young. It has restricted the supply of affordable homes to FTBs and has had a knock-on effect to fuel HPI up to the top levels. It is a social disease and a very negative factor in our economy which should have been taxed punitively.

Well said!

It's high time the media took a long hard look at itself and stopped posting drivel about BTL being a positive thing. I would have expected more from the FT.

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Excellent post. I always think of myself and my oldest friend in relation to the whole BTL thing. We are both of the same age, we both went to polytechnic (rememeber those!) together. Over the proceeding 25 years I went into business for myself, I employed (still do) people, paid taxes (still do) and bought a property. He has spent the last 25 years in a standard 9-5, earning a reasonable (but certainly not exceptional) salary, using BTL mortgages he has built up a BTL portfolio of 5 properties...hes been letting now for 15 years and has done very nicely thank you from it: no one has ever enquired about wether hes paying tax on his rental income, so he never has!! Recently he sold his original property bought back in the '80s, pocketing a nce £190,000 profit...a year previous to the sale he stopped letting it and started paying council tax so it appeared to be his primary residence...no enquiries were made as to if this was otherwise and no capital gains tax was paid.

I'm not criticising my friend..I'm simpy using him as an example of what I think a lot of BTLr's attitude to paying tax is and how easy it seems to be to avoid, and I also use him as an example to illustrate another social/economic problem of BTL...besides ridiculously inflating property prices I think it also kills entrepeneurship...not just in the amount of money it sucks from the general economy for property investment but also in the sense that if I could replay those 25 years, I would not have bothered starting a business, I would have done as my friend, get myself a nice little job and then get a series of BTL mortgages, that way I would be financially well off for no real effort, and certainly very little risk, and I'd have lots of assets that it seems nobody cares about wether I pay tax for...

Shocking! :(

There are only too many people who will line up to profit at the loss of others. While this is (unfortunately) human nature for many, to then turn around and say that they are doing it food the good of society, is just disgusting.

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Excellent post. I always think of myself and my oldest friend in relation to the whole BTL thing. We are both of the same age, we both went to polytechnic (rememeber those!) together. Over the proceeding 25 years I went into business for myself, I employed (still do) people, paid taxes (still do) and bought a property. He has spent the last 25 years in a standard 9-5, earning a reasonable (but certainly not exceptional) salary, using BTL mortgages he has built up a BTL portfolio of 5 properties...hes been letting now for 15 years and has done very nicely thank you from it: no one has ever enquired about wether hes paying tax on his rental income, so he never has!! Recently he sold his original property bought back in the '80s, pocketing a nce £190,000 profit...a year previous to the sale he stopped letting it and started paying council tax so it appeared to be his primary residence...no enquiries were made as to if this was otherwise and no capital gains tax was paid.

I'm not criticising my friend..I'm simpy using him as an example of what I think a lot of BTLr's attitude to paying tax is and how easy it seems to be to avoid, and I also use him as an example to illustrate another social/economic problem of BTL...besides ridiculously inflating property prices I think it also kills entrepeneurship...not just in the amount of money it sucks from the general economy for property investment but also in the sense that if I could replay those 25 years, I would not have bothered starting a business, I would have done as my friend, get myself a nice little job and then get a series of BTL mortgages, that way I would be financially well off for no real effort, and certainly very little risk, and I'd have lots of assets that it seems nobody cares about wether I pay tax for...

Well try shopping him to HMRC for the non-payment of taxes due on any rental profits he's made - they'll go back at least 7 years in an investigation. CGT - he's done the right thing - ask about 300 MPs!

For the futre the solution is to force landlords to found a limited company to hold their property interests. That way they are forced to treat these as businesses, which is what they are.

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The practice needs to be HIT ON THE HEAD,

with stiff fines applied, and/or with some people doing Jail time.

The low-tax status of this passive income is shameful, and does nothing for enhancing the wealth-generating statues of the UK. Rather, tax-advantaged BTL has diminished the UK's Wealth.

It is a shame that while one beast (Brown) has been eliminated, another beast (BTL advantages) still lives on.

It demonstrates how crucial HPI is to the survival of our nation. We are now a nation with the unenviable status of an HPI junkie.

It is clear beyond a doubt that the moderate rise in CGT was a nod by the Koalishon that house prices must be maintained and allowed to rise gently. They have not grasped the nettle for fear of the sting. What they have allowed is the root of evil to continue to grow under the foundations of the house built on sand.

Judgment day delayed again. But the market is slowly winning the day if the FT's Acadametrics is right and the market is starting to fall.

Locally, I have two friends left trying to sell--one had to drop their price from 230 to 190 and the other has had nothing but low ball offers on a very nice detached in a very desirable Avenue. The other friend has sold (STC and a chain) for 20k more than paid two years ago after the builder dropped the asking from 225 to 175 (she "sold) for 190). I am watching a desres in very nice Rottingdean which went on for 350k and it has dropped to 325k with an offer on. Two or three around me have come back on having "sold" weeks ago. I am not seeing a boom market but a market that is softening with more for sale signs being added by the week.

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If he wasn't a mate I would!!! :)

Haven't you seen those tax-dodging adverts where the laughing, friendly 'mate' is doing far less work than you, or no work at all, but he has loads more cash to spend than you, nicer car, more holidays, etc, because he is not paying any tax and you are?

He is not a mate - he is taking you, and us, for mugs.

I belive both HMRC and your local Council Tax dept have hotlines for this.

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http://www.ft.com/cms/s/0/bd439f06-7dff-11df-b357-00144feabdc0.html

Property investors welcome CGT move

By Daniel Thomas and Ed Hammond

Published: June 22 2010 14:47 | Last updated: June 22 2010 15:07

Property investors also welcomed the immediate application of the tax change, which will go into effect from midnight on Tuesday, given fears that second home owners would quickly sell properties prior to any forward date implementation.
“Thankfully, the rate has not been brought into line with higher rate tax levels, but this is something that many will not be happy about.
Particularly, buy-to-let investors, who have propped up the housing market over the last 20 years,
will suffer and this could hit the future supply of rented housing.”

BTL has done far more than "propping up,"

Though it isn't for 20 years.

I bought into BTL in 1997 and it was virtually unheard of. It was a right bugger getting someone to give me a mortgage. It must have been around 2002-3 before it took off enough to be anything other that a very minor player in the housing market.

tim

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I wonder if its worth making a website called: shopabuytoletter.com or something similar.

Popularise the idea of hitting back, making these guys pay their CGT and income taxes. Who knows, it may even precipitate the crash we've been waiting for.

I would bet that the majority of BTLers do not declare it. What do you think the figure is? This could make a big impact if this money were clawed back. Billions?

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I wonder if its worth making a website called: shopabuytoletter.com or something similar.

Popularise the idea of hitting back, making these guys pay their CGT and income taxes. Who knows, it may even precipitate the crash we've been waiting for.

I would bet that the majority of BTLers do not declare it. What do you think the figure is? This could make a big impact if this money were clawed back. Billions?

From the experience of my friend (who BTL's) I suspect that most BTL landlords are not being honest about their tax and can avoid CGT if they sell a BTL by simply claiming it as their primary residence (OK, they may have to pay council tax there for a year, but big deal): once again from his experience it appears to me that HMRC do seem to see BTL income/capital gains on property as a priority.

Another little story...a nephew of mine had a rental on a bare shorthold tenancy: amongst other things it meant that the £3800 deposit was not held by an agency. After my nephew left the ladndlord came up with a list of £800 worth of (uncosted) deductions from the deposit. 4 weeks passed, balance of deposit not returned, 8 weeks passed, no deposit returned, 10 weeks, still not returned: on my advice my nephew then emailed the landlord saying quite directly that if he did not recive the full deposit within his account within 7 days he would call HMRC to enquire re the landlords tax status with respect to paying tax on his rental income: the full deposit was in my nephews account within a week. I guess the landlord had something to hide..

A previous poster here mentioned that BTL landlords should be forced to put thier properties/income through a limited company: I think this would be an excellent idea and would help curb the worst of the abuses.

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From the experience of my friend (who BTL's) I suspect that most BTL landlords are not being honest about their tax and can avoid CGT if they sell a BTL by simply claiming it as their primary residence (OK, they may have to pay council tax there for a year, but big deal): once again from his experience it appears to me that HMRC do seem to see BTL income/capital gains on property as a priority.

Another little story...a nephew of mine had a rental on a bare shorthold tenancy: amongst other things it meant that the £3800 deposit was not held by an agency. After my nephew left the ladndlord came up with a list of £800 worth of (uncosted) deductions from the deposit. 4 weeks passed, balance of deposit not returned, 8 weeks passed, no deposit returned, 10 weeks, still not returned: on my advice my nephew then emailed the landlord saying quite directly that if he did not recive the full deposit within his account within 7 days he would call HMRC to enquire re the landlords tax status with respect to paying tax on his rental income: the full deposit was in my nephews account within a week. I guess the landlord had something to hide..

A previous poster here mentioned that BTL landlords should be forced to put thier properties/income through a limited company: I think this would be an excellent idea and would help curb the worst of the abuses.

I think your nephew could have got more considering his Landord should have lodged the deposit with the appropriate government agency.

I may be wrong.

Edited by Alan B'Stard MP

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I'm not criticising my friend..I'm simpy using him as an example of what I think a lot of BTLr's attitude to paying tax is and how easy it seems to be to avoid, and I also use him as an example to illustrate another social/economic problem of BTL...besides ridiculously inflating property prices I think it also kills entrepeneurship...not just in the amount of money it sucks from the general economy for property investment but also in the sense that if I could replay those 25 years, I would not have bothered starting a business, I would have done as my friend, get myself a nice little job and then get a series of BTL mortgages, that way I would be financially well off for no real effort, and certainly very little risk, and I'd have lots of assets that it seems nobody cares about wether I pay tax for...

+ 1

i must have a 'whats the point' moment at least each week with my business.

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I think your nephew could have got more considering his Landord should have lodged the deposit with the appropriate government agency.

I may be wrong.

You are correct, but in this case the rent was over £25k...the deposit protection scheme doesn't cover rents over this level: another nice little wrinkle for the landords!!

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You are correct, but in this case the rent was over £25k...the deposit protection scheme doesn't cover rents over this level: another nice little wrinkle for the landords!!

Did your nephew dob him in anyway ;)

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+ 1

i must have a 'whats the point' moment at least each week with my business.

Well don't panic..when you have your own business I think that "whats the point" moment is regular and standard: you just have KBO!

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