Jump to content
House Price Crash Forum
Sign in to follow this  
gf3

Should Vat Be Charged On Rent

Recommended Posts

FTB are always having to compete against BTL landlords and there tenants. The love affair between the young tenant and his landlord is a very tainted love, and exploitative.

Yes by renting the young can leave parents home much earlier just need to save a months rent in advance. But once in rented accommodation it's hard to get back out. Saving for a deposit while paying rent.

Charging VAT on rent would make renting less attractive which would mean less profits for BTL landlords. This would bring down the price of houses for FTB

Share this post


Link to post
Share on other sites

FTB are always having to compete against BTL landlords and there tenants. The love affair between the young tenant and his landlord is a very tainted love, and exploitative.

Yes by renting the young can leave parents home much earlier just need to save a months rent in advance. But once in rented accommodation it's hard to get back out. Saving for a deposit while paying rent.

Charging VAT on rent would make renting less attractive which would mean less profits for BTL landlords. This would bring down the price of houses for FTB

the BTL firm would need to meet turnover requirements to register for VAT.

therefore, most wouldnt be able to charge it.

And as the chain of products for VAT is non existent, there would be no collection for the Government either.

Meanwhile, larger landlords would have to charge VAT and would quickly burn.

Share this post


Link to post
Share on other sites

I bloody well hope not! :(

Less scrupulous landlords will try and pass on the increased cut on their rental income to their tenants, so that they might pay more. Would probably lead to an increase in Housing Benefit claims.

With the likelihood of interest rate rises this year, best the housing market be left to economic forces. :)

Share this post


Link to post
Share on other sites

the BTL firm would need to meet turnover requirements to register for VAT.

therefore, most wouldnt be able to charge it.

And as the chain of products for VAT is non existent, there would be no collection for the Government either.

Meanwhile, larger landlords would have to charge VAT and would quickly burn.

I must admit I didn't know anything about VAT registration I was looking at it more from the point of view.

For a given Yield the landlord would have to pay 20% less for a house.

Share this post


Link to post
Share on other sites

Charging VAT on rent would make renting less attractive which would mean less profits for BTL landlords. This would bring down the price of houses for FTB

How about, as an alternative, charging VAT on absolutely nothing at all?

Share this post


Link to post
Share on other sites

Should VAT be charged on bank loans?

Once you start going down the road of putting VAT on things the govt won't stop it will try and increase tax revenues for it's spending binge.

You don't see BTL landlord + tenant out biding the FTB as a problem then?

Share this post


Link to post
Share on other sites

For a given Yield the landlord would have to pay 20% less for a house.

There could be a social problem brewing if landlords are forced to take a cut in their income. Those with BTL mortgages may no longer be able to afford the cut and will probably put their properties on the market at near enough the same time. Even those without mortgages may decide that property isn't the most tax efficient investment vehicle and sell up.

This may very well have the desired negative effect on house prices. However, it will force displaced tenants to look elsewhere, and may even make the homelessness situation in this country worse. Lets face it, if most Landlords decide to sell then there will be sod all private rental property to choose from. And council housing/social housing is already in short supply.

Share this post


Link to post
Share on other sites

You don't see BTL landlord + tenant out biding the FTB as a problem then?

We have plenty of taxes to deal with already and increasing the number of taxes or the scope of existing taxes isn't going to solve anything

A couple of things that would help FTBs without adding additional costs to their rent and tax burden would be...

- Running Capital Gains Tax back up to a level where it is comparable with income tax

- Allowing property speculators to reap the whirlwhind they have sown rather than propping them up

Share this post


Link to post
Share on other sites

Charging VAT on rent would make renting less attractive which would mean less profits for BTL landlords. This would bring down the price of houses for FTB

At best it would squeeze another few renters into buying on the extreme limit of affordability (if they can get the mortgage), and shake out a few rich renters (predominantly STR). Leaving the remainder worse off once again. It works in the same direction as all the government schemes to help selected renters become buyers.

VAT on mortgages now (with an exemption for the first mortgage on your own home) .... interesting :lol:

Share this post


Link to post
Share on other sites

There could be a social problem brewing if landlords are forced to take a cut in their income. Those with BTL mortgages may no longer be able to afford the cut and will probably put their properties on the market at near enough the same time. Even those without mortgages may decide that property isn't the most tax efficient investment vehicle and sell up.

This may very well have the desired negative effect on house prices. However, it will force displaced tenants to look elsewhere, and may even make the homelessness situation in this country worse. Lets face it, if most Landlords decide to sell then there will be sod all private rental property to choose from. And council housing/social housing is already in short supply.

I disagree. There will be the same number of people and the same number of houses. Why will people be homeless? It simply means that prices will fall hard and fast, and may mean that people need to move house in the process, but the ratio of houses to people will not change.

As a rentor, I would welcome a sudden market crash if it means house prices drop two salary multiples but I have to move.

Share this post


Link to post
Share on other sites

I disagree. There will be the same number of people and the same number of houses. Why will people be homeless? It simply means that prices will fall hard and fast, and may mean that people need to move house in the process, but the ratio of houses to people will not change.

As a rentor, I would welcome a sudden market crash if it means house prices drop two salary multiples but I have to move.

More empty homes ...

Zero interest rates and have led to lots of empty homes as owners are under no pressure to fill them. A tax on filling them will only make that worse.

Renters would be stuck in the middle, forced to move *before* any price falls.

Edited by porca misèria

Share this post


Link to post
Share on other sites

One of the main problems I see at the moment is .When some one is priced out of the market they rent instead which prevents the market crashing to the point they could afford a house

Share this post


Link to post
Share on other sites

As a rentor, I would welcome a sudden market crash if it means house prices drop two salary multiples but I have to move.

That crash would happen quite quickly if government stopped propping up the housing market

Expanding the scope of VAT to drive down the price of housing, whilst simultaneously supporting the price of housing (through subsidy, tax breaks and suppressed interest rates) would make no sense to anyone but the tax gatherers

Share this post


Link to post
Share on other sites

That crash would happen quite quickly if government stopped propping up the housing market

Expanding the scope of VAT to drive down the price of housing, whilst simultaneously supporting the price of housing (through subsidy, tax breaks and suppressed interest rates) would make no sense to anyone but the tax gatherers

But the government isn't supporting the housing market for the house owners it's supporting the housing market for the banks. Banks go bust more tax payers money to support them.

Share this post


Link to post
Share on other sites

How about, as an alternative, charging VAT on absolutely nothing at all?

+1

VAT is a consumption tax, but one that ends up punishing the poor for being poor. Much of my post-rent/bills income has to be spent on diesel on which the govt has a high take. I certainly don't need my rent going up by 20% too (the tenant would be the one who ended up paying the tax, not the mortgage lender or the landlord, because he's got no-one he can pass it on to.)

Remove the UEL on EY and EE NI conts instead of charging VAT - the govt will raise £12bn* by doing this, and the tax will be paid by folk who can actually afford it for a change.

*(so I read somewhere recently, possibly HPC)

Share this post


Link to post
Share on other sites

But the government isn't supporting the housing market for the house owners it's supporting the housing market for the banks. Banks go bust more tax payers money to support them.

It doesn't matter why the government is supporting the housing market (you could debate that for ages), it is

So, the suggestion that the government should try to drive down house prices whilst supporting them at the same time strikes me as being a peculiar one

The simplest, most transparent and honest way to make housing more affordable for FTBs is to let house prices drop

If there is a genuine shortage of housing, government should be compeled to withdraw its snout a little from imposing restrictions and costs on new building

I've seen plenty of other 'solutions' being touted to help FTBs but all of them strike me a being thinly disguised attempts to maintain an unsustainable status quo, and the vested interests that benefit from it

Edited by Charlton Peston

Share this post


Link to post
Share on other sites
I certainly don't need my rent going up by 20% too (the tenant would be the one who ended up paying the tax, not the mortgage lender or the landlord, because he's got no-one he can pass it on to.)

In the short term perhaps, but rents are determined by the the abililty-to-pay, if they could get away with charging 20% more now they would have done already.

I think VAT on rent is a good idea. Large landlords can set themselves up as VAT registered, smaller landlords must go through a VAT registered agency.

It wouldn't kill the market dead, it'd just tip the balance in favour of home buyers rather than BTLers

Share this post


Link to post
Share on other sites

The simplest, most transparent and honest way to make housing more affordable for FTBs is to let house prices drop

This is wisdom. First it will be derided, then violently opposed, then accepted as self-evident. Most sheeple, bankstas and gubmint types are still at the first stage I fear.

Share this post


Link to post
Share on other sites

It doesn't matter why the government is supporting the housing market (you could debate that for ages), it is

So, the suggestion that the government should try to drive down house prices whilst supporting them at the same time strikes me as being a peculiar one

I do see your point here.

I just see it as out biding wars. for a given amount of savings and a given wage

1) buy cash out right

2) repayment mortgage

3)interest only mortgage

4)rent off BTL landlord

1) in this list is the cheapest way of having a home and 4) is the most expensive In the long run

however option 4) make option 3) more expensive .......................ect

Share this post


Link to post
Share on other sites

In the short term perhaps, but rents are determined by the the abililty-to-pay, if they could get away with charging 20% more now they would have done already.

I think VAT on rent is a good idea. Large landlords can set themselves up as VAT registered, smaller landlords must go through a VAT registered agency.

It wouldn't kill the market dead, it'd just tip the balance in favour of home buyers rather than BTLers

Thank you

I am glad some one can see my point. I thought I may get a very bad reaction because it is a very anti intuitive idea.

Share this post


Link to post
Share on other sites

I do see your point here.

I just see it as out biding wars. for a given amount of savings and a given wage

1) buy cash out right

2) repayment mortgage

3)interest only mortgage

4)rent off BTL landlord

1) in this list is the cheapest way of having a home and 4) is the most expensive In the long run

however option 4) make option 3) more expensive .......................ect

In a rational world maybe, but in recent years much of the bidding had nothing to do with wages or savings. The market was distorted by large amounts of borrowing that were barely connected with the borrower's ability to repay, or the risks they were taking on

Until interest rates and property values are allowed to return to more sustainable levels, putting that list of yours in the right order isn't quite as intuitive as it should be

It's also worth remembering that a lot of amateur BTLetters were in it for the capital gains, not the income. Higher CGT rates, higher interest rates. more selective lending policies, and a flat, or falling market will knock them out of the game and reduce the amount of competition for property without the imposition of even more taxes

Edited by Charlton Peston

Share this post


Link to post
Share on other sites

In a rational world maybe, but in recent years much of the bidding had nothing to do with wages or savings. The market was distorted by large amounts of borrowing that were barely connected with the borrower's ability to repay, or the risks they were taking on

Until interest rates and property values are allowed to return to more sustainable levels, putting that list of yours in the right order isn't quite as intuitive as it should be

It's also worth remembering that a lot of amateur BTLetters were in it for the capital gains, not the income. Higher CGT rates, higher interest rates. more selective lending policies, and a flat, or falling market will knock them out of the game and reduce the amount of competition for property without the imposition of even more taxes

I have to agree with most of that.

However if exiges is right wouldn't it be nice if the Wilsons had a big tax bill. and housing benefit was slashed by a fifth. I think there should be less tax on those that are woken by the alarm clock at 6 o'clock in the morning and more tax paid by rent seekers.

Share this post


Link to post
Share on other sites

I think its not a bad Idea charge vat in full on all rent and continue to allow interest to be offset is probably fair.

On a lot of commercial property VAT is payable on the rent and on some commercial properties its payable on the full purchase price, I found out this when I looked at buying a pub recently only to discover I was going to have to pay VAT on the purchase price and then stamp duty on the VAT too !!! so buying and selling right away at the same price would have bled away something like 26% in taxes !!!

It seems amazing that there are super high taxes business rates and vats and all manner of other crippling costs on commercial property but BTL is basically tax free to most small time operators ..

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.