Is It Feasible To Charge Btl Income At A Higher Rate Of Tax?

[(Blizzard)]

Could you explain how that would work for a house? If there is no separate concept of land ownership, for all practical purposes, ownership of the house equates to ownership of the land.. because noone else can use the land as long as the house exists.

That isn't even true under the current arrangements.

[sims]

I think he's talking about land ownership rather than property ownership. The benefit of building a property would presumably be to live in it.

LVT meme here we come..

In that case, his rant about BTL and renting is entirely senseless. Renting to live somewhere is about renting houses/flats, not about renting land.

Renting a house is just as expensive if the landlord doesn't own the underlying land, but only the house. And in fact, in many cases, the landlord is only a leaseholder anyway, so doesn't even own the land.

LVT doesn't really make much of a difference. Germany has a LVT, yet ~60% of the population rents.. and it's just yet another tax that people pay and noone is too bothered about.

[sims]

That isn't even true under the current arrangements.

If you had actually bothered to read my post, it says 'If there is no separate concept of land ownership' - i.e. referring to your hypothetical situation without land ownership, but with a possibility to own a house.

[(Blizzard)]

If you had actually bothered to read my post, it says 'If there is no separate concept of land ownership' - i.e. referring to your hypothetical situation without land ownership, but with a possibility to own a house.

You can own a house without owning the land. Plenty of people do.

[(Blizzard)]

In that case, his rant about BTL and renting is entirely senseless. Renting to live somewhere is about renting houses/flats, not about renting land.

Renting a house is just as expensive if the landlord doesn't own the underlying land, but only the house. And in fact, in many cases, the landlord is only a leaseholder anyway, so doesn't even own the land.

LVT doesn't really make much of a difference. Germany has a LVT, yet ~60% of the population rents.. and it's just yet another tax that people pay and noone is too bothered about.

Rant? I think you just conceded.

[mercsl]

Not really. Your examples only show that other businesses also get state handouts, which I haven't denied.

The only difference is degree - a landlord's profits are almost entirely a benefit handout, just like someone on the dole.

Interestingly, my ancestors bought the rights to all the oxygen in the atmosphere. This has made me a very wealthy man.

You don't have to pay me, but then you don't get any oxygen. If you take some of my oxygen, I'll have you arrested.

What is the difference between my claim to own the oxygen, and a landlord's claim to own the ground?

A landlord buys land/property at the current Market price , rents it out ... Where is the government handout? It's a free country nothing stopping you buying it if you have the funds. I am getting the rent based on the amount of capital I put into the investment, nothing more. Location and planning may for some reason have made that property more expensive but I have paid the Market price at the time , no subsidy.

If people could have done it they would have carved up oxygen and sold it on to you I'm sure

You will find you don't own the own the air space either , uk government does, try flying over central London in a cessna and find out , access is controlled.

You don't own the mineral rights under your land either In many parts of the world

This is the real world , you are born with what you have when you come into it and it's up to you to make the best of things given the rules at the time , or find some way round them.

Edited October 10, 2011 by mercsl

[mercsl]

No. House building and developing are wealth creating businesses.

Trading and renting land are not.

The value of the house itself and maintenance make up a small fraction of the profits made by landowners. Typically, landlords pay other people for these services (agents, house-builders, and landlord insurance) and only collect the land rent.

Land can be wealth creating due to it's location , for example my tree logging company would be much wealthier if it was located next to a river for transport rather than in the middle of a desert. Trading of land from smaller strips to large huge farms was wealth creating , farming was more economical on a large scale.

[Bloo Loo]

Land can be wealth creating due to it's location , for example my tree logging company would be much wealthier if it was located next to a river for transport rather than in the middle of a desert. Trading of land from smaller strips to large huge farms was wealth creating , farming was more economical on a large scale.

more economical for whom exactly?

would that be Monsanto?, the farmers now unemployed, the bankers doing the finance for the big guys, the clients looking for choice?

[Bloo Loo]

A landlord buys land/property at the current Market price , rents it out ... Where is the government handout? It's a free country nothing stopping you buying it if you have the funds. I am getting the rent based on the amount of capital I put into the investment, nothing more. Location and planning may for some reason have made that property more expensive but I have paid the Market price at the time , no subsidy.

If people could have done it they would have carved up oxygen and sold it on to you I'm sure

You will find you don't own the own the air space either , uk government does, try flying over central London in a cessna and find out , access is controlled.

You don't own the mineral rights under your land either In many parts of the world

This is the real world , you are born with what you have when you come into it and it's up to you to make the best of things given the rules at the time , or find some way round them.

many landlords dont BUY...they BORROW and rely on the tax difference in the cost of their loans to allow them to force OOs, priced out, to rent from them.

A BUYER of land with no finance doesnt get this advantage either.

[mercsl]

more economical for whom exactly?

would that be Monsanto?, the farmers now unemployed, the bankers doing the finance for the big guys, the clients looking for choice?

History proves me right, try getting a combine harvestor on a small allotement of land for instance like back in in the 1600s when many had small parcels, or just strips of land. Farming gets more economical with scale and has had to with population increasing. Check out the cost of a tractor or just one of the tires...not something for small time operators.

Edited October 10, 2011 by mercsl

[mercsl]

many landlords dont BUY...they BORROW and rely on the tax difference in the cost of their loans to allow them to force OOs, priced out, to rent from them.

A BUYER of land with no finance doesnt get this advantage either.

Most oo borrow to buy so what? Rates are double that of OO's and you still need to make the rent figures add up.

Duel income buyers can outbid single buyers...

A buyer of land with no finance is well...poor ...

Edited October 10, 2011 by mercsl

[Bloo Loo]

History proves me right, try getting a combine harvestor on a small allotement of land for instance like back in in the 1600s when many had small parcels, or just strips of land. Farming gets more economical with scale and has had to with population increasing. Check out the cost of a tractor or just one of the tires...not something for small time operators.

Its more about oil than scale in most areas.

You fail to understand or are deliverately failing to understand how a tax free bid trumps a taxed bid.

Not only that, the BTL could bid on any property, with no proof of income whatsoever...so your joint single, buy with the neighbours point is mute.

[mercsl]

Its more about oil than scale in most areas.

You fail to understand or are deliverately failing to understand how a tax free bid trumps a taxed bid.

Not only that, the BTL could bid on any property, with no proof of income whatsoever...so your joint single, buy with the neighbours point is mute.

Not much oil under farms in England ????

lots of people could get self cert , lie even ,and get 100% + mortgages in the day...

Rent has to typically make 125% of the mortgage payments, hard to make that add up these days without substantial deposit and interest rate is double for BTL

Edited October 10, 2011 by mercsl

[MrWallace]

It's completely feasible to tax buy-to-let profits at a higher rate than other capital gains, in fact other countries have done it in the past.

The problem is politicians of all parties are neo-liberal who believe that it should all be left to the markets and wouldn't want to do it.

In fact, after the crash Labour wanted to introduce special tax breaks for buy to let landlord. So it's completely feasible, but if anything the powers that be would do the opposite.

Always remember that politicians are mostly corrupt self seeking scum and that they're all bought, then things will make more sense.

[mercsl]

It's completely feasible to tax buy-to-let profits at a higher rate than other capital gains, in fact other countries have done it in the past.

The problem is politicians of all parties are neo-liberal who believe that it should all be left to the markets and wouldn't want to do it.

In fact, after the crash Labour wanted to introduce special tax breaks for buy to let landlord. So it's completely feasible, but if anything the powers that be would do the opposite.

Always remember that politicians are mostly corrupt self seeking scum and that they're all bought, then things will make more sense.

Punative rates of taxation on property investment will mean higher rental prices. New south Wales Australia introduced a land tax of 1.7% in addition to other taxes, result is Sydney has had soaring rents since it's introduction as supply contracts. . Queensland has benefited as investors , many foreigners ,

invest there. If you held large tracts of land which you were getting planning permission on you were clobbered , often took ages for it to be approved.

If you halt new landlords coming into the rental Market and have quite a few leave you are going to get much higher rent , not much lower prices I suspect.

Edited October 12, 2011 by mercsl

[(Blizzard)]

If all the doctors in all the world disappeared overnight, would we be better or worse off?

I think it pretty obvious we would be worse-off. Pretty soon, we'd pay to train up a new set of doctors.

If all the cleaners in all the world disappeared overnight, would we be better or worse off?

Again, worse off. We could do our own cleaning, but we don't always want to. The market price of cleaners would shoot up, until we had all new people working as cleaners.

If all the landlords in all the world disappeared overnight, would we be better or worse off?

The land they were renting still exists. The builders, electricians and boiler repair-men still exist.

Companies will still build homes for people who want them. Only the rent has gone away.

[libspero]

If you halt new landlords coming into the rental Market and have quite a few leave you are going to get much higher rent , not much lower prices I suspect.

Agreed.. rents would increase, prices would decrease.

Odd to hear a landlord complain that rents might increase though

Given that the government is the single biggest (rental) customer, it might focus their minds on other pressing matters such as housing supply and/or population management.

[mercsl]

Agreed.. rents would increase, prices would decrease.

Odd to hear a landlord complain that rents might increase though

Given that the government is the single biggest (rental) customer, it might focus their minds on other pressing matters such as housing supply and/or population management.

Yes but the only landlords who would beneift would be ones with plenty of equity , others on thiner margins would probably have to exit unless they can pass it on.

As the number of rental properties decreased they probably could at some point.

If we had 100% GGT tommorrow most landlords would simply never sell and wait for eons for government to repeal rates to a more realistic level.

Land tax has all sorts of issues, I buy large track of land and put my planning permission in...few years drag on and I'm paying say 2% on its value a year and nothing is approved as boxes of paperwork is filled in. God help you if they find some ancient ruins ...

[(Blizzard)]

...

Land tax has all sorts of issues, I buy large track of land and put my planning permission in...few years drag on and I'm paying say 2% on its value a year and nothing is approved as boxes of paperwork is filled in. God help you if they find some ancient ruins ...

The government grants you planning permission, and by doing so hands you thousands of pounds. Are you seriously suggesting that this gift shouldn't be taxed?

Why shouldn't the government just charge for planning permission?

[mercsl]

The government grants you planning permission, and by doing so hands you thousands of pounds. Are you seriously suggesting that this gift shouldn't be taxed?

Why shouldn't the government just charge for planning permission?

You brought the land off some one typically at a price with that factored this all in so no gift as such. Most land has already been zoned so its a given after a few attempts you will get planning , but maybe not what you originally imagined. You might be lucky and buy some farm land that becomes residential.

[(Blizzard)]

You brought the land off some one typically at a price with that factored this all in so no gift as such. Most land has already been zoned so its a given after a few attempts you will get planning , but maybe not what you originally imagined. You might be lucky and buy some farm land that becomes residential.

If the possibility of planning permission was factored into the price when you bought it, that just means someone else got the handout.

In practice, it often doesn't get factored into the price (because it is impossible to predict the whim of the people who make the decision) and people do make a lot of money from this.

I personally know people who have earned far more from planning applications than from their job. They are great people, hard-working and friendly, and in receipt of a massive state benefit.

[mercsl]

If the possibility of planning permission was factored into the price when you bought it, that just means someone else got the handout.

In practice, it often doesn't get factored into the price (because it is impossible to predict the whim of the people who make the decision) and people do make a lot of money from this.

I personally know people who have earned far more from planning applications than from their job. They are great people, hard-working and friendly, and in receipt of a massive state benefit.

Yep someone several decades ago or centuries did alright out of it , been priced in since. Let's go back in a time machine and get this handout off them, nothing to do with the generations of buyers who paid the prevailing market price since the land was first owned by someone.

Yes sometimes people get lucky but they speculated and won.

Property owners benefit from an areas gentrification , sure you would like to tax them on that as well.

Nothing stopped you going out and getting planning permission on something so what's your gripe? This handout as you see it is available to anyone who wants to try it out. Fact you might have to risk some capital and have loads of expense if it didn't work out? Sounds all so easy what these people you know did , must be a piece of cake and zero risk ..no skill whatsoever

In most large developments you need to do about 20% social housing as part of it

Edited October 12, 2011 by mercsl

[(Blizzard)]

Yep someone several decades ago or centuries did alright out of it , been priced in since.

1. Planning permission isn't always priced in, as I explained.

2. The present value of the government right to raise a tax (rent) is priced in. Buying land is a speculation on rises in rent. It is as if I can pay you for all your future unemployment benefits, hoping that this will rise in future.

Nothing stopped you going out and getting planning permission so what's your gripe? Fact you might have to risk some capital and have loads of expense of it did not work out?

Maybe I do, I certainly could. Nothing stops me becoming an MP and claiming expenses, or claiming the dole, or becoming an investment banker.

Fairness is not the issue.

The issue is that BTL income is a benefit claim, not an entrepreneurial activity, and should be treated as such. It isn't the only benefit claim dressed-up as business, but it is the worst.

It doesn't matter that anyone could do it, nor does it matter that it isn't a great investment at the moment and lots of landlords will be losing lots of money.

What matters is that the country cannot support this huge drain on the economy.

Instead of socialism disguised as capitalism, we would do better if the economy were run on more free-market principles.

Edited October 12, 2011 by (Blizzard)

[mercsl]

1. Planning permission isn't always priced in, as I explained.

2. The present value of the government right to raise a tax (rent) is priced in. Buying land is a speculation on rises in rent. It is as if I can pay you for all your future unemployment benefits, hoping that this will rise in future.

Maybe I do, I certainly could. Nothing stops me becoming an MP and claiming expenses, or claiming the dole, or becoming an investment banker.

Fairness is not the issue.

The issue is that BTL income is a benefit claim, not an entrepreneurial activity, and should be treated as such. It isn't the only benefit claim dressed-up as business, but it is the worst.

It doesn't matter that anyone could do it, nor does it matter that it isn't a great investment at the moment and lots of landlords will be losing lots of money.

What matters is that the country cannot support this huge drain on the economy.

Instead of socialism disguised as capitalism, we would do better if the economy were run on more free-market principles.

Some people get lucky with zoning/permission , reward for their imagination and entrepreneurship. Somehow this is evil compared to other endeavours.

There is often great degree of risk associated with developments.

I buy a flat and rent it out, it has existed and been rented out since pre Victorian times with quite few buyers and sellers paying the prevailing Market price. Where's the hand out ? Just getting a return on capital.

The area the flat is goes from slum to prime London property , rental income soars as a result... A handout or just doing my homework and being rewarded for it.

Too few houses have been built historically and immigration is unprecedented , there's your housing problem...

Edited October 12, 2011 by mercsl

[(Blizzard)]

Some people get lucky with zoning/permission , reward for their imagination and entrepreneurship. Somehow this is evil compared to other endeavours.

There is often great degree of risk associated with developments.

I buy a flat and rent it out, it has existed and been rented out since pre Victorian times with quite few buyers and sellers paying the prevailing Market price. Where's the hand out ? Just getting a return on capital.

The area the flat is goes from slum to prime London property , rental income soars as a result... A handout or just doing my homework and being rewarded for it.

Other people improve the neighbourhood trough their economic activity, who collects the value?

Unlike other commodities, there is no opportunity to undercut landowners by producing your own, so there is nothing to stop rents rising. This is the key. Landlords have a monopoly (hence the game) on land. You always have to pay-off an existing landowner, although you do get to choose which one.

As business booms, landlords increase rents to suck up all the economic activity.

Personally, I think this economic argument makes it seem more complicated than necessary.

You can't build a factory in the UK without paying money to the government, we call that a tax. You can't build a factory in that field without paying money to the landowner, we call that rent, but it is exactly the same thing.

Landlords are governments, governments landlords.