Landlords regret investing in buy-to-let

[Unmoderated]

 

@markyh@Unmoderated

hahaha nice!

[markyh]

 

Aside from the fact that there will be many, many lottery tickets posting better returns from this I'm calling London flats bought with a 5% deposit. 

Total return on equity we're talking. 

No net gain, 12 months, as a %. Unless you want me to say i can use 100x exchange leverage in my BTC position, then sure. 

A flat buying a selling costs over 12 months you would have no chance. An if you want to pick London flats, you need it down to postcode level as a specific asset. 

 

[Unmoderated]

 

No net gain, 12 months, as a %. Unless you want me to say i can use 100x exchange leverage in my BTC position, then sure. 

A flat buying a selling costs over 12 months you would have no chance. An if you want to pick London flats, you need it down to postcode level as a specific asset. 

I thought you said asset class? 

Net gain is buy Jan 1, sell Dec31 and total returned minus put in divided by what went in right? Bitcoin isn't a leveraged and you could invent any old leverage ration (and look forward to the screen shot of those margin calls )

You'll need to do the same for Bitcoin... Looks like it's pausing for effect just now but I'm sure it'll be tenfold returns in twelve months. 

[markyh]

 

I thought you said asset class? 

Net gain is buy Jan 1, sell Dec31 and total returned minus put in divided by what went in right? Bitcoin isn't a leveraged and you could invent any old leverage ration (and look forward to the screen shot of those margin calls )

You'll need to do the same for Bitcoin... Looks like it's pausing for effect just now but I'm sure it'll be tenfold returns in twelve months. 

You can have London property, fine, but not "flats" as specific, or "chelsea flats" , unless you want to specify a certain postcode area monitored buy the gov UK HPI index. So London property as per the UK HPI index, vs Bitcoin , lets use the Bakkt physical futures spot price. 

I will be kind to you and allow you just the index gainz % , you wont have to account for solicitors costs, mortgage costs, mortgage interest costs in your net gain, and i wont include the couple of quid exchange fees it would cost to buy 1 BTC. 

[markyh]

 

@markyh@Unmoderated

Fine by me, you had better lube up for an **** raping. 

[Unmoderated]

 

You can have London property, fine, but not "flats" as specific, or "chelsea flats" , unless you want to specify a certain postcode area monitored buy the gov UK HPI index. So London property as per the UK HPI index, vs Bitcoin , lets use the Bakkt physical futures spot price. 

I will be kind to you and allow you just the index gainz % , you wont have to account for solicitors costs, mortgage costs, mortgage interest costs in your net gain, and i wont include the couple of quid exchange fees it would cost to buy 1 BTC. 

No just general flats in central London as reported on the house prices indices... they strip them out. 

For clarity I'm not actually putting my money where my mouth is because I can't afford to buy a flat in London without selling my house and I like my house (one of the reasons I like it is because it's not in London ) 

But for posterity I'm saying that 5% (or 10%) down on a flat in London would be looking at what that £30k 5% despite returns from that £30k.

I shall return your boundless munificence and not require tat you deduct your implied rental costs for having stuffed the £30k into twitcoin. 

So I'll take £30k as a 5% deposit on the general London flats (shall we agree the index to be land registry?). So if flat increase by 10% my 5% deposit of £30k has returned £60k, plus the £30k back.

[Unmoderated]

 

Fine by me, you had better lube up for an **** raping. 

Bring it on big boy. 

[spyguy]

 

You would have filed 3 tax returns since it came into force so most do. 

Issue with its scope is it doesn't impact all landlords far from it 

 

Bought years ago say 2000 with naff all mortgage? No impact 

Pensioner renting out fully paid off former house? No impact. 

Lower rate taxpayer? No impact. 

Incorportated portfolio landlord? No impact 

 

So it has had a big impact on IO portfolio landlords who are higher rate taxpayers and havent incorporated. Some will have shifted theirs into a company shell (yes getting done on stamp as a one off). 

Its not 100% of the market and hence the whole death of thing is totally overdone. 

Reduction of would be realistic.

It matters as people should be campaigning for the lack of interest deduction in companies for residential property interest not crowing about the death of something that is alive and well. 

Thats ought to have filled tax returns.

ALL LLs should have been filling in a tax return before S24.

Cant find the FT article but there was something from HMRC saying ~90%+ of LL had not filled in a return.

HMRC know who needs to fill a return in.

They just require the LL to do it.

 

 

 

Edited December 15, 2020 by spyguy

[captainb]

 

Thats ought to have filled tax returns.

LL should have been filling in a tax return before S24.

Cant find the FT article but there was something from HMRC saying ~90%+ of LL had not filled in a return.

HMRC know who needs to fill a return in.

They just require the LL to do it.

 

 

 

That's just pure HMRC incompetence. 

Im never failed to be amazed at the number of landlords who don't file tax returns and get away with it year after year.. 

If only HMRC had access to a registry to pick up who owns multiple properties...a land registry if you will. 

 

[Si1]

 

That's just pure HMRC incompetence. 

Im never failed to be amazed at the number of landlords who don't file tax returns and get away with it year after year.. 

If only HMRC had access to a registry to pick up who owns multiple properties...a land registry if you will. 

 

Yes. It is genuinely bamboozling.

[Si1]

 

Thats ought to have filled tax returns.

ALL LLs should have been filling in a tax return before S24.

Cant find the FT article but there was something from HMRC saying ~90%+ of LL had not filled in a return.

HMRC know who needs to fill a return in.

They just require the LL to do it.

 

 

 

Is this a drop in the ocean?

https://www.landlordzone.co.uk/news/breaking-number-of-landlords-caught-up-in-hmrc-tax-avoidance-campaign-jumps-by-28/

During 2019 some 11,129 landlords were found to have under-paid or not declared rental income at all, up from 8,704 in 2018. HMRC has subsequently reclaimed £44.7 million from landlords, an increase of 36% from £32.8 million during 2018.

 

The FOI request, which was submitted by the Telegraph newspaper, also found that HMRC had fined accounting professionals dealing with landlords’ tax affairs a total of £7.6m, another rise of 36% compared with the 2018 fines.

[spyguy]

 

That's just pure HMRC incompetence. 

Im never failed to be amazed at the number of landlords who don't file tax returns and get away with it year after year.. 

If only HMRC had access to a registry to pick up who owns multiple properties...a land registry if you will. 

 

No its not.

Before S24, HMRC worked on the assumption that if a LL had money to declare theyd declare it.

The advice from accountants was to declare BTL income - as its an income - and then be able to show the the mortgage interest as a cost.

Even at stupid low yields most LL did have some income to declare, even if tis only 100s.

But few did.

HMTC worked on the assumption there was not much tax to recover.

With S24, HMRC know now there is tax to pay - they know who owns what house, and what mortgage is on it, and, if ness, how much money is being DD to the LL account.

They ran a series of ads for a number of years, put articles in papers, had a LL amnesty.

The onus is always on the person to declare and pay their tax.

HMRC are not their to hold LL hand. or help them with their taxes.

 

HMRC have 20 years to go after unpaid tax - and fines.

 

.

 

[msi]

 

The onus is always on the person to declare and pay their tax.

HMRC are not their to hold LL hand. or help them with their taxes.

HMRC have 20 years to go after unpaid tax - and fines.

I know several contractors caught in the 'disguised remuneration' wheeze.  All were happy to flash the cash and boast on how smart and 'protected' they were.   HMRC have contacted them; suddenly the PCP  M series is a Kia, no more holidays planned 'due to COVID', and a sudden urge to sell up and 'live smaller in the country'.

 

HAHAHAHAHAHA

[markyh]

 

No just general flats in central London as reported on the house prices indices... they strip them out. 

For clarity I'm not actually putting my money where my mouth is because I can't afford to buy a flat in London without selling my house and I like my house (one of the reasons I like it is because it's not in London ) 

But for posterity I'm saying that 5% (or 10%) down on a flat in London would be looking at what that £30k 5% despite returns from that £30k.

I shall return your boundless munificence and not require tat you deduct your implied rental costs for having stuffed the £30k into twitcoin. 

So I'll take £30k as a 5% deposit on the general London flats (shall we agree the index to be land registry?). So if flat increase by 10% my 5% deposit of £30k has returned £60k, plus the £30k back.

Hmmm. Ok Central London flats is fine if UK HPI strips them out, and yes a paper trade (although i am in Bitcoin for £100kish actual in 2021) 

But you cant have fee free leveraged Paper trade, Free free index gain trade sure, Average Central London flat index £xxxxxxxxx 1st Jan 2021, £xxxxxxxxx 31st Dec 2021.  

If you want to paper bet a CLF leveraged bet gain vs Bitcoin you need to come up with all the costs over 1 year to buy a £600k CLF.   Stamp duty alone is a killer.  You paper trade is not possible real life without large fees, mine is. Under £10.

It would cost £0 to get £30k to a BTC exchange using UK Faster Banking and spot trade fees would be about £3, £0 if you place a limit order, even one 50p away from the spot price. Same on the sell side. 

Either way i expect £30k BTC bought 1st Jan 2021 (guess about 2 BTC) to be at least £150k come 31/12/21. 

 

So we going Index v Index with no fees accounted for, unleveraged, or your HPI leveraged but with fees? 

[captainb]

 

No its not.

Before S24, HMRC worked on the assumption that if a LL had money to declare theyd declare it.

The advice from accountants was to declare BTL income - as its an income - and then be able to show the the mortgage interest as a cost.

Even at stupid low yields most LL did have some income to declare, even if tis only 100s.

But few did.

HMTC worked on the assumption there was not much tax to recover.

With S24, HMRC know now there is tax to pay - they know who owns what house, and what mortgage is on it, and, if ness, how much money is being DD to the LL account.

They ran a series of ads for a number of years, put articles in papers, had a LL amnesty.

The onus is always on the person to declare and pay their tax.

HMRC are not their to hold LL hand. or help them with their taxes.

 

HMRC have 20 years to go after unpaid tax - and fines.

 

.

 

That's pretty shockingly poor from a tax collection perspective which is their role. 

You can't just assume that there is nothing to declare because people don't declare when you have evidence they have multiple properties. 

Its like saying well we have these NI numbers as people as directors of companies but as they haven't ever filed a tax return nothing to see here move on... 

It also seems to make the assumption that landlords make nothing out of BTL. Even with a full deduction for interest there is tax due on the profit, s24 has done nothing for that. Landlords don't do it for fun, some serious cash is being made and not declared for years. 

 

Yes I get HMRC don't hold your hand but given they know who has multiple properties and have done for decades just playing we can collect later mañana manana card is ridiculous. The discuised remuneration cash collection followed a change in the law I. E hrmc knew about but hands were tied for years. 

 

[msi]

 

Yes I get HMRC don't hold your hand but given they know who has multiple properties and have done for decades just playing we can collect later mañana manana card is ridiculous. The discuised remuneration cash collection followed a change in the law I. E hrmc knew about but hands were tied for years. 

 

HMRC's Big Data systems collects everything into a neat package.  To avoid any well heeled subject trying to use a QC to find a loophole, they build up a solid case framework of legal precedent and statute.  Disguised remuneration was always illegal, no change in the law was made.  They used case precedent to define a 'disguised loan', then got a statute change to apply a defined set of charges (to avoid 'negotiated' court settlements).  The result was for people who used the wheeze couldn't argue it wasn't a wheeze (due to case precedent) and couldn't 'offer' to settle due to the statute charges.  Think speeding ticket; it isn't worth the risk or the cost to argue in court.

 

HMRC collection is politically sensitive, accusations of 'Red Tape' and pressure from Party Donors means they go for an automated approach - both in collection and charging.  It takes longer to work, but work it does.

 

With Rishi needing to find money in 2021, I can see the green light being given for HMRC to chase harder.  LL's aren't politically sensitve and will be first.  From my, albeit limited, interactions, they are already planning an approach with regards to Crypto.

 

[captainb]

 

HMRC's Big Data systems collects everything into a neat package.  To avoid any well heeled subject trying to use a QC to find a loophole, they build up a solid case framework of legal precedent and statute.  Disguised remuneration was always illegal, no change in the law was made.  They used case precedent to define a 'disguised loan', then got a statute change to apply a defined set of charges (to avoid 'negotiated' court settlements).  The result was for people who used the wheeze couldn't argue it wasn't a wheeze (due to case precedent) and couldn't 'offer' to settle due to the statute charges.  Think speeding ticket; it isn't worth the risk or the cost to argue in court.

 

HMRC collection is politically sensitive, accusations of 'Red Tape' and pressure from Party Donors means they go for an automated approach - both in collection and charging.  It takes longer to work, but work it does.

 

With Rishi needing to find money in 2021, I can see the green light being given for HMRC to chase harder.  LL's aren't politically sensitve and will be first.  From my, albeit limited, interactions, they are already planning an approach with regards to Crypto.

 

Understand and that's kinda my point. On the loans as remuneration, they got all their ducks lined up with statute changes before hitting go. Hence people had a nasty shock years later having thought they got away with it. And then ha are stuck as there is nowhere to argue. 

As far as I am aware renting out a property and not declaring the income has always been tax avoidance. In 1982 or 1992 or 2002 etc. 

Its not small fry either given the volume of landlords who don't file and tax due at 40% on profits for higher rate taxpayers. Now okay 40% of profits and only a 25% deduction for interest not 40%. Very interesting, but the point still stands as to why they haven't gone after them for decades given the % that don't file and full access to land registry. 

[spyguy]

 

That's pretty shockingly poor from a tax collection perspective which is their role. 

You can't just assume that there is nothing to declare because people don't declare when you have evidence they have multiple properties. 

Its like saying well we have these NI numbers as people as directors of companies but as they haven't ever filed a tax return nothing to see here move on... 

It also seems to make the assumption that landlords make nothing out of BTL. Even with a full deduction for interest there is tax due on the profit, s24 has done nothing for that. Landlords don't do it for fun, some serious cash is being made and not declared for years. 

 

Yes I get HMRC don't hold your hand but given they know who has multiple properties and have done for decades just playing we can collect later mañana manana card is ridiculous. The discuised remuneration cash collection followed a change in the law I. E hrmc knew about but hands were tied for years. 

 

They have to balance the cost of collecting and finding unpaid tax.

HMRC have had numbers cut too, so are short on numbers.

The way it goes -

HMRC pick a type of income, or profession and have a detailed look at sample.

If they find a notable amount of unpaid tax they look at more, see if theres a pattern.

Then they go after everyone who matches the selection.

Before s24, as interest could be offset against rent and io btl was extreme leverage, there was possibly little tax to collect, so HMRC never pursued io btl LL.

As s24 has cranked up, there is now definitely tax yo collect.

As it was a tax change HMRC had to do the process - as, amnesty etc, play it nice.

Io btl have had time to hold up hands n confess.

Now HMRC will go after them hard.

[spyguy]

 

That's pretty shockingly poor from a tax collection perspective which is their role. 

You can't just assume that there is nothing to declare because people don't declare when you have evidence they have multiple properties. 

Its like saying well we have these NI numbers as people as directors of companies but as they haven't ever filed a tax return nothing to see here move on... 

It also seems to make the assumption that landlords make nothing out of BTL. Even with a full deduction for interest there is tax due on the profit, s24 has done nothing for that. Landlords don't do it for fun, some serious cash is being made and not declared for years. 

 

Yes I get HMRC don't hold your hand but given they know who has multiple properties and have done for decades just playing we can collect later mañana manana card is ridiculous. The discuised remuneration cash collection followed a change in the law I. E hrmc knew about but hands were tied for years. 

 

No it's not.

Fines are profitable.

HMRC have targets, like everyone else.

They also have limited capacity.

Handling the tax investigation  of a btl LL is excellent training for junior staff.

The disgues remuneration offshore loans needed a court ruling. Th process takes a few years.

Once the ruling was made, HMRC went after everyone.

[markyh]

 

 

As far as I am aware renting out a property and not declaring the income has always been tax avoidance. In 1982 or 1992 or 2002 etc. 

. Very interesting, but the point still stands as to why they haven't gone after them for decades given the % that don't file and full access to land registry. 

My guess. Cash.  if the BTL LL has never used an agency, or bothered with the TDS, and taken all rents in cash, with little paid into bank accounts. How can HMRC ever know if it's undeclared. 

They would have to prove the tennents where ever real.  If the BTL LL was able to show IO payments made from PAYE earned income, easily, and said the house is a leveraged play on HPI for his pension, has never had tenants, how do HMRC easily disprove this. 

Much harder to do with 10 houses where the IO payments in total exceed all your PAYE Income. This proves money was coming from rent to pay the IO monthlies. 

[captainb]

 

My guess. Cash.  if the BTL LL has never used an agency, or bothered with the TDS, and taken all rents in cash, with little paid into bank accounts. How can HMRC ever know if it's undeclared. 

They would have to prove the tennents where ever real.  If the BTL LL was able to show IO payments made from PAYE earned income, easily, and said the house is a leveraged play on HPI for his pension, has never had tenants, how do HMRC easily disprove this. 

Much harder to do with 10 houses where the IO payments in total exceed all your PAYE Income. This proves money was coming from rent to pay the IO monthlies. 

If we go back to spy guys post aparently 90% don't file.. 

I get some dodgy types only accept rent in cash.. But 90%?

If it was 10% then I'd agree with you. Even 20% with some for fraud as well. 

[markyh]

 

If we go back to spy guys post aparently 90% don't file.. 

I get some dodgy types only accept rent in cash.. But 90%?

If it was 10% then I'd agree with you. Even 20% with some for fraud as well. 

To truely evade tax you need to play the game rigidly, as my kitchen fitter mate has, for 20+ years. All shopping, cars, holidays bills, all paid in cash, earns 90k p/a gross only declares just under the 20% limit. All the rest is cash. 

Facebook would be their undoing. If HMRC ever went that route. All their numerous holidays for 10+ years are on there for HMRC to see and cost, that they couldnt afford on a BR tax income. 

[Unmoderated]

 

Hmmm. Ok Central London flats is fine if UK HPI strips them out, and yes a paper trade (although i am in Bitcoin for £100kish actual in 2021) 

But you cant have fee free leveraged Paper trade, Free free index gain trade sure, Average Central London flat index £xxxxxxxxx 1st Jan 2021, £xxxxxxxxx 31st Dec 2021.  

If you want to paper bet a CLF leveraged bet gain vs Bitcoin you need to come up with all the costs over 1 year to buy a £600k CLF.   Stamp duty alone is a killer.  You paper trade is not possible real life without large fees, mine is. Under £10.

It would cost £0 to get £30k to a BTC exchange using UK Faster Banking and spot trade fees would be about £3, £0 if you place a limit order, even one 50p away from the spot price. Same on the sell side. 

Either way i expect £30k BTC bought 1st Jan 2021 (guess about 2 BTC) to be at least £150k come 31/12/21. 

 

So we going Index v Index with no fees accounted for, unleveraged, or your HPI leveraged but with fees? 

Each has let us say £60k to invest. you stick it in bitcoin, I buy a flat. 

We could get into the whataboutary of the rent you pay versus the rent I've saved but the interest and SDLT etc. Your standpoint to many an FTB is to stick the lot in BitCoin so to make a fair comparison I think you need to take all things considered into the equation. 

I buy a £600K flat (let's take a 10% deposit) and you buy bitcoin. You do not typically borrow 90% to own bitcoin and any rates would be punitive on such a volatile 'asset'. 

If you are so convinced of the magical power of BitCoin and it'll go five fold next year then it seems like you've nothing to fear and it's not like we're betting each other for money. I just take a view that BitCoin is nonsense and will not make anyone the riches they think. I don't even understand how the valuation comes about beyond likening it to Tulips or the Southsea or Tech in the late 90s so I think most people taking your viewpoint can only be extrapolating which is never reliable. 

£60K to invest, using it as a deposit on a £600K flat (with £5k SDLT for completion 1 Jan 2021) and a 1%+VAT disposal with £1K conveyancing on each side is reasonable but plonking £60k and borrowing £540K on a bitcoin spread betting scheme with a margin call is less reasonable but I'll take that bet if we can agree that any margin call marks you as a lost all immediately since we've only got £60K (perhaps give you the £6k upfront transaction costs too but then you give me £2k/month for rent ).

[user not found]

 

in case you missed it at bottom of previous page. This is a month out of date, can't find this month's RICS report.

[Saving For a Space Ship]

London landlords feel the burden of buy-to-lets

https://www.ft.com/content/cd12e80d-927b-4024-bf9c-49ee0fd7c042

 

Landlords in London feel the burden of buying

https://londonnewstime.com/landlords-in-london-feel-the-burden-of-buying/83175/