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Watch Out Landlords - Browns On Our Side

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Tucked away in the Sunday Times a piece of earth shattering imporrtance - especially for LLs.

http://www.timesonline.co.uk/tol/comment/c...icle2076274.ece

He’s barely been prime minister for three weeks, yet Gordon Brown is already getting a taste of his own medicine. He’s had his first row with the chancellor.

Brown and Alistair Darling have disagreed over plans to change the tax rules on buy-to-let properties. The prime minister wanted to axe some of the financial advantages enjoyed by landlords, and discussed the plan with housing advisers and Treasury officials. But Darling insisted it would lose votes.

“I’ve had my first row with No 11,” Brown told Labour supporters last week, while a Treasury source explained: “The idea would be electoral suicide. Alistair Darling is against any tax on buy-to-let properties and will not move on the proposal.”

Unlike the clashes between Brown and Tony Blair, this dispute will do little harm to either side. The revelation is possibly designed to show Brown is not the Stalinist of political legend, while Darling – a long-time Brown ally – is shown to have a mind of his own.

Nice to note that the main driver of economic policy is what will get you votes and not what is the just thing to do - what happened to principles

.

But there was a hint Brown could get his own way in the end. One adviser said: “Gordon believes housing is the issue that will win or lose him the next election, and he wants to get it right.”

Wooah - Brown seems to have finally realised the complete **** up he's made in th ehousing market and now he wants to ride to the rescue as the peoples champion. Kiss your property dreams goodbye 'property investors'. If you can't tell which way the winds blowing now then you are in deep do dos.

Edited by Bearfacts

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Tucked away in the Sunday Times a piece of earth shattering imporrtance - especially for LLs.

http://www.timesonline.co.uk/tol/comment/c...icle2076274.ece

He’s barely been prime minister for three weeks, yet Gordon Brown is already getting a taste of his own medicine. He’s had his first row with the chancellor.

Brown and Alistair Darling have disagreed over plans to change the tax rules on buy-to-let properties. The prime minister wanted to axe some of the financial advantages enjoyed by landlords, and discussed the plan with housing advisers and Treasury officials. But Darling insisted it would lose votes.

“I’ve had my first row with No 11,” Brown told Labour supporters last week, while a Treasury source explained: “The idea would be electoral suicide. Alistair Darling is against any tax on buy-to-let properties and will not move on the proposal.”

Unlike the clashes between Brown and Tony Blair, this dispute will do little harm to either side. The revelation is possibly designed to show Brown is not the Stalinist of political legend, while Darling – a long-time Brown ally – is shown to have a mind of his own.

Nice to note that the main driver of economic policy is what will get you votes and not what is the just thing to do - what happened to principles

.

But there was a hint Brown could get his own way in the end. One adviser said: “Gordon believes housing is the issue that will win or lose him the next election, and he wants to get it right.”

Wooah - Brown seems to have finally realised the complete **** up he's made in th ehousing market and now he wants to ride to the rescue as the peoples champion. Kiss your property dreams goodbye 'property investors'. If you can't tell which way the winds blowing now then you are in deep do dos.

It doesn't matter if Brown does remove the tax advantage for BTLers - the slump has already started and both Brown and Darling know this!

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It doesn't matter if Brown does remove the tax advantage for BTLers - the slump has already started and both Brown and Darling know this!

There is political capital to be gained out it however if they manage to use it to get the generation that doesn't vote to vote for them, even better if they convert/evangelise their parents into voting for team Brown too.

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It doesn't matter if Brown does remove the tax advantage for BTLers - the slump has already started and both Brown and Darling know this!

There is no tax advantage with BTL. How can he remove it if it doesn't exist?

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There is political capital to be gained out it however if they manage to use it to get the generation that doesn't vote to vote for them, even better if they convert/evangelise their parents into voting for team Brown too.

If he does, he will have to put something else in place to house many tens of thousand of people. And I just cannot see that happening anytime soon.

Luv his caring attitude prior to the upcoming election, a man who is all things to all men.

He is a spin Doctor, and he should be voted out of office pronto, and sent back to Scotland to work for his constituents in his parliament.

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Guest Cletus VanDamme
There is no tax advantage with BTL. How can he remove it if it doesn't exist?

Perhaps he needs you as an advisor!

I read your sleight-of-hand explanation of the lack of tax advantage. I don't buy it, but I need to think about it some more to figure out why. It reminds me, in a way of the trick used to con shopkeepers out of the change of a £20 note (you know the one, where you end up getting the note back plus the change).

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If he does, he will have to put something else in place to house many tens of thousand of people. And I just cannot see that happening anytime soon.

indeed,it's called a stockmarket!!!

I wrote a while back on why the BoE could deliberately sabotage the housing market.

A strong currency is not necessarily in the interest of the country.

the introduction of so many dollar-sensitive stocks into the ftse is not coincidence,it's strategy.

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Perhaps he needs you as an advisor!

I read your sleight-of-hand explanation of the lack of tax advantage. I don't buy it, but I need to think about it some more to figure out why. It reminds me, in a way of the trick used to con shopkeepers out of the change of a £20 note (you know the one, where you end up getting the note back plus the change).

:lol:

It's all legit I assure you. If you can find the fault, let me know. The proof is in the pudding: would you be better off getting a friend to buy your house on your behalf and rent it to you(in a little secret deal that nobody need know about, maybe you could do the same for him)?

If you can find a way to access this alleged tax advantage I would love to hear it. As I see it you would end up paying more tax, not less. Ergo there is a landlord tax disadvantage, not an advantage.

I suspect the inability of what seems like 95% of HPC posters to understand this (never mind the general public...) goes quite a long way towards explaining the irrational state of affairs in the UK housing market.

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I suspect the inability of what seems like 95% of HPC posters to understand this (never mind the general public...) goes quite a long way towards explaining the irrational state of affairs in the UK housing market.

Sorry, I just ignored your posts about tax advantages for LLs 'cos I have clearly explained on several occassions why they have a tax advantage over other investors. If you have written a serious disagreement to this somewhere I would like to give it a proper read, so would appreciate if you would point me to it.

Thanks.

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:lol:

It's all legit I assure you. If you can find the fault, let me know. The proof is in the pudding: would you be better off getting a friend to buy your house on your behalf and rent it to you(in a little secret deal that nobody need know about, maybe you could do the same for him)?

If you can find a way to access this alleged tax advantage I would love to hear it. As I see it you would end up paying more tax, not less. Ergo there is a landlord tax disadvantage, not an advantage.

I suspect the inability of what seems like 95% of HPC posters to understand this (never mind the general public...) goes quite a long way towards explaining the irrational state of affairs in the UK housing market.

Can someone post a link? I'm curious to read this.

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There is no tax advantage with BTL. How can he remove it if it doesn't exist?

Not compared to other businesses perhaps.

Simple solution: Declare btl as no longer being a "proper" business (just like professional contractors). It can be done.

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Question here is what if anything does this tell us about future government policy towards the housing market ? To me it sounds as though Brown has finally realised that the housing market is out of control and turning into a vote loser unless he can sort it out and it sounds as though he is well aware of the distorting effect of BTL too. I think hes prepared to sacrifice BTL and the VIs in order to get the market under control afterall hes pretty much nailed his colours to the mast on this one ... unless he can be seen to make housing more affordable for all i.e cheaper then hes toast. The treasury on the other hand are terrified that any cooling of the housing market will mean economic armagedon and a potential loss of votes. Interesting times .

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Not compared to other businesses perhaps.

Simple solution: Declare btl as no longer being a "proper" business (just like professional contractors). It can be done.

It isn't a proper business now - if it were and had to follow business rules then i would be happy for the tax advantages

Funnily enough, contractors, whilst no longer being 'proper businesses, have to provide annual accounts etc. i.e. they are still treated as proper businesses by the IR

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Sorry, I just ignored your posts about tax advantages for LLs 'cos I have clearly explained on several occassions why they have a tax advantage over other investors. If you have written a serious disagreement to this somewhere I would like to give it a proper read, so would appreciate if you would point me to it.

Thanks.

My point was regarding BTL not having a tax advantage over an owner occupier, on the contrary BTL is at a disadvantage.

As far as other investments go, BTL is a business, not an investment. If you rented out cars would you consider yourself to have a business or an investment? So why compare BTL to other investments?

An investment is a "buy and forget about" purchase. A business requires ongoing work and expenditure to function. An investment merely provides capital, running a business involves work.

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What? Brown is Chancellor of the exchequer for ten years, becomes Prime Minister, then tells the encumbent in his old position to tax BTL. Why didn't he do it while Chancellor ? Because Tony wouldn't let him?

Suppose that means, even if Darlin' objects, he should 'jump to it'. PM says so.

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Can someone post a link? I'm curious to read this.

Here is my original explanation:

"I find it very disappointing that so many intelligent HPC posters fall into this nonsense trap about BTLers having an advantage over owner occupiers. It is utter nonsense. Let me explain:

An OO pays his mortgage out of his post tax income. A landlord pays his out of his tenant's post-tax income. This means that there is no advantage to the landlord, he is still limited by what people can afford to pay from post-tax income in the same way that an OO is limited by what they can afford to pay.

The OO is effectively a landlord (he owns the house) and a tenant simultaneously. Think of it as renting the house from the person who owns it, it's just that landlord and tenant are one and the same. This is the concept of an imputed rent in tax terminology (the OO receives £5k of value by virtue of living in the flat).

So if we assume that a £100k flat rents for £5k p.a. then the OO pays this to himself. He then pays his mortgage from this rent. Anything left over is his to keep, he doesn't pay any additional tax. If his mortgage was £4k p.a. interest only, he would have a £1000 left over with no additional income tax to pay. If he sells, he pays no capital gains tax.

Now compare this to the landlord who owns an identical property. He receives £5k rent. He pays £4k interest. He then has to pay income tax on the remaining £1k. If he sells the property, he has to pay capital gains tax.

As you can see, the landlord is in fact at a gross disadvantage compared to the OO. He gets the same rent that the OO gets, but he has to pay income tax on it after deducting interest, and has to pay CGT if he sells it.

Now, if tax was charged on his gross rent rather than net of tax, you can see that the LL would be utterly screwed. He could still only charge £5k rent (that is all the market will bear), but he may have to pay £2k of tax. His remaining £3k is £1k short of paying the mortgage, so trouble looms. He may have to sell. If a new landlord comes along to buy the flat, how much will he be prepared to pay for it? Well, he can get £5k rent for it, and that has to cover £2k tax and then pay the interest, and maybe some left over for running costs and (I know this is stretching credibility now.....) a little PROFIT!

He would probably only be prepared to pay 60-70% of the £100k price the previous landlord paid. Result: Massive crash, and huge advantage for the OO."

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My point was regarding BTL not having a tax advantage over an owner occupier, on the contrary BTL is at a disadvantage.

As far as other investments go, BTL is a business, not an investment. If you rented out cars would you consider yourself to have a business or an investment? So why compare BTL to other investments?

An investment is a "buy and forget about" purchase. A business requires ongoing work and expenditure to function. An investment merely provides capital, running a business involves work.

I don't disagree with your definition of what is a business, but the IR treats private BTLs as investors and not businesses. My argument is strictly about comparison of investments, not BTLs vs OOs which are 2 different classes.

Edit

Just seen you posted your argument, thanks. Will have to digest!

Edited by the end is nigh

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The difference is that we are not actually allowed to run a business as such from a residential property.

Anyway, aparently the government is quite within their rights to make special cases when applying rules to any particular business sector, so if GB decides that the interest on money borrowed to fund btl is not to be tax deductable as a business expense then it will be made so.

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I don't disagree with your definition of what is a business, but the IR treats private BTLs as investors and not businesses. My argument is strictly about comparison of investments, not BTLs vs OOs which are 2 different classes.

Edit

Just seen you posted your argument, thanks. Will have to digest!

You've got the wrong way round, they treat BTL as a sole trader business.

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Letter in our local paper this week:

Licensing landlords is a positive step

AT last something is being done about the destruction of our areas by landlords who do not give a monkeys about what happens in and with their properties.

Many areas have gone drastically downhill. Ask any long-term resident and they will tell you that the beginning of the end of their areas was nearly always down to "absentee landlords" who let their properties out to yobs, who cause misery to the rest of the street with their anti-social behaviour.

It is almost always impossible to contact some of these landlords, to get them to do anything about this, so people move out and more landlords move in, until you get the destruction of decent communities as is happening all over Burnley.

I witnessed this in my area, where a lovely street was turned into a mess in only a relatively few years and I can categorically state that this was due to irresponsible landlords.

Reading that the landlords were upset about the move to licence them and their weak reasons as to why they should be allowed to carry on the way they have, makes me fume. Maybe if they had self-regulated it would have not got to this stage. All I can say is that if licensing had happened a decade or so ago, we would probably not have had the need for all the Elevate money having to be spent on terrace houses to bring them up to a decent state. By the way isn't it strange how all these unreachable landlords soon come out of the woodwork when there is money to be had from the council, for houses that are to be demolished.

Yes, there are responsible landlords as most of the association rentals are. But, unfortunately, there are too many who buy houses to make their money, and then abandon them when they have got what they can out of them, leaving them to rot and destroy the look of the rest of the street.

So, in conclusion, well done Burnley Council for being constructive in ridding Burnley of this blight.

And to the "poor landlords" try living in streets next door to your houses and see how you like the stress of living next to drug dealers, noisy gangs, music blaring out at all times of the day and night, abuse and intimidation etc.

SUE JACKSON

http://www.burnleyexpress.net/letters-to-t...ticleid=3028958

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Letter in our local paper this week:

Licensing landlords is a positive step

AT last something is being done about the destruction of our areas by landlords who do not give a monkeys about what happens in and with their properties.

Many areas have gone drastically downhill. Ask any long-term resident and they will tell you that the beginning of the end of their areas was nearly always down to "absentee landlords" who let their properties out to yobs, who cause misery to the rest of the street with their anti-social behaviour.

It is almost always impossible to contact some of these landlords, to get them to do anything about this, so people move out and more landlords move in, until you get the destruction of decent communities as is happening all over Burnley.

I witnessed this in my area, where a lovely street was turned into a mess in only a relatively few years and I can categorically state that this was due to irresponsible landlords.

Reading that the landlords were upset about the move to licence them and their weak reasons as to why they should be allowed to carry on the way they have, makes me fume. Maybe if they had self-regulated it would have not got to this stage. All I can say is that if licensing had happened a decade or so ago, we would probably not have had the need for all the Elevate money having to be spent on terrace houses to bring them up to a decent state. By the way isn't it strange how all these unreachable landlords soon come out of the woodwork when there is money to be had from the council, for houses that are to be demolished.

Yes, there are responsible landlords as most of the association rentals are. But, unfortunately, there are too many who buy houses to make their money, and then abandon them when they have got what they can out of them, leaving them to rot and destroy the look of the rest of the street.

So, in conclusion, well done Burnley Council for being constructive in ridding Burnley of this blight.

And to the "poor landlords" try living in streets next door to your houses and see how you like the stress of living next to drug dealers, noisy gangs, music blaring out at all times of the day and night, abuse and intimidation etc.

SUE JACKSON

http://www.burnleyexpress.net/letters-to-t...ticleid=3028958

Would you consider most tenants you have come across as Anti Social, or isolated incidents.

The reason I ask is that many people here are STR'ing, and argue that renting is better. For the above reasons that you have stated, I too think renting doesnt provide good value for money, and for me doesnt tick all the boxes.

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Prolblem with all that crap about BTL landlords is it doesn't work like a business, it works like a benefit claim.

Was this property your principal residence for a period of at least 2 years relating to your claim of capital gains tax exemption.

Yes

Actually in relation to the number of numpty BTLters around, I think it's time to check if their own tenancy agreement, or that their Leasehold allows running a business from their current property, do they all have Freehold?

Edited by maxwell

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There is political capital to be gained out it however if they manage to use it to get the generation that doesn't vote to vote for them, even better if they convert/evangelise their parents into voting for team Brown too.

There is always the outside chance that it's a matter of principal (ahem). Giving people a chance to own there own homes and better themselves and there family I would have thought would have appealed to both the Tory and Labour voters alike. Even people who own there own homes have children who will want lives of there own. How can it be a vote looser? What a bunch of to**ers the conservatives are for not getting there first. Deserve to loose for stupidity if nothing else.

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