Friday, Jul 20, 2018

Extraordinary, councils asking landowners to pay for services!

Daily Mail / This is Money: A buy-to-let register by the back door? Councils are introducing landlord licence schemes costing up to £1,000

If a tenant doesn't pay their council tax, the rubbish still gets collected, the roads still get maintained and lit, courts and police will enforce the landlord's property rights, etc. The landlord gets all of this for free, it's only fair that councils attempt to get some revenue from landlords. Much simpler solution is to just make council tax payable by the LL. Viola - bad debt eliminated, collection departments can go down to a fraction of their size as there won't be nearly as many changes on the account payer, etc. And the ridiculous 25% reward for living alone could be scrapped.

Posted by mombers @ 12:52 PM (2031 views)
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1. techieman said...

So..... add the council tax to the rent the LL collects and make him / her responsible for the bad debt if applicable ? Council tax is a charge on the person using the council facilities , I. E. the person / people who living at the property.

Isn't that the reason you get charged less if you live alone ? use less facilities ? Since every person uses council facilities to a extensive or less extensive degree are we saying the cost should be equally spread across the people who use the services ? (That sounds familiar ). What about giving people credits as part of their council tax and if they go over those credits they have to pay more ?

..... Anyway the point of the LL paying a charge for being licenced seems completely reasonable. If LLS are refused a licence because their property is uninhabitable then a prospective tenant could know that the property was not available. There are of course costs of say applying for planning permission. That doesn't mean the permission will be granted. If you apply for a licence and don't get one or rent with no licence then I see no reason why you shouldn't be fined.

Saturday, July 21, 2018 03:50AM Report Comment

2. mombers said...

@1 The landlord is the user of the council facilities. How much could the home be rented out if there were no roads, parks, refuse collection etc? From a pure efficiency point of view, council tax could be made at least 5% lower by sending the bill to the LL instead of the tenant. No bad debt and a much smaller collections department as payee will not change when a tenant does. In the US the local government is ahead of the bank in the queue, sharpens minds so much that banks collect property tax along with the mortgage to ensure that it gets paid.

Re living alone, if a discount is given for this, when why not a premium for 3, 4, 5 people living in a home? My family should be paying 5 times what the under-occupiers in our block do in this case. And why give a bigger subsidy to those living alone in the most valuable homes? That's a poll tax, we've been there and it was a disaster.

A large proportion of those living alone are pensioners, who chomp up a huge amount of council services (adult social services are a huge portion of council budgets).

Monday, July 23, 2018 12:47PM Report Comment

3. techieman said...

1. As I said you are just making the LL responsible for any bad debt. So yes you are asking the LL to be the collecting agency. I don't have a problem with that in the least. Was just pointing it out.

2. Exactly you should pay more. If you have 8 kids and I have none then shouldn't you pay more tax too . Since you are using much more of the educational resources ?

Yes a poll tax.... it was a disaster because it wasn't handled correctly but I can't see what's wrong with the principle. The only reason it was a disaster was because , it started with huge increases for some and , possibly as a consequence, couldn't be collected.

I actually don't begrudge the older generation paying less (bur then so do single parents etc.). We know that most are relatively asset rich but cash poor. So do you live in the compulsory purchase world ?

Monday, July 23, 2018 05:45PM Report Comment

4. mombers said...

1. Yes, landlord is responsible for bad debt. As the council is responsible for the roads, rubbish collection, parks, police, etc that the landlord could not collect any meaningful rent without. Even after Section 24, many landlords can get away without paying a penny in tax - basic rate taxpayer can still deduct all mortgage interest. This is rent seeking on a grand scale.This system works fine in the US, where rents are lower to boot.

2. Someone with 7 siblings does not use any more educational resources than someone with no siblings. Unless you're suggesting punishing children for having siblings?? You might change your mind if you've ever been mugged by an undereducated and impoverished child like I have been. Nobody wins from child poverty. If you think a poll tax is a good idea, how could you possibly force everyone to pay £11,630 p.a. (UK tax revenue divided by population)? Workhouses, asset confiscation, etc?

Re the elderly, someone who dies at 65 uses a lot fewer resources than someone who lives to 100, At the moment the former suffers a huge tax burden for their whole adult life, whereas the latter gets an enormous amount from the state. Living a long life is often down to luck and is an enormous privilege. It is not only unsustainable but very unfair to have such favourable treatment of the asset-rich, cash poor at the expense of everyone else. We are largely in this position because domestic rates were abolished. Had these not been replaced by council tax, there would be few low income pensioners in very valuable homes, and many fewer hard working families fighting over what's left.

Monday, July 23, 2018 06:13PM Report Comment

5. techieman said...

1. Nothing to add. I dont have a problem with LLs being debt collectors, nor do i have a problem with people collecting VAT obo HMG.

2. I didnt think a child was responsible for having siblings!! I thought that was down to the parents - isn't that the basis of procreation ? And thats my point - no one holds a gun to your head and forces you to have children. How does 7 children not use more educational resources than one child ? Shouldn't those parents contribute more? Are you saying we should encourage people to have as many kids as they want and use others tax to pay for it ?

Council tax revenue divided by population is £11k??? We are discussing council tax no? If your right how can a £3 - £4k per household be the right amount?

3. "hard working families" now where did i hear that before? I see so pensioners never did a days work in their lives , for lower incomes and less pension (no S2 or SERPS for example )? Are you advocating a "Logans Run" type society ? Maybe you would like to explain what you mean. Sounds like you want to Euthanise them at 65 ?

Monday, July 23, 2018 08:27PM Report Comment

6. nickb said...

@4 I'd expect some increase in rents if the LL became responsible for council tax, since more disposable income will be in the hands of tenants. Lower rents in the US probably reflects other factors. Still a good idea though, brings us closer to an LVT, and would punish keeping empty property for speculative purposes. Closer still if council tax restored the link to property values, closer still if site values were used.
Why should I pay the same tax if I don't have kids? Because I benefit from education of the population, which is a public good in the economic sense. It's a society, we are all in it together, we are responsible for each other. The other way lies privatisation of everything and every man for himself, a game in which most people will lose.

Tuesday, July 24, 2018 11:05AM Report Comment

7. mombers said...

@5 I'm sorry if I sound harsh - rereading my post I was.

The fact of the matter is that for the first time in modern history, a generation will be worse off than their parents. Whether deliberate or not, this is a complete failure. If you agree, how do you propose rectifying? If not, I'd like to hear your thoughts. Maybe today's working age population are just inferior to their parents and unable to produce as much economic output. Maybe we could aim for equality of opportunity and endeavour to have every middle class person end up with a half million pound 3 bed home by the time they retire? Instead many are doomed to a poor value, insecure private rental their entire lives despite working as hard as their forebears. We already have 25 million spare rooms in the country, imagine how many more we'd have to build to ensure equal opportunities across the generations.

Re children, my point is that trying to make families with more children pay more tax is that you end up with lower quality outcomes - crime, poor productivity, health problems, etc. The per person educational expenses are not different, regardless of how many siblings one has. The UK tax system is actually one of the worst in the developed world for couple families anyway. And we don't have a problem with people having too many children anyway - birthrate is 1.8 and the population is rapidly ageing. Immigration as a way to solve it has been roundly rejected, as has efforts to raise the retirement age to a sustainable level.

An extension of the 'user pays' principle could go the other way. A working age person has approx 1/8 chance of dying before reaching pension age and even lower than that of requiring expensive old age health and social care. Shouldn't those lucky enough to live long be subject to at the very least the same tax rates as those working who might not enjoy these services? In the narrowest sense, it's 12% on ~£9k+, 32% on ~£11k+, 42% on ~£46k+ for working age people vs 0%, 20% and 40% for the retired. Add in VAT (depresses wages and business activity before it is even levied on the higher spend that a family has) and employer NICs and you're looking at punitive confiscation of private property, even from people in working poverty.

I put a great deal of effort into paying the least amount of tax that I can because the intergenerational pact has been broken - investment in the future has been sacrificed for bribing the elderly and landed electorate. The state could guarantee a dignified retirement for all for a lot less than they spend now. Equalising the tax rates on working and retired would raise an enormous amount of money. Instead there are still millions of pensioners living in poverty, and millions more living an unimaginable standard of living at much more favourable tax rates than the next generation could ever hope for.

More than 8 million working age households are already taxed so heavily that they need refunds via welfare. I think it would be both cruel and pointless to try to squeeze them for more. Millions of people are losing faith in the status quo, where luck has such a huge impact on living standards.

Tuesday, July 24, 2018 01:28PM Report Comment

8. mombers said...

@5 BTW I'm absolutely not proposing a Logan's Run. But I have to ask if you are proposing starving people out of having children? A less damaging program would be forced sterilisations or something else dreadful.

Tuesday, July 24, 2018 01:44PM Report Comment

9. techieman said...

Hi Mombers... I'm a bit busy at the moment but I will come back to you later this week. Cheers !

Wednesday, July 25, 2018 07:41AM Report Comment

10. mombers said...

@9 ta. Sorry if I'm a bit heated on this but an interesting exchange I think :-)

Wednesday, July 25, 2018 12:50PM Report Comment

11. techieman said...

Ok so previously i was using my phone to respond, but now on the Laptop.

First of all given where we are now should the Council Tax burden be shifted to the LL rather than the Tenant , then the LL will simply increase the rent to cover this increased cost. So yes if you want to move the burden to LLs i cant see the issue, but its naive to think that the Tenant will now automatically see a reduction in overall cost. So no i dont "agree with Nick" that there would be SOME increase for the reason he cites, the increase would be pari passu with the cost of the council tax to the LL. In fact, as you say, to deal with potential bad debts from his tenant, the LL might even charge a premium above the council tax rate.

While the application of new infrastructure, for example, does give the existing owner (LL) a windfall and should (perhaps via LVT as Nick advocates) be reflected, the point you are making that without existing council facilities there would be smaller rents is reflected in the price paid for that property and therefore yield.

When the yield is too low, resulting in people (including LLs) paying too high an amount, that is not a function of excellent council services. Yes there is a point if, for example, an existing school with a poor OFSTED rating, all of a sudden acquires a better rating (e.g through a new head ) that will likely be reflected in Local price increases, all other things being equal, but generally the council services are , imo, already reflected in the price.

IF for example, the council stops weekly rubbish collections are we saying that the rents payable to the LL should be reduced? How does such a restriction on services affect the LL? Just on a logic basis, perhaps you are right that the LL should pay a base amount to services (perhaps reflected as an additional tax like SD on purchase) but surely, using the rubbish collection example, the council only collects (and should therefore charge for) the person whose rubbish it actually is and not the person whose rubbish it isn't.

You have raised many points about Children. Ill try to respond piecemeal.

1. Im not advocating paying more tax for those having ANY children, my initial point was that you get credit for having so many children educated as part of a council tax / community charge , but above that level yes you would have to pay a charge. I agree that is unworkable but i still think its valid. Its likely to be moot anyway per your point about the low birthrate. Im confused about the constant reference to siblings to be honest, as ive already explained. The per capita cost of education is exactly that . Its up to £10k per pupil , of course subject to variations. ( So yes i agree for "free" education for the greater good (as Nick and you say) but only for ALL up to a point. My cut off range is say 5 - some would say more some would advocate no such application. If you want more children you can have as many as you like but then thats' your responsibility. and cost.

2, I dont think any generation has an automatic right to be better of than any other generation. So i dont hold with your view. I think you need to define "modern history"and probably what you mean by being "better off". I think there are many entitled youngsters these days and that also there is much competition for jobs (including from for example the EU) that drives down the cost of that Labour.

3. The retirement age has been raised (quite significantly for women - its odd that those who live longer should have an earlier retirement age anyway imo - but thats a different issue) . You have raised the issue of importing more tax payers to provide for the elderly (in effect what Germany did as a policy by importing many Turks)., because the birthrate is 1.8. I have no issue with immigration, so long as its the right kind of immigration. We should be importing workers who can fullfill a role that .is needed to fullfill., it strikes me that those competing for jobs that can be readily done by the indigenous population should be done by them, and if there is a surplus of such vacancies then we should look to import. The increase in jobs could itself be a function of increased demand by pensioners. For example they may want their houses maintained and want to employ someone to do so.

4, Your point about old age and the use of health care is badly worded, "and even lower than that of requiring expensive old age health and social care" if they are not in old age how can they require old age health care? But i think i get your drift. This relates back really to the start of the NHS. In 1948 there were old people that had never paid in to the system , whereas there were young people (say those with income of above the equivalent of the Lower Earnings Limit) who were paying in from then on. Both sets received health care on the basis of need, not on the basis of contribution. Then, as now, the younger generation were paying for the older generation. However now the older generation have already paid in throughout their working lives. Yes the cost of the healthcare has risen dramatically so the older person's account is obviously in deficit as they didnt earn so much during their lives, and yes i agree obviously carry more demand.. My point is they WERE working though, and i think they would have paid tax etc when they were. If they were high earners they would have had a high marginal tax rate in some of their working lives. - much higher than today.

You will know that in addition to the State pension, many employees now (baby boomers for example) have private pensions. Indeed this has been extended recently as we know. Of those current retirees though many did not have such pensions at all and the rest probably only for a potion of their lives (excluding the state employees where the pension "dividend" was often an offset against poor public sector pay). So your point that they pay a lower tax rate - which looks to me to be marginal - is offset by the fact that generally they will have a lower income. Yes if you are at state pension age you no longer pay NIC (in fact you earnt the maximum from SR2 / SERPs if you have a full payment record of 35 years (I think!)), but again you have already paid in for that.

So generally i think your point boils down to pensioners not paying enough and having benefited from their purchases of property which for whatever reason has appreciated much more than their frugal pension. As regards council tax, unless a very low income and/or on pension credit then pensioners still have to pay counciil tax in full, and at the rate consistent with the higher bands. Therefore your argument boils down to them having too much expensive property, at the cost of the younger generation. And that is somehow their fault?

Im not really sure how you can then go on to say you strive to pay as little tax as possible? Doesn't that put you in the same boat as those pensioners that you are having issues with?

I think your comment at 8 is a little silly to be honest. Im obviously not proposing to starve anyone, but i am proposing that people (parents - not siblings??) take responsibility and dont rely on others to pay for their actions. If a man wants 50 children by 4 different women, then i am not someone that takes issue morally, but if he cannot support those children then why should i be asked to pay. I suppose you are going to say its not the children's fault, true but we should somehow ensure that support is restricted. Isnt this the point of the change of the benefit system to give a maximum amount of benefit to a couple ? Whether this is pitched at the right level or not is a different issue.

Finally I dont even get the point that some pensioners live in poverty and some in wealth. On the one hand you are arguing for taxing pensioners more and then you are saying that some already live in poverty - so presumably you want to tax them less? Isn't that what the tax system already does. Its not like you pay zero income tax when you retire. I've made no comment regarding the BOMAD either and their "help" to maintain prices via giving Rupert a leg up which affects the market as a whole.

Thursday, July 26, 2018 02:51PM Report Comment

12. mombers said...

@11 Thanks for the post.

As we've seen from Section 24, landlords are not able to pass on costs. So tenants will pay existing rent + what they save in not paying council tax. If they could pay more, landlords would already be charging more - they are not charities. There are many, many who get off scot free under the current system - untaxed rent that either goes offshore or is offset by a mortgage, and no consequences for their private property rights if services aren't paid for by an absconding tenant. Would be interesting to see what the landlord's bank or insurance company would say if the fire dept wouldn't put out a fire for a defaulting tenant!

I guess where we depart on children is that I think it is never acceptable to punish children for the actions of their parents. Aside from the moral aspect, it's penny wise, pound foolish. Incarcerating someone is very, very expensive, and child poverty is directly linked to criminality. As is lifetime productivity, so declining to invest in a child's upbringing yields lower economic activity over their lifetime, making everyone poorer. I have three children and cannot come close to even affording even one of them, despite a household income in the top 5%. It's tragic that the lives of so many are being stunted, it will come back to bite us in a very bad way. If they stay in the UK, their private property will be taken to pay for the old age care of strangers, I think they deserve a lot of state funding for their health, education, etc as a quid pro quo.

Your threshold of 5 kids is a very, very small number of families, especially if you make it 5 children per adult. I'm assuming that you wouldn't go as far as to dock a child for having half or step siblings! And it would be tragic for a family to have to split in two to avoid the 5 child policy. Maybe you need to think of a way of punishing the parents instead of the children. Take the kids into care, dock their pension, take away their vote?

It's not a pensioner's 'fault' that they have won the housing and pension lottery. But it's certainly not the fault of the many people who work just as hard but are under-housed and doomed to old age poverty due to the demographic sums not adding up. The country has gotten a lot, lot richer, it is reasonable to expect the same or better standard of living than our forebears. Private property rights should be respected - labour and business should be held at least in the same esteem as land in my opinion. Let's share the burden of the policy mistakes. Those who weren't born when the future was plundered are not to blame. Interesting how the electoral calculus is changing. The Tories policies of high house prices, high taxes on labour, low taxes on land and high benefits for old people has been rejected by every age group under 49. I imagine this will be 50 next year, then 51, etc. Someone renting in their late 40s and paying so much tax that they need to be compensated by benefits is not going to vote for the Tories ever.

On personal responsibility, I hope that you are not advocating throwing feckless old people under the bus? If someone doesn't work much during their life, then tucks into everyone else's private property to fund their old age, a civilised society would never, ever say 'You're on your own, mate, go sleep on a bench and beg for food'. In my opinion, people like that are much, much more responsible for their own circumstances than a child.

Tuesday, July 31, 2018 04:02PM Report Comment

13. techieman said...

hi mombers.

Yes i think i was probably unclear regarding Children. I defintitly wouldnt want to punish children, but they are already punished if there would be too many of them to be catered by infrastructure limitations for example.

So yes, my point (badly put ill admit) was to stop adults having as many children as they like, either by incentivising them not to or dis-incentivising them to. Either by restricting benefits or modifying the tax system. I take your point that this is likely moot as ive already said. I did say parents though, so i thought i wasnt that unclear.

As for taxes, I am sure that high taxes on labour is err a labour policy. High marginal rates of tax are what Labour does best. Thats not to say the Tories arent applying higher taxes , some would argue they need the money to balance the books (not me by the way Im reading Adults in the room at the moment and i definitely dont agree with Austerity) . So i think either party is looking to higher the tax take - i suppose the tories are more about restricting welfare and labour are more about increasing taxes to pay for increased welfare. There is probably a purple patch somewhere in between, but of course any political party that seeks office needs to upset the least amount of people.

I find your posts quite confusing though about pensioners, and i dont believe we have a right to do better than our forebears. Depending on where you look the opportunities today are far more numerous than before.

All we need is a housing price crash to move opportunities toward the younger generation. I agree with you though, as more people are priced out, of ridiculously overpriced properties those who wish to govern will have to transfer wealth toward those people. Section 24 is seen by BTLs as the worst thing that has happened to them. They may find - again as you allude to - the start.

Wednesday, August 1, 2018 08:34PM Report Comment

14. mombers said...

@13 It's going to be fun watching the BTL market squeal. The Tories won't lose a single vote by nailing them further. Corbyn will never offer them a better deal! Tenants won't suffer either, as we've seen. Sit back and enjoy the ride!

I really do hope that the next generation is better off than mine. If not, there needs to be a solid, fair reason. I can't see a reason for Millennials to be worse off than their forebears (I'm a few months too old to be one :-)). If everyone paid the same for housing, that would solve the problem to a very large degree...

Thursday, August 2, 2018 01:55PM Report Comment

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