IHT- how to avoid if you have enough wealth

M0nica

David49 If legislation were in place and activated to inhibit people buying property and leaving it empty for years it would bring 50,000 more properties onto the London rental market, it would ease the rental problem. Some owners would decide to sell rather than tenant and manage their properties.

No, obviously IHT doesn't come into play, bit it is an example of how local factors can distort the market in localised areas while not affecting the overall regional market.

The problem is that properties are owned by companies as they are being developed, if they are not sold or rented out there isn’t much can be done.
Not unless you supervise every development and effectively ban any development above a certain size, which would mean the money would go elsewhere. You could tax empty properties, but they would get round that in one way or another, or just pay the tax, overseas billionaires are not UK tax sensitive.

Dinahmo

This is taken from an accountancy forum. If you are sufficiently wealthy you might want to give it a try! Of course, you won't know if you've been successful.

www.accountingweb.co.uk/tax/hmrc-policy/hmrcs-failings-let-family-dodge-ps600k-iht-bill?cm-uuid=2a6474e2-e2c5-44cd-a401-f35626ea191c&utm_medium=email&utm_campaign=AWUKPOTW280824&utm_content=AWUKPOTW280824+CID_9ffecdd46a3b2da3515cece95dad9a89&utm_source=internal_cm&utm_term=Read%20more

This was a case of human error, a mistake was made and the taxpayer got away with it.
We cannot eliminate mistakes we are fallible.

David49 There is plenty you can do. Local Authroities in tourist hotspots can increase rates on 2nd homes.

All that is needed is something similar for properties left vacant, for, say, over 2 years. Double the rates, or better still a tax based on the capital vaalue of the property, so that if house prices go up, so does the surchaarge.

All these things are possibly if someone just puts their mind to it and finds a solution. Obviously there will need to be an apeal system, but in case anyone deliberately trashes a flat, or buys a flat and doesn't have bathroom suites fitted then the LA should be able to compulsorily take it over on, say a 5 year lease, do the repairs or install bathroom suites and deduct that cost plus management costs from the rent before sending the balance to the owner.

My ideas for ways of dealing with this problem may not be ideal, and there may be better, but there are solutions. It just needs people determined to find them.

Monica

All the above you describe could be done but I don’t think it would make any difference they would just pay it or find a way to avoid any tax.

Where did you get the figure of 50,000 properties that sounds an awful lot

David49

Monica

All the above you describe could be done but I don’t think it would make any difference they would just pay it or find a way to avoid any tax.

Where did you get the figure of 50,000 properties that sounds an awful lot

I googled it and got a range of all subtly different figures. The highest around 90,000, the lower around 30,000, and decided that 50,000, was good round number to indicate the ball park.

Here is a link for the higher figure www.estateagenttoday.co.uk/features/2024/04/50bn-price-tag-for-londons-empty-homes/. This is a link for the lower figure, but I think the area it covers is more localised www.london.gov.uk/mayor-london-and-westminster-city-council-call-stronger-powers-crack-down-long-term-empty-properties

I did look at some ONS figures for London, as you say there is a lot of variation because properties are empty for different periods for many reasons

In London Khan has used 34000 as unoccupied dwellings, the ONS highlights 10000+ LA owned dwellings empty of which half are long term empty. Many are going to be major refurbishment, others due for demolition and replacement.

The other 20000+ owner occupied or rented are likely similar proportions of moving in and out, refurbishment and redevelopment. Whether housing association properties are included in the LA figures is not clear,

There is obviously a lot of politics surrounding empty properties, the vast majority are unoccupied for valid reasons, those that are deliberately not used should be taxed or taken over, I doubt that either would make much difference. There is also a lot of unused retail and office space that could be used for housing but planning issues prevent that being done

I was wondering why empty commercial properties in London can't be used for housing? There must be heaps of empty office space after covid encouraged WFH and desk sharing. In the East End many warehouses have been converted into dwellings, even old police stations.

escaped

I was wondering why empty commercial properties in London can't be used for housing? There must be heaps of empty office space after covid encouraged WFH and desk sharing. In the East End many warehouses have been converted into dwellings, even old police stations.

Offices have the wrong layout for housing so it’s often not practical to convert them, old warehouses etc are often listed and converted at great expense.
The other obstacle is planning it’s not easy to change from commercial, it’s easy to change a pub into a Tesco Express but not into residential.

escaped

I was wondering why empty commercial properties in London can't be used for housing? There must be heaps of empty office space after covid encouraged WFH and desk sharing. In the East End many warehouses have been converted into dwellings, even old police stations.

The reason is that many office and commercial premises are not suitable for conversion, large open offices with floors possible 100ft or more in length with windows on the outside walls, no light wells, cannot be converted because you end up with rooms with no windows.

Also the fire and safety rules that govern the construction of these buildings are based on each floor remaining open plan with very few individual offices. One of the last tasks I had when working was organising a change of offices and one of the biggest problems I had was telling some senior manaagers that they could not have individual offices because more senior managers had already been allotted the few we were allowed.

In the few cases where these conversions have taken place, they have not been a success. There is a government initative already to do this, but because a lot of planning regulations wer waived to make it possible (like permitting windowless rooms, the resulting housing is very poor quality and doubts about firesafety have been aired.

The other problem is that the sort of office blocks that have been made available are not town centre ones or in good areas, where the ownrs remain confident of eventuaally getting a commercial tenant but older 1960/70s blocks on industrial estates where tenants find themselves in places, otherwise unoccupied at night, without public transport or easy access to shops or schools and they ahave been an unqualified disaster.
www.investorschronicle.co.uk/content/eabef00d-85d8-548b-992e-e00f1a78f0f5 theippo.co.uk/why-converting-office-space-into-flats-wont-solve-the-housing-crisis/
Here are a couple of useful links