No tax rises

David49

Maisie

I did read the short version of Murphys report and as you said I do agree with most of it there are far too many allowances that are too generous, the government can and I hope will change that.

I am dead against a “Wealth Tax” based year by year on a fixed % of assets

The first one should be the tax allowance at a higher rate for pension contributions. It's totally unfair and is blatant support from the government for higher rate taxpayers. Those who can't even afford pension contributions get nothing.

We shall see, but so far this present government does not have a good record of keeping its promises, both pre and post election.

“I wasn't referring to business property, but ordinary residential property, in which billions of pounds are invested in the UK, often by very "ordinary" people. The point is that it doesn't generate money in the same way as money invested in business does. It skews the UK economy and society.”

Domestic property should be subject to more taxation there is far to much invested that is dead money not being used productively. I don’t expect anyone on GN to agree with that, too many vested interests.

Most rich individuals - less than 5% of the population have their wealth tied up in business assets, everyone from Mrs Patel with a corner shop to Lord and Lady Bamford with JCB and Daylesford

“I didn't even mention tax avoidance, so I'm not sure what you're going on about.”

Tax allowances (avoidance) are deliberately set by governments to achieve targets or influence voters, there are many that I would change along the lines that Murphy suggests.

I doubt very much if 'Mrs Patel at the corner shop' has the sort of wealth that we are concerned with, David. Unless she has a huge chain of them...

I'm intrigued by your contention that money 'invested' in domestic property is 'dead money'.

As far as I can see, most homeowners are spending money all the time into the domestic economy, sustaining all sorts of businesses, both retail and services. Repairs and maintenance, refurbishments. new furniture, new carpets, new kitchens and bathrooms and much other expenditure on domestic property all cost money which goes to the businesses which provide the necessary resources. It circulates in the economy just as money should.

The real 'dead money' is money that is being saved and not spent.

I disagree with you Maizie. A significant amount of money in the UK is invested by landlords in residential properties, who then reinvest their money in more property or other "tax-efficient" schemes. Not only are they pushing up property values, they are diverting investment from businesses. They are accumulating wealth without doing much for it and increasing the inequality gap.

PS. I'm not talking about owner-occupied homes.

I get your point, growstuff. I was just writing about owner occupied housing (which surely must make up the greater percentage of domestic dwellings?)

Not only are they pushing up property values, they are diverting investment from businesses.

It could be argued that owning rental properties is a business. I wonder if David considers it as such and would say that this isn’t ‘dead money’ 🤔

But I agree with your view; inflated property prices caused by this plus uncontrolled rents and light taxation of the rental income contribute to the inequality gap.

MaizieD

I get your point, growstuff. I was just writing about owner occupied housing (which surely must make up the greater percentage of domestic dwellings?)

Not only are they pushing up property values, they are diverting investment from businesses.

It could be argued that owning rental properties is a business. I wonder if David considers it as such and would say that this isn’t ‘dead money’ 🤔

But I agree with your view; inflated property prices caused by this plus uncontrolled rents and light taxation of the rental income contribute to the inequality gap.

The issue is that owning property doesn't generate the kind of opportunities for employment which other businesses do. The landlords are rentiers who don't do that much for their money. Not only do they have an income in the current market but their asset is almost guaranteed to increase in value. Investment in property is much safer than investment in more productive businesses. Eventually, the asset is passed on to offspring and a new property owning class is formed, while those who have no hope of inheriting money will continue to rent and end up with nothing. The housing market in the UK is a mess.

Maizie The owner occupied sector is still the biggest, but the private rental sector has doubled since the early 2000s. About 20% of households live in private rentals, which means they are paying their landlords' mortgages and ending up with nothing.

Sorry, forgot the link:

www.gov.uk/government/statistics/chapters-for-english-housing-survey-2022-to-2023-headline-report/chapter-1-profile-of-households-and-dwellings#:~:text=In%202022-23,%20there%20were

growstuff

Sorry, forgot the link:

www.gov.uk/government/statistics/chapters-for-english-housing-survey-2022-to-2023-headline-report/chapter-1-profile-of-households-and-dwellings#:~:text=In%202022-23,%20there%20were

If you dig deeper into the stats you will find that within the 20% private renters are a growing number of institutional/business renters (not social renters).

Individual renters are on a hiding to nothing, regulation makes it more difficult, many will already paying top rate tax and then CGT when sold, and agents fees in between
Institutions/business renters have a big advantage, their tax rates are lower, can claim back VAT on repairs and can offset gains in many ways

Just to add, you can see when this started.

It was the 2008 crash after which interest rates dropped to historic lows and stayed there for 14 years until late 2022.

www.bankofengland.co.uk/boeapps/database/Bank-Rate.asp

Many with existing capital moved it from savings accounts to B2L while others borrowed very cheaply to B2L.

I would like to see strong government measures to curb this market so that FTBs stand a fighting chance of buying somewhere to live.

Yes, you are correct Silverbrooks. My ex was one of those who has made a fortune from B2L since 2008. B2L has been a much safer investment than businesses. Many small new builds are now snapped up by B2L investors before they're even offered on the open market. The money involved is diverted from business enterprise and property prices are out of reach of people on average incomes who don't have inherited wealth. It's a problem for the UK. Nobody can blame people for investing their money safely, but investing in businesses needs to be made more attractive.

David The information I've posted is about households, not business renters. The number of private renting households has doubled in approximately 20 years.

“David The information I've posted is about households, not business renters. The number of private renting households has doubled in approximately 20 years.”

The ONS record the increase in England from 2008 - 2024 from around 4m homes to around 5m homes with low interest rates to buy that’s hardly surprising because UK shares did not prove to be a great investment in that period.

David49

“David The information I've posted is about households, not business renters. The number of private renting households has doubled in approximately 20 years.”

The ONS record the increase in England from 2008 - 2024 from around 4m homes to around 5m homes with low interest rates to buy that’s hardly surprising because UK shares did not prove to be a great investment in that period.

That's what I've been saying!

Investing in property and becoming a landlord is a much safer investment and considerably less work than using an asset to set up a small business. Historically, property has been a good investment for decades (despite the occasional crashes) and much safer than the volatile stock market.

For an individual it makes sense to invest in property, but on a macro-economic level, it's detrimental to the national economy for a number of reasons.

Individual renters are on a hiding to nothing, regulation makes it more difficult, many will already paying top rate tax and then CGT when sold …

Hardly. My decorator age 50, is now in the process of buying his 5th and 6th B2L. With six, he expects to generate an income of almost £100,000 a year, more than £72,000 net of income tax without getting out of bed in the morning.

That’s double what he earns now getting out of bed in the morning and working five days earning a £1,000 a week. Once he has the 5th and 6th, he will retire - which is a shame for his customers as he’s very good at his job.

All done through tax free inheritance from family members.

If and when he sells at a gain, he will only pay CGT at 24% so he’ll keep 76%. That’s one tax the government should increase to aling with income tax.

It’s easy money and the main reason young FTB are stuck renting and unable to buy.

It needs to stop. Homes are for living in nor for landlords to profit from.

There has always been a need for a private market to supplement local authority provision but since that was decimated by Thatcher, more and more people have jumped on the bandwagon of B2L and make easy money at the expense of people desperate for a home.

It’s a disgrace that over 40% of local authority housing is now owned by private landlords charging three of four times social rent and often paid through housing benefit. It’s a racket exploited by criminal gangs to launder drug and other illegally acquired money.

That 5 million homes are now B2L and another 1 millon homes are standing empty most or all of the time in the UK (source Action On EmptyHomes) it’s no wonder so many people are struggling.

Silverbrooks If your decorator has any sense/a good financial adviser, he could squirrel away £20,000 a year of the rent into an ISA and/or buy himself a pension. He's probably paying 40% tax on the rental income, so he could contribute to a pension fund before paying tax and the government will effectively give him a 40% subsidy on his pension contributions. I'm sure there are all sorts of other tricks. My ex is in the process of selling his properties. They're all mortgage-free now. They've all increased in value many times, so paying CGT on a property which originally cost £100k but is now worth £350k isn't a great hardship - especially as he's had rental income for 25 years.

Silverbrooks There is considerably more to owning a buy to let than collecting rent and paying tax. I only ever owned one accidentla buy to let and I had a steady stream of expenses from insurance to regular care and maintenance. I certainly didn't just bank and spend the rent.

M0nica

Silverbrooks There is considerably more to owning a buy to let than collecting rent and paying tax. I only ever owned one accidentla buy to let and I had a steady stream of expenses from insurance to regular care and maintenance. I certainly didn't just bank and spend the rent.

Sorry MOnica but there is a considerable amount of money to be made from Buy to Lets (maybe not for amateurs who don't know what to expect). I really have had personal experience of it via my ex-husband.

Surely that depends on the condition of the property, the tenants and how it’s managed.

The person I described had four B2L houses already with solid long-term tenants. He regards it as doddle if you choose the property and tenants carefully, which is precisely why he’s buying two more.

He says it’s a darn sight easier than working for a living and will yield twice the income compared to working. Six houses bought outright and rented at between £1,200 and £1,500 a month. Where else would one get that ROI in the short term and virtually guarantee capital gains?

Really, how much time does it take to manage own’s home? Very little in my case. I don’t see why a BtL should be any different.

Politically and socially, I don’t agree with what he’s doing but he’s far from alone in it if there are now 5 million privately rented homes in the UK

There is considerably more legislation governing buy to let properties than there is for owner occupied properties.

Quite often as house owners we will live with a minor problem because we can't be bothered to do anything and it isn't that much of a nuisance. With a tenant they will contact you and expect repairs to be done quickly. Of course you can always be the kind of landlord who neglects their properties and ignores tenants complaints. If owning and renting out property was such a guaranteed large money maker, even more people would do it.

Then you must consider the return he could have got investing the money in other assets that require no effort at all, like stocks and shares, which, with a distributed portfolio consistently outperforms inflation and fixed rate investments - and all without effort,

Of course there will always be those who get lucky and make enormous returns like your builder friend, but the exception does not provide the rule.

Many private rental owners are effectively retired and I& they just have a couple of properties taxation isn’t an issue it’s effectively their pension.

A friend has around 10 city rentals that he inherited, they are a real burden, continually in need of work the sort you see on the TV refurbishment shows. He’s thinking of selling the lot it’s not viable to pay builders to refurbish then properly, if he sells them and pays the taxes and other expenses he won’t end up with much more than £500k. He’s hardly going to be a pauper of course but its not a great prospect

The escape route from manifesto promises is 'Events, dear boy, events'.

David49

Many private rental owners are effectively retired and I& they just have a couple of properties taxation isn’t an issue it’s effectively their pension.

A friend has around 10 city rentals that he inherited, they are a real burden, continually in need of work the sort you see on the TV refurbishment shows. He’s thinking of selling the lot it’s not viable to pay builders to refurbish then properly, if he sells them and pays the taxes and other expenses he won’t end up with much more than £500k. He’s hardly going to be a pauper of course but its not a great prospect

You really don't know much about the market. I'm not going to give full details, but I really do have personal experience. My ex-husband gave up doing paid work in his early 40s to become a full-time landlord. Not only that, but my son did his MSc in housing and has worked in housing since he graduated, so I do know how it works.

My ex-husband is a qualified building surveyor, so was able to buy properties he knew would make him the most money, but apart from the original purchases, he hardly lifted a finger to do anything about the properties and has spent most of the last 25 years swanning around Europe. He employs maintenance contractors, an accountant and a solicitor to do the work - and still makes a tidy profit. There are many other people who operate in the same way and are far from retirement.

MOnica If a landlord can't make a decent profit from renting, I'm afraid he/she isn't doing things properly. I can see with my own eyes how well my ex-husband has done in the last 25 years because he's a professional.

I also have experience from the other side because I'm a tenant and have lived in the same house for over 11 years. My landlord bought the house for cash and isn't that interested in making a huge profit. He employs an agent who does all the hard work and he collects the rent every month (minus agent's commission, fees for checks, insurance, taxes, etc.) He still has a surplus. There is nowhere he could have invested his money to produce the same income. If he were really making a loss, he could have put the rent up, but he hasn't. The rent has only increased £25 in 11 years and the house is well-maintained. He recently had a water softener installed, even though I didn't ask for it - just because he had one installed himself and thought I might like one too. Not only has he had rental income, but the property has at least doubled in value during the time I've been a tenant. He's not interested in selling, but wants to leave his daughter a nice legacy.