BTL, vile lowlife business, nobody wants to be living under their roofs

Graham_Devon

Interesting thread. Loved the description of people sat with their pants around their ankles and kleenex in their hands. So apt!

Anyway, there is a problem with BTL. But not ALL BTL.

Funnily enough, its the ones on this thread, and the ones who will post later on in this thread, trying to argue against the OP, who will be best described in the OP

Graham_Devon

stringsmk2 wrote: »

Interestingly, I still have had no advice as to what I should have done with my property now that I am not living in it, should I leave it empty?

I had this problem when I bought a new car.

I already had a car. What was I supposed to do with the one I already had?

Well, I'd just have to have 2, thought I.

That was until someone suggested I sold it. Brilliant! Couldn't believe that stroke of genius. I mean, who would have thought! Sell the old car, and then I'd be left with the one car I need.

My problem was solved.

It was such an eye opener to me. I'm only too happy to share the insight.

Cleaver

PasturesNew wrote: »

On the other hand, many have no profit and are paying no tax.

Same as any business though really: if you don't make a profit then you don't pay tax.

PasturesNew wrote: »

They'll pay CGT when they sell, if they can't find a way to "hide" the property as a BTL anyway.

Again, same as any other asset really: if you earn enough in capital gains then the you pay CGT. Whethere that's a share, house etc.

I guess that, as a society, we could introduce a higher CGT for second property owners (either second home or BTL) although I'm not really sure this would introduce any benefits for people who want to rent houses aside from higher rent.

PasturesNew wrote: »

How would anybody actually know if I was trousering rent money and paying no tax? I'm sure a lot do, for reasons from stupidity/cluelessness through to intent to evade.

It's the same deal for anyone who owns a business. If you pay your plumber £2,000 cash for your new boiler how do yo know he's declaring it for tax? When you buy a sandwich from your local shop for £3 how do you know they are declaring it for tax?

I would argue that BTL is actually one of the harder businesses to avoid tax. I would imagine that the vast majority of people pay their rent via standing order so there is an electronic evidence trail.

I imagine that the percentage of landlords not declaring tax is the same percentage of plumbers, eBay sellers, website designers, builders, gardeners, shop owners or any other business where cash flows through before tax.

But as I've said a million times on here, if you're worried about tax avoidance your first place to look is your Tescos, Barclays and Philip Greens of this world who are experts in avoiding tax.

PasturesNew wrote: »

Also, if I buy one at £50k, then a year later MEW £20k out of it, is there any tax to pay? How easy is it to hide that? How does it work?

It works the same as any other business I believe. If you take a loan against an asset you own then you pay interest on that loan. You can offset that interest against profit.

In terms of your example, you pay tax on your profit. So if you take a loan, you'll have less profit, so you'll pay less tax. However, if you're worried about tax payments in general, the person (bank?) you borrowed money on should be paying tax on the profit they make from lending you the money. So whether you take the loan or not, a similar amount of tax will be made. Also remember that the money you've MEWed will presumably go to buy, then rent out, a new place. Which will be rented by people, which will then make profit and... you've guessed it, more tax. Or you'll spend the £20k on stuff, which creates profit for companies (which they'll pay tax on) and create VAT payments.

Capitalism, basically. I'm not saying it's a great system by the way, just pointing out that tax will be paid either way.

PasturesNew wrote: »

Lots of opportunity for cash dealing and ducking and diving.

I'm going to sound like a stuck record, but if you own a business then your opportunity for 'ducking and diving' is the same. Doesn't matter if you're a landlord, driving instructor, plumber or mechanic. The logistics of your business with regard to tax is pretty much all the same.

Cleaver

Graham_Devon wrote: »

Funnily enough, its the ones on this thread, and the ones who will post later on in this thread, trying to argue against the OP, who will be best described in the OP

Do you include me in that, just out of interest?

EB69

Graham_Devon wrote: »

I had this problem when I bought a new car.

I already had a car. What was I supposed to do with the one I already had?

Well, I'd just have to have 2, thought I.

That was until someone suggested I sold it. Brilliant! Couldn't believe that stroke of genius. I mean, who would have thought! Sell the old car, and then I'd be left with the one car I need.

My problem was solved.

It was such an eye opener to me. I'm only too happy to share the insight.

Would you like to buy my house from me sir? I need to sell it for around £230k to clear the debt against it, but unfortunately its probably only worth maybe £185k at the moment - perhaps £195k at a push. Tell you what, you can have it for £225k. I am sure in a few years it will go back to the £300k it was valued at 3 years ago, so its a good investment for you, unfortunately I cant pay the mortgage unless someone is willing to stump up the difference to appeas the dreaded mortgage co.

Graham_Devon

Cleaver wrote: »

Do you include me in that, just out of interest?

Do you sit there with your pants around your ankles and a box of kleenex next to you, celebrating rental and house price increases?

If so. Yes.

If not. No.

Let me expand a little.

It's the BTL landlords who see it as a pension vehicle....yet proclaims its all about the yield. It's nothing to do with the yield. It's all about rising house prices, which involves alienating more and more of the generation below them, while watching the cost to the taxpayer rise and rise due to ever higher rental and housing costs.

Now, we have lax regulation in terms of letting in this country. I think we all accept that if tougher regulation came in, like other countries, many landlords would dump their houses ASAP.

I can't remember where I read it, may have been on here, may have been totally untrue, but in some other countries, the tennants don't pay the council tax, the landlords do.

Afterall, you don't go into Sainsburys, and pay a levy on top of your shopping bill for their business rates.

The whole letting scene is a bit bizzare, and really needs some proper regulation applied to it A) to reduce the massive and rising tax bill we all pay for it to give tennants more security and C) to stop it being used as a speculative pension scheme.

Do the above simple steps, and we'd be left with real people, real companies doing the letting. My sister has a place with a real company, and she pays one fee. She doesn't pay council tax on top, it's all part of it, and the fee she pays per month is actually lower than the average. Probably because it's a letting company, rather than someone using it as a pension scheme squeezing as much blood out of the stone as they can. She even gets the interest on her deposit when she leaves. She's moved within their properties, and they have always been pretty good.

Massive problems in this country surrounding the BTL scene. However, as half the cabinet are involved in it, nothing much is going to happen quickly.

diable

Graham_Devon wrote: »

It's the BTL landlords who see it as a pension vehicle....yet proclaims its all about the yield. It's nothing to do with the yield. It's all about rising house prices, which involves alienating more and more of the generation below them, while watching the cost to the taxpayer rise and rise due to ever higher rental and housing costs.

Not all BTL's are the same some view it it as an extra income once the mortgage is paid off I am all for it as I am too old and can't afford to pay in to a pension scheme that does not guarantee a return, if I had a spare flat with decent tenants that were look after and after risking 25 years in the BTL market to pay the mortgage off then I would like to see a return in my old age so i don't have to claim benefits.

Not all landlords are !!!!s a lot are but not all.

EB69

it was never about chance or even making money - I needed somewhere bigger to rent - quickly - and could not afford to do so. Rental properties in my area were too high and I happened upon a property in the area that ticked the boxes. Oooooh what a mistake. Anyways, had to move fast to get new property at the reduced price, stuck with old one. this all happened in March 2007. Boom - lost everything. I am not a risk taker - I dont deal in shares, I dont guess at how long to boil an egg - I dont even cross the road unless green man is lit.

Bad luck, bad judgment. Wet behind the ears. I'm guilty on all counts. But I'm still not a scum landlord - still stuck with two mortgages, doing best I can to make ends meet. And will still sell my crappy little house to you for £230k... ;-)

diable

EB69 wrote: »

Would you like to buy my house from me sir? I need to sell it for around £230k to clear the debt against it, but unfortunately its probably only worth maybe £185k at the moment - perhaps £195k at a push. Tell you what, you can have it for £225k. I am sure in a few years it will go back to the £300k it was valued at 3 years ago, so its a good investment for you, unfortunately I cant pay the mortgage unless someone is willing to stump up the difference to appeas the dreaded mortgage co.

Don't forget that the car sold was most probably bought brand new and lost 90% of its value in the 10 years of ownership so it wasn't the best business decision in the world but most probably made the lump in the pants look far larger then it was.

Graham_Devon

EB69 wrote: »

it was never about chance or even making money - I needed somewhere bigger to rent - quickly - and could not afford to do so. Rental properties in my area were too high and I happened upon a property in the area that ticked the boxes. Oooooh what a mistake. Anyways, had to move fast to get new property at the reduced price, stuck with old one. this all happened in March 2007. Boom - lost everything. I am not a risk taker - I dont deal in shares, I dont guess at how long to boil an egg - I dont even cross the road unless green man is lit.

Bad luck, bad judgment. Wet behind the ears. I'm guilty on all counts. But I'm still not a scum landlord - still stuck with two mortgages, doing best I can to make ends meet. And will still sell my crappy little house to you for £230k... ;-)

I deleted my post, as I'd worded it wrongly.

But, you still took a chance. You decided to buy instead of rent. You decided to keep your property instead of, like most, trying to sell before buying somewhere else.

Unless your house was a bedsit (and for 185k today, I can't see it being so), it can't have been that small. A friend split from his girlfriend, and has been sleeping on his dads sofa for 2 years. His dad can't just buy another place, and keep the one he's got now. Like many all over the country can't.

I am assuming you thought it a good investment at the time, and unfortunately got your fingers burnt.

Theres not that many people taking the route you took, simply because of the risk. Most sell, before buying, or at least rent while trying to sell. Not many buy another propertly before selling the other if they are on such a budget whereby you have found yourself in the situation you are in. The risk is simply too high for most people to choose that route.