Why do people resent buy-to-letters so much?

cells

BananaRepublic wrote: »

Yet again you phrase this as a business, and then refer to a daily rate of £500. No wonder BTL landlords can price others out of the market with that sort of financial muscle. Frankly your post makes you sound very greedy, sorry if that sounds rude. That impression of greed seems to permeate this thread.

Im not saying I should be paid £500 per day for paperwork even though a lot of people are (most jobs these days are a form of 'paperwork').

I was trying to put forward the idea that a medium to large BTL 'its not a business' requires a reasonable amount of time and admin which if you employ someone to do it would cost a pretty penny. Contractor rates are about £500 per day, employed staff average ~£37k a year (~£150 per day) but the business employing them has overheads and other costs (eg employers NI) which means the actual cost to hire someone is >£150 a day

If large businesses are to become landlords then they will need to hire people to work and do these paperwork jobs.

BananaRepublic wrote: »

By the way I've spent most of this week going through the paperwork for my investments, checking gains, moving some around. What do you think the value of that work is? Shall I pretend this is a business?

You can value your own time however you like, but if you hire an asset manager they are not going to do it for free (they wont even do it for £500 per day!)


In a lot of the country private rents are the same or similar to social rents. One of my firneds is a landlord in telford and he lets some 2 bed flats for £425 per month. The local housing trust also charges £425 for a 2 bed flat. He pays 45% tax, the local housing trust pays nothing.

Graham_Devon

cells wrote: »

I was trying to put forward the idea that a medium to large BTL 'its not a business' requires a reasonable amount of time and admin which if you employ someone to do it would cost a pretty penny. Contractor rates are about £500 per day, employed staff average ~£37k a year (~£150 per day) but the business employing them has overheads and other costs (eg employers NI) which means the actual cost to hire someone is >£150 a day

Exaggerating just a tiny bit there with those figures for the type of role you are describing.

You could halve your figures and still have change.

cells wrote: »

The local housing trust also charges £425 for a 2 bed flat. He pays 45% tax, the local housing trust pays nothing.

Pointless comparison.

Two very different sectors running two different activities.

For a start, if your chum wishes to reduce his tax bill to £0, he can simply funnel all profits back into the business, like Housing Associations have to do.

But I guess he want's a profit? Hence he pays the tax. He only pays 45% due to his total income from all avenues and will only pay 45% on a portion of that income.

cells

Thrugelmir wrote: »

BTL is a business. In fact many people seem to view it as an one-way investment. Leverage up and cash in without doing anything. A business can make a trading loss as well a profit. You are assuming that it is let.

also you can not go bankrupt with an investment, at most you lose your investment. You can go bankrupt with a business as any sole trader or partnership should know. With BTL you can go bankrupt which makes it lean towards the business end of the spectrum

cells

Graham_Devon wrote: »

Exaggerating just a tiny bit there with those figures for the type of role you are describing.

You could halve your figures and still have change.

Pointless comparison.

Two very different sectors running two different activities.

For a start, if your chum wishes to reduce his tax bill to £0, he can simply funnel all profits back into the business, like Housing Associations have to do.

But I guess he want's a profit? Hence he pays the tax. He only pays 45% due to his total income from all avenues and will only pay 45% on a portion of that income.

how do you funnel profits back into the business to reduce tax bill to zero? you have no clue of what you say

housing associations make no profit because they pay their staff, and you know landlords, they shouldn't make a profit because its evil.

kinger101

cells wrote: »

also you can not go bankrupt with an investment, at most you lose your investment. You can go bankrupt with a business as any sole trader or partnership should know. With BTL you can go bankrupt which makes it lean towards the business end of the spectrum

Technically, you can, as many people found out during the Wall Street Crash. But UK tax law defines it as a business, or more specifically, a "property rental business". And this is all that matters as that is where the rules are set out under what deductions are allowed for the purposes of Income Tax or Corporation Tax. So BananaRepublic can protest all he likes but he may as well be telling us oranges are vegetables.

Of course, he might realize if he stuck £100,000 in GSK shares there is no chance they'll ring him up tomorrow asking him to fix their boiler.

The underlying asset value might go up or down (*and real estate isn't unique in this respect), but property rental involves compliance with multiple laws, finding tenants, ongoing repairs to the asset. It's not passive by any stretch of the imagination. You can delegate some of these to activities (at a cost), but any business can use subordinates, and the delegation itself is a management activity.

Generali

cells wrote: »

also you can not go bankrupt with an investment, at most you lose your investment. You can go bankrupt with a business as any sole trader or partnership should know. With BTL you can go bankrupt which makes it lean towards the business end of the spectrum

It's a bit more complex than that. You can go bust if you take on a liability. If you buy a house for cash and it remains unrented you could be bankrupted for not paying council tax or utility bills for example.

BananaRepublic

cells wrote: »

Im not saying I should be paid £500 per day for paperwork even though a lot of people are (most jobs these days are a form of 'paperwork').

I was trying to put forward the idea that a medium to large BTL 'its not a business' requires a reasonable amount of time and admin which if you employ someone to do it would cost a pretty penny. Contractor rates are about £500 per day, employed staff average ~£37k a year (~£150 per day) but the business employing them has overheads and other costs (eg employers NI) which means the actual cost to hire someone is >£150 a day

If large businesses are to become landlords then they will need to hire people to work and do these paperwork jobs.




You can value your own time however you like, but if you hire an asset manager they are not going to do it for free (they wont even do it for £500 per day!)


In a lot of the country private rents are the same or similar to social rents. One of my firneds is a landlord in telford and he lets some 2 bed flats for £425 per month. The local housing trust also charges £425 for a 2 bed flat. He pays 45% tax, the local housing trust pays nothing.

I think you live in a different world. I have done IT contracts, and have worked alongside IT contractors, none get £500 per day. And quite why you think you are so important that you should earn such an astronomical sum is beyond me. Greed is the only answer I can see.

The main gain for a BTL landlord is the value of the asset which in the long term will appreciate significantly, as per my stock market investments. The amount of gain you stand to make is very high when compared to the amount of work you put in. I know BTL landlords who do very little once the house is purchased, and furnished. Quite why you deserve tax breaks is beyond me. I bet BTL would thrive without the tax breaks. The difference would be less BTL landlords, as they would need more capital at the outset. That would not be so bad. And it would make it easier to protect the landlords, as public sympathy would be higher, by for example introducing stronger legal protection to protect against a house being trashed.

As I've said, the current tax situation means that BTL landlords are unfairly advantaged allowing them to outbid potential owner occupiers, and forcing the market price up.

BananaRepublic

cells wrote: »

how do you funnel profits back into the business to reduce tax bill to zero? you have no clue of what you say

housing associations make no profit because they pay their staff, and you know landlords, they shouldn't make a profit because its evil.

The problem is the scale of the profits, and the tax breaks that allow those profits. BTL has been easy money for huge gain.

BananaRepublic

kinger101 wrote: »

Technically, you can, as many people found out during the Wall Street Crash. But UK tax law defines it as a business, or more specifically, a "property rental business". And this is all that matters as that is where the rules are set out under what deductions are allowed for the purposes of Income Tax or Corporation Tax. So BananaRepublic can protest all he likes but he may as well be telling us oranges are vegetables.

Of course, he might realize if he stuck £100,000 in GSK shares there is no chance they'll ring him up tomorrow asking him to fix their boiler.

The underlying asset value might go up or down (*and real estate isn't unique in this respect), but property rental involves compliance with multiple laws, finding tenants, ongoing repairs to the asset. It's not passive by any stretch of the imagination. You can delegate some of these to activities (at a cost), but any business can use subordinates, and the delegation itself is a management activity.

There is nothing stopping you buying a house for cash as per my buying shares in a unit trust.

The difference is that you get someone else to lend you the money, and then you get someone to pay off most of the interest on the loan. So I think it not unreasonable that you have to fix the boiler, paint the walls and so on.

kinger101

BananaRepublic wrote: »

There is nothing stopping you buying a house for cash as per my buying shares in a unit trust.

The difference is that you get someone else to lend you the money, and then you get someone to pay off most of the interest on the loan. So I think it not unreasonable that you have to fix the boiler, paint the walls and so on.

I never said it was unreasonable. I was just explaining how the landlord is actively doing something as opposed holding shares.

Companies (and individuals) also borrow money to finance their activities with the expectation that the profits can be used to repay both the interest and capital.

Once upon a time, banks did lend retail customers money to buy shares. They don't anymore, as buying shares on margin proved too risky for them.