Housing benefit to private landlords

Electrum

cells wrote: »

What do you think should happen to those unable to afford housing?

Do you think instead of having a housing benefit which is based on local areas there should be a national 'dole money' which also covers housing.

So for instance if its currently £100pw living money and x per week housing money (where x is £100pw to £400pw depending on local rents) have a flat £250pw living money for all areas. (Also this living money would depend on size of household)

Then poor people have the choice to spend that £250pw to live in London or move out to stoke.

I think that would be a reasonable idea however the unintended consequences are

1. People move within London to the cheaper areas
2. People rent smaller to afford. Eg instead of renting a 3 bed for £1500pm they rent a 2 bed for £1000pm
3. People share/cram perhaps two households to a unit.

One thing overlooked is that most families in London on housing benefit are working and earning a normal wage. Its not because they are scroungers its because housing benefit has pushed up rents to distorted levels and property prices with them. Take away housing benefit and rents would have to fall a huge amount so most normal working families can pay the rent out of the paycheque.

Also this benefit cap has been partly doing what you are talking about, its only £500 total for families not working, so if about £250 is tax credit and all that, then they dont want to spend more than £250 on rent, if they live in London it may be £350 week on rent only leaving them £150 for living, so they prefer to move further out where they can find a place where they can rent for £250.

Electrum

Thrugelmir wrote: »

No direct money. Totally the reverse. The air is being very slowly engineered out of the balloon.

chucknorris wrote: »

I agree, I think shares are now a better investment than London property. Due to the current high price of London property (lower yield and less scope for real term capital gain) and the recent changes (loss of the wear and tear allowance, mortgage interest as an expense capped at 20%, the additional 3% stamp duty, the higher CGT rate (which is difficult to avoid, unlike shares) and the much better income tax treatment of dividend income compared to rental income. If I was starting out now, I wouldn't be aiming to own a property portfolio, maybe just one investment property for overall portfolio diversity, but definitely not a property heavy portfolio.

The stealth tax on the greedy landlords is only just starting, desperate governments tax non portable things, like property with rental income, even if the governments are mostly paying the rental income to start with.

Property cant be taken offshore, unless you sell up in the UK and buy elsewhere... HANG ON A SEC;)

chucknorris

Electrum wrote: »

The stealth tax on the greedy landlords is only just starting, desperate governments tax non portable things, like property with rental income, even if the governments are mostly paying the rental income to start with.

Property cant be taken offshore, unless you sell up in the UK and buy elsewhere... HANG ON A SEC;)

You are far too emotionally involved, it isn't just starting, it is done (unless you are referring to the phased introduction of the mortgage interest as an expense). But as my post stated enough has already been done to make shares more attractive.

kinger101

Electrum wrote: »

The stealth tax on the greedy landlords is only just starting, desperate governments tax non portable things, like property with rental income, even if the governments are mostly paying the rental income to start with.

You're almost right. I don't think the rules will make any difference to the proportion of property in the hands of private landlords. It just shifts to those needing less leverage (with a 3% SDLT surcharge along the way), and more of the profit than lies with the landlord rather than the bank.

The landlord is probably taxed at 40%. The banks are notionally taxed at a much lower rate (20%), but can easily shift their profit offshore.

chucknorris

kinger101 wrote: »

You're almost right. I don't think the rules will make any difference to the proportion of property in the hands of private landlords. It just shifts to those needing less leverage (with a 3% SDLT surcharge along the way), and more of the profit than lies with the landlord rather than the bank.

The landlord is probably taxed at 40%. The banks are notionally taxed at a much lower rate (20%), but can easily shift their profit offshore.

I do think that it will make a difference (especially in London), but most likely not as much as some expect. Although I did consider hanging on to my properties for longer because I am not significantly leveraged (I can pay off the mortgages if I want to, but obviously I don't want to pay off my mortgages with a rate well below 1%), as I would have a competitive edge over landlords that are leveraged, and those having to pay the 3%. But the urge for an easier life is stronger than making money to me now, but after December I drop down to 1 day a week a work, maybe that will be enough, I don't know yet.

mwpt

cells wrote: »

What do you think should happen to those unable to afford housing?

Do you think instead of having a housing benefit which is based on local areas there should be a national 'dole money' which also covers housing.

Something like that. I would prefer that the true cost of things is less hidden, in general. I'm not a fundamentalist about this sort of stuff, so it would be appreciated if you keep that in mind.

For example, I fully support the NHS, the welfare state up to a certain extent, and so forth. I just believe there are tweaks we could make that would make it more efficient and better for more people.

That is why I'm actually a supporter of citizens income in some form. I would prefer people were able to make their own choices and were not vilified as scroungers.