Reply to: Whoever gets in build some flaming houses!

[hugebrain]

Having never done a BTL, that doesn't work in my head. If the rent doesn't cover the mortgage then who pays it? In my mind, servicing the mortgage is a running cost, on top of maintenance and letting agent fees (if you use one).

Imagine if you do it contractor-style and just buy the house outright. Then it’s obvious that if the rent is higher than the running costs you are making money.

The mortgage payments are mostly to make up for the value of money going down because of the governments insane money-printing. But since they are not printing loads of houses (they should be) the house goes up in price while the real value of what you owe on the mortgage plummets - that’s why BTL works so well.

i think they are fairly tax-neutral because the massive sums they hand out to landlords via housing benefit more or less equals the amount of income tax they get back from them.

[ladymuck]

You could go contracting three days a month and whack in an extra day if they don't pay the rent.

Seriously, your mistake is thinking that the rent has to cover the mortgage for BTL to be successful. You only have to cover the running costs, which are negligible.

Having never done a BTL, that doesn't work in my head. If the rent doesn't cover the mortgage then who pays it? In my mind, servicing the mortgage is a running cost, on top of maintenance and letting agent fees (if you use one).

[hugebrain]

A £600k house down south paying £2000 rent a month, after paying 50% tax on that turnover you have £1000 to pay a £3200 mortgage, where do you get the other £2200, what happens if they decide to skip paying rent?

You could go contracting three days a month and whack in an extra day if they don't pay the rent.

Seriously, your mistake is thinking that the rent has to cover the mortgage for BTL to be successful. You only have to cover the running costs, which are negligible.

[hobnob]

This video has some interesting points:
Will The Labour Party Help Build Your House Extension (youtube.com)

Basically, he's advocating for VAT to be scrapped on home renovations. There's no VAT on a new build (e.g. if you buy a plot of land and then hire builders to build you a house), and there's also no VAT on property purchases (e.g. if you buy from a property developer who's just done a new build). That means that if you need more space, it's effectively cheaper to move rather than extending your existing house. I'm not entirely convinced that this is a problem, because the people who move to bigger homes are presumably selling their smaller homes, i.e. there should be the same number of properties available.

His other point is that if Labour (or any other party) want to build loads more houses, where are the builders going to come from? It takes time to train new builders, and 20% of existing builders are over 50 (i.e. approaching retirement). One approach is to increase immigration, i.e. lure the builders back from Poland etc., but that might be controversial...

[vetran]

Ha, ha, touché! I had no idea that was even a thing. I obviously need to get out less

Anyway, as I'm sure you know, what I meant was that many landlords pay tax on the profit from their rentals, which is a disincentive for the government to reduce that profit, especially to zero if the landlord sells and the house becomes owner-occupied. The trick is to keep both sides happy while maintaining tax income, a task which seems quite beyond the current administration.

The UK government (of many flavours) had many contractors and uk staff yet encouraged firms to offshore and onshore to cheaper workers where many companies stopped paying UK tax and and the imported workers earnt so little that other uk employees were paying their benefits.

Expecting the government to make sense is a stretch.

[Snooky]

Quite. The abolition of Schedule A imputed tax on ownership was obviously a great mistake

Ha, ha, touché! I had no idea that was even a thing. I obviously need to get out less

Anyway, as I'm sure you know, what I meant was that many landlords pay tax on the profit from their rentals, which is a disincentive for the government to reduce that profit, especially to zero if the landlord sells and the house becomes owner-occupied. The trick is to keep both sides happy while maintaining tax income, a task which seems quite beyond the current administration.

[woody1]

What has caused wage stagnation? Why do we have a shortage of services or housing?
Where is all this new money going?

Low productivity; we've become an unproductive nation. Despite ultra low interest rates, and QE, for 13 years since the GFC, economic growth has been anaemic.

[vetran]

Or misinformed perhaps?

https://cebr.com/reports/immigration...ion-since-2018

Must be a bit of a bummer, for many of those who voted Leave, that EU immigrants have simply been replaced with non-EU immigrants (and more of them every year).

What has caused wage stagnation? Why do we have a shortage of services or housing?
Where is all this new money going?

[woody1]

Obviously anyone suggesting immigration doesn't generate significant monetary benefits is obviously a racist.

Or misinformed perhaps?

https://cebr.com/reports/immigration...ion-since-2018

Must be a bit of a bummer, for many of those who voted Leave, that EU immigrants have simply been replaced with non-EU immigrants (and more of them every year).

[DoctorStrangelove]

Compare that to those same properties instead being owned by the occupier, mortgaged or not, where no tax is paid on the act of owning or living in the home, and you can see why they're just that - platitudes.

Quite. The abolition of Schedule A imputed tax on ownership was obviously a great mistake:

Since 1963, with the abolition of Schedule A income tax, owner-occupiers are no longer required to declare or pay tax on the notional rental income they would receive from the property in which they live. This reflects the political priority historically attached to boosting home ownership in the UK. None of the parties plans to introduce taxes on imputed rents. In general, such taxes would be inconsistent with politicians’ desire to promote and incentivise owner-occupation.

I think my grandfather paid about £1/17/6d a year.

[vetran]

Would you care to explain where the money is supposed to come from to upgrade our infrastructure?

Well the massive positive events of immigration should supply it. Obviously anyone suggesting immigration doesn't generate significant monetary benefits is obviously a racist. Having cheap pliable labour so that multinationals can offshore their profits does not negatively affect wages or tax take.

Alternatively spending money to improve services should drive growth.

Or we could stop mass immigration and rebuild our services.

[Zigenare]

The thing we need to do when we increase population is to provide the resources & services they need, now why the population is increasing whether it be Bozo /JRM having huge families or by people arriving on Visa's or by rubber boat is another issue. The indigenous population has been below replacement level for decades. Population growth is via immigration or children of immigrants nowadays encouraged by parliament.

Would you care to explain where the money is supposed to come from to upgrade our infrastructure?

[vetran]

I never understood Britian in terms of housing, if there's such a huge need / demand, why isn't there more housing developers building left / right / centre? You can sell basically anything and make tons of money on it.

look up land banking.

[vetran]

You mean the ones you raised.

oh they is no doubt they are mine, - Handsome, clever, witty & stylish!

[dsc]

I never understood Britian in terms of housing, if there's such a huge need / demand, why isn't there more housing developers building left / right / centre? You can sell basically anything and make tons of money on it.