In my experience a good tenant will treat you / your property with the same respect he is shown.
But no matter how well you treat a bad tenant, they will still treat you with contempt.
No-one understands the hassles of BTL unless you’ve been in the game. But I always maintain if you put the work in, it can be an excellent investment.
A while back (ten to fifteen years) I knew a guy who was living in his rental properties for about six months before selling in order to claim that they were his primary residence.
I think HMRC cottoned on to this and there are no rules as such but if you’re clearly acting in a way as to avoid CGT, they’ll come down on you hard.
Seems to be 12months in basic terms
https://www.property-tax-portal.co.u...r-siddiq.shtml
I am sure they don’t like it, nor do they like the likes of Amazon to evade paying their “fair share” but they have to follow rules: unless there is a law that specifically addresses this, and provided you fulfil the criteria for calling one of your previously let properties your principal residence, there isn’t much they can do to come down on you hard...
'Against stupidity, the gods themselves struggle in vain' - Schiller.
It doesn’t quite work like that with HMRC Marc, you’re guilty until you can prove yourself innocent to their satisfaction.
If you only have one extra property to sell then you’ll probably be ok but doing it on a regular basis over a period of time could attract unwanted attention.
I completely accept that ( they are the same in France and I won on a different matter after 3 years, and they paid damages). You would indeed have to be able to prove absolutely everything, your mail, your shopping locally, etc.
But if the sums are substantial, and you are retiring and want to sell, it may be worth doing.
'Against stupidity, the gods themselves struggle in vain' - Schiller.
Absolutely Marc and there are other ways too.
When I had my shop, a very wealthy customer had recently returned from a year in New Zealand.
He’d sold his business and his tax advisor had advised him that as long as he spent less than
Ninety days in the UK in the tax year in which he sold it, he was exempt from CGT.
So selling at the right time and heading over the channel for twelve months may also be an option for you without having to live in the property/properties.
I only have the roof over my head here, unfortunately. I joined the discussion by curiosity and because my solution was so obvious to me that I was wondering why it wasn’t mentioned earlier. I am sure there are experts -maybe Draftsman?- who have much better and more time efficient ways.
'Against stupidity, the gods themselves struggle in vain' - Schiller.
The problem is the dichotomy of the landlord and tenant:-
To the tenant it's a home, with all the reliability and stability associated with that, no tenants no rental market
The landlord it's an unsecured investment with all the risk and reward associated with that, no landlords nothing to rent.
Landlords do not have a social responsibility, they have an investment, tenants do not have any responsibility to the investment of the landlord.
The market is too fragmented for the tenant to find out who is a good landlord but the landlord does have the ability to check to a certain extent who is a good tenant (which is the first asymmetry)
Landlords can give good references to bad tenants which destroys the reference system and maybe if the landlords who suffered at this sued the landlords who abused it, it would stop
Rents are propped up by housing benefit and tax credits, without them the rental market would collapse as many tenants would just not able to afford the rents, the whole sector is forced to chase those who do supply>demand, or more simply supply x desired rents > demand x available money and so prices drop and drop brutally, many landlords are over leveraged and the house of cards starts to collapse, housing prices drop, banks get nervous everyone unhappy. Governments do well to survive housing crashes hence it's easier to keep it going, but maybe questions need to be asked about the state subsidising private landlords to the extent they are. If the state wants to support private landlords to replace social housing, then the landlords need to accept some social responsibility with it, which of coarse in contrary to any investment. No one with an investment has ever said, enough, enough- i don't want any more profit, well not in a capitalist society.
part of the problem is the planning laws we have in the uk, making housing so expensive, it means the entry into buy to let has high admittance price, a price that many can't afford. The growth of buy to let has had a feedback look as planning stops a true balance of supply and demand, the ability of landlords with equity in multiple properties to get credit to buy start homes and flats off plan at a discount has meant a reduction in the availability of first time housing, pushing more people into renting, which forms a feedback loop. Without the planning rules, building would kick on to counteract this. There is claerly a squew as the profit is in those in ther 20s in 1-2 bedrooms, not in bigger properties. This has resulted in lots of the bigger properties being converted into flats or HMOs often inappropriately. Permanently damaging the housing stock and the housing ladder
low interest rates but high deposits further reinforce the problem, it's expensive to join the club, but once in mortgages rates are at an all time low, my first mortgage (which hands up was 110% but was only 3x income) 50% of the monthly payments were interets, 50% equity, my sister has just taken out a mortgage 50% bigger, over a shorter period, the repayments are 75% of what i paid and 90% of each month is equity
The government is equally at fault here, stamp duty is too high and fiscal drag bring more properties into the higher bands, even people with housing can't afford to move. People rather then moving every 5-10 years get trapped
Are the rules wrong, yes there needs to be a better balance. Tenants should not be able to not pay rent without the landlords permission, evictions should be fast easy for those not paying. The landlord should be able to inspect the property and charge the tenant or evict them for damages. It is hard for most sensible people to think otherwise.
The balance, if you are paying rent and not damaging the property landlords should not be able to end contracts, if they want to sell on and the property has a sitting tenant then the new owner must take over the contract. Rent rises should be limited to the rate of inflation if not should be referable to to a tribunal system. Landlords not making timely repairs become liable via rent payments for the loss of value of the facilities.
Both landlords and tenants should have to provide references, landlords and tenants are legally responsible for the accuracy of these
I'm not sure this fixes the problems but we need to find a way to realise that rights come with responsibilities.
To the landlords who i've posted, and i will admit i'm one, sadly it is just an investment vehicle and as they say with any investment, the value of your investment may go down as well as up, past profits are no guarantee of future performance
hmmmmm i'm not sure if you've really read the thread or if you mean this as a joke, so what you're saying if the landlord is legally able to get more money off the state and off tenant why shouldn't they be able to? Is this not the exact opposite of the point of this thread? Because if that is true, then if the tenant is able to not pay rent, not look after the property and are protected by law why should they not be allowed to? If the government now decides it wants to tax the hell out of landlords why should it not be allowed to?
Yes I'd heard something similar as regards the 90 day rule, OR sell the property on condition no return to the UK for a period.. although I believe from recollections of a conversation with my British accountant some time back, admittedly, the picture had become more complex. Individual situations vary, best seek specfic advice.
Personally I accept there's always tax to pay, just the cost of doing business, though I'm all for mitigation wherever legally possible...As I posted yesterday in the US it's 'worse' both the State and Feds have to be paid tribute although for commercial property you can do what's called a 1031 exchange and roll all of your funds from one deal, sin taxes, into another deal provided its within a limited time period, perhaps 180 days iirc...though in reality you be liable on the full tax gain at a point in the future...But it allows you to control what tax year that might fall into fwiw, which could be advantageous. As well as more capital, ie with deferring the taxes at the point of sale, to roll into the next larger deal.
Last edited by Passenger; 10th April 2021 at 11:17.
If you have owned a BTL for say 15 years ... living in it for the 16th year will not wipe away all your CGT liability ... you will be liable for tax on the gain for the years 1-15 but not the gain for the 16th year.
Of course you can twist the valuations a bit in your favour for the date you moved in but not by such a huge amount that makes the process worthwhile.
Edit: this is my understanding but I am not a tax accountant.
Last edited by Montello; 10th April 2021 at 11:05.
No, the question is to Temlpelogin who was seems to think that landlords have a licence to print money.
He complained about his rents being increased on a six monthly basis and the landlords getting tax breaks.
My questions were valid, it has nothing to do with getting more money off the state. If costs are tax deductible then why shouldn’t a landlord take advantage in order to reduce his tax burden?
If the rental value of a property increases then why shouldn’t a landlord increase rents to the correct levels?
It’s not the landlords responsibility to support his tenants because they are unable to support themselves.
Unfortunately the law does allow tenants to live Scott free in other people’s properties because it takes the problem away from the government and a number of tenants take advantage of this. Once all the landlords have had enough and sold their portfolios then the government will have to do something about it. There will always be people who will never be able to afford to buy their own property but there may not be a rental market to provide homes for these people.
Mrpgkennedy. What a well thought out post. I envy your eloquence.
Ah, you mean the opportunity to set your costs against your revenues - just like any commercial enterprise? Unfortunately some of that has been taken away, making the whole thing less attractive. You might consider that to be a good thing, but people need a place to live. Most tenants are tenants because either:
a) They want to be. It suits their circumstances
b) They aren't able to buy because they can't raise a deposit
Neither of these things will change by making private renting less attractive. It will simply throw the burden/opportunity on to large scale landlords and the state. Will that be better? I don't know.
Surely you plan for change?
Hope for the best, plan for the worst has served me well.
Planning for suboptimum scenarios is absolutely the right way to go, but where do you stop? I expect few landlords planned for the compounded penalising of landlords through taxation, layer on top of that covid and potentially poorly behaved tenants, and you have a perfect storm!
The bottom line is that most tenants are ok as are most landlords.
However, there are some opportunists in both camps.
Political shifts are continuing to make being a landlord less attractive through changes in tax legislation, increasing costs for referencing and compliance with various red tape (EPC, EICR etc) and legal over protection of tenants.
Add to that increasing difficulty in finding affordable trades to complete maintenance tasks and the whole show is slowly coming to an end.
This is resulting in fewer landlords and fewer private rentals which will inevitably result is higher rents.
If the government piles into landlords they will end up being the bag holders.
Article in the Guardian
https://www.theguardian.com/commenti...roperty-labour
This is a better article explaining the tax position imo https://www.unbiased.co.uk/life/home...o-let-property
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I briefly read that. I'm not certain giving tenants the right to buy adds anything. If the property is sold at market value they still have the issue of raising a deposit and getting finance. If as claimed 18% of properties were bought by landlords that still leaves 82% for purchase by private buyers. However a more detailed breakdown is required. It is possible that landlords may be buying properties that FTB would be interested in and driving the price up and out of reach ??
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True, although there are still some ways to mitigate risks re covid/Brexit potential job losses even now, there's agencies who'll take the property for very close to market rate, no fees off the top like an Estate agent, long guaranteed rental contracts eg 3 years, and they'll give the place a fresh coat of paint between tenants at their, the agents cost...In a storm they offer a potential safe harbour, the market keeps moving.
An ex-colleague of mine had an agreement similar to this with his then local council. The council would refurbish the property, at the end of their agreement period, to the same standard which he had handed it over. He got less than the market rent and a homeless family got housing. Altruism in safety perhaps?
More or less this, tenants are likely familes on the council housing or emergency housing waiitng lists, they may be in and out in a few months or end up in the property for years, either way no voids, landlords not on the hook for redecoration, or faffing with deposits/ scheme either. The Agency deposits the rent by direct debit every month without fail.
The tenants right to buy legislation (should it ever happen) is potentially another way to screw over the landlord
If a tenant bought a property from me there would be significant cost to replacing the property with one of the same value
Legal fees to sell, legal fees to buy and the 3% stamp duty, so about 5k
I bet this won’t be added into any potential legislation