75% CGT on second homes

They have already removed the wear and tear allowance and heavily reduced the ability to claim deductions on mortgage interest.

BTL activity has halved: https://www.theguardian.com/money/2...uk-property-sales-fall-by-almost-50-in-a-year

Bumping up CGT will mean people will just never sell, it would be easier for them to keep an empty property than sell one and pay [insert amount of money here]. If you bought a flat for £500k and in in 10 years it was worth £1m with 100% CGT would you bother selling?
 
Put CGT on all houses and an annual allowance for inflation which is rolled over. The way things are at the moment people are working their entire lifetime for an average house. Maybe it will always be that way but the prices in south East especially are crazy.

Or put stamp duty on to the seller if house prices have been inflationary as they benefit from price rise
 
London isnt typical of the rest of the country though is it, and introducing rules which apply country wide, to what is pretty much a south east issue would be stupid.

You can buy a decent size 3 bed semi detached house with garden and drive for 150k where I live. Hardly unaffordable.

Also, bumping up CGT will likely do nothing at all. Most BTL investors are purely doing it for yield, not for the capital gain. e.g. get 5-8% "interest" from the capital invested, rather than 1-2% in savings. The capital gain is a bonus, not what people are banking on.

also, havent London house prices gone down the last 12 months?
 
As prices are lower and less inflationary in other parts of the country the changes would have less impact do would be ok

I am pretty sure that most BTL in south East were in it for the price inflation more than yield. Obviously it is the combination of those, tax avoidance and low saving interest rates (which fuelled the capital growth) which made it so popular.

It (BTL) is beginning to be tackled and peoples income is so stretched hence possibly a small reduction in prices and slowing of the market.
 
The uk has an obsession with owning property. A large proportion of mainland Europe rents quite happily because rent costs < mortgage interest costs.

Increase supply of houses to allow people to buy if they want to. Mortgages are no longer particularly effIncident for BTL because the interest cost isn’t deductible- I am aware that in London many owners have just passed this cost across to renters.

Concentrate on making the North a viable alternative to London.

Second home investments shouldn’t be punished - it’s one of the few alternatives to pumping money into the financial services system for income in retirement.
 
tax avoidance? really? Id say 28% of your gain, especially given its not exactly cheap to maintain a property over many years is already taking the ****. Why should they get any of it. Adding more rules to the already too big tax rules will only make people search out new ways of reducing legally their tax burden.

Many BTL investors are now creating LTD companies which then own (and paying stamp, and CGT during the transfer) because of the new rules and taxes; and LTD companies dont pay CGT, and the profits come out as dividends at 32% which is cheaper for the business owner.

Also do we have any proof that BTL investors are the reason for the property prices? I doubt it. Its more than likely just simple supply and demand, especially int he SE; with the huge amount of people working their and the massive amount of immigration over the last 20 years.

A different way to sort it would be to target the underlying problem of london-centric business. If corporation tax was made a local issue, then perhaps london would be more expensive and somewhere like Derby, or Newcastle-upon-Tyme would be cheaper to setup shop.

The problem is that targetting BTL investors is nice and easy for the gov of the day, doesnt change anything for the really really rich, make a good headline for the poor and squeezes the middle classes who are for the most part the ones with 1-2 BTL properties as part of a pension strategy. Its just lazy.

(and FYI I dont own a BTL before someone asks!)
 
Snax said:
The uk has an obsession with owning property. A large proportion of mainland Europe rents quite happily because rent costs < mortgage interest costs.
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Actually, speaking as someone who purchased a flat in Germany, people don't happily rent there, it was just always a complete ball ache to buy anywhere from a paperwork/requirements level. It took me nearly a year and loads of hassle to buy a flat, and luckily the seller had people who could help in the local Government. In the end I had a flat in Munich, my mortgage was much cheaper than renting and I was allowed to do things like paint the walls different colours rather than white walls and wooden laminate floor. Renting a place is generally *very* restrictive in Germany, you even need to ask permission to put pictures up, and now that mortgages are more easily accessible more and more people are buying there now.

https://www.ft.com/content/dc6ad2e4-c6ac-11e6-9043-7e34c07b46ef

The only advantage with renting in Germany is that you have a lot more rights as a tenant when it comes to being kicked out, something I'd gladly see here.
 
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mikeh501 said:
London isnt typical of the rest of the country though is it, and introducing rules which apply country wide, to what is pretty much a south east issue would be stupid.

You can buy a decent size 3 bed semi detached house with garden and drive for 150k where I live. Hardly unaffordable.

Also, bumping up CGT will likely do nothing at all. Most BTL investors are purely doing it for yield, not for the capital gain. e.g. get 5-8% "interest" from the capital invested, rather than 1-2% in savings. The capital gain is a bonus, not what people are banking on.

also, havent London house prices gone down the last 12 months?
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This.

I live in the NW.
Our friend is a nurse & her hubby earns less than her. They live in a 4 bed semi, & have a pretty good life. Can go on holidays etc.
Friends kids of an age, can all get on the housing ladder with reasonable jobs.
In fact I don't know anyone that rents, other than people on income support or short term BAE workers from USA & Canada, renting big houses.

Until the North/South divide is addressed this is only going to get worse for you southerners.:
https://www.theguardian.com/uk-news...vestment-in-transport-is-in-london-says-study
 
I don't think that's necessary, the new level of taxation on Buy to Let (section 24) and the restriction of household borrowing to a maximum of 4x net income is having a huge effect in the SE


My old home village of Kidlington; this is very similar to my old house (it is one street up, but mine was slightly smaller) and I got £350k for mine three years ago. Even number 8 (identical layout, mirror image semi-detached) in my street was around the same selling price and that was a dump compared to my house!.

Struggling to get £270k now: https://www.zoopla.co.uk/for-sale/d...8312b40a06f9d936c01370b39#a15Lo4SQZy4RM4fl.97

People are still asking for more for their Kidlington two beds, even in ex council areas!
 
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mikeh501 said:
Many BTL investors are now creating LTD companies which then own (and paying stamp, and CGT during the transfer) because of the new rules and taxes; and LTD companies dont pay CGT, and the profits come out as dividends at 32% which is cheaper for the business owner.
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No, they are not. They would be stung for both CGT and increased mortgage rates at the inception of the LTD company, a lot of buy to let landlords ran things close to the wire i.e. remortgage every last bit of capital gain on new property (and have high LTV mortgages) to avoid tax from rental income. This was the recommended way of going about things for at least the last decade.

Hence most BTL LLs have no spare money to cover their looming tax liabilities, you only have to look at various landlord forums to see the complete state S24 has left them in.
 
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Em3bbs said:
Have you thought about getting a job and paying taxes? Every little helps!
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Been there, done that.

Besides, I spend all my money, no concentration of wealth going on here! Admittedly most of it goes to China but meh.
 
mikeh501 said:
London isnt typical of the rest of the country though is it, and introducing rules which apply country wide, to what is pretty much a south east issue would be stupid.

You can buy a decent size 3 bed semi detached house with garden and drive for 150k where I live. Hardly unaffordable.

Also, bumping up CGT will likely do nothing at all. Most BTL investors are purely doing it for yield, not for the capital gain. e.g. get 5-8% "interest" from the capital invested, rather than 1-2% in savings. The capital gain is a bonus, not what people are banking on.

also, havent London house prices gone down the last 12 months?
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It is in no way just a south east issue.
 
Glaucus said:
It is in no way just a south east issue.
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Yeah - I'm in the South West - cheapest reasonable 3 bed semi or detached with a garden and drive that isn't in a **** area is £212K the decent size ones start at £250K.

EDIT: Really its £275K for what I'd really call a decent size, the others aren't a bad size by modern housing development standard.

These prices have actually come down a bit - ones like the £275K one were at low to mid £300K around 6-12 months ago.
 
The inevitable consequence of a hike in CGT on second properties is they would never be sold. It's already a massively discouraging factor.

People would simple borrow against the equity and pass the properly on to their children at 40% IHT.
 
Dr House said:
This would cause a huge fall in house prices without proportional impact on normal working people. It would force people who have empty homes sitting around not giving any sort of return to rent them out because they are no longer getting huge capital gains.
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A huge fall in house prices doesn't affect normal working people?

You try remortgaging your house if you're in negative equity.
 
As with all of these ideas they need to brought in gradually. What we need is a period of stagnant or very slight decline in house prices for 10 years so people arent in significant negative equity and speculation on borrowing 200k for a house and having it turn into 300k in 5 years is gone, this in itself reduces demand and lowers the house prices.
 
MatteH Oxford said:
No, they are not. They would be stung for both CGT and increased mortgage rates at the inception of the LTD company, a lot of buy to let landlords ran things close to the wire i.e. remortgage every last bit of capital gain on new property (and have high LTV mortgages) to avoid tax from rental income. This was the recommended way of going about things for at least the last decade.

Hence most BTL LLs have no spare money to cover their looming tax liabilities, you only have to look at various landlord forums to see the complete state S24 has left them in.
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Whilst "many" is perhaps too loose a description, there is a large increase in BTL landords using LTD companies. It may not be existing properties, perhaps new ones, but its certainly happening. The other cost is conveyancing which is still required.

https://www.google.co.uk/search?q=r...rome..69i57.4352j0j7&sourceid=chrome&ie=UTF-8

I think the other reason its a rising trend is simply because we dont know what crazy corbynista policies are coming down track (if he wins), to kill off all these undesirable landlords! a company provides better protection.

the laughable thing is that the recent mortgage relief removal actually helps the really rich landlords, as its removing some of their competition at auction!
 
Glaucus said:
Y
Insane council tax for empty properties.

But more importantly much greater renters rights and conditions. Stop have a go for profit and put in no effort landlords which seem to be 95% of the market.
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Trouble is here, you are penelising people for not letting their properties,

And then you are penelising them for doing so....

I am actually in that position now. I never "Planned" to have an unoccupied property, but letting the damn place out is such a massive ballache that I am better off just using it as storage (Which I do actually need at the moment

Yes, I could sell, but...

a) There are personal non-financial reasons why I would prefer not to.

b) What would I do with the money? Stock market is at pretty much all time high. A rotten time to buy in methinks...

:/
 
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