75% CGT on second homes
- Thread starter Dr House
- Start date
Landlords have been it for many decades. Because the general condition of renting in the UK sucks.
Massively different to the banker situation. Which was media fueled rubbish.
Soldato
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Even if it was 6 months per year living in their Cornwall house and 6 months per year living in their Shropshire house, that is still equivalent to 1 house being empty per year. There definitely need to be higher taxes on people who own 2nd homes. It is unfair on the renters who are trying to get their 1st home.
Same where I live, you CAN spent 300K on a house if you want to buy you'll get 3 bedrooms, drive etc for well under that. My own one is worth about £140K, is 4 bedrooms mid-terrace over 3 floors.
There's a lot more single people looking to buy though than when I last moved, most of which don't seem to be happy with 1 bedroom anymore. They almost expect to "start" with the family house and never move which frankly would be ideal but is only practical in a handful of circumstances.
From my perspective there are a number of issues with the rental market in the UK, but all of them are systemic of a much larger problem which sits at another door step rather than the landlords by default.
I am a landlord myself and I wholeheartedly agree that renting is massively expensive. My properties are not massively leveraged at all but once I take into account all of the fees and costs associated with leasing them (yes including section 24) there is no cash flow for me. In fact in many cases it costs cash year on year. The 'benefit' is elsewhere.
Section 24 was only ever going to do one thing, and it has succeeded in increasing rent so landlords can offset some of the cost. In fact two of the agents that managed my properties recommended that I do it (of course they would.....they get paid a % of the monthly income).
In respect of scumbag landlords who fail to maintain their properties, if anything section 24 has only made this worse as landlords feel the squeeze of the cost.
Where does the blame lie with all of this? In my opinion its the lack of new housing which has pumped up the prices (alongside the help to buy scheme), and resulted in landlords taking out larger mortgages and rolling that cost downwards.
If a 75% CGT was ever introduced on a second property and it had tight regulation in respect of limiting the 'this is my primary residence' loophole effectively removing any incentive then I would never sell up unless I had to.
I am sure there are examples of landlords living the life of Riley in the sun somewhere while someone in the UK struggles to pay their rent on one of their properties, but in the landlord circle I involve myself in, I don't know anyone.
Make it two tiered - if the property has been regularly occupied then then one tax level (but not too punitive) but the flip side is if the property has been mostly empty then its classed as an investment with a much larger tax take on the CGT.
First I don't think it would put that many people in negative equity because most are sitting on large paper profits over the last 10 years
If they bring in a graduated system for example
sell your house in 2018 and pay 40% CGY (which is fair I think)
sell your house in 2019 and pay 50% CGY
sell your house in 20020 and pay £75% CGT
2020 onwards CGT starts become due even if you have not sold ie you have to realise the paper profit, by that time the profit will not actually be that high as house prices would have started to come down over 2 years.
To the person that said rent prices will go up, I think its the opposite, rent is always a function of the value of the property. In London generally about 4 to 6% pa, unto 8 to 10% in other parts of the country. If the value goes down rent prices will follow, more people will be buying so rental demand will go down.
I have nothing against landlords, I have owned both commercial and residential property. I just feel its not right that everyones life is being spoiled by high house prices.
If they bring in a graduated system for example
sell your house in 2018 and pay 40% CGY (which is fair I think)
sell your house in 2019 and pay 50% CGY
sell your house in 20020 and pay £75% CGT
2020 onwards CGT starts become due even if you have not sold ie you have to realise the paper profit, by that time the profit will not actually be that high as house prices would have started to come down over 2 years.
To the person that said rent prices will go up, I think its the opposite, rent is always a function of the value of the property. In London generally about 4 to 6% pa, unto 8 to 10% in other parts of the country. If the value goes down rent prices will follow, more people will be buying so rental demand will go down.
I have nothing against landlords, I have owned both commercial and residential property. I just feel its not right that everyones life is being spoiled by high house prices.
yes but thats the risk you take when you make a investment.
For example my friend, he is not a rich guy but has a normal 4 bed house in Croydon, house prices have gone up and some how house is now worth £1m, he took the extra money about, spent £168k on a 360 Scud and bought another flat to rent.
Soldato
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I would love a 1bed place, problem is They start at £215k in my OX5 town/village.
I can't remember the last time I saw a housing development that had 1 bed flats or house around Oxfordshire. So even on my above average salary for the UK and Oxford (I nether live or work near Oxford anymore) I would need a £60k+ deposit to get a mortgage.
Its only getting worse and worse, with the gap between properties prices and salary's. Setting out self's up for a massive implosion and or massive social issues as a result.
I suppose it depends on the definition of the term over leveraged. I have around 50% equity in all of my rentals, I make zero cash on them and even if the property doesn't increase in value my capital increases every year with the repayments. My benefit is long term, not the short. The status quo is something I am more than comfortable with because I can service it easily. Over leverage to me refers to a situation where you have a loan that you can't service without a struggle.This isn't the case for me.
Am I lighting cigars with £50 notes though?No. This is a far fetched or perception of the landlord populus.
Then there is corruption to deal with. According to Transparency International Uk- 36,342 London properties totalling 2.25 sq miles are held by offshore haven companies. Almost one in ten properties in the City of Westminster (9.3 per cent), 7.3 per cent of properties in Kensington & Chelsea, and 4.5 per cent in the City of London are owned by companies registered in an offshore secrecy jurisdiction. In 2011 alone £3.8bn worth of UK property was bought by British Virgin Islands–registered companies. According to the latest figures, which cover October 2013 to September 2014, estate agents contributed to only 0.05% of all Suspicious Activity Reports (SARs) submitted. This figure does not match the risks posed by money launderers to the UK property market.
Transparency International makes 10 recommendations for reform, calling for buy in from the UK Government, lawyers, and estate agents to ensure that the UK property market is no longer a safe haven for corrupt funds. Action from the British Overseas Territories is also necessary to end this crisis. The key recommendation is that transparency should be established over who owns the companies that own so much property in the UK through making such transparency a Land Registry requirement. Sign our petition to UK political party leaders.