A big problem is that many of the overseas buyers don't live in the property and don't even let it. London property is seen as a safe place to put your savings.
One thing that can be done is for council tax reform. The bands have been the same since 1991. The top band is for properties over £320,000, so studios in some parts of the London pay the same as Hyde Park mansions.
This is much better than a mansion tax with an arbitary cut-off point.
Like the sound of that but not sure that Council Tax is meant to penalise property owners. Doesn't every penny collected have to be accounted for, hence you pay significantly more if you live in prestigious areas.
Bit flippant considering I don't want this to become a vilification of all landlords, just pointing out that if you are a wannabe first time buyer like me, seems unfair that others can own 4/5 properties.
It's not going to change and will probably get worse.
Work hard, save up and you can buy a house.
I did that.
I bought my house in 1985. I left to go to Prague in 1993. Fortunately I kept the house.
When I left, having worked hard, I was on a very decent salary. So I had what was a decent house (3 bed modern terrace)
20 years later I have established that the typical salary now for the job I was doing then has risen 33%.
Yet the value of my house has risen by 430%!!!!!
How could someone in their mid 30's, possibly afford even my modest 3 bed town house, in need of modernisation, now?
They are going to do a bit more than just "work hard and save up", aren't they?
Honestly, I watch it from afar, thankful I never sold the thing, but bewildered by how people are expected to live in London now.
Thanks Prague, saved me a reply there. Perhaps I, like many others just aren't working hard enough.
As said, I'm not on a bring down landlords and their greed mission. I tried to offer a balanced argument that people are only looking after their families if they invest in property etc. But, based on everything I see/hear/read, someone owning 4/5 properties in the current climate is quite demoralising, as it only contributes to other people getting less of a chance of owning
In a country like ours where the population is growing far faster than new homes are being made available and people are already living in cramped conditions, it can no longer be considered moral to allow people to profit on a necessary and finite resource such as land & property when there are so many people either homeless, in temporary housing or in overcrowded homes. If the government really wants to cut the housing benefit bill, instead of punishing those in social housing by cutting housing benefit, it needs to target those who exploit this country's lack of suitable housing for massive profit and their own personal self-satisfaction.
There are plenty of non-property investments that investors can use to make profit (even commercial property at a stretch) but the fact is when the housing market can be exploited for profit, the effects are always going to be a rise in homelessness, hyperinflation of prices, and the need for more government spending as the poor are priced out of the market and need to rely on benefits & social housing in order to live.
As long as the government is paying for social housing, they are effectively subsidising those profiting from the exploitation of the fear of homelessness. Can you imagine if cancer treatment was expensive and unavailable on the NHS but the government subsidised cigarette companies?
Why is owning such a common aspiration? I understand these days with rents so high but it is an aspiration that has gripped more and more people since right to buy your council house was first encouraged and seems to have gotten an ever tighter grip of people.
Not being at the mercy of shit landlords who do the bare minimum of maintenance, raise the rent by huge amounts each year, and then kick you out at short notice. It's enough of a pain in the arse when you're young and single, but once you've got kids you need stability, rather than having to worry about finding an affordable place to live that's near their school(s) or finding them new school places where you've ended up having to move to.
Agree with you for the most part of course. Bad landlords are not uncommon with practices as you describe. They also skew the market by owning multiple properties. A clear case for stronger red tape and intervention; tighter controls over landlords and especially chase down buy to let landlords for tax on income received. So much more could be done by tightening existing rules protecting tenants, as well as building more affordable and co-operatively owned housing. My point stands i think, that blindly jumping on the wheel of property ownership doesn't help the wider problem.
A big problem is that many of the overseas buyers don't live in the property and don't even let it. London property is seen as a safe place to put your savings.
One thing that can be done is for council tax reform. The bands have been the same since 1991. The top band is for properties over £320,000, so studios in some parts of the London pay the same as Hyde Park mansions.
This is much better than a mansion tax with an arbitary cut-off point.
Like the sound of that but not sure that Council Tax is meant to penalise property owners. Doesn't every penny collected have to be accounted for, hence you pay significantly more if you live in prestigious areas.
Not really about penalising owners but getting us back to where we were when it was set up. Virtually nobody pays band A (properties less than £40K). Instead in London and the SE everyone is squeezed into the top 2 bands G (£160K-£320K) and H (£320K+).
The owner of a £80m penthouse at One Hyde Park (Westminster City Council) pays exactly the same as the owner of a £320,000 one bedroom ex-council house in Pimlico.
1 million newcomers here (thats net) in the next 4 years------regardless of which colour the next Government is building cant not keep pace with that. A city every 4 years which will need its own hospitals etc etc etc-----the prices for houses are totaly out of reach of the majority of youngsters and i cant see that changing.
We have our hse up for sale (contract agreed) was stunned when i was told the value, and then found out 2 bedroomed flats are going for £400k !! yes in Kidbrooke.
Buy-to-Let was mentioned and you are supposed to declare the income you receive from the rental and pay tax on it.
These people from Hong Kong, China, et al that have access to buy these houses and rent them out, presumably don't pay tax on the income generated.
That can't be right
It's not and neither are you. All rental income derived from a UK situs property is taxable here in the UK at exactly the same rates as anybody else. Also check out the ATED rules for a realistic view of how property is taxed in the UK irrespective of where you live.
Sorry to burst your own and the Daily Fail's bubble but taxation of rental income earned by non UK residents is really not one of the problems.
Work in this industry and he would be surprised at some of the stories I could tell you. The fact is cash is king. These developers will keep pandering to the needs of the foreign client because they have the money.
One property we did some design work on was a large penthouse at £4 million. A Russian man came over and said she wasn't size and wanted to buy the one belowto effectively double his property. It was then redesigned to become one large duplex which was now worth £9 million. Bear in mind this is for his son who started at university this September. The Russian man was so impressed with it he did exactly the same in the next tower along for his daughter who starts university next year.
So why would I have 10 flats at about £400,000 that will be given to social tenants when he can make a very easy £18,000,000 on two large ones
baby boomers retiring and selling their properties for closer to £1 million and then buying a little bungalow some where nice and quiet for £250,000 and sitting on the money and taking their pension til they die when it gets eaten up by inheritance tax.
Now those in their 50s dont have much of a pension pot to piss in and it's looking like their house prices will crash at some point, no pension, no money from property. First time buyers have no hope. Another example of baby boomers kicking the ladders down once they get to the top.
In a country like ours where the population is growing far faster than new homes are being made available and people are already living in cramped conditions, it can no longer be considered moral to allow people to profit on a necessary and finite resource such as land & property when there are so many people either homeless, in temporary housing or in overcrowded homes. If the government really wants to cut the housing benefit bill, instead of punishing those in social housing by cutting housing benefit, it needs to target those who exploit this country's lack of suitable housing for massive profit and their own personal self-satisfaction.
There are plenty of non-property investments that investors can use to make profit (even commercial property at a stretch) but the fact is when the housing market can be exploited for profit, the effects are always going to be a rise in homelessness, hyperinflation of prices, and the need for more government spending as the poor are priced out of the market and need to rely on benefits & social housing in order to live.
As long as the government is paying for social housing, they are effectively subsidising those profiting from the exploitation of the fear of homelessness. Can you imagine if cancer treatment was expensive and unavailable on the NHS but the government subsidised cigarette companies?
At the risk of sounding like a broken record... broken record... broken record... It's not moral that the 2000 or 3000 richest Brits pay as little tax as they possibly can (if any), while there are working people resorting to food kitchens to survive. Sort out those over indulged few and the rest becomes easy.
Am I right in thinking that all landlords "buy to let" by the way? Or are we using that expression to distinguish from people like the Duke of Westminster, who inherited to let, which is far more acceptable...
In a country like ours where the population is growing far faster than new homes are being made available and people are already living in cramped conditions, it can no longer be considered moral to allow people to profit on a necessary and finite resource such as land & property when there are so many people either homeless, in temporary housing or in overcrowded homes. If the government really wants to cut the housing benefit bill, instead of punishing those in social housing by cutting housing benefit, it needs to target those who exploit this country's lack of suitable housing for massive profit and their own personal self-satisfaction.
There are plenty of non-property investments that investors can use to make profit (even commercial property at a stretch) but the fact is when the housing market can be exploited for profit, the effects are always going to be a rise in homelessness, hyperinflation of prices, and the need for more government spending as the poor are priced out of the market and need to rely on benefits & social housing in order to live.
As long as the government is paying for social housing, they are effectively subsidising those profiting from the exploitation of the fear of homelessness. Can you imagine if cancer treatment was expensive and unavailable on the NHS but the government subsidised cigarette companies?
At the risk of sounding like a broken record... broken record... broken record... It's not moral that the 2000 or 3000 richest Brits pay as little tax as they possibly can (if any), while there are working people resorting to food kitchens to survive. Sort out those over indulged few and the rest becomes easy.
Agreed, it's all part of the same problem - people can't afford to eat because their wages are terrible so the government subsidises their wages and spends money supporting initiatives to stop people going hungry whilst the poor's employers earn massive profits. Essentially the government is subsidising business who exploits their employees.
Tax avoidance and evasion is a somewhat different issue - it's immoral but if employers paid their employees a living wage and housing was allocated according to need rather than ability to pay then we wouldn't need such high taxes in the first place to the point that people went out of their way to avoid paying it.
A big problem is that many of the overseas buyers don't live in the property and don't even let it. London property is seen as a safe place to put your savings.
One thing that can be done is for council tax reform. The bands have been the same since 1991. The top band is for properties over £320,000, so studios in some parts of the London pay the same as Hyde Park mansions.
This is much better than a mansion tax with an arbitary cut-off point.
Like the sound of that but not sure that Council Tax is meant to penalise property owners. Doesn't every penny collected have to be accounted for, hence you pay significantly more if you live in prestigious areas.
Not really about penalising owners but getting us back to where we were when it was set up. Virtually nobody pays band A (properties less than £40K). Instead in London and the SE everyone is squeezed into the top 2 bands G (£160K-£320K) and H (£320K+).
The owner of a £80m penthouse at One Hyde Park (Westminster City Council) pays exactly the same as the owner of a £320,000 one bedroom ex-council house in Pimlico.
But Jints, that one bedroom place would have to have been valued at 320k back in 1991to fall into that band. It doesnt matter what the value of that 1 bed place is now.
Buy-to-Let was mentioned and you are supposed to declare the income you receive from the rental and pay tax on it.
These people from Hong Kong, China, et al that have access to buy these houses and rent them out, presumably don't pay tax on the income generated.
That can't be right
It's not and neither are you. All rental income derived from a UK situs property is taxable here in the UK at exactly the same rates as anybody else. Also check out the ATED rules for a realistic view of how property is taxed in the UK irrespective of where you live.
Sorry to burst your own and the Daily Fail's bubble but taxation of rental income earned by non UK residents is really not one of the problems.
Just for my education on this issue, may I ask
1. If the owner is resident in a country with a double taxation treaty in place, then the owner can elect to pay tax on the rental in that country, right?
2. What about the notorious non-doms, such as Abramovic? Do you think they pay UK tax on rental income here. I bet they don't
3. What about capital gains tax liability when they come to sell? Especially if they are claiming double taxation exemption
The issue is partly down to London being seen as a safe haven for money to put into property by wealthy people the world over. They are usually cash buyers. Overseas buyers may never have seen the UK and often have only heard of London (or possibly Manchester - because of the football). Regulating mortgage lending will help a little bit (it's starting to happen now) but that won't stop overseas buyers. You cannot build enough houses in London each year to reduce prices by much.
I don't know the answer but you can still buy a nearly new 2 bed nice house near Cardiff for under 120k!
Buy-to-Let was mentioned and you are supposed to declare the income you receive from the rental and pay tax on it.
These people from Hong Kong, China, et al that have access to buy these houses and rent them out, presumably don't pay tax on the income generated.
That can't be right
It's not and neither are you. All rental income derived from a UK situs property is taxable here in the UK at exactly the same rates as anybody else. Also check out the ATED rules for a realistic view of how property is taxed in the UK irrespective of where you live.
Sorry to burst your own and the Daily Fail's bubble but taxation of rental income earned by non UK residents is really not one of the problems.
Just for my education on this issue, may I ask
1. If the owner is resident in a country with a double taxation treaty in place, then the owner can elect to pay tax on the rental in that country, right?
2. What about the notorious non-doms, such as Abramovic? Do you think they pay UK tax on rental income here. I bet they don't
3. What about capital gains tax liability when they come to sell? Especially if they are claiming double taxation exemption
1. Not strictly, the rule in the UK is that tax is payable here by non residents/ Non Doms. They can register with HMRC as a non resident landlord in order to receive the rents gross but if they don't then the letting agent or the tenant must deduct tax at the basic rate from the rent before it is paid. Obviously if they register then HMRC will have a record and will issue Returns etc and charge the tax due. A double taxation agreement will enable the landlord to claim relief for UK tax paid in their country of residence provided the treaty allows for it. There is no general election to be taxed elsewhere.
2. Domicile is separate from residence and as such only affects the taxation of their non UK income. Given how much time he spends here and his business ties to the UK i think we can safely assume that Roman is UK resident/non domiciled. As such he is fully taxable on his entire UK income be it rental profit, bank interest or salary. As a non dom he can elect to be taxed on the remittance basis. If he does so he will not be taxed in the UK on income or gains arising outside the UK provided that he does not remit that income or those gains into the UK but if he does so elect he will almost certainly be required to pay The Remittance Basis Charge of £30,000 or £50,000 per annum in addition to the tax due on his UK income depending on how long he has been UK resident.
3. The Capital Gains Tax total exemption only applies to your principle private residence. If you are non resident in the UK and therefore living abroad full time you cannot claim that the property in the UK is the one you are living in full time and in addition if it is let then it is not even available for you to live in. In the past you would have been correct in so far as a non UK resident would not have been liable to Capital Gains Tax but the Finance Act 2013 ( I think but it might have been earlier) removed this general exemption for UK real property owned by non residents. Again the Double Tax Treaty relief will give relief in the country of residence provided that country has a tax analagous to our Capital Gains Tax but not here in the UK.
Hope this is helpful, incidentally Ive just re-read my earlier post which came across as more sarky than was intended. I apologise for any offence but I think is is important not to let a misunderstanding of the rules divert attention from the real problems.
Bit flippant considering I don't want this to become a vilification of all landlords, just pointing out that if you are a wannabe first time buyer like me, seems unfair that others can own 4/5 properties.
It's not going to change and will probably get worse.
Work hard, save up and you can buy a house.
I did that.
I bought my house in 1985. I left to go to Prague in 1993. Fortunately I kept the house.
When I left, having worked hard, I was on a very decent salary. So I had what was a decent house (3 bed modern terrace)
20 years later I have established that the typical salary now for the job I was doing then has risen 33%.
Yet the value of my house has risen by 430%!!!!!
How could someone in their mid 30's, possibly afford even my modest 3 bed town house, in need of modernisation, now?
They are going to do a bit more than just "work hard and save up", aren't they?
Honestly, I watch it from afar, thankful I never sold the thing, but bewildered by how people are expected to live in London now.
I think a major part of the problem is there are so many people now that want to live
A big problem is that many of the overseas buyers don't live in the property and don't even let it. London property is seen as a safe place to put your savings.
One thing that can be done is for council tax reform. The bands have been the same since 1991. The top band is for properties over £320,000, so studios in some parts of the London pay the same as Hyde Park mansions.
This is much better than a mansion tax with an arbitary cut-off point.
Like the sound of that but not sure that Council Tax is meant to penalise property owners. Doesn't every penny collected have to be accounted for, hence you pay significantly more if you live in prestigious areas.
Not really about penalising owners but getting us back to where we were when it was set up. Virtually nobody pays band A (properties less than £40K). Instead in London and the SE everyone is squeezed into the top 2 bands G (£160K-£320K) and H (£320K+).
The owner of a £80m penthouse at One Hyde Park (Westminster City Council) pays exactly the same as the owner of a £320,000 one bedroom ex-council house in Pimlico.
That's not quite right about Council Tax. It's based on the value IN 1991 when those bands were set up, rather than the value now. My 2 bed flat in Lewisham (current value circa £350k) is in Band B because it was worth about £45k in 1991, and the house I used to live in with my ex (current value circa £450k) is in Band C. So the Hyde Park Penthouse wont be paying the same as the ex council house. For the most part, as far as I'm aware, the bandings are reasonably fair.
It is criminal that people cannot get on the London and South East property ladder. I worry for all the Greenie Juniors, lord knows if/when they will ever be able to buy a house.
If you want to understand what’s gone wrong with property, imagine car manufacturers were in future only allowed to build small hatchbacks. The price of a Ford Mondeo would gradually rise as family cars became more scarce and it would drag up the price of a hatchback beyond the reach of the first time buyer. The Ford Mondeo would become a luxury item which only the well off could afford and only Arabs would be able to afford a BMW. It can be argued that it is not only the lack of affordable housing being built but also the lack of modest family housing being built, where it is needed, that's a big part of the problem.
Planning policy has no regard for how property markets work and are designed to prevent developers building what they think is needed in order to meet what planning policy decides is needed. For example - an exclusive development of 6 executive houses was granted approval in the Surrey green belt subject to a couple of semis as “affordable” housing. There are no shops, no buses, no schools, no work and the nearest town is 7 miles away. The “affordable” housing has not been sold, neither have the two units either side of the affordable housing. The affordable housing which cannot be afforded should have been on land near the town where people need to live and work not stuck in the middle of nowhere looking like a social experiment.
Given that more Surrey green belt is occupied by golf courses than housing, I don't accept the green belt needs to be destroyed to meet housing needs and building houses in places no one wants to live is not helping solve the basic problem which is lack of supply. Restricting the ability to get planning simply pushes up the value of land which gets planning. The cost of building a house has not changed much and the high property prices for new builds are purely because of artificially high land values resulting from bad planning laws.
Investors in property, as opposed to house buyers, are looking for a yield and most sources of low risk yields have disappeared with low interest rates. So demand for rental income has grown and house buyers and investors are competing for the same asset for different reasons, and guess what, investors have access to more capital than first time buyers. Quantative easing has caused as many problems as it has solved and when it disappears and markets adjust there will be turmoil for many homeowners and buy-to-let speculators.
Prague's 430% property rise over 20 years inflation carries a bit of inflation which accounts for around 180%. 430% is not extraordinary in terms of historic investment returns, a bit below the historical average for equities of 460% but above the actual equity returns of around 360%. The extraordinary thing is the lagging behind of wages, that is a key ingredient. At present, property prices need to fall by 30% to get back to sustainable prices in line with wages. In reality a mixture of increasing wages and reducing house prices needs to happen.
The bubble must burst because politicians will need the votes of the disenfranchised and will have to stop supporting house price inflation to make home owners feel good and spend borrowed money. When the property bubble bursts, those who think their home is their pension or buy-to-let generates a safe pension income will realise that the property market is no more of a one-way-bet than any other market where prices are driven by speculation. There are many more lower risk ways to invest in property growth that uses commercial rather than domestic property and provides diversification so those envying the speculating landlords are simply wishing they could become part of the problem.
If you need income you can now participate in crowd funding that for all parties cuts out the middlemen, the banks, for a decent fixed yield of around 8% provided by strong businesses that can't get money for investment from the banks. So my hope is that investing in domestic property for income is seen for what is is, a high risk, high maintenance and inefficient method compared to modern alternatives. People with savings who want to build up a pension can now start directly supporting real ventures with loans that generate jobs and wealth instead of helping to price out home buyers and setting unaffordable rents.
Dippenhall - it's funny you mention golf courses. I cannot fathom why so many golf courses as so close together. There's around 3-4 within a 5 mile drive of my house. I struggle to think of any other recreational activity that requires so much purpose built land space, and the only people who regularly play golf are usually the well-off anyway. Surely the land could be put to much better use? I'm not necessarily saying housing and I am opposed to destroying areas of natural beauty just so we can fit more humans in this country but as the population continues to rocket, there is eventually going to be the need to look at whether we are making the best use of space and golf courses definitely rank low on things we ought to be prioritising.
As a golfer, I can't help but agree. One of the worst things about the game is the, frankly, ridiculous waste of land associated with it. The number of courses in Surrey is obscene - it could easily be cut in half. However, the land is designated greenbelt in most cases, so unavailable for housing.
Surrey councils are starting to clamp down on planning permission for golf courses in the past few years - there's an ongoing row about another needless golf resort being built somewhere near Leatherhead I believe - but it's too little, too late.
Watched this last night, followed by another Dispatches episode 'Children on the Bread Line', not sure how old that episode was, it just auoplayed on 4OD and I ended up watching it.
Came away from it all with an overwhelming sense of injustice. The housing crisis is all part of the increasing polarisation between the have and the have-nots in British society, as it is in many developed world societies, to be fair.
One of the most shocking statistics was that 2/3 of the families being forced to turn to food banks have at least one person working.
It seems more and more each year, the odds get stacked against people at the bottom and the chances of people breaking free and moving upward socially get less and less. From healthy fresh produce being more expensive vs processed crap, to gas payment meter rates being higher than direct debit rates, to the ever increasing cost and unavailability of housing, to a benefits system that often excludes the most needy and vulnerable who don't have the capability or support to fight the constant rejections and diversionary tactics whilst often protecting those who know how to play and exploit the system, the poorest in society are increasingly being left to rot by a political class that pays lip service to helping them but ultimately don't care because they don't need these people's votes or financial backing.
Most immoral of all, it seems the people who are now suffering the most are those on low incomes but who want to work and want to stand on their own two feet. Meanwhile, the rich get richer and richer every year and more and more of the world's wealth gets locked away in off-shore bank accounts.
It all just seems so wrong to me, and most depressing of all, I see no one in power doing anything real about it.
funny that I don't recall all these "landlords" with their half a dozen rental properties in their "investment portfolios" 25 years ago when mortgage interest rates were 12%.
I know a lot of people have jumped on the btl bandwagon in the last 5-10 years now that they cant earn any interest on their capital & believe that property prices only go up. Problem is if you ask then they would say they are risk adverse & would not think of investing their money into the stockmarket.........but don't understand that they are taking a big risk buying a btl property - esp if they buy 4 or 5 as per the programme.
cant wait for another early 90's slump and property prices drop 20-30% , meaning tenants can then afford to buy their own property & no need to rent....double trouble of capital loss & no rental income to cover the mortgage payments (which have been artificially low for the past 6 years)
I saw an article the other day that stated that the next generation of ordinary people are the first for decades that can expect a lower standard of living than the last. Part of the problem is too many of the people at the bottom are brainwashed by media into not realising where the problems really lie... ( There goes that broken record again - sorry ).
Reducing or eliminating stamp duty would somewhat paradoxically bring down prices. As pure 'dead money', it acts as a heavy disincentive to moving - as others have noted, if even a modest family home in many areas is £1m+ then buyers need to find £50k in stamp duty on top of other moving costs. Result: people renovate and/or make do rather than move.
The increase in supply which would result would have a very meaningful impact on prices and filter all of the way down the ladder.
At just 2% of total UK tax receipts, the lost revenue could easily be replaced.
I also think we need to promote other cities and towns in the UK for businesses to relocate. I know that will be a long road, but if certain regions had say their own tax powers (to an extent), that may encourage people away from London.
I know we have regional development agencies, but they can only do so much
I also think we need to promote other cities and towns in the UK for businesses to relocate.
To me, that seems to provide [a part of] the answer to so many of the complaints on this forum, from overcrowding on public transport to pressure on schools and health system to preserving the green belt to removing the perceived London bias of government policies.
The problem is, the way to do that is to make London subsidise development in the rest of the country to some extent, more than currently happens. I'm not sure that's an easy thing to sell to people in London - spending lots more money on Hull or Glasgow or Birmingham and underinvesting in London.
I wonder how much a penthouse overlooking the Humber would cost.
Comments
I did that.
I bought my house in 1985. I left to go to Prague in 1993. Fortunately I kept the house.
When I left, having worked hard, I was on a very decent salary. So I had what was a decent house (3 bed modern terrace)
20 years later I have established that the typical salary now for the job I was doing then has risen 33%.
Yet the value of my house has risen by 430%!!!!!
How could someone in their mid 30's, possibly afford even my modest 3 bed town house, in need of modernisation, now?
They are going to do a bit more than just "work hard and save up", aren't they?
Honestly, I watch it from afar, thankful I never sold the thing, but bewildered by how people are expected to live in London now.
Thanks Prague, saved me a reply there. Perhaps I, like many others just aren't working hard enough.
As said, I'm not on a bring down landlords and their greed mission. I tried to offer a balanced argument that people are only looking after their families if they invest in property etc. But, based on everything I see/hear/read, someone owning 4/5 properties in the current climate is quite demoralising, as it only contributes to other people getting less of a chance of owning
There are plenty of non-property investments that investors can use to make profit (even commercial property at a stretch) but the fact is when the housing market can be exploited for profit, the effects are always going to be a rise in homelessness, hyperinflation of prices, and the need for more government spending as the poor are priced out of the market and need to rely on benefits & social housing in order to live.
As long as the government is paying for social housing, they are effectively subsidising those profiting from the exploitation of the fear of homelessness. Can you imagine if cancer treatment was expensive and unavailable on the NHS but the government subsidised cigarette companies?
The owner of a £80m penthouse at One Hyde Park (Westminster City Council) pays exactly the same as the owner of a £320,000 one bedroom ex-council house in Pimlico.
We have our hse up for sale (contract agreed) was stunned when i was told the value, and then found out 2 bedroomed flats are going for £400k !! yes in Kidbrooke.
Sorry to burst your own and the Daily Fail's bubble but taxation of rental income earned by non UK residents is really not one of the problems.
One property we did some design work on was a large penthouse at £4 million. A Russian man came over and said she wasn't size and wanted to buy the one belowto effectively double his property. It was then redesigned to become one large duplex which was now worth £9 million. Bear in mind this is for his son who started at university this September.
The Russian man was so impressed with it he did exactly the same in the next tower along for his daughter who starts university next year.
So why would I have 10 flats at about £400,000 that will be given to social tenants when he can make a very easy £18,000,000 on two large ones
Now those in their 50s dont have much of a pension pot to piss in and it's looking like their house prices will crash at some point, no pension, no money from property. First time buyers have no hope. Another example of baby boomers kicking the ladders down once they get to the top.
Am I right in thinking that all landlords "buy to let" by the way? Or are we using that expression to distinguish from people like the Duke of Westminster, who inherited to let, which is far more acceptable...
Tax avoidance and evasion is a somewhat different issue - it's immoral but if employers paid their employees a living wage and housing was allocated according to need rather than ability to pay then we wouldn't need such high taxes in the first place to the point that people went out of their way to avoid paying it.
It doesnt matter what the value of that 1 bed place is now.
1. If the owner is resident in a country with a double taxation treaty in place, then the owner can elect to pay tax on the rental in that country, right?
2. What about the notorious non-doms, such as Abramovic? Do you think they pay UK tax on rental income here. I bet they don't
3. What about capital gains tax liability when they come to sell? Especially if they are claiming double taxation exemption
I don't know the answer but you can still buy a nearly new 2 bed nice house near Cardiff for under 120k!
2. Domicile is separate from residence and as such only affects the taxation of their non UK income. Given how much time he spends here and his business ties to the UK i think we can safely assume that Roman is UK resident/non domiciled. As such he is fully taxable on his entire UK income be it rental profit, bank interest or salary. As a non dom he can elect to be taxed on the remittance basis. If he does so he will not be taxed in the UK on income or gains arising outside the UK provided that he does not remit that income or those gains into the UK but if he does so elect he will almost certainly be required to pay The Remittance Basis Charge of £30,000 or £50,000 per annum in addition to the tax due on his UK income depending on how long he has been UK resident.
3. The Capital Gains Tax total exemption only applies to your principle private residence. If you are non resident in the UK and therefore living abroad full time you cannot claim that the property in the UK is the one you are living in full time and in addition if it is let then it is not even available for you to live in. In the past you would have been correct in so far as a non UK resident would not have been liable to Capital Gains Tax but the Finance Act 2013 ( I think but it might have been earlier) removed this general exemption for UK real property owned by non residents. Again the Double Tax Treaty relief will give relief in the country of residence provided that country has a tax analagous to our Capital Gains Tax but not here in the UK.
Hope this is helpful, incidentally Ive just re-read my earlier post which came across as more sarky than was intended. I apologise for any offence but I think is is important not to let a misunderstanding of the rules divert attention from the real problems.
I did that.
I bought my house in 1985. I left to go to Prague in 1993. Fortunately I kept the house.
When I left, having worked hard, I was on a very decent salary. So I had what was a decent house (3 bed modern terrace)
20 years later I have established that the typical salary now for the job I was doing then has risen 33%.
Yet the value of my house has risen by 430%!!!!!
How could someone in their mid 30's, possibly afford even my modest 3 bed town house, in need of modernisation, now?
They are going to do a bit more than just "work hard and save up", aren't they?
Honestly, I watch it from afar, thankful I never sold the thing, but bewildered by how people are expected to live in London now.
I think a major part of the problem is there are so many people now that want to live That's not quite right about Council Tax. It's based on the value IN 1991 when those bands were set up, rather than the value now. My 2 bed flat in Lewisham (current value circa £350k) is in Band B because it was worth about £45k in 1991, and the house I used to live in with my ex (current value circa £450k) is in Band C. So the Hyde Park Penthouse wont be paying the same as the ex council house. For the most part, as far as I'm aware, the bandings are reasonably fair.
I still think that there shoudl be additional bands to deal with the super high value properties.
I worry for all the Greenie Juniors, lord knows if/when they will ever be able to buy a house.
Planning policy has no regard for how property markets work and are designed to prevent developers building what they think is needed in order to meet what planning policy decides is needed. For example - an exclusive development of 6 executive houses was granted approval in the Surrey green belt subject to a couple of semis as “affordable” housing. There are no shops, no buses, no schools, no work and the nearest town is 7 miles away. The “affordable” housing has not been sold, neither have the two units either side of the affordable housing. The affordable housing which cannot be afforded should have been on land near the town where people need to live and work not stuck in the middle of nowhere looking like a social experiment.
Given that more Surrey green belt is occupied by golf courses than housing, I don't accept the green belt needs to be destroyed to meet housing needs and building houses in places no one wants to live is not helping solve the basic problem which is lack of supply. Restricting the ability to get planning simply pushes up the value of land which gets planning. The cost of building a house has not changed much and the high property prices for new builds are purely because of artificially high land values resulting from bad planning laws.
Investors in property, as opposed to house buyers, are looking for a yield and most sources of low risk yields have disappeared with low interest rates. So demand for rental income has grown and house buyers and investors are competing for the same asset for different reasons, and guess what, investors have access to more capital than first time buyers. Quantative easing has caused as many problems as it has solved and when it disappears and markets adjust there will be turmoil for many homeowners and buy-to-let speculators.
Prague's 430% property rise over 20 years inflation carries a bit of inflation which accounts for around 180%. 430% is not extraordinary in terms of historic investment returns, a bit below the historical average for equities of 460% but above the actual equity returns of around 360%. The extraordinary thing is the lagging behind of wages, that is a key ingredient. At present, property prices need to fall by 30% to get back to sustainable prices in line with wages. In reality a mixture of increasing wages and reducing house prices needs to happen.
The bubble must burst because politicians will need the votes of the disenfranchised and will have to stop supporting house price inflation to make home owners feel good and spend borrowed money. When the property bubble bursts, those who think their home is their pension or buy-to-let generates a safe pension income will realise that the property market is no more of a one-way-bet than any other market where prices are driven by speculation. There are many more lower risk ways to invest in property growth that uses commercial rather than domestic property and provides diversification so those envying the speculating landlords are simply wishing they could become part of the problem.
If you need income you can now participate in crowd funding that for all parties cuts out the middlemen, the banks, for a decent fixed yield of around 8% provided by strong businesses that can't get money for investment from the banks. So my hope is that investing in domestic property for income is seen for what is is, a high risk, high maintenance and inefficient method compared to modern alternatives. People with savings who want to build up a pension can now start directly supporting real ventures with loans that generate jobs and wealth instead of helping to price out home buyers and setting unaffordable rents.
Surrey councils are starting to clamp down on planning permission for golf courses in the past few years - there's an ongoing row about another needless golf resort being built somewhere near Leatherhead I believe - but it's too little, too late.
Came away from it all with an overwhelming sense of injustice. The housing crisis is all part of the increasing polarisation between the have and the have-nots in British society, as it is in many developed world societies, to be fair.
One of the most shocking statistics was that 2/3 of the families being forced to turn to food banks have at least one person working.
It seems more and more each year, the odds get stacked against people at the bottom and the chances of people breaking free and moving upward socially get less and less. From healthy fresh produce being more expensive vs processed crap, to gas payment meter rates being higher than direct debit rates, to the ever increasing cost and unavailability of housing, to a benefits system that often excludes the most needy and vulnerable who don't have the capability or support to fight the constant rejections and diversionary tactics whilst often protecting those who know how to play and exploit the system, the poorest in society are increasingly being left to rot by a political class that pays lip service to helping them but ultimately don't care because they don't need these people's votes or financial backing.
Most immoral of all, it seems the people who are now suffering the most are those on low incomes but who want to work and want to stand on their own two feet. Meanwhile, the rich get richer and richer every year and more and more of the world's wealth gets locked away in off-shore bank accounts.
It all just seems so wrong to me, and most depressing of all, I see no one in power doing anything real about it.
I know a lot of people have jumped on the btl bandwagon in the last 5-10 years now that they cant earn any interest on their capital & believe that property prices only go up. Problem is if you ask then they would say they are risk adverse & would not think of investing their money into the stockmarket.........but don't understand that they are taking a big risk buying a btl property - esp if they buy 4 or 5 as per the programme.
cant wait for another early 90's slump and property prices drop 20-30% , meaning tenants can then afford to buy their own property & no need to rent....double trouble of capital loss & no rental income to cover the mortgage payments (which have been artificially low for the past 6 years)
The increase in supply which would result would have a very meaningful impact on prices and filter all of the way down the ladder.
At just 2% of total UK tax receipts, the lost revenue could easily be replaced.
I know we have regional development agencies, but they can only do so much
The problem is, the way to do that is to make London subsidise development in the rest of the country to some extent, more than currently happens. I'm not sure that's an easy thing to sell to people in London - spending lots more money on Hull or Glasgow or Birmingham and underinvesting in London.
I wonder how much a penthouse overlooking the Humber would cost.