Principle Private Residence Property Letting and Tax Advice

Landlords may have seen Ken Livingstone – whom I usually quite admire – propose on “Newsnight” that tenants’ rents should be capped at no more than the mortgage is costing their landlord.

It’s an interesting concept and I wonder how Mr. L would suggest this could be policed.  I guess about as easily as the new restriction on child benefit to those on lower rate tax. (Expect to see an unprecedented rate of relationship “break ups” among the better off once that particularly daft proposal becomes law.)

All this kind of talk really shows is that we are in the depths of the silly season. But to be a killjoy I have decided to give the proposers of rent controls a little history lesson.

Pesky Demand and Supply

Firstly, I wonder if Ken has ever heard of the great classical economist Alfred Marshall and his pesky demand and supply curves. Here is a link to help Ken:

http://en.wikipedia.org/wiki/Supply_and_demand

The curves imply that if you cut the price of something, its availability, rather annoyingly tends to go down, as suppliers quit offering the product or service.

I also wonder if Ken has heard of a certain Mr. Peter Rachman. Rachman was a slum landlord who flourished in the days of rent controls by being a terribly beastly chap to his tenants. With few other options available to tenants in those days, people like Rachman would use bullying and brutal methods to control their tenants and Rachman did very well indeed. Must we also go back to those times too, I wonder?

As well as being in the middle of the silly season we are also half way through the financial year.

So I just thought that as it’s a bit of a short news week (well apart from the massive housing benefit row) landlords may like some top tax tips related to Principle Private Residence (which is a neat tax avoidance measure that our Dear Leaders in the Palace of Westminster are very adept at using*) These tips are all in my book, of course.

* Due to popularity amongst MPs you may be unsurprised to hear that among the various tax changes now being brought in, there are no plans to amend the raft of  PPR  exemptions.

Tax Tips

Tip 1: If you’ve bought a property that requires substantial construction work before it can be occupied as your main residence, the Principle Private Residence (PPR) exemption can be extended for up to a year. You can also extend it if you’re unable to occupy the property due to a delay in selling your old property. In this situation, it’s possible to have both properties covered by the PPR exemption.

Tip 2:

If you have more than one main residence you should tell HMRC which is your main one within two years of acquiring the second. Obviously, this must be your own private residence where you habitually live, not a property that you rent out. If you are lucky enough to have two homes that you can live in (neither of which is rented) and fail to nominate one, HMRC may make a nomination for you based on the facts. If you live in both, choose the one that will have the biggest capital gain or perhaps the one you wish to sell first as your PPR.  Once you have elected a property as a PPR, you can change it at any time by writing to HMRC. However, it will only be effective for a period beginning less than two years before the date of your election to change.

Tip 3

If you take in a lodger in your own home, your PPR exemption will usually not be affected but if any part of your property is used exclusively for business purposes, the PPR exemption is not available for that part of the property for the period in question. However, if you have an office at home and sometimes use it for other home uses, then the PPR exemption is still usable in full.

Successful Property Letting

Our book still remains the top selling book on property in the UK – a position it has occupied for 3 years. And this, despite being available in just a handful of high street shops (all Waterstones.) Well, after much badgering from me,  my publishers have made sure it will, once again, soon be more widely available at nearly all Waterstones branches.

But if you want a faster route to buying it, get it on line at Amazon: click here to Buy the Book at Amazon

Missing – All the Government and Quango Jobs

In our office, reading the “Sunday Times” appointments pages became something of a sport during the fag end years of the last government.

One was constantly astounded by the great largesse in pay that execs in the various quangos would award themselves (or rather their friends in the ever so “impartial” remuneration committees would set.)

Fast forward to today and I see the few government, NHS, housing association and numerous quango jobs that are advertised are suddenly remarkably coy about listing their execs pay in the few job ads advertised.

Naturally, the top execs will claim they are worth the pay, the job is as complex as those in the private sector and that they also deserve to earn 50 times what their junior staffers get.

The trouble is that I don’t think the public ever believed them.

However, I do feel a bit sorry for all the junior viagra price public sector staff and those in the quangos who could now be jobless.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector and Landlord Information.

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