Generation Rent, the Nation of Renters and Landlords Taxes

A recent survey and press release from the Halifax (the ones with those annoying but oddly impactful adverts of the two girls making a jingle and spilling their coffee) got a lot of column inches. “Suddenly we are becoming nation of private renters” says the Halifax.

Those of you who have followed my work for a while will know that 5 years ago, I made a prediction that half of all residential properties could be let by the year 2026.

Back then, journalists’ favourite Ray Boulger thought it was crazy to make predictions like this, pointing out that government policy could change and easily make the prediction invalid.

Mr. Boulger had a point. We really don’t know what will happen in the future and government policy changes could radically effect what will happen to the private rented sector – its size, scope and ownership profile. Changes to tax policies on housing in particular can also make huge changes to the attractiveness of different parts of the housing sector.

One big potential change, which I have written about here before, will be if big city investors get into the lettings market and start financing the building of large blocks exclusively for the private rented sector (PRS). This looked suddenly more attractive following the last budget’s changes to stamp duty on multiple property units purchased as a block. (Look at the category, “Private Rented Sector Initiative” and “Build to Let” over to the right in our Categories section for more on this.)

The Private Rented Sector Initiative (or PSRI) – which is all about institutional investment in the PRS – is an area of the business that I am watching and already advising on.

Underwriters Staying Underwriters

Speaking of government policy and tax changes and their impact, last week I did a talk to a group of underwriters from a major lender involved in buy to let mortgage lending. This lender is one of an increasing number who have sufficient initiative to see that it might help their staff to find out what landlords do from an actual expert and practioner in the field.

The talk was part of my consultancy for this lender and one bit of the talk covered what successful landlords do (and don’t do.)

Interestingly, only one member of the audience was actually a landlord, (and that was by default, as she had relocated for work.)

At the end of the session, I asked them all, if, as a result of my talk, they any more inclined to become landlords, and was a tad disappointed to find that they were still unprepared to make the leap.

Usually, when I speak, people get a bit inspired to look into landlordism more, though their reticence could be due to them being based in a part of the UK where house prices have been decimated in the past year due to problems in the local economy.

Landlords and Tax

A key thing I highlighted in my speech to them was how I thought the tax system was relatively kind to private landlords. (Yes, I know the landlords reading this won’t all agree.)

In particular, the fact you can offset interest on loans against rent before declaring profits is very attractive (and contentious for some).

Of course, all businesses can do this, but some pressure groups think landlords should not be able to. “It’s not a proper business and it sets landlords at an unfair advantage over first time buyers when it comes to buying property” they say.

I won’t go into that debate, here, except to note that a few years ago on Radio 4’s MoneyBox programme, where I was on with someone from Pricedout.org.uk, an organisation which has this view; I suggested that the lack of social housing was a far more significant factor in the growth of the PRS than landlords’ tax breaks.

Of course, there are other tax breaks too – especially the little understood, “Private Letting Relief” which, whenever I explain it, always has landlords saying, “Are you sure HMRC really gives us all that!”

Yes it does, and it is just one of the things that explain why buy to let remains attractive.

But the tax system could all change and the changes may not all be to landlords liking. It’s a risk to our business but it’s just a risk of doing our business.

And those who don’t like risk are condemned to not become wealthy and to moan about those who have.

Link to the article from 2006:

http://www.mortgagestrategy.co.uk/brokers-ridicule-buy-to-let-predictions/128457.article

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector Expertise and advice.

Services to Businesses and the Public Sector

Primarily we are consultants to a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers. We help them develop and improve their landlord, private rented sector and buy to let product strategies, marketing and services.

We also write for property websites, speak at property shows and we are regularly quoted by the media.

Services for Private Landlords

We also find a limited amount of time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor.

AT OUR WEBSITE LETTINGFOCUS.COM:

TO GO TO THE HOME PAGE OF THIS BLOG click here: Blog

To read blog posts on related posts use the tags and categories at the bottom of each post (after the list of links), or over to the top right. Here, you can click on “Select Categories” and use the pull down menu to read all the posts on any specific topic.

THE HOME PAGE OF OUR MAIN SITE click here: http://www.LettingFocus.com

For general info on our CONSULTING SERVICES and also to find a small sample of links to articles where our comments have been featured in the National Press please click here: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS click here: Property Advice

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING”

Our book is the highest selling property book in the UK. Click here to Find Out More and Buy the Book at Amazon. If you are from an organisation and would like to bulk buy at least 50 books please ask us for special rates.

To JOIN our Free NEWSLETTER containing regular news for landlords and details of our Events simply send an email to [email protected] – Please note we WILL NOT send spam or sell our mailing list to advertisers but please put us on your “white list” to ensure you receive our emails.

Discounted Products for Landlords: Landlords Resources

This blog is updated once a week, usually on a Monday or Tuesday (or more frequently when “hot” news items come up.)

For my random thoughts on property and personal finance, plus a host of other random things that interest me from football, to 80s and 90s Indy music, to tsunamis, to politics please see our TWITTER PAGE: Twitter

Copyright of Blog: David Lawrenson 2011. We pursue copyright infringements.

LINK TO THIS BLOG OR TO OUR WEBSITE

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.