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  • Tax

    Government to ease burden of regulations and taxation for BTL?

    I came across yesterdays report "Financing of new housing supply - Communities and Local Government Committee"

    It makes an interesting read:

    "The private rented sector: conclusion

    46. While it is right to consider the potential for large institutions to invest in the private rented sector, it is also important to remember that the sector is, and will continue to be, dominated by small companies and individual landlords. Although these smaller landlords tend to invest in existing property, they do make an indirect contribution to new housing supply, and in the past have provided upfront funding for development by buying property 'off-plan'. There are a number of issues facing those in the sector: the financial crisis had a significant effect on the availability of buy-to-let mortgages; many landlords no longer have the benefit of capital gains; and there is some concern about the levels of return. We have heard that the burden of regulation and taxation has deterred landlords from expanding their businesses. While constraints on mortgage finance will continue to affect investment in the sector, the Government could provide some support by taking steps to address this burden. We recommend that the Government bring forward a set of proposals to simplify the tax and regulatory structures that apply to private landlords. These proposals should aim to create an environment in which small private landlords are encouraged to expand their portfolios and invest in new build housing."

    Read more hereAngela

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    Yeehah! Let's hope the powers that be take notice!

    Do you have a link please Angela?

    Lisa

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    Lisa All comments are for education and information purposes only and do not construe as advice or a financial promotion. No liability is accepted for comments made. If you wish to receive information in an advisory capacity then please contact me about becoming a client. www.keys-mortgages.com

    It's at the bottom of my post Lisa.

    And yes, let's hope something good comes out of this. I read the lot and it looks promising (or I am naive LOL).

    It also touches on Universal Credit and many other issues.Angela

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    Duh!!! Many thanks Angela.

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    Lisa All comments are for education and information purposes only and do not construe as advice or a financial promotion. No liability is accepted for comments made. If you wish to receive information in an advisory capacity then please contact me about becoming a client. www.keys-mortgages.com

    i wonder what they think needs attention.

    Some would advocate that the change should be to make a BTL venture a business so it can be taxed as one. Right now the taxes are more about an investment.

    Another idea, from the US, is to allow roll over relief (tax deferral on the capital gains). If the person is a BTS investor, there would be no relief. If they are a BTL landlord and they are honestly holding for investment, the capital gains when they sell would not be taxed if the money was re-invested into further BTL property. A way to grow a portfolio without needing to hold onto the original properties.

    John CoreyFollow me on Twitter-> https://www.twitter.com/john_coreyhttps://www.ChelseaPrivateEquity.com/blogLondon RE meeting, 2nd Tuesday of the month -> meetup.com/real-estate-advice

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    John Corey 


    I host the London Real Estate Meet on the 2nd Tuesday of every month since 2005. If you have never been before, email me for the 'new visitor' link.

    PropertyFortress.com/Events

    Also happy to chat on the phone. Pay It Forward; my way of giving back through sharing. Click on the link: PropertyFortress.com/Ask-John to book a time. I will call you at the time you selected. Nothing to buy. Just be prepared with your questions so we can use the 20 minutes wisely.

    Following a question (similar to the above comment) posed to a panel that I was on myself at the NLA annual conference last autumn I had our property tax expert Carl Bayley put together an in-depth article of about 2500 words for Property Investor News to explore the rationale behind the lobbying from large scale landlords via BPF, RLA etc on this matter.

    His core conclusion was that small portfolio landlords (who are the vast majority) are in the main better off with the current situation but that larger portfolio landlords would be better if 'landlordism' was treated as a business rather than as 'investment' and losses could be offset against gains etc. As always with tax mattters it is not as simple as some would present it and 'trading' v 'holding' strategies poses different +/- net returns....as does property held in limited companies etc 

    If anyone wants a low res pdf copy, email me: richard@property-investor-news.com

        

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    The NLA has for years been promoting rollover relief and changing the taxation of rentals to a trading rather than an investment basis, so Carl Bayley's conclusions are very interesting. I'm a regular reader of his Tax Cafe books How to Avoid Property Tax and Using a Property Company to Save Tax. He doesn't often express opinions on the way the tax system works, but just says this is how things are, and these are the tax implications if you pursue particular strategies or time things wrongly. Could he be invited to suggest what tax changes, if any, the Government should consider to encourage small portfolio landlords and the supply of and demand for new-build property for rent?

      Richard Bowser said:

    Following a question (similar to the above comment) posed to a panel that I was on myself at the NLA annual conference last autumn I had our property tax expert Carl Bayley put together an in-depth article of about 2500 words for Property Investor News to explore the rationale behind the lobbying from large scale landlords via BPF, RLA etc on this matter.

    His core conclusion was that small portfolio landlords (who are the vast majority) are in the main better off with the current situation but that larger portfolio landlords would be better if 'landlordism' was treated as a business rather than as 'investment' and losses could be offset against gains etc. As always with tax mattters it is not as simple as some would present it and 'trading' v 'holding' strategies poses different +/- net returns....as does property held in limited companies etc 

    If anyone wants a low res pdf copy, email me: richard@property-investor-news.com

        


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    As a small-scale developer and intermittant landlord, I was also interested in the section of the report on self-build, which is at https://www.publications.parliament.uk/pa...mcomloc.... A great deal of the Government's changes to planning actually act against the interests of self-builders - for example by changing the categorisation of backland infill or "garden grabbing" developments to greenfield, and by continuing with the policy of the Labour government that S106 payments have to be made upfront at the point of applying for planning permission, if the self-builder can't persuade the current mortgage provider on the site to co-sign the S106 agreement (very common). Also, the National Planning Policy Framework seems to have very little to say to promote self-builders and self-builders. In my area, the local authority is using the NPPF to continue its policy of active hostility to infill housing, and is trying to ensure almost all new-build to 2026 (and the infrastructure and the affordable homes) is built on four large sites controlled by the large lcoal landowners and the national housebuilders. Self-builders and the many small buiders and developers in the area won't get a look-in on those sites.

    This new report is generally enthusiastic about self-build, saying "we recommend that the Government establish a fund to incentivise local authorities to support pilot "volume self build" schemes by allocating sites and taking a flexible approach to planning (whilst ensuring continued compliance with energy and safety regulations)." However it says nothing about infill housing, and there's very little about the interests of small builders and developers, who in fact together build more houses each year than all the big firms like Barratt and Persimmon combined.

     

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