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They won't come for homeowners' wealth
Inheritance Tax has always been around and there are more and more homes being sold to fund care home fees - homeowners' wealth is being targetted.
but they will for that of LL
As a lodger LL I feel the RAR scheme is generous. As a small unencumbered LL I am not heavily taxed. As a potential Incorporated Commercial LL there is no immediate threat, no additional SDLT, reduced CGT, etc. Of course, this could change but I'm not aware of any current proposals.
Of course this is the real reason Govt promotes homeownership.
It needs equity to rob to pay for care home fees.
An army of renters can do the Govt no good at all.
It has been the lack of self funders that has been driving many care providers out of business especially up North where there is very little equity to rob from property value.
Such value can still be found in the SE where as you suggest property equity provides many more self funders which in turn support the council funded care for those without any assets.
It really reaches the point where it is pointless retaining a property with lots of equity in it as such equity will not be allowed to to be passed onto heirs.
It will be stolen by councils to support those care homes who need rich self funders to make up the difference the council aren't paying.
Councils would far rather go after what it perceives as the rich and these are basically anyone who has a lot of property equity.
To councils that is basically money in the bank for them.
Therefore it makes economic sense for many in their latter years to downsize and rent.
Hide the sale proceeds of the sale of a PPR.
But then of course we have the open wound of alleged intentional deprivation.
By all accounts councils can go back as far as they like when they determine that intentional deprivation of the former PPR or any other property has occurred.
They could for example state well 5 years ago you knew you might need a care home even though there was back then currently no indication that you would and so we maintain that you intentionally deprived yourself of that asset namely your former home as therefore we will not be funding any care fees etc.
If you are a feckless welfare scrounger none of this will apply.
The State will pay for everything.
To have so many assetless people would be very bad news for Govt in about 40 years.
It will need homeowners to fund much of the care system otherwise the State will have to pay.
I don't consider there is the political will to have the State needing to find considerable sums to sustain care fees without being able to rob the equity of those who have managed to build up equity by whatever means in their home or any other properties.
Basically any LL will just have to accept that to maintain income from their BTL properties they will lose most of the equity to pay for care fees.
LL in their latter years need to consider a gradual divestment of valuable properties or rather those with the most equity and having sold such to then hide the cash away and to divest sufficently well before Councils can accuse such LL of intentional deprivation.
It will be a fine balancing act to validate divestment as not intentional deprivation.
It is awkward to find that balance as councils seem to be able to determine when they feel intentional deprivation occurred with very few people able to validate that they had not planned on intentional deprivation.
I think the lesson here is to get rid of all your assets with lots of equity in them and buy a property with very little equity in it so that any care funding requirements would mean very little equity for the council to rob.
Essentially this is doing what I believe is called colloquially doing a Ronnie Corbett!!!
He shrewdly sold his PPR which had massive equity and distributed the released funds to those he wanted to have them.
Then he rented
So had he required care fees then the Council would have been required to pay.
It is doubtful that the Council would have been successful to maintain that 5 years previously Mr Corbett intentionally deprived himself of the substantial asset value of his long standing PPR.
But with these cash strapped councils you wouldn't trust any of them to push back the years when they consider anyone intentionally deprived themselves of asset value.
Personally I believe the sooner an elderly person can divest themselves of any property with substantial equity value the better.
Have a few with low equity and they will act as a smokescreen for those properties that did have great equity value that were sold.
It is a will be a tricky determination to make regarding divestment.
Somehow LL in particular are going to carry out an actuarial exercise on themselves to work out the ideal time to start offloading the properties with the most equity.
Yes there will be potential CGT hits but these will be far more preferable than losing all the equity value to the Council.
As it turned out Ronnie Corbett planned well and didn't ultimately require the services of a care home.
Very few wi be as fortunate to manage the calculations as successfully as he achieved.
So Govt needs to maintain the fiction that buying your own home is good for you.
When in fact all Govt is doing is encouraging people to build up a piggybank of equity which the State will then come along and rob when care funding is required.
Of course in this there is an opportunity for LL to let to those who are attempting to avoid intentional deprivation and as such are looking for quality lettings that are funded out of resources hidden away.
So as a LL faced with a pensioner who wishes to let a property from me I would not be unduly concerned if their plausible income was allegedly low but they advised resourcing wasn't really an issue; wink, wink due to their having sold their PPR recently and they wished to downsize and not have the hassle of ownership anymore!
Thsee circumstances could provide a rich source of new tenants who previously may have been considered risky by many LL.
I suggest exactly the opposite.
They will be the best tenants to have.
The LL will know that as far as resourcing is concerned there will never be any problems the rent being paid.
It would take a few years to burn through £500000 of equity sale proceeds!!!
Intentional deprivation will become the new national sport especially for SE LL.
How to avoid the Council robbing you of everything you have built up over the years.
I intend to ultimately become a silver renter.
I won't have much plausible income but somehow I will always manage! !!!