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  • Section 24 HQ

    S24 discourages landlord expansion - £50K cap



    The problem I can see If there is no incentive to expand a business for a working Landlord

    But If you are a full time Landlord you can live quite well on £50k a year

    If there is any tax breaks now its at the advantage of companies.

    Think of this and who it helps ....

    A very rich landlord owns property via a Company.  His company pays corp tax which is lower than basic rate tax so as long as they have cash they can buy property with little tax to pay

    They then put their profits into a Pension and there is zero tax to pay up to £40K a year

    The Pension is ring fenced from IHT - ask yourself the question who benefits from this arrangement?

    The answer is simple - the very rich !

    So in this game of Monopoly, you can own personal property and pay around £6K tax on a £50K income and then you invest via a company and pay zero or little tax

    The question I ask myself is this - will the Govt allow a company structure to avoid tax in coming years?

    You don't need to stay on a low wage if you don't want to as a Landlord, but I have realised that taking income from a company only makes S24 worse.

    So effectively there is a £50K cap on income and landlords need to juggle the company game and extract profits via a Pension, but it is skewed for the rich and nor the working Landlord who will pay through the nose to own investment property.

    Of course a working Landlord can use a company but with drawing the Salary or Dividends when you're working and paying higher rate tax would be costly

    My view  - company strategy just becomes a Large pension fund and not an income generator when you're working

    ... And then of course will future Govt be so happy to help investment Ltd Co's?

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    You could always take the gamble and keep buying more properties, if section 24 is removed in the future you'll be laughing, having bought all your properties cheap at a time when fewer landlords are buying.

    Then if the day comes when section 24 is removed all your properties will shoot up in value, it will be a buyers market and you wont pay as much tax.

    All big IF'S of course ...

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    I would like you to be so right

    But I dont think there is a cat in hell's chance of S24 being removed

    In point of fact I think there is more chance of all relief to go

    We are just not flavour of the year with any Govt and I believe our sector is not wanted in the long term

    It's not what I want or you want but which Govt listens to Landlords ?

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    The problem I can see If there is no incentive to expand a business for a working Landlord

    It's this sense of entitlement that winds me up.

    The universe doesn't owe me a thing and I expect no help from the government, I don't seek nor need an "incentive".

    I choose to be in business and as someone who is in business I'll take the rough with the smooth.

    I'd still rather be a landlord than not be a landlord.

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    I dont think you can shut your eyes and not relies that every thing we do in the PRS is with the blessing of a Govt policy

    Personalty I can go back to 1982 when I first became a property investor

    It was a very different time and the law was not in the favor of the PRS 

    The major change came with the AST and it was a govt policy to encourage the PRS  and the old sitting tenant rules and rent control went

    and then we have the start of the PRS as we now know it

    Every Business operates because the Govt allows it one way or another

    So its very important we are mind full that the Govt can Give and it can take it away

    from what I can see its starting to take the privileges we have had just look at S24 Tenants Fee ban End of S21  ect ect

    I can see our sector slowly going back to the days when I first became a Landlord and precisely why I have made arrangement to fund my life away from BTL

    If I am wrong I have two income streams one from BTL and Pension income If I am right I have my Pension

    I dont trust Govt to support my old age





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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    from what I can see its starting to take the privileges we have had just look at S24 Tenants Fee ban End of S21  ect ECT

    But let's break these "privileges" down:

    S24 sorts out the over leveraged and brings down LTVs

    Tenant Fee Ban sorts out the complacency of weak letting agents

    S21 sorts out fly by night landlords who treat tenants as commodities rather than customers

    I'd say these aren't privileges, they are hindrances to those who run a proper business, it removes the weak, wreckless competition and allows serious players to thrive.

    It was a very different time and the law was not in the favor of the PRS 

    Yet you still invested anyway and were successful proving that we don't need favours.

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    Al I am saying is going forward its not going to be as easy as it was

    If your happy with the changes Thats fine with me

    If you think S24 is a good thing ? Im not sure where your logic is Its going to do harm to Landlords and Tenants because of its retrospective nature and maybe you think the Axe the tax is a bad thing Im not sure landlords would agree with you

    I am quite sure we will have rent control and we will have secure tenancy as it was in 1982

    if that happens I think you may change your mind about the changes being good for your business

    I set my rents around LHA rates because thats the rate I think the govt will use in the coming years

    Nothing is really new in life Its just what we forget that comes around again and we are going back to pre AST days which i remember well

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    Al I am saying is going forward its not going to be as easy as it was

    I don't need it to be easy, I'd much prefer the market to be sustainable.

    If your happy with the changes Thats fine with me

    Wouldn't say I'm happy, but I don't think it's the end of the world the way many of you on here portray it.

    If you think S24 is a good thing ? Im not sure where your logic is Its going to do harm to Landlords and Tenants because of its retrospective nature and maybe you think the Axe the tax is a bad thing Im not sure landlords would agree with you

    Only weak businesses will suffer and the wreckless landlords will be forced out. Tenants will be ok as someone has to buy these houses. Perhaps they can rent from me when I snap up the repossessions on the cheap from those who haven't prepared properly.

    I am quite sure we will have rent control and we will have secure tenancy as it was in 1982

    Again, not the end of the world.

    if that happens I think you may change your mind about the changes being good for your business

    Nah.

    I set my rents around LHA rates because thats the rate I think the govt will use in the coming years

    Surely you set the maximum rate as dictated by the market in the areas you've invested in?

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    Being in the NE rents are around LHA rates which I think will be used by a future govt to set rents

    so I will be fine


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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    I think the actual proposal is to limit RISES to inflation.

    So LHA rates won't come into it.

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