Is government thinking of disallowing operating costs, and for companies as well?

Interesting that the main response to this topic is that commentators seems resigned to the fact that it’s only going to get worse by being a landlord.

However, there also seems to be many here who are determined to fiddle while Rome burns - and hope for the best and continue to be a landlord.

The future governments, of any colour, are going to get landlords in the end. We are a convenient social football and collectively our value as voters is peanuts to any party. The benefits we present for public floggings outweigh any drawbacks that upsetting us may bring.

The sale of my portfolio of my 19 'mortgaged' properties are due now to complete on to 28 March. I paid the mortgages off already to facilitate a simpler sale legally. So lenders are now out of my life anyway. I had low gearing (under 50%) but didn't want these clowns in my life. However, my total exit from property will be May 2020.

I have polarised my thinking lately and have given 4 months notice to 2 more tenants this week. I am also selling another to a tenant's father, as ironically he 'wants to get into BTL'. So he can step in my shoes with pleasure. He's a know-it-all wholesale meat producer - so obviously he knows as much about this game as I do about butchering a side of beef.

Lamb to the slaughter sprung to mind. But we all live and learn.

I just remembered that I forget to tell him why I am getting out - then again he didn't ask me. If he had done so, I still wouldn't have told him.

If you are thinking of selling up - there are still plenty mug punters around. They are behind the curve regarding current intelligence - but won't be forever.

I'm quite enjoying taking control like this. I have no problems giving notice. I always give 4 months notice and good references too. I also explain, where required, to potential new landlords for my departing tenants why I am evicting the tenants (not through arrears are poor performance etc).

Unlike some on P118 I do not feel honour bound to be a guardian angel to what is effectively a customer of my business. I have had hundreds of tenants give me notice over the years - now the situation is reversed. Simple.

I have outlined my reasons here before, but just to remind anyone, and in no particular order of importance to me.....

• Section 24 - the 1st show of total disregard for landlords
• Inevitable issues regarding tenant discrimination.
• Ditto re maybe having to allow pets.
• Epc demands. After 2020 it will be more stringent.
• Landlord registration - strong possibilities
• Rent caps - strong possibility
• Lender's dirty tricks - an on-going threat - always.
• Corbyn factor - should he be elected.
• Interest rate rises. Rates are only going to go one way now.

Each 1% rise means 10k increased payments annually for each 1m borrowed. 3% - 30k. This will cripple many - not to mention residential mortgage owners.

Also, not wishing to face the possibility of the state allocating me a family (with pets) to live in a property that I own - at a rent they deem reasonable - I'm out.

Many will think this to be paranoia. However, no one can really deny that things will, at best, get worse. Best to plan and prepare for the worst I've always found

There are many other threats, no doubt, but the overriding one is that landlords are now considered fair game, and it is open season.

Couldn’t have put it better myself I agree ken it’s going to get worse it is state backed sabotage of a whole industry. I’m not going to go as far as your plans but I am cashing some of my chips. The higher yield stuff I am keeping.

Ian

I agree we need to calm down. For landlords who are very concerned about the impact of recent tax changes this is an opportunity to express their views and, if they are selling properties because of the tax changes, to say so.

I don't see anything in this questionnaire to suggest that government is planning to disallow operating expenses. But to ask questions about whether the landlord is compliant with the law (e.g. do you have a current gas safety certificate) is odd. As you say, non-compliant landlords would have to be pretty stupid to confirm they're breaking the law.

Finally, I thought the prize was amusing - membership of the NLA or RLA. That'll whet peoples' appetites (not).

To be slightly fair to the survey, it does suggest clearly problem tenants is an issue as to why landlords do not offer longer tenancies. Plus it does raise the prospect that tax cuts as a inducement towards longer tenancies also.

The Government really can see already what section 24 is going to do to the PRS. It is going to decimate the sector altogether, they have already taken away all incentives for prospective Landlords which, without them, the housing shortage would be far worse.
I believe bed and breakfast, will be where landlords could consider diversifying. There will be plenty of requirement for this type of accommodation as the private rented section goes into decline over the next few years unless, there is a Damascene revelation by the Conservative Government.

..The Government DO know what is going to happen to the PRS - we've been telling them ofr the last 2 years!!!!
They just won't believe it (and therefore won't act) until it actually happens. There's been too many groups crying wolf when a budget is cut/frozen which have coped or even improved e.g. police.The PRS will survive but it's going to be a lot smaller. Probably half the current size.

Reply to the comment left by Ken Smith at 17/03/2018 - 11:13
"However, there also seems to be many here who are determined to fiddle while Rome burns - and hope for the best and continue to be a landlord."

I don't see much fiddling, unless you mean many on here are not panicked into a fire sale. Restructuring and consolidation seems to be the norm.

Even if 'many' are fiddling (who?), by luck or judgement, they have done alright out of it so far. Since Osborne announced this, average house prices are up 8.84%. Using your example, for every 1M owned means an average increase of £88,400.

(I'm selling BTW, just gradually over the next 20 years!)

Put two houses up for rent one on Prescot one in birkdale 88 calls before I had to shut down the ads. People offering me up to 100 pcm over the advertised rent tells you all you need to know. This policy is starting to bite the amount of calls I had telling me landlord is selling was scary. The question I would like to ask the Tory’s is where are all these people going to live ? Can’t get my head round what they are doing messing with people’s lives.

On the 15th I sent the following email to the address given in the questionnaire:

What is the thinking behind the questions on pages 29 and 30 which compare gross rent receipts with taxable income from other sources?

Regards.

The next day I got the following reply from a Senior Researcher 
NatCen - Social Research that works for society:

Hi
 
Thanks for your interest in the English Private Landlord Survey. These questions on income and rent receipt are asked as they help researchers and policy makers understand a bit more about the profile of private landlords, including the role that rental income plays in their financial circumstances. This is helpful in understanding the range of landlord experiences. Very similar questions were asked on the 2010 Private Landlord Survey. You can see the output of this survey here: https://www.gov.uk/government/statistics/private-landlords-survey-2010
 
I hope that’s helpful.
 
Kind regards

So the same day I replied:

Hi

Thanks for your reply.

The questions will not help anyone understand the role that rental income plays in their financial circumstances.  On the contrary, they will give a nonsensical view.

This is because gross rents are not taxable income.  It is the rental profit, after deducting all the items that the question excludes - i.e. before tax and deductions, mortgage, letting and other operating costs - that is taxable.

The question on percentages asks the landlord to add gross rent receipts to other taxable income and work out what percentage the former is of the sum.  As the sum is irrelevant and extremely misleading, so is the percentage.

So why have the questions been carefully posed in this way?

Regards 

I followed this up the next day with:

I have now had a chance to look at the questions for the 2010 survey. There is only one about income. On page 16 it reads:

“ASK IF: RESPONDENT IS LLORD
PrpEarn
SHOWCARD 3 What proportion of (your/your group’s/the landlord’s) gross income would you say (was/is) rent from residential lettings?

(1)Nil
(2)Less than 25%
(3)Less than 50%
(4)Less than 75%
(5) 75% or more”

This is similar to one in the 2018 version. However, respondents would have assumed that you meant rental profit because they would know that gross rent receipts are not the same as taxable income, and to treat them as such would be nonsensical.

There was one big difference in 2010 - landlords were were not asked in a previous question what their gross rents were without any deductions.

Another difference is that in the 2010 version there was no maximum percentage. In the 2018 version the maximum is 100%. That means you assume that gross rents are gross taxable income.

Last year for example my gross rents were 169% of my taxable income from all sources including rental profit. Your questionnaire does not allow me to report this percentage. It clearly assumes therefore that gross rents are taxable income.

This is a very serious error, as I explained in my earlier email to you.

Regards

On the 21st she replied:

Hi
 
Thank you for your feedback. These questions are intended to provide information for a basic calculation that adds gross non-rental income to gross rental income to then calculate what proportion gross rental income is of gross total income. For example, someone earning £30,000 p/a pre-tax might let a flat for £1,200 pcm (£14,400 p/a). Their total gross annual income from both sources before taxes and any deductions is £44,400, and the proportion of this amount that comes from gross rent is ~32%. If the respondent’s only source of income is from rent the calculation is more straight-forward – all or 100%. Respondents are only asked to give the proportion if they preferred not to provide amounts at either of the two earlier questions.
 
Asking these questions in this way avoids asking a very complicated set of questions similar to asking respondents to work out their annual tax liability, which is more than what is required for the purposes of the survey, as gross rental income as a proportion of gross total income is sufficient to give contextualising information about the role that rental income plays in financial circumstances. These questions were tested with landlords and agents prior to the survey being launched, and we found that respondents were able to answer them as intended.However, we will continue to monitor the questionnaire, and any feedback, as the survey progresses to ensure the questionnaire is working as intended.
 
I hope that helps to clarify the purpose of these questions. If you have any queries about the policy background to the questionnaire you can also contact EPLS@communities.gsi.gov.uk– this is the contact email for the EPLS team at the Ministry of Housing, Communities and Local Government who have oversight of the questionnaire.
 
Kind regards
 
I replied:

I’m afraid you have completely missed the point.  Gross rental receipts are not taxable income, only the rental profit is. Comparing gross rents with other taxable income is nonsense, and gives a nonsensical result.
 
In your example the £44,400 is overstated and so is the percentage.
 
Against gross rent of £14,400 a year it would be normal for there to be deductible costs of £6,400.  So the rental profit would be £8,000 and the real total taxable income would be £38,000.  Rental income would thus be about 21% of the total.
 
Agents are not asked these three questions.  The landlords that they were tested on were able to answer them but were probably baffled as to why they were asked.  
 
It is no easier for landlords to give a year’s gross rents than it is for them to give the taxable rental income - both figures are available from the annual tax returns.
 
I would recommend that landlords leave these three questions unanswered to prevent GIGO - garbage in, garbage out.
 
Thank you for the Ministry’s email address, I will contact them direct
 
Regards

I have sent the following email to the Ministry, with the subject Garbage In, Garbage Out

Hi

Why are you comparing gross rent receipts with taxable income from other sources, with questions on pages 29 and 30 of the 2018 English Housing Survey, ?

The questions will not help anyone understand the role that rental income plays in their financial circumstances.  On the contrary, they will give a nonsensical view.

This is because gross rents are not taxable income.  It is the rental profit, after deducting all the items that the question excludes - i.e. before tax and deductions, mortgage, letting and other operating costs - that is taxable.

The question on percentages asks the landlord to add gross rent receipts to other taxable income and work out what percentage the former is of the sum.  As the sum is irrelevant and extremely misleading, so is the percentage.

This is a serious blunder.

I would recommend that landlords leave these three questions unanswered to prevent GIGO - garbage in, garbage out.

Regards