Jeremy Corbyn calls for rent controls to prevent ‘excessive’ landlord profits

Reply to the comment left by John Gelmini at 03/02/2025 - 14:02
Fully agree with your sentiments - but perhaps the answer is, if you can’t beat ‘em join them.

S24 drove me out primarily, I started selling off as soon as Osborne announced it. But I didn’t want to own just a small number outright as the risk isn’t diversified enough for the upcoming regime.

I am invested in Lloyds bank partly because of its move in to owning Build to Rent (They don’t own L&G - that is a FTSE100 share but the general insurance division was sold to Allianz). I’m invested in L&G, again partly because they are into Build to Rent. Plus a few others including most of the house builders.

One thing that attracts me to B2R is the fact that the players who I have shares in for dividends and hopefully capital growth are ordering in dozens or hundreds - and of course buying more cheaply as a result than any of us could as retail buyers. Not forgetting the ability to put £20k worth a year into ISAs. With REITs (Real Estate Investment Trusts) that means the 90% statutory dividend derived from rental profits is Tax free along with any capital growth - whereas residential property is not eligible for ISA holdings. (Lloyds and L&G are not REITs. Grainger the large residential property company is going to convert to a REIT later this year I believe and there are other options holding different types of commercial property.

Not without risk but neither is directly holding seven figures worth of residential property with leverage.

Reply to the comment left by Rookie Landlord at 03/02/2025 - 11:28
It would be reasonably easy to determine a reasonable (non-binding) profit (and therefore, a reasonable rent).

Start with property value. Add additional rate SDLT, legal fees and anything else that involves capital expenditure.

Choose an interest rate. I would suggest the historical average as being reasonable. Since 1975, I calculate the average Bank of England base rate to be 6.176%.

So that’s the minimum return that a landlord should earn (profit). Add on other costs relevant to the property size and location. Things like insurances, repairs, maintenance, licensing. Let’s not forget risk.

I would imagine that a return that delivers 6.176% net would be appropriate.

In some areas, this might require a gross yield of around 8%
Where properties are cheaper, a yield of 9% or 10% might be more apt.

Reply to the comment left by Stella at 03/02/2025 - 14:44
I think that there is a good chance that Jeremy Corbyn is so incompetent that he doesn't know that profit is (although it may be that he just does not care). Up to a point he can't necessarily be blamed for this. I don't know what his motivation is or what he knows but if people are ignorant and incompetent and nobody educates them it's not always entirely their fault.

This article for example from This is Money in October 2024 claims that buy-to-let returns reached a record high at 7.2%:

https://www.thisismoney.co.uk/money/buytolet/article-13950443/Buy-let-returns-reach-record-high-landlords-profit-rising-rents.html

But what the article says to illustrate its point is that for example a £10,000 return on a £200,000 property is giving the landlord 5%. And of course it isn't doing that at all. What they are talking about here is return on capital employed, not the return on the landlords equity.

But the profit that counts isn't the operating profit, or the return on equity, it's the AFTER TAX profit.

Because most landlords have mortgaged properties the return on their equity may be much lower than the figure quoted above, especially if they are small portfolio landlords who are unable to offset their interest costs. For many of these landlords their return on equity may be zero, or negative, and ultimately their families probably face a 40% inheritance tax charge on their equity if they don't sell.

A family farm might be delivering a 5-8% gross margin (although in the case of small farms it may be that there is no margin and any income is coming entirely from public subsidy). The farmer can probably still pass on a million pounds free of inheritance tax, or may face an inheritance tax bill that is half the rate applicable to anybody else. In contrast, a small buy-to-let business might be making a 7% profit if it is lucky, but that small business is probably going to face a 40% inheritance tax bill.

Reply to the comment left by Keith Wellburn at 03/02/2025 - 14:52
I think one should look at other assets like physical gold,silver and whiskey which produce far better rates of return than residential property.
Buying and renting overseas in places like Garland Texas or Singapore through a brass plate entity makes more sense as does cryptocurrency mining with proper research.

Reply to the comment left by John Gelmini at 03/02/2025 - 15:55Absolutely right. But if you are looking at gold then you need to be aware that gold bars and other forms of gold are subject to capital gains tax, unless you hold them in a company. Gold coins are not subject to capital gains tax because they are currency. And because gold is easy to steal one of the factors to take into account with gold is the storage and security costs.
Gold is potentially subject to inheritance tax, (if HMRC knows where it is). But even if HMRC does not know where it is, because mostly people do not carry cash any more you have still got to get it back into a bank account in order to be able to pay for the family holiday with your credit card, or pay for childcare costs, or help the children get on the housing ladder.
Buying gold is fine but it does not feed or educate anybody, put a roof over the heads of any family or result in residential accommodation that is cheap to run or reduces UK CO2 emissions.
The solution to that is the tax system.
Communists like Jeremy Corbyn do not care about this of course because they do not believe anybody should own anything anyway. Communists are really good for the price of gold because they destroy incentive and are great at producing black markets....although they are not great at doing anything else other than destroying incentive.

That's why I said a brass plate entity .
On a small scale one has to imitate people like Charlie Mullins and the 10,500 wealthy people who have already left the country.
If I were younger I would leave the country so all one can do is outwait the Labour government which will be gone by 2029

Reply to the comment left by John Gelmini at 03/02/2025 - 16:16
That is one possible option. Another is to draw 25% out of your pension and spend it. Yet another is to go and spend it in Portugal, Cyprus, Dubai or somewhere else that wants your hard-earned money. 🙂

But certainly there's not much incentive to invest in a pension any more and if you are investing in buy-to-let it seems the only sensible way to do that on any scale is to invest via a company. Being a small-portfolio landlord is socially useful (especially compared to buying gold) but it is being penalised by all the main parties.

Well Mr Corbyn, let’s see what your stupid government has done so far, along with the idiotic Tories.

An increase in stamp duty surcharge of 66%
Reduction in sdlt thresholds about to hit us.
Double council tax or worse on property being renovated, sold or purchased.

An increase in delinquency period for eviction notices by 50%, removal of mortgage interest relief on short term rentals, council tax rises, selective licensing no longer requires housing minister approval, increase in national insurance, interest rates increases, pension funds will now form an estate taxable item from April for inheritance tax, energy costs increases, you’ve given all the new housing stock to illegals.

You Labour numpties know absolutely nothing about renting an asset or how to build or fund it, the Tories are just as bad, they started this housing nightmare and it’s going to get a lot worse.

Reply to the comment left by John Gelmini at 03/02/2025 - 15:55
Each to their own I suppose, certainly doesn’t appeal to me. I love the notion of getting one over on the series of half wits like Osborne. Went from some ridiculous gross rental income of about £93k before the pathetic 20% interest credit with a silly amount at 40% tax 3 or 4 years ago to virtually no income tax now. I took the hit on CGT, but 28% (24% last year) could have been, and almost certainly will be worse in the future - some other clown if not Reeves will go for highest marginal tax rate one day. And now the capital is mine tax free unlike a pension pot which I didn’t really bother with and three quarters of which would be taxed on exit for the rest of life and now to be so on death.

After being clobbered by S24, it now is very sweet to effectively receive residential rental income tax free - and whilst ISA allowances are being allowed to wither on the vine, unlike CGT allowances they haven’t been cut, I believe Reeves committed to keeping the £20k pa for the rest of the parliament, quite generous really when the working people she claims to support usually don’t have anything like that to shelter each year.

Interesting to note that I sold a couple of student HMOs to an investor in Singapore who had a couple of UK companies and was literally spending millions buying them up in the UK. Also a cash sale to a Hong Kong resident for one of my family lets.