Credit deflation and the reflation cycle to come (part 2)

[Loki]

2 minutes ago, sleepwello'nights said:

Woodland might be a better bet for you. You'll also have a source of firewood. 

I'd love that, I thought it came with mandatory upkeep/coppicing? 

[sleepwello'nights]

4 minutes ago, Loki said:

I'd love that, I thought it came with mandatory upkeep/coppicing? 

It will need some maintenance I guess otherwise it will become too overgrown to your detriment.

https://www.woodlands.co.uk/

[spygirl]

1 hour ago, ThoughtCriminal said:

Just what I was looking for SP. someone to make me consider the downsides, I knew you were the man. Not that I’m saying you’re a pessimist or anything. 😉

 

You’re right though, it is all hunky dory until its not. A bad tenant would see me and my German shepherd kicking the door in as I don’t suffer fools, but then do I really want that hassle? 
 

I wouldn’t pay tax on it as I think the chances of being caught for not doing so are infinitesimally small. 
 

In a rising market I think I’d do it in a heartbeat, but in these conditions it’s really not so clear cut. 
 

I think I need to ponder. 
 

Cheers SP

Yes, I’ve never understood the logic behind the higher end stuff. You pay 10 x the price but barely get more than twice the return. 

Youd see yourself with no rent and in court for harrassment.

Youd also get yourself delisted from the LAs fit n proper LL list.

Youd be liable for tax as HMRC know you have a rental. Theres no escaping it.

 

[Loki]

4 minutes ago, sleepwello'nights said:

It will need some maintenance I guess otherwise it will become too overgrown to your detriment.

https://www.woodlands.co.uk/

It's more expensive, but would be more practical and interesting.  Might have to convince the lads they want in on it...

[Hardhat]

Here's a question on laddering up

One of my best performing stocks is CWR (Ceres Power Holdings), a manufacturer of fuel cells (for hydrogen etc.). My holding is currently up 40%.

I'd quite like to increase this holding even more, as I see a lot of potential upside still ahead in the hydrogen sector. However, the share is now at a 40% premium to the last time I bought ... and I'm hovering over the buy button as it now seems expensive.

We've often discussed laddering down on here, but does anyone have any strategies for laddering up? Is this even a technique?

[Loki]

@Hardhat great question actually! Maybe worth waiting till things drop possibly at the end of summer?

[ThoughtCriminal]

50 minutes ago, spygirl said:

Youd see yourself with no rent and in court for harrassment.

Youd also get yourself delisted from the LAs fit n proper LL list.

Youd be liable for tax as HMRC know you have a rental. Theres no escaping it.

 

Have to say SG, I know half a dozen people who rent out multiple houses and have done for years, not one of them has ever paid tax on the income. 
 

By what method would HMRC be alerted to the fact one is gaining income for a house? I can’t see where in the chain the information would be transmitted. 

[spygirl]

4 minutes ago, ThoughtCriminal said:

Have to say SG, I know half a dozen people who rent out multiple houses and have done for years, not one of them has ever paid tax on the income. 
 

By what method would HMRC be alerted to the fact one is gaining income for a house? I can’t see where in the chain the information would be transmitted. 

Jesus? Are you being serious?

[ThoughtCriminal]

1 hour ago, Loki said:

Does anyone know if buying a plot of currently agricultural land comes with any ongoing costs/liabilities? 

I am not looking for planning permission, council can deal with that when they compulsory purchase it in 10 years

As a bloke, imagine being up to say "Going up the field, back later/Up the field lads, fire's lit, booze cold" 

I’ve been actively looking at this for a while. Short of covenants etc there’s nothing you HAVE to do. It’s just a piece of land. Put a little “storage” shed on it or barn, with planning natch. And for around 7k an acre you’ve got yourself a little piece of England as your empire.

 

As was mentioned, woodland is even more tempting as it’s even cheaper and privacy is guaranteed. 

 

Ive long considered building a house in the middle of a wood as no one would spot it in the right area.

 

Anyway, im definitely guilty of being off topic now so I’ll zip it.

[ThoughtCriminal]

1 minute ago, spygirl said:

Jesus? Are you being serious?

Deadly. 
 

They’ve never been caught so there’s obviously no method for HMRC to know what activity lies behind a mortgage. 
 

Otherwise they would have. 

[spygirl]

Just now, ThoughtCriminal said:

Deadly. 
 

They’ve never been caught so there’s obviously no method for HMRC to know what activity lies behind a mortgage. 
 

Otherwise they would have. 

Land registry record who owns a property.

Any mortgage or finance is recorded too.

Bank transaction record flow of money. Ditto Amazon, credit cards.

HMRC have instant access to all 3. They can query all transation to n from person ins n outs.

They have 30 years to go after tax evasion, so they are in no rush.

If you want to hide assets or income from HMRC then housing is about the worst way to go about it.

 

 

[Bobthebuilder]

1 hour ago, JMD said:

DB, great to see you have an open mind (joking of course), given what you have said about property prices etc, previously. Not being sarcastic btw, as I think this is crucial in identifying all sorts of opportunities in next cycle. Also if I may say it shows a certain fortitude of character to state this 'openly', ie. I expect you'll get some blowback from some here. 

Never say never is what i would say.

[Loki]

2 minutes ago, spygirl said:

They have 30 years to go after tax evasion, so they are in no rush.

Give them enough rope...

[DurhamBorn]

1 hour ago, spygirl said:

Youd see yourself with no rent and in court for harrassment.

Youd also get yourself delisted from the LAs fit n proper LL list.

Youd be liable for tax as HMRC know you have a rental. Theres no escaping it.

 

Iv had a few removed from my partners rooms she rents out spy,no problem at all.The lads i use are mates of mine and dont make mistakes,there is no way anyone can prove anything.They are on lodgers contracts though so have no rights.Proper tenants would be more tricky,but still doable.

[sleepwello'nights]

20 minutes ago, ThoughtCriminal said:

Have to say SG, I know half a dozen people who rent out multiple houses and have done for years, not one of them has ever paid tax on the income. 
 

By what method would HMRC be alerted to the fact one is gaining income for a house? I can’t see where in the chain the information would be transmitted. 

If you use an agent they are required to submit information on their clients rental income to HMRC.

[sleepwello'nights]

17 minutes ago, ThoughtCriminal said:

I’ve been actively looking at this for a while. Short of covenants etc there’s nothing you HAVE to do. It’s just a piece of land. Put a little “storage” shed on it or barn, with planning natch. And for around 7k an acre you’ve got yourself a little piece of England as your empire.

 

 

A while back someone posted the title of a book that made some suggestions as to how you could buy a field and then little by little gain full planning permission for a house. 

Field to.....cant remember.

[spygirl]

7 minutes ago, DurhamBorn said:

Iv had a few removed from my partners rooms she rents out spy,no problem at all.The lads i use are mates of mine and dont make mistakes,there is no way anyone can prove anything.They are on lodgers contracts though so have no rights.Proper tenants would be more tricky,but still doable.

Ahh, that's lodgers not tenancies.

Also, you are dealing with single people.

Forcibly or illegally remove a family with kids and you are in shit in most LAs.

[ThoughtCriminal]

23 minutes ago, DurhamBorn said:

Iv had a few removed from my partners rooms she rents out spy,no problem at all.The lads i use are mates of mine and dont make mistakes,there is no way anyone can prove anything.They are on lodgers contracts though so have no rights.Proper tenants would be more tricky,but still doable.

Yes, maybe it’s a northern thing DB, although I think SG is from up here too. But anyone I know who has a problem with damage to property or refusing to pay they turn up with a transit van full of lads and the problem is resolved.

 

Theres theory and then there’s reality.

[Don Coglione]

1 hour ago, spygirl said:

Youd see yourself with no rent and in court for harrassment.

Youd also get yourself delisted from the LAs fit n proper LL list.

Youd be liable for tax as HMRC know you have a rental. Theres no escaping it.

 

 

49 minutes ago, ThoughtCriminal said:

Have to say SG, I know half a dozen people who rent out multiple houses and have done for years, not one of them has ever paid tax on the income. 
 

By what method would HMRC be alerted to the fact one is gaining income for a house? I can’t see where in the chain the information would be transmitted. 

 

45 minutes ago, spygirl said:

Jesus? Are you being serious?

 

37 minutes ago, spygirl said:

Land registry record who owns a property.

Any mortgage or finance is recorded too.

Bank transaction record flow of money. Ditto Amazon, credit cards.

HMRC have instant access to all 3. They can query all transation to n from person ins n outs.

They have 30 years to go after tax evasion, so they are in no rush.

If you want to hide assets or income from HMRC then housing is about the worst way to go about it.

 

 

 

21 minutes ago, spygirl said:

Ahh, that's lodgers not tenancies.

Also, you are dealing with single people.

Forcibly or illegally remove a family with kids and you are in shit in most LAs.

Whilst Spy is renowned for being a Pinocchio-nosed cunt, he is not wrong here.

The Boys against an AST and HMRC is never going to work these days - unless they employ a shovel, a patio and a shit-load of luck.

[ThoughtCriminal]

There’s a mortgage, there’s money being paid into a bank account or you’re picking up cash.

 

Short of wearing a t shirt saying “I’m committing  tax fraud, please inform HMRC” I’m really not seeing where the leakage takes place.

 

I can definitely see the danger if you’re using an agent, but I don’t know anyone who’s willing to pay someone to do nothing. 
 

I wonder if there’s a north/south divide on this.

 

[spygirl]

8 minutes ago, ThoughtCriminal said:

There’s a mortgage, there’s money being paid into a bank account or you’re picking up cash.

 

Short of wearing a t shirt saying “I’m committing  tax fraud, please inform HMRC” I’m really not seeing where the leakage takes place.

 

I can definitely see the danger if you’re using an agent, but I don’t know anyone who’s willing to pay someone to do nothing. 
 

I wonder if there’s a north/south divide on this.

 

They correlate people against houses, find people with more than one in land register. Does not matter if it's in wife's names. You still have a primary residence.

Then they look at council tax  to see who's registered.

Then theyll look for regular payments into a bank account. Average UK rent us 700/m, cash in hand is not viable.

If they cant find a bank transfer then theyll assume cash in hand assume average local rent.

Then, when the tax owed is above 5k, theyll start an j testigation and its down to the LL to prove the HMRC are wrong.

You are assuming HMRC are both stupid and not total cunts.

[CVG]

14 minutes ago, spygirl said:

They correlate people against houses, find people with more than one in land register. Does not matter if it's in wife's names. You still have a primary residence.

Then they look at council tax  to see who's registered.

Then theyll look for regular payments into a bank account. Average UK rent us 700/m, cash in hand is not viable.

If they cant find a bank transfer then theyll assume cash in hand assume average local rent.

Then, when the tax owed is above 5k, theyll start an j testigation and its down to the LL to prove the HMRC are wrong.

You are assuming HMRC are both stupid and not total cunts.

I use to build US customer marketing profiles using over 6 billion rows of data - every week. Joining a few million land registry records to council tax records and a couple of other sources would be a doddle to do every other day of the week.

[MrXxxx]

1 hour ago, Hardhat said:

Here's a question on laddering up

One of my best performing stocks is CWR (Ceres Power Holdings), a manufacturer of fuel cells (for hydrogen etc.). My holding is currently up 40%.

I'd quite like to increase this holding even more, as I see a lot of potential upside still ahead in the hydrogen sector. However, the share is now at a 40% premium to the last time I bought ... and I'm hovering over the buy button as it now seems expensive.

We've often discussed laddering down on here, but does anyone have any strategies for laddering up? Is this even a technique?

Trying to understand the logic in this approach (no offense meant)...unless you have bought the share right at the bottom, future gains are alreeady limited...are there not other shares that would potentially offer a better return for your capital?

[sancho panza]

5 hours ago, spygirl said:

Yorkshire councils could declare themselves 'bankrupt' in months due to pandemic

 

Only the services councils are legally obliged to provide would remain intact, with spending on services like parks, museums and economic development halted or dramatically pared back.

Those are the only services they should have been providing.

OMFG! No more economic development!!

 

Some good may come of the epic mismanagement of this crisis if we get some reform of the woefully incompetent way we're governed locally.Layer upon layer of administration costs.As Ive said Leicesterhwire has something like 8 or ten councils,plus the county council.The CEO's are lla on £150k plus packages...……...and all they do is pipe money from taxpayers into a black hole.

5 hours ago, Castlevania said:

My old man and his business partner used to rent out the flats above their commercial premises - back in the day when no bank would lend for a flat above one. He always used to moan about what a pain in the arse it all was.

They had one tenant who they later realised had mental health issues. Every morning he’d wait beside the window for one of them to turn up for work by which point he’d leap into action, open the window and shout obscenities and slurs at them. It took them months to eventually evict him.

Another tenant had a small chip pan fire which damaged the paint on the walls. Panicking over losing his deposit, before he left he decided to repaint. He clearly bought the cheapest paint he could find and so the entire kitchen and front room were repainted in bright red.

One tenant died of aids.

I don’t think I’d want the hassle.

Great stories and they ring true when I think of some of the dumps I've lived in when I was younger

I wouldn't do it either CV.In a world where you can get 5% +div in BP,I'd need 15%+ to get me to give that up for the grief.There  are also professional bad tenants who go from ruining one LL's life to antoher.If you want hassle free tenants you generally get gross rental yields circa 3% at the mo.

 

5 hours ago, ThoughtCriminal said:

Just what I was looking for SP. someone to make me consider the downsides, I knew you were the man. Not that I’m saying you’re a pessimist or anything. 😉

 

You’re right though, it is all hunky dory until its not. A bad tenant would see me and my German shepherd kicking the door in as I don’t suffer fools, but then do I really want that hassle? 
 

I wouldn’t pay tax on it as I think the chances of being caught for not doing so are infinitesimally small. 
 

In a rising market I think I’d do it in a heartbeat, but in these conditions it’s really not so clear cut. 
 

 

Yes, I’ve never understood the logic behind the higher end stuff. You pay 10 x the price but barely get more than twice the return. 

Glad to be of help.I wouldn't dismiss it out of hand but there are other issues as per my reply to CV in terms of opportunity cost.I think with BP paying nearly 8% at his level,you can hide that in an ISA's...…..

@spygirl has written extensively about the HMRC's new computer system and how they're mapping transactions for fraud..My experience of watching the HMRC work is that they wait until you've built up enough of a debt then they pursue it.I've seen people build BTL empires on tax dodging only to find that the bill when it comes is ruinous.And then you're selling potentially into a market where everyone knows you're a distressed seller.

With BTL you need to play with a straight bat imho.

Another issue is liquidity.SHares and the like I can sell that day,houeses take months even years sometimes.There's a palce I'm watching in SA been on for five years.

For me,at the mo,the arbitrage available between renting and buying is huge.That place at circa £500k.You could stick £500k in BP/XOM get an income of £40k and pay the £12k rentwith it and then leave the maintenance to the LL's.Incredible value.

My main worry going forwards is feeding the family and buying fuel.Houses are generally bought with credit,I'm not sure they will match inflation like they did in the 70's 

 

[sancho panza]

4 hours ago, Sasquatch said:

We let the property (2 bed terrace) to a single lady. Probably in her 50's. Always very polite but I think she had had troubled life. We didn't use an agent and let it directly to her using an assured shorthold tenancy. She was getting some kind of benefit (can't remember what now) and that was paid to us directly and she topped it up. I think she had a part time job. Anyway, to cut the story short she had a major drinking problem and would go off grid at times and wouldn't answer the phone or the door. After about 12 months the benefit payments stopped and so did her contributions. We were then paid erratically but never enough and the arrears started to build up. She would sober up and plead with us to let her stay (I'll get myself sorted out etc, get a job etc). Looking back we were far too lenient. Eventually I think the debt built up to the equivalent of about 4 months rent and after more and more broken promises we set up a meeting with Shelter to sort things out. She didn't turn up! However, from Shelters perspective it was our problem, not the tenants. Eventually we'd had enough and served notice to leave. Shelter then advised her that we hadn't used exactly the right wording and we had to serve notice again. She stayed right up to the date stated in the eviction notice but then left of her own accord, leaving the house in a total mess. In the end we lost at least 6 months rent. All of our other tenancies were fine.

I'm not sure what would have happened if she had refused to leave by the stated date. Presumably we would have needed a court order and bailiffs.

In the future we would use an agent and make sure the vetting is more robust. As I said before, most people are extremely happy to let a fully maintained property in good order. 

Thanks for sharing.It's sobering to consider the downsides.I think the law is generally stacked to give the tenants a fair bit of leeway.iirc if tenants have kids then the process can be tougher.Yeah if she'd not observed the S21 then you'd have had another few months of unpaid rent and court costs as well to get judgment and eviction notice for the bailiffs.

Like I said about that guy at my work,he just got sick of the hassle and he used agencies,they just didn't do the reference checking properly.Even then,the people who are pro's just get fake references.

I think when you have nice properties that are well maintained,they often sell themselves and you get a choice of tenants.I know one guy who rented out a place in a rough bit of town.He pitched up after the rent hadn't been paid and found his tenant had left and gone back home and that a load of Bulgarians had moved in.Obviously didn't speak English.Took him months to get them out.Scars me hearing those stories.