How does Buy to Let END!

[snaga]

Truly heart warming, worth a watch if you need cheering up.

 

[MrXxxx]

32 minutes ago, snaga said:

Truly heart warming, worth a watch if you need cheering up.

 

Correct up to 13.00 and then he said rental prices can't go up by double and property values can't reduce by 50%...I agree with the former to an extent unless of course salaries do the same [great for inflation rates...not!], but the latter is possible and demonstrates that property isn't always a case of 'pure' availability and demand per population numbers, but one demand and affordability....I am happy for greedy BTLers to 'burn' their funds/'profits' whilst waiting for their expected [yet at present unrealized] Capital gains :-)

[Ash4781b]

13 hours ago, snaga said:

Truly heart warming, worth a watch if you need cheering up.

 

 Sometimes in the video BTL is an investment then other times it’s a business. He does mention about limited company setups. He’ll have what is it insurance if he told all his clients to pipe into BTL

Edited October 3, 2023 by Ash4781b

[onlyme]

I never did get how REIT's would work buying a mixed portfolio of housing, having to deal with day to day legal, financial, service, personal, maintenace and other issues with all the admin of that on top and make money.

May be an extreme / bad example but holy hell, just how far away from you will on nothing and be happy is this, will you own it and get prety much nothing in return.

 

https://www.investmentweek.co.uk/news/4130684/aew-tenants-home-reit-portfolio-rent-collection-falls

AEW re-tenants 10% of Home REIT portfolio as rent collection falls to 3%

More tenant liquidation expected

Home REIT no longer has any exposure to Redemption Project CIC, one of its non-performing tenants that had not paid any rent for 2023, after it surrendered all of its leases.

 

Home REIT’s new investment manager AEW has completed lease surrenders and re-tenanting on 10% of the trust’s property portfolio, as rent collection fell to 3% in September.

 

 

In its second monthly update today (2 October), the trust said rent collection fell to 3% during the month, down from 7% in the three months to August, as some tenants' financial strength continued to deteriorate. 

[reformed nice guy]

45 minutes ago, onlyme said:

I never did get how REIT's would work buying a mixed portfolio of housing, having to deal with day to day legal, financial, service, personal, maintenace and other issues with all the admin of that on top and make money.

May be an extreme / bad example but holy hell, just how far away from you will on nothing and be happy is this, will you own it and get prety much nothing in return.

 

https://www.investmentweek.co.uk/news/4130684/aew-tenants-home-reit-portfolio-rent-collection-falls

AEW re-tenants 10% of Home REIT portfolio as rent collection falls to 3%

More tenant liquidation expected

Home REIT no longer has any exposure to Redemption Project CIC, one of its non-performing tenants that had not paid any rent for 2023, after it surrendered all of its leases.

 

Home REIT’s new investment manager AEW has completed lease surrenders and re-tenanting on 10% of the trust’s property portfolio, as rent collection fell to 3% in September.

 

 

In its second monthly update today (2 October), the trust said rent collection fell to 3% during the month, down from 7% in the three months to August, as some tenants' financial strength continued to deteriorate. 

This REIT invested in "Redemption Project CIC" which is run not for profit..... and expected what exactly?

 

[onlyme]

 

No let up in this trend.

 

 

[spygirl]

https://www.latimes.com/california/story/2023-10-04/airbnb-guest-refuse-pay-leave-luxury-rental

[Wight Flight]

32 minutes ago, spygirl said:

https://www.latimes.com/california/story/2023-10-04/airbnb-guest-refuse-pay-leave-luxury-rental

I did wonder when that would happen.

Though i note it was a six month let, so in UK terms an AST by default.

[spygirl]

The Metrobank situation has been going on a bit.

The regulator is refusing to take their model/figures on  capital required.

The shift in IR has made the situatio much much worse.

Metro Bank in talks about urgent £600mn capital raise

UK lender’s shares have plunged 50% in recent weeks

https://www.ft.com/content/3532195d-4153-4566-8fab-a719457ffff9

Like othe challngers n small banks/BS, Metro is balls deep in BTL and other crap far far along the risk line.

Market Summary > Metro Bank Holdings PLC

49.50 GBX-2,760.50 (-98.24%)past 5 years

 

 

[spygirl]

2 hours ago, spygirl said:

The Metrobank situation has been going on a bit.

The regulator is refusing to take their model/figures on  capital required.

The shift in IR has made the situatio much much worse.

Metro Bank in talks about urgent £600mn capital raise

UK lender’s shares have plunged 50% in recent weeks

https://www.ft.com/content/3532195d-4153-4566-8fab-a719457ffff9

Like othe challngers n small banks/BS, Metro is balls deep in BTL and other crap far far along the risk line.

Market Summary > Metro Bank Holdings PLC

49.50 GBX-2,760.50 (-98.24%)past 5 years

 

 

Market Summary > Metro Bank Holdings PLC

38.14 GBX-2,771.86 (-98.64%)past 5 years

5 Oct, 09:54 BST • Disclaimer

[Talking Monkey]

On 03/10/2023 at 19:53, onlyme said:

 

No let up in this trend.

 

 

That must be bad for the HMO owning parasites 

[spygirl]

https://www.property118.com/allegations-made-by-dan-neidle-of-tax-policy-ltd-statement-from-property118-and-cotswold-barristers-2/

We are aware of a series of publications by Dan Neidle of Tax Policy Associates Limited to his website and his social media channels since 13 September 2023.

Our solicitors have sought advice from an independent Tier 1 Tax King’s Counsel to confirm the correctness of our approach. We anticipate making a summary of this advice available to mortgage lenders, our clients, and their professional advisers on request when it is finalised.

HMRC has been aware of our work for several years, and has subjected our work to many detailed checks without concern. We will of course be approaching HMRC in order to address any other concerns they may have.

MORTGAGES

The credit teams and legal counsel of several mortgage lenders have scrutinised our work and have been happy to extend further lending to our clients.

None of our clients’ lenders has ever called in a loan.

Many of our clients have gone on to arrange new financing in their company structure to complete the contracts substantially performed.

[spygirl]

https://www.property118.com/property118-and-cotswold-barristers-rebuttal-of-dan-neidles-allegations/

Kings Counsel has confirmed the correctness of our approach to incorporation.

Why we have only published a holding response to Dan Neidle’s articles (until now!)

Given the extremely damaging nature of Mr Neidle’s article, and the distress it has caused to our existing clients and their trusted advisors, we knew we needed to seek professional help from a specialist solicitors’ firm.

Their advice was to appoint an independent Tier 1 Tax Kings Counsel (and junior barrister), at arms’ length, to conduct a comprehensive review of Mr Neidle’s articles as against our advice and processes in order to assess the correctness of our approach. This included providing, under legal privilege, actual client files, including files that HMRC had reviewed. These files contained evidence of the detailed nature of HMRC’s enquiries, and the complete transparency our clients and their advisers bring to dealings with HMRC. No-one at Property118 or Cotswold Barristers had any influence over the content of the KC’s advice, as it had to remain a process of integrity.

Naturally, that process took a significant amount of time to complete.

Felicity Cullen KC of Devereux Chambers was appointed by our solicitors because she is ranked as Tier 1 Kings Counsel and specialises in this form of tax. She is well known for her ‘robust approach’ to projects of this nature. She has given permission for people with a legitimate reason to see her advice. Felicity took silk in 2008, becoming the first woman Silk in specialist tax chambers. She has been in practice since the mid 1980s, having started life at the tax bar at Gray’s Inn Tax Chambers. In 2012 she became a CEDR Accredited Mediator and has observed several commercial mediations. The Chambers UK Bar Awards shortlisted her as ‘Silk of the Year’ for Tax in 2015.

We have also sent a copy of Felicity’s advice to Mr Neidle along with a request for substantial revisions of his articles. In fairness to him, once he had seen we were going down this path he did ask for us to correct any errors identified by our KC so he could publish amendments.

[spygirl]

Thing is,tge KC deals with commercial tax.

If the houses had been bought in a LtdCo then there'd be no issue.

The p118 is an elaborate scam to take assets held as an individual and magic them into a LtdCo, without paying stamp duty or breaking mortgage TnCs

[spygirl]

Less Tax for Landlords: the £50m landlord tax avoidance scheme that HMRC say doesn’t work, and can trigger a mortgage default

https://www.taxpolicy.org.uk/2023/10/05/lt4f/

 

[spygirl]

https://www.propertytribes.com/hybrid-tax-planning-hmrc-deliver-verdict-t-127661162-1.html

[leonardratso]

36 minutes ago, spygirl said:

https://www.propertytribes.com/hybrid-tax-planning-hmrc-deliver-verdict-t-127661162-1.html

All sounds very reasonable to me, hopefully the tax dodgers get shafted by HMRC and also never see their thousands in fees to set up the bogus bullshit again, then cant flog anything except for a pittance and go broke.

[spygirl]

https://www.taxpolicy.org.uk/2023/10/06/slappedagain/

[spygirl]

6 October 2023

Sent by email to xxxxxxx@BrettWilson.co.uk from [email protected]

Dear Sirs and Madams

Property118, Mark Smith and Cotswold Barristers

Thank you for your letter of 3 October 2023, claiming that our reports on your clients are highly defamatory, and asking us to retract them.

Your letter fails to identify a single specific statement we have made which is false, or with which you disagree.

Our reports aim to be accurate and complete, and we will always correct errors of fact or law as soon as they are pointed out to us. We have, therefore, reviewed your summary of the KC opinion. As we do not have the instructions, it is not clear on what facts and assumptions the opinion is based. I would, nevertheless, summarise our view (in light of that summary), as follows:

1. Your clients market a scheme on the basis that it is “fully compliant for mortgage lending purposes” and is “invisible to lenders unless you alert them”. Our view is that in most cases the Property118 scheme breaches the terms of its clients’ mortgages, likely leading to a mortgage default. That is our view, the view of every real estate finance specialist we spoke to, and the publicly stated view of UK Finance, the industry body for mortgage lenders.

It is hard to imagine a more serious problem for your clients than their scheme defaulting their clients’ mortgages. Yet your client refused to explain their position to me in correspondence, and the summary KC advice acknowledges that there is a potential breach, but provides no view on the point.

If this was the only problem with your client’s structure, it would be a disaster for their clients (which is why I described it as the “worst tax avoidance scheme ever”). This is, however, not the only problem.

 

2. Your clients market a scheme for which the main purpose and benefit include the obtaining of a tax advantage. The normal incorporation of a property rental business has many commercial advantages, not least legal segregation and protection from liabilities of the business. Your clients’ scheme has none of those advantages, because legal title, and hence all liabilities, remain with the landlord. Its main purpose, and perhaps its sole purpose, is gaining a tax advantage.

An arrangement where the main purposes and/or main benefits include gaining a tax advantage is subject to numerous anti-avoidance rules, and many people would refer to it as a “tax avoidance scheme”.

An important consequence is that your client’s scheme is likely disclosable to HMRC under DOTAS, and their failure to disclose could render them liable to a penalty of up to £1m. Another consequence is that your clients’ scheme cannot rely on HMRC guidance, concessions or clearances. Furthermore, no deduction is available under the loan relationships rules. Perhaps most seriously, it means that HMRC could have up to 20 years to challenge Property118’s clients and impose tax, interest and penalties.       

(You mention the term “unlawful tax advantage” in your letter; this is not a term I have used, and it has no legal meaning.)

The summary KC advice does not express any view on these issues. I do not know why that is. An opinion on a tax avoidance scheme which doesn’t discuss anti-avoidance rules and principles is worthless.

 

3. Your clients claim that the Mr Smith carries professional liability insurance of £10m per client, meaning that his clients are “shielded from financial risk”. This is a misleading way to describe professional indemnity cover, which omits the minor detail that clients would need to bring a negligence claim against Mr Smith, and win.

We also understand from the experienced insurance lawyers and underwriters we have spoken to that Mr Smith’s insurance is mostly unlikely to provide £10m of cover “per client” – it will be £10m of cover “per claim”. This is a very significant distinction. The typical definition of “claim” means that, if Mr Smith has sold the same scheme to 1,000 clients, and each scheme fails for the same reason, then the cover “per claim” will actually be £10,000, not £10m.

It is our opinion that your clients are misleading their clients into thinking that insurance protects them from the risks their scheme creates. It does not.

 

4. Your clients claim that “HMRC has confirmed [our] strategy is perfectly above board”. HMRC do not provide confirmations of this kind. In our opinion, the claim is false.

 

5. We observe that Property118 has no staff with any tax qualifications. Indeed, Mr Alexander seemed unaware of the existence of the CTT and CTA qualifications. The only prior connection I can see between Mr Alexander and tax planning is that he was an investor in two failed film relief tax avoidance schemes.

Cotswold Barristers also has no staff with any tax qualifications. It is not a tax set; Mr Smith revealed (in a discussion on LinkedIn) he had not heard the term “tax set”. Mr Smith’s practice ranges from business law, to tax, to criminal defence work, to private prosecutions (including one where he was suspended by a month by the Bar Standards Board for acting negligently and “failing to act with reasonable competence”). Mr Smith’s profile on the Cotswold Barristers website in 2017 and 2020 did not include tax in his stated areas of practice.

In light of this, and the advice they have proffered, it is our opinion that Property118 and Cotswold Barristers are unqualified to advise on tax matters.

 

6. Your clients market an SDLT avoidance scheme for married couples who jointly own a property rental business. The scheme involves retrospectively claiming that the couple has always been a business partnership, and therefore that SDLT “partnership relief” is available. They do this even in cases where there was no partnership agreement, no partnership tax returns, and no extraneous evidence of any kind that a partnership existed. The one decided case on similar facts was thrown out.

It is our opinion that it will only be in rare cases that this strategy succeeds, and SDLT relief applies. We also expect HMRC to contest the availability of relief. The fundamental problem is that relations between a married couple are very different from relations between members of a business partnership. Furthermore, anti-avoidance legislation could potentially apply even if a partnership was found to retrospectively exist.

The KC correctly states the law in this area but provides no view on whether SDLT will be available – she says “This is a question of fact and we cannot comment more specifically at this stage”. The KC then provides no view on the anti-avoidance point. Again, I don’t know why that is.

 

7. Your clients claim that CGT incorporation relief applies on the establishment of their structure. Our opinion is that it does not, because the fact the company is becoming a beneficiary, without legal title – and will stay in that position for at least the term of the mortgage – means that the landlord’s original business did not in fact transfer to the company. An additional problem is that the HMRC concession on which your client’s scheme relies cannot be used for tax avoidance. There are then further questions about the impact on the CGT analysis of a sale that is in breach of a mortgage.

The KC states that incorporation relief applies but does not seem to appreciate the long-term nature of the trust. The KC does not address the avoidance point or the breach point. Once more, I don’t know why.

 

8. Your clients claimed that the company could claim a tax deduction for the mortgage interest, even though it is the landlord (not the company) who is the borrower under the mortgage. Our view is that this is probably not possible. The KC disagrees, but does not address our arguments around s330A CTA 2009, and does not consider the loan relationship anti-avoidance rules. I do not know why.

 

9. Your clients claimed that the company makes payments to the landlord to cover the landlord’s own interest payments, but the landlord wouldn’t be taxed on these payments. They were unable to explain why. We said in our report that either the landlord would be taxed (income treatment), or the company wouldn’t obtain a deduction (capital treatment): you can’t have your cake and eat it.

The KC’s view on this is not clear to me. It is possible she is a “cakeist”, and believes there can be a deduction on one side, without taxable income on the other, but that seems unlikely, and it is perhaps more likely that I am misunderstanding her position.

I should add that some of the law in this area is complex, particularly the interaction between the income/capital distinction, the annual payments rule (and the pure income profit test established in Conservators of Epping Forest), and the scope of the miscellaneous income rule (given the continuing relevance of the old 19^th century Schedule D Case VI caselaw such as Attorney-General v Black).

This and point 8 are important, because Property118 rely on “cakeism” for their structure to work – they need the company to have a deduction, but the landlord to have no income tax. This is a very unlikely outcome. That means we expect Property118’s clients will end up in a worse position, on these two points alone, than if they hadn’t effected the structure at all.

 

10. Your clients marketed a scheme as an “amazing opportunity”. It involves the creation of a bridge loan for no purpose other than the obtaining of a tax advantage. In our view, the scheme fails for a variety of technical reasons, and is likely (again) disclosable under DOTAS. The KC thinks the scheme is acceptable, but the caselaw and HMRC guidance she refers to relate to a different type of transaction entirely. I do not know why that is.

 

11. Your clients market a scheme under which “growth” shares are created, entitling the holder to all the future growth of a company. Yet they argue these shares have no value. Our opinion is that they do have value. The KC declined to express a view on the valuation point. I do not know why.

It is our view that shares with a strong chance of upside, and zero chance of downside, will not have a value of zero. If your clients still disagree, please tell them that I would be interested in acquiring some of these shares, and I am prepared to pay well over the odds (up to £10, subject to contract).

 

12. You say in your letter we make the incorrect assumption that your clients give the same advice to all clients. We make no such assumption. We simply note that we have reviewed multiple copies of advice from your client recommending an essentially identical scheme, and viewed promotional material published by your clients reflecting that same scheme. If your clients believe we have inaccurately described any aspect of their scheme, or if they are currently marketing other schemes, then please let us know.

 

I would be grateful if you could let me know if there are any errors of fact or law in the above, and we will strive to correct them.

What we will not do, however, is change or retract our opinion because it is inconvenient to your clients. I say “our” opinion because, whilst I take sole responsibility for the content of Tax Policy Associates’ reports, they reflect the views of a large team of experienced tax advisers. This includes KCs, solicitors, tax accountants and retired HMRC officials. Most of those advisers cannot be named, for professional reasons, but you will note that those that we do name are some of the most eminent in their field, who literally “wrote the book” on the taxes in question. We believe that our views reflect that of the wider profession (and the comments on social media from other advisers reflect that).

We are committed to transparency and will publish this correspondence, an annotated copy of the KC opinion summary, and all further correspondence between us.

Your clients may wish to consider notifying their insurer.

Yours faithfully

 

Dan Neidle

Tax Policy Associates Ltd

[eek]

11 hours ago, spygirl said:

Thing is,tge KC deals with commercial tax.

If the houses had been bought in a LtdCo then there'd be no issue.

The p118 is an elaborate scam to take assets held as an individual and magic them into a LtdCo, without paying stamp duty or breaking mortgage TnCs

Property118’s KC didn’t really deal with tax - if he had a DOTAS number would have been set up and then used to say the scheme had HMRC approved.

both this and the other scheme Tax Policy reported on this week made the typical tax avoidance scheme sold to contractors look plausible.

Sane banks (which sadly we don’t have) would be rapidly looking at calling in the mortgages and take procession of the properties now before  HMRC kick things off and completely bankrupt anyone foolish enough to use these schemes

[Wight Flight]

I read today that the council are addressing our homelessness problem by renting properties from private landlords.

Which means the person that otherwise would have rented it now becomes homeless.

it is an interesting take on fixing a problem.

[MrLibertyRedux]

15 hours ago, Wight Flight said:

I read today that the council are addressing our homelessness problem by renting properties from private landlords.

Which means the person that otherwise would have rented it now becomes homeless.

it is an interesting take on fixing a problem.

Do you know if they are paying more than the local authority maximum rate?

[Wight Flight]

23 minutes ago, MrLibertyRedux said:

Do you know if they are paying more than the local authority maximum rate?

Not for sure - but they would have to. No landlord will rent for the LHA rate.

[spygirl]

26 minutes ago, Wight Flight said:

Not for sure - but they would have to. No landlord will rent for the LHA rate.

I dont know but they migth be turning them into HMOs.

 

[spygirl]

Its gping to be brutal but the mind set will be changed.

https://www.dailymail.co.uk/femail/article-12612079/Would-marriage-survive-one-inherited-fortune-spent-themselves.html

When lecturer Fiona Wilde heard that her husband, Pete, had inherited £200,000 from a much-loved aunt, she — perhaps naturally — expected him to use the money to pay off the mortgage on the family home or invest in a rental property to cushion the future of their ten-year-old child.

Im guessing thats form the woman ratehr than an insta quotefrom jounro.

Pay off mortgage and *invest* for the kid FFS.

In the end, he got his BMW and a family holiday in Mauritius... but Fiona also won renovations to the family home — new windows and a kitchen — although there was no money left over to invest in a rental property. 'We've come out the other side now,' she says.

 

For Sarah Greeff, 52, her inheritance was indeed the stuff of dreams — but for her husband, not her.

When she received a £200,000 legacy after her beloved father died in October 2020, she was consumed by grief and what she now knows was the brain fog of menopause.

Unable to think about what to do with the money, she gave it to her husband of 21 years, Nick, 49, who promptly spent it all on his lifelong dream — a remote Scottish croft.

'When the solicitor handed me the cheque, I was engulfed by sadness for my dad and cried sitting on the floor of her office,' says Sarah, a dog trainer and behaviourist, who was living on the Isle of Wight at the time and had cared for her elderly father for two years.

Her sister received an equal inheritance.

'Unbeknown to me, after Dad died, Nick started looking online for property with land and persuaded me to go and view the 100-acre croft and the four-bedroom house on it. When I saw how rundown it was, I told him we would not be buying it. It hadn't been decorated since 1980, there was water pouring in through the roof and the heating didn't work.

Yeah ... meniopausem ade me do it ...

200k isnt a huge diollop of money.

Not to be sniffed at but it really isnt life changing.

I say that as my cousins got ~200k each when their Dad died. Ones given up work at 54, which is fuckign nuts.

Its what 14p UC mum will rawn down in 4y....

Sarah is adamant that Nick spent the money in good faith on a lifestyle change he thought they'd both love. She admits that she loves having so much land as much as he does — if only the house was warm and more habitable.

'At the time, I wasn't great at making decisions. I'd lost all my oomph. Just getting out of bed and feeding us both was an achievement.'

As her grief receded, and with an HRT prescription to give her some energy back, Sarah became increasingly concerned about what she'd done. 'I realised I was deeply unhappy, and when Nick sat down and asked me why, I told him I felt I'd lost control of everything,' she says.

Nowe, the thing is, if he vlew 200k on a croft then hes a fuckign moron. AFAIK crofting cottages arenot expensive - 

https://www.hspc.co.uk/crofts.asp

Id not pay more than 10k.

Wellbeing company founder Vicky Borman had no qualms about being bullish with the £178,000 she inherited from her 94-year-old grandmother in 2020.

After treating herself to a convertible Mercedes and putting some of the money into her business, she invested the rest in a Grade II-listed mews property which she rents out on Airbnb and owns jointly with her mother. There's no mention of Vicky's husband's name on the deeds.

And the tits.

Tech company director Danielle Holmes, 36, admits she was in a state of total disbelief when she learned she was to inherit £250,000 after her grandmother died in 2021 in her 90s, and also left money to her two sisters and their mother.

'I regularly stared at my new bank balance for about eight weeks after the money had been paid in because I couldn't quite believe it was real,' says Danielle, who lives in Wiltshire with her husband, Kyle, 31. They are co-directors of a tech company and each has a ten-year-old child from a previous relationship.

Having shared their finances throughout their five-year marriage, Danielle admits that although she and Kyle pooled ideas about what to do with the inheritance, there was an understanding that she would have the casting vote on all spending.

'We agreed we would not blow it, but disagreed on how we might put it to best use,' she adds. 'For example, some of it was inherited in stocks and shares and Kyle's view was that we should leave those investments to see how they performed, whereas I didn't want that sort of financial risk. I cashed them in and banked the money.

'We also looked at buying a property to rent out but decided against it, and very nearly bought a new home, which fell through.'

In the end, they splashed out on two, no-expenses-spared family holidays — one to Turkey and another to Disneyland Paris —voted for by their children.

'Then we invested £40,000 in the business and bought a VW Transporter van for our business,' Danielle says. She also used some of the inheritance to lend her husband the money for a car.

 

Why does a techco need a VW?

https://www.journalism.co.uk/press-releases/wiltshire-woman-named-as-one-of-the-42-under-42-to-watch-in-the-south-west--a-year-after-her-husband-received-the-same-accolade-/s66/a1042525/

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Underwhelmed ...