Category Archives: Taxation

New Government Plans for Future Buy-To-Let Landlord Laws?

NOTE: None of these new regulations are expected to apply to limited companies holding more than 100 properties.

After Dave and George had exhausted benefits claimants and the disabled as their chosen targets for blame, they found Buy To Let Landlords, who are now fast becoming the nation’s favourite bêtes noir, after bankers, estate agents and journalists of course. Now Theresa May’s government is following in the footsteps of its predecessor.

Following the current torrent of anti-landlord legislation from our so-called Conservative government, these are some futuremeasures I can imagine being considered by The Treasury and the Ministry for Communities and Local Government, plus a new government quango being set up – see below.

2019. Psychological Assessments for Landlords
This will make it mandatory for all existing and prospective landlords to undergo Psychological Assessments for Landlords (PAL) to verify their fitness to be a landlord. These will take up to two hours, to be carried out by qualified Government Approved Psychologists. Cost estimated at around £490.00 plus VAT. Note that private landlords will not be able to claim back the cost of these PALs and furthermore they will not be an allowable business expense.

The tests themselves

The tests will include the famous word association test where subjects are asked to interpret what they see in random ink blot shapes. For example, they will be shown a photo of a student and if they say something like, ‘Cash cow to be exploited and degraded at every opportunity’ or something to that effect they will be marked down.

Where landlords fail the tests, in some cases they will be offered ECT (Electro Convulsive Therapy). This would be supervised by qualified psychiatrists and could last a fortnight and cost up to £7400.00. At the end of this they could then re-take the PAL – if they were still conscious that is.

Those that refuse the PAL will be required to sell their properties within 12 months or face an additional surcharge of 15% CGT, or a maximum of 6 months Community Service, whichever causes them the greater suffering.

2019. Mandatory CRB Checks for Residential Landlords

All existing and prospective (if there are any by then) landlords will be forced to undergo a full Criminal Records Bureau check.

Projected for 2020. New maximum age limit of 55 for all new landlords

No one over the age of 55 will be allowed to become a landlord and all those currently over that threshold age will be required to dispose of their existing properties within 12 months. Those not doing so will be subject to a 15% CGT levy or a maximum 6 months imprisonment.

Landlords who fail the PAL (see above) will also be required to walk around a designated local area for up to 4 hours over a period of one week, carrying sandwich style boards with big red lettering saying ‘I AM A LANDLORD AND I AM AN UNFIT PERSON’.

Authorised people, ie local government officers, MPs, members of Generation Rent and registered tenants will be allowed to pelt them with rotten eggs and tomatoes – no solids will be allowed. In some cases it will also be permissible to beat landlords with rolled up copies of The Guardian or New Statesman – but not both at once.

Rent Controls

Before any flat or house is let, a local authority officer will be required to inspect it and set a maximum rent for the next 12 months.

A Rent Assessment Visit (RAV) will take place within 2 months of application by the landlord, at a cost of £275.00 per property.

This, combined with all the other anti-landlord laws is expected to lead to a decrease in available rented accommodation and thus a consequent rise in demand over supply. So, anticipating this, where a landlord is advertising a property for what will be far below the market rent and receiving applications of more than 500 prospective tenants, then the landlord will be required to raffle the property or alternatively arrange a 100 metre sprint to see which of the prospective tenants shall be permitted to rent it.

Penalties for Landlords

Penalties for transgression of any of the above will range from an extra 15% CGT on the disposal of a buy-to-let property, to fines of up to £20,000 or 4 years’ imprisonment. Boroughs will also be allowed to set up Landlord Pillory Facilities where repeat offenders will be chained for up to 24 hours while rotting vegetables, soft fruit and insults will be hurled at them.

Bureau for the Administration of Landlord Legislation and Supervision (BALLS)

From 2020, the Government is proposing to set up a new quango called the Bureau for the Administration of Landlord Legislation and Supervision (BALLS), with an expected staff of 4000 people. BALLS will oversee all this new legislation and will consider future controls should they be deemed necessary.

I know it all sounds far-fetched but back in 2000 so would all the anti-landlord legislation that exists today.

Landlords and Letting – Affordable Landlord Insurance

 

How Labour WASTED £12.4 billion on NHS IT System

UPDATE MAY 2017

I originally wrote this article over two years ago, but I am re-publishing it in the light of the latest success of the worldwide hacking attack that has hit the NHS so hard.

This blog is essentially about property and general money matters, so admittedly this is a little out of its normal scope. However, it certainly IS also about money and, given that Labour are endlessly preaching about spending more of our money on their sacred cow, the NHS, I feel compelled to try to remind people of Labour’s incredible ability to waste massive amounts of our money on it.

The way the NHS has been affected by the latest worldwide hacking attack underlines the low quality of senior management in the NHS. This though is not a party political failing, more one of complacent and inefficient management.

NHS Computer System – what was it?

Simply put, it was envisaged that it would be a national patient record IT system, linking health professionals, hospitals, GP practices etc. The project was originally started in 2002, with a total budget of £2.3bn envisaged! Imagine you asked a builder to estimate for some work on your house and he quoted £50,000 but when he gave you the bill, it was for £269,000!

In 2005 a government agency, grandly called NHS Connecting for Health was formed to administer the project.  Various private IT companies were subsequently awarded contracts by the Department of Health and the whole bloody fiasco was presided over by a succession of ever so well-meaning Labour Secretaries of State for Health. So let’s remind ourselves of those names…

The Ministers Responsible

Alan Milburn  (October 1999 – June 2003)
John Reid  (June 2003 – May 2005)
Patricia Hewitt (May 2005 – June 2007)
Alan Johnson  (June 2007 – June 2009)
Andy Burnham (June 2009 – May 2010) (as of December 2014 – current Shadow Secretary of State for Health)

Yes Minister

As usual, it seems impossible to uncover all the names of the useless senior civil servants in the DoH and this is the way they always work, by remaining effectively shadowy and anonymous. Thus we have phrases like ‘The DoH decided that’ or ‘The DoH awarded the contracts to’ etc etc.  It’s as if a huge stone building in Whitehall actually signed off poorly drafted contracts. Various names are available however, such as David Nicholson (associated with the Mid Staffs scandal), Richard Granger, Gordon Hextall, Richard Jeavons and Harry Cayton.

Saving contractors money

Richard Granger is of particular interest. He was the Director General of IT for The NHS, on a basic salary of around a £280,000 a year. And that was back in 2006 when £280,000 a year was good money. The ridiculous costs for this project should have been lessened by clauses in their contracts which made the contractors liable to pay massive compensatory sums to the DoH in the event that they withdrew from the projects.  Accenture, just one of the contractors, withdrew in 2006 and, instead of charging them £1 billion, as their contract allowed, it’s reported that Richard Granger charged them just £63 million – a massive saving for Accenture of about £937 million – and an extra cost of £937 million to all of us! Granger apparently started his career with Andersen Consulting…which subsequently went on to become Accenture. Interesting.

The project was FINALLY abandoned on 2013 with total costs of around £12.4bn – a revised cost that had already been predicted by the National Audit Office as far back as June 2006.

‘Doctors and Nurses…Doctors and Nurses’

When justifying yet another raid on our pockets in the form of higher taxes, the Labour Party are fond of endlessly talking about ‘Doctors and Nurses, Doctors and Nurses’ and that if we want enough ‘Doctors and Nurses’ we must pay even more tax.  So, next time you hear the lovely Andy Burnham bleating about ‘creeping privatisation’ by the Tories and  preaching about ‘Labour’s Commitment to properly funding the NHS’ and that the NHS is only ‘safe in their hands’…remember The Great NHS Computer System Scandal. Mr Burnham admittedly came in on the tail end of it but it WAS a Labour project from the start.

This Labour Government Project WASTED £12.4 billion of OUR MONEY. They might as well have stuffed it all down the nearest drain – except of course that it made a few (private) IT companies very rich indeed and helped pay the mortgages of a number of obscenely overpaid civil servants like Dave Nicholson (‘Sir David’ to the sycophants in our society), Richard Granger and many others.

£12.4 billion – How else could they have spent it?

I’ve done a few back of fag packet calculations (as Nigel Farage would say). Naturally they are very approximate, although nowhere near as approximate as government estimates of costs!

  • Assuming an average salary of £22000 pa…approximately 563000 nurses for a year or 28000 nurses for 20 years!
  • Assuming a very generous salary of £100,000 pa we could have employed 124000 GPs for one year.
  • Don’t know how much a hospital costs but I reckon we could have a had a few of them for £12.4 billion.

And finally, if they hadn’t WASTED this mountain of money maybe the inappropriately named NIHCE would have been able to license more expensive life-saving drugs and therapies.

Of course, this scandal is symptomatic of how government and the civil service waste our money on an industrial scale. I seem to remember that Phillip Green was commissioned by the Government in 2010 to find ways of saving cash. He estimated that up to £20 billion a YEAR could be saved with more focussed and aggressive procurement strategies.

I have to credit the majority of the informational details here thanks to the great Wikipedia. So if you don’t believe me, just check it out. Of course I want a great NHS that is free at the point of delivery only to settled citizens of this country, but we don’t have to pay more tax for it, they just have to stop wasting our money.

As a footnote, when I entered the search term £12.4 billion NHS Computer System into Google, even Google couldn’t believe it and said ‘Did you mean £12.4 million?’

 

Landlords and Letting

Time to reform Stamp Duty Land Tax?

Stamp Duty Land Tax, more commonly referred to as Stamp Duty is not only yet another iniquitous government tax on property, it is a tax designed by idiots – but no surprise there!  See our Poll below…

Stamp Duty Thresholds on Residential Properties (October 2014)

  • £0 to £125,000 – No Tax
  • £125,001 to £250,000 – 1%
  • £250,001 to £500,000 – 3%
  • £500,001 to £1 million – 4%
  • Over £1 million to £2 million – 5%
  • Over £2 million – 7%

Look at the Stamp Duty thresholds above.  This shows the real idiocy of Stamp Duty.  As soon as a property transaction exceeds a specific amount – even by a £1.00, the WHOLE of the transaction is subject to the next level of tax!  Thus if you buy a property for £250,000 you will pay £2500.00 in Stamp Duty, whereas if you paid £250,001 you would pay £7500.03 in Stamp Duty!

As far as really expensive property is concerned, it’s even more ridiculous. Take an example of a property selling for £2 million the Stamp Duty would be an incredible £100,000.  But – if that same property sold for £2,000,001 the Stamp Duty would be…£140,000.07!  In other words about £40,000 more.

Distorting the market

Apart from being an outrageous amount of money, this of course badly distorts the property market, with sales just above one of the thresholds being incredibly hard to achieve.  So, a property valued at £250,000 really achieve £300,000 before you can get the real value when you sell, because buyers will be put off houses that are advertised for say £265000 and will try everything to push them below the threshold.

Dodgy Dealing

Of course, because this tax, via fiscal drag, now accounts for such a huge amount of money, people try to avoid it.  There are various schemes dreamed up by clever property lawyers that involve arcane and complex procedures to avoid SDLT but they are of course risky.  Also, some people claim that part of the price includes fixtures and fittings such as kitchens – but really there is no way to safely avoid this scurrilous tax.

What we need is for politicians to wake up to the stupidity of this tax and if it really has to be at these levels then it should work in the same way as income tax and tax the marginal amount by which a sale price crosses a threshold.  An example would be say a property selling for £260,000 would bear 1% on the first £250,000 and 3% on the final £10,000.  Also, why on earth does it jump from 1% to 3%!

In conclusion, the reason this tax exists in its present form is because it does.  Civil servants and politicians often are incapable of original thought and just go on doing something in the way it’s always been done – just because that’s the way it’s always been done.

Tell us what YOU think

See our Stamp Duty Poll below…

Does the current UK Stamp Duty system need reform?
YES
NO

Poll Maker

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