Outbreak of common sense...

... at HMRC.

Spotted by MBK in The Telegraph:

The tax office has stepped up its scrutiny of landlords, sending letters to thousands of buy-to-let investors it suspects of bending the rules in order to pay less tax...

While HM Revenue & Customs (HMRC) has targeted property owners for three years, accountants said the past year had seen its approach toughened. It is understood that additional manpower has been deployed to hunt down the £500m underpaid each year. Tens of thousands of landlords are believed to be paying little or no tax on rental income and capital gains made on second properties...

Ten months on, the Revenue has begun gathering information from a wider range of sources, accountants said. Mark Giddens, a partner at UHY Hacker Young, said HMRC had gone beyond the Land Registry and the electoral roll.

“It was not until April this year that the taxman sent out notices to letting agents in which they asked for details to be provided of everyone on their books.

“The housing benefit payments that go direct to landlords are also being monitored more closely. This information can be obtained through the local council’s records. By investing all this time and effort they have certainty stepped up the pressure on landlords who are not declaring enough, and the letters are the next part of that.”

Lucy Brennan, a partner at Saffery Champness, the accountants, said officials at the Revenue had been turning to social media for information.

“Those who let out a holiday home will not be registered to vote at that address,” she said. “The Revenue has increasingly been using social media to look into cases where a holiday home is, for instance, being advertised to friends to ensure that the right amount of tax is being declared on that property.”

Fewer than 500,000 taxpayers are registered with HMRC as owning second properties. The taxman estimates that the true number of landlords is much higher, at around 1.5 million, and wants to close the gap.

They own land! Give them money!

From The Telegraph:

Home-owners will be offered council tax discounts and house price guarantees to encourage them to accept a new Garden City development in their area, under plans being drawn up by ministers.

Nick Clegg, the Deputy Prime Minister, said he wanted a shortlist of potential locations for up to three new towns, each with more than 15,000 homes, to be published by the end of the year.

He suggested ministers could offer to buy houses adversely affected by disruption during construction at the full market price, in a scheme similar to other major infrastructure projects like the planned High Speed 2 rail line.

Fun Online Polls: Private landlords

I was doing some more research taxes and subsidies in the UK housing market and stumbled across another interesting statistic.

See if you can guess using the widget in the sidebar.

NHS Hospital Health Fascism

From the Telegraph

The NHS has been accused of fuelling the obesity epidemic after an investigation disclosed that dozens of fast food restaurants, coffee bars and shops are selling discounted chocolate at hospitals. Medical experts urged the health service to “get its house in order” and clear its hospitals of junk food companies such as Burger King and Subway and coffee shops selling muffins and high-sugar drinks.

Simon Stevens, the head of NHS England, said the health service had to take “hard-nosed action” to end the sale of junk food in hospitals, to help tackle the obesity crisis. Health campaigners said they were particularly disturbed by the march of Costa Coffee, which has recently come under fire for selling fruit drinks with four times the recommended daily sugar limits.

You can also buy a black americano with no sugar in them too, which as long as you don't overdo the caffeine is rather healthy. Or a mineral water.

And since when is Subway a "junk food" company? It's about the healthiest takeaway around.

But what do they expect people to eat?

My eldest was recently in hospital and the food was abysmal. A fine example of Friedman's 4th way of spending money - someone spending someone else's money on someone else, which means they don't really care how good it is. Every day, my wife brought food in for her (a mix of some healthy and unhealthy stuff). But for someone who is maybe on their own, what's their option?

And even Burger King have healthy options. And unhealthy ones if that's what people want. Because they're adults and have the brains to choose for themselves, thank you very much.

Balancing an egg

Excellent petty crime/house price story in The Daily Mail

Emailed in by MBK:

Outrage at high flying City asset manager who became 'biggest fare dodger in history' by avoiding £43,000 in rail tickets while owning two country mansions worth £4million

"UK drivers owe 'millions' in unpaid fines"

From the BBC:

Foreign countries are missing out on millions of Euros every year because UK drivers abroad are not paying parking fines, the Local Government Association says.

British vehicles can be driven in another country for six months before being registered, with any parking offences committed in this period not recorded…

One authority, Brighton & Hove Council, says its residents owed more than £750,000. An estimated three million British drivers make journeys in Europe each year…

Peter Box, chairman of the LGA's economy and transport board, said:

"Drivers of UK-registered vehicles need to realise they are not above the law when they are abroad. Reckless and inconsiderate parking by British drivers abroad puts other drivers and pedestrians at risk.

"The millions of Euros worth of fines written off could also be spent filling potholes, providing bus services and tackling the €12bn repair backlog to bring Europe's roads up to scratch."

Oh, the Irony

From the Graun

Since then, the Cheltenham business community has been attempting to raise funds to keep the piece, which had been sprayed with anti graffiti paint, in the town.

Angela De Souza, of Save The Banksy, a group of Cheltenham business owners, said a local millionaire had been in the process of buying the piece.

But on Friday morning, graffiti covering the artwork appeared, leaving locals in a "race against time" to save it.

Graffiti? Tell people it's done by Tracy Emin and everyone will be queueing up to buy it again as art.

They can't have it both ways (part 2)

Lie #1: I paid for my land
Lie #2: The rebuild cost of my house is much higher than what you say, so only a small part of the total current value relates to land.

I'm not disputing that people paid for the cost/value of the building, I am talking about the land element.

Having argued over the numbers with Bayard, this is what it boils down to. Assume average house price has gone up from £60,000 to £210,000 and that RPI inflation was 50%:

My view:
1994
Average price - £60,000
Build cost/value - £54,000
Balance is land value - £6,000

2014
Average price - £210,000
Build cost/value - £81,000 (£54,000 + 50% inflation)
Balance is land value - £129,000

Average build costs are £900/square metre (£800 to £1,000) and average new built semi-detached is 88 square metres.
Semi-detached houses built twenty years ago were a bit larger but the fabric of the building has depreciated a bit, cancels out.

If we index up the original £6,000 we get £9,000, meaning that people who bought in the good old days when houses cost about three times the gross average salary (from 1945 to 2001, ignoring a couple of spikes) only paid for 7% of what the land is now worth.

Bayard's view:
1994
Average price - £60,000
Build cost/value - £40,000
Balance is land value - £20,000

2014
Average price - £210,000
Build cost/value - £60,000 (£40,000 + 50% inflation)
Balance is land value - £150,000

Even if Bayard is correct, that would still mean that older owners only paid for one-fifth of the current value of the land on which their house sits.

The rest was a free gift, kindly engineered for us by the UK government when we had rent controls and mortgage restrictions etc, a free gift which the neo-liberals took away again from the 1980s onwards, with the Boomers and Homeys cheering them on.
-----------------------------
Predictably, Sobers in the comments:

If you can build a 3 bed semi for £81K, you better start a property development company, you'll make a killing.

For a undeveloped but serviced site to finished house ready to live in, you'd need £125K minimum, assuming you aren't doing the work yourself. My parents have just had a cottage in rural Wales (so cheaper builders than England) completely renovated for about 60K, labour and materials. Thats new roof, new doors and windows, back to bare walls, complete new everything inside. If you had to start from an empty site you could more than double that easily.

I am not interested in rebuilding cottages in Wales. I am interested in the average selling price of an average 3-bed suburban or urban semi.

If Sobers is correct and the current rebuild cost of such a home is (say) £120,000, indexed backwards to 1994, it would have cost £80,000.

Seeing as the average house price at the time was about £60,000, this would suggest that builders either made a loss of £20,000 on each home or that they paid negative £20,000 for the land. We can rule out both of those.

So his figures simply do not add up and can be ignored, and if he were correct, it would imply that older home-owners actually got a free gift of £20,000 when they bought their home, which nukes the traditional Homey nonsense of "I paid for my land".

"South African giraffe dies after hitting bridge"

Seriously.