Smart meter / off-peak electricity question

[Mottie]

You think you are an island entire of itself? You are wrong.

I'm just an ordinary working bloke. I've been in the motor trade all my life, the last 22 years I've been involved in training young mechanics - predominantly from schools that deal with excluded pupils and organisations that work with looked-after children and those with learning difficulties and in care homes that no other school or organisation can cater for. I've seen quite a few of them go on to make a go of their lives when they possibly wouldn't have done otherwise. I'm 60 this year so not too far off retirement. Bought a house with a workshop attached back in 1984, moved from it in 1990 and managed to retain the workshop and yard. The area it's in used to be mixed residential/commercial use but is now almost exclusively residential. Everyone nearby is over the moon that the workshop may be going and two flats may replace it. I could sell it as I've had a fair few offers for it but none of them want the workshop - they're all interested in the plot it's on. That's what's given me the idea of doing it myself. Can't see why you appear to be so aggreived that I want to spend my money on my property to build something that will bring me an income throughout my retirement - I don't have a particularly good pension worth bothering about.

I feel I've done my bit. What's your story then?

Once upon a time, a political party noticed that homeowners voted their way, and tenants voted for the other lot.

At the time, many tenants lived in social housing, which at the time was called "council houses" and they tended to be built and maintained to higher standards than private homes of comparable size, and could be had for modest rents.

In order to strengthen their hold on power, this party (let's call it the Con Men Party) had the idea of forcing the owners of this social housing to sell it, for less than its value, to the tenants. This would increase the number of homeowners, reduce the number of tenants, and thus increase the number of Conned voters. To maintain this hold, the owners of the social housing would not be allowed to use the receipts from sale to build new homes.

In some cases, the Con Men committed crimes to get rid of poor tenants and bring in prosperous owners. When caught, some of them ran away to foreign countries with no extradition treaty, or pretended to have given away all their money so they couldn't be made to pay fines and surcharges, and didn't emerge from hiding until they were so old they thought their Con Man friends wouldn't send them to prison.

For a time, this scheme worked well. The Con Men Party got lots of votes from the happy ex-tenants who had been able to buy well-built and well-maintained homes for less than they were worth. Only the people still needing social housing were unhappy, but they wouldn't have voted for the Con Men anyway, so who cares?

Eventually, many of these former Social Housing homes became owned by private investors, who were very pleased to see that asset price inflation pushed up the value of their investments, and the deliberate prevention of new housebuilding pushed up rents for people needing homes.

Later still the sons and daughters of people who had once been tenants found they couldn't afford to buy houses, and there was no social housing to be had. So they lived with their parents into middle age, or lived in nasty, run-down accommodation, or sometimes slums and barracks called HMOs. If they had enough money, they paid high rents.

Slowly, the Con Men Party became aware that there was a growing underclass of people with poor and expensive housing. These disgruntled people could sometimes be fobbed off by telling them that the reason for scarce housing was due to little green men from Mars, who had landed their spaceships in Britain and seized all the houses. The deliberate prevention of housebuilding was hushed up, and the reason social housing had disappeared was almost forgotten.

However, these numbers of these young unfortunates slowly grew. They were tenants, not homeowners, and apart from the very stupid ones, they started to blame the Con Men Party, and didn't vote for it.

The Con Men Party has always known which side their bread is buttered on. They didn't want the young unfortunates voting for someone else. They began to think they might have been overly generous to private landlords, and started to make the BTL trade more controlled and less profitable. They started to say that even people who were young, or poor, ought to have decent housing.

Surprisingly, the Con Men Party is in power now, and wants to stay that way.

Do you think it will want to tilt the scales in favour of the large number of young unfortunates who can't buy a home, or rent a decent one? And reduce the popularity and profitability of BTL?

I think it will.

.......and the party in opposition came along and their bright leader, let's call him Tony B Liar, thought,"I know, I'll pretend to be a Labour man but really, I couldn't give a **** about the poor people, I'm in it for myself and my mates".

Long story short, he allowed one of his mates to sell most of our gold reserves at a knock-down price and teamed up with another prat on the other side of the world and invaded a country under false pretences. That opened up a Pandora's box in the Middle East, the results of which we are all still suffering from - the most recent only a few days ago in Westminster.

Still, it all ended well for him as he now owns 10 houses and 27 flats, enjoys a multi million pound income and the protection of a 12 man full-time security detail paid for by......the poor people.

Blimey. All this and I only asked a question about smart meters!

 

[SimonH2]

That's an easy one.

Apparently not since you then went on to describe an INVESTMENT, not a business.

Can't see why you appear to be so aggreived that I want to spend my money on my property to build something that will bring me an income throughout my retirement

I'm not, and I don't think anyone else was either.
What some (myself included) were critical of was an attitude (not particularly from yourself) along the lines of "never mind doing a good job of it, it's only for renting and tenants will have to like it or lump it". And from there it diverged into a discussion of the merits and finances of being a landlord.
That question of "to X or not" is always a tricky one - a matter of balancing what's reasonably practical and affordable, against the costs and whether you'll see a return. Sadly most developers these days seem to err on the side of "how cheap can it be done and still meet regs" - that certainly epitomises the new house my Mum is waiting to be finished. I'd have spend a couple of hundred quid more on doing a decent job - rather than penny pinching on a house where retroactively dealing with it is in practical terms impossible. The way it's been built makes running ay additional cabling impractical - yet there's no provision for telephones, computers, or even electric cooking.
I'd have put "electric heating only" in the "WTF was he smoking" category or penny pinching unless to install gas was really expensive.

 

[JohnD]

Apparently not since you then went on to describe an INVESTMENT, not a business.

Are you telling me that BTL landlords don't look on the homes they buy as an investment?

like

Not arrogant at all mate, a wise decision. Mate and I were happy with our passive income from BTL buffering potential savings in future old age and haven't taken the time to investigate the pension schemes.

I think there are many "small landlords" like myself taking a long term view - my plan is that when I get the mortgages paid off, then the rent is part of my pension.

I want to spend my money on my property to build something that will bring me an income throughout my retirement

 

[EFLImpudence]

Are you telling me that BTL landlords don't look on the homes they buy as an investment?

Are you telling me that all business men don't look on the businesses they buy as an investment?

 

[JohnD]

So you think I should get tax relief on the money I borrow to pay for my gold bullion, my rare stamps, my pension fund, and my shares in BHS?

 

[EFLImpudence]

No, I keep telling you that they are not business expenses.

Buying property to run as a business is and would include a philately shop and/or stock exchange should you own one.

Would you consider buying a hotel as BTL?

 

[SimonH2]

Are you telling me that BTL landlords don't look on the homes they buy as an investment?

In part - but only in part.
Being a landlord isn't something you buy, sit on and hope it goes up in value, then sell. There are people who do that - but they aren't landlords - they are the ones sitting on empty properties they do nothing with.
By your argument, being a publican isn't a business. You buy a pub as an investment and wait for for it to go up in value - the process of dealing with customers, serving up pints and nosh in return for cash, aren't relevant. As a landlord, you have things you have to do (or subcontract out) on an ongoing basis - the myth of doing nothing but sit back and wait for the rent to come in is nothing more than a myth.
And in any case, HMRC (in most cases) say it's a business.

Actually, if you want to treat it as an investment, then there are companies who basically sell you shares in a property portfolio. You pay your money, sit back, they manage everything, and you get a dividend and hopefully capital gains. If you borrow money to put into that then you don't get tax relief as it is just an investment - not a business. The company itself can get tax relief if it borrows money because it IS running as a business.

 

[Mottie]

Reading the various posts on here regarding investment/business, this might have opened a whole new can of worms for me. Currently I am running my own business on the site that I own and which am planning to build on. Can remember talking to my accountant about my plans several years ago. I remember him asking me about the site, the ownership, how long my wife and I had owned it etc and I do remember him saying that if I did want to go ahead, once I have got planning permission to come back and speak to him before going ahead. Perhaps there may be some tax implications/advantages depending on which way we go about it?

 

[ban-all-sheds]

Maybe.

Maybe the only way this type of investment really works for everyone's benefit is when the returns are considered over a 50- or 100-year timeframe.

 

[SimonH2]

Perhaps there may be some tax implications/advantages depending on which way we go about it?

Yes, there definitely will be.
It's complicated, and I would not even start trying to explain things - even if I understood them as they apply in your case (which I don't, not by a long way) So you need to be taking expert professional guidance BEFORE you do anything. The "before" bit of that is critical, in some areas of tax/finance it's possible to do seemingly innocuous things which you later find out have exposed to you a big extra tax bill. Also, some aspects may need a year or two to deal with in terms of making the timing fit with HMRC rules - so it's no good going along with a "I'm packing up tomorrow, what do I need to think about" timescale of enquiry

By way of an example (though it's not applicable to you), there's the case of splitting off part of a big garden and selling the plot off. IIRC if you sell the plot first then it's part of your residence (assuming you live there) and you get all the reliefs such as you Principle Private Residence relief which means there's no capital gains tax (CGT) to pay - but if you sell the house first, the plot is no longer part of your residence, and you can be stung for CGT which (depending on your circumstances) could be 40% of a good proportion of the sale price for the plot At least, I believe that's the case.
A seemingly innocuous difference - after all, the plot was always part of the garden attached to your house - but in HMRC's eyes, a very different situation with different taxes due.

Also, you need to be aware that once you start down the road of having the new properties built - then there's a raft of tax and other legal stuff you need to comply with. For example, I believe you have to register with HMRC as a "developer" and make monthly returns related to employees and contractors you've been using. It's to do with cracking down on itinerant "cash in hand" labour avoiding taxes - and the penalties for not registering in advance are (as is often the case with HMRC) designed to "be severe enough to be a deterrent".
And depending on whether you project mange it yourself, or contract it to (say) an architect, then you may have to take care of all the H&S stuff - and there's a lot of rules/regulations there, particularly the CDM regs.