Accidental Landlord Question -

Mrslancaster:

Also, consumers of any item or product pay for the assets and goodwill of a business over time, most businesses operate for profit. Property letting in the private market is the same, it’s not a social enterprise even though some would like it to be. The social responsibility belongs to the state and the many charities funded by the state, not private landlords.

To be clear, the assets and other capital of any enterprise are provided by the shareholders/owners/proprietors of the enterprise, not by the customers. It's the fact that they provide the capital that entitles the owners to receive the profits of the business. This is pretty much the fundamental basis of the capitalist enterprise. It's really not negotiable. (An enterprise in which the customers provide the capital is what we call a co-operative or a collective. In such an enterprise there are no external owners to whom the profits of the business are to be paid.)

Obviously, the capitalist who owns an enterprise hopes/expects that the profits of the business that they receive will exceed the cost (to them) of providing the capital; if they didn't, they wouldn't invest in the business. But there is a risk that the profits will not exceed the cost of capital and that risk is born by them, the capitalists, not by their customers. There's no reason why the price am enterprise can charge its customers should be assumed to rise to cover the owner's cost of capital, whatever that might be. If an owner finds himself in the position that profits don't cover the cost of capital, he might consider himself unfortunate, or he might consider himself foolish, but what he is not entitled to do is consider himself unfairly treated. A risk that he took has gone against him; that is nobody else's fault. Nor is this an example of market failure; the market is in fact working exactly as a market should.

A time of housing crisis caused by hugely increased property values is precisely the kind of time where landlords may suffer. The more houses cost, the more capital a landlord has to put in to his enterprise of renting a home. Therefore, the higher the rent he will have to charge for the profits of the enterprise to cover his cost of capital. But the higher the rent, the lower the demand. You might think that everybody needs to be housed, and they do, but they don't all have to be housed in privately-owned property let at the market rent. More and more of the housing demand will be diverted into other options — people seek housing from the local authority or other housing agencies; they live for longer in shared houses, renting one house between them instead of two or three; they live at home for longer, renting no house at all; etc. And, remember, a great many people who are seeking to rent properties are doing so precisely because they can't finance the cost of buying properties. But if they can't afford to finance the cost of buying a property directly, the likelihood that they can afford rents that will indirectly finance it is not great.

In other words, the times we are living in right now are precisely the times when landlords are at greatest risk of net rents not covering their cost of capital. So if the market is working as markets should, we should expect landlording to be a not very profitable enterprise right now, and a higher than usual proportion of landlords to be experiencing financial stress.

It is very strange and must be connected to historical issues where all landlords were seen as evil personified, ergo, all landlords today must also be evil greedy parasites, who take advantage, swindle and mistreat tenants. Please 🤣

It's not that strange. Sure, it's not fair on landlords, because they are not, in fact, all evil greedy parasites. (The OP, in particular, clearly is not.) But in a time of housing crisis tenants also suffer, and it's understandable that they will look for someone to blame. The landlord is an obvious target. (Made more obvious, I have to say, by those landlords who go about loudly complaining in ways that make it clear that they regard it as their entitlement to have rents always cover their cost of capital.)

All people are saying, I think, is that the OP's tax evasion was not motivated by greed. He didn't trouser the excess profits resulting from the evasion, but generously passed them to his tenant in the form of a heavily discounted rent.

(He didn't think this through, obviously, so we don't have a Robin Hood vibe going on here. But he wasn't motivated by greed.)

You're only liable to income tax on the rent that you actually received. Presumably you're in a position to prove, if challenged, that you only received 1200 (bank statements, records of lodgements, etc).

The risk you face is (1) some kind of fine or penalty for the false registration with the RTB (and I have no idea how big that is or how likely they are to impose it) and (2) an action for misrepresentation by the purchaser of the property, who bought it in the belief that it was being rented for 1600 when in fact it was not, and therefore was induced to pay considerably more than it was worth by your fraudulent misrepresentation.