BTL as a pension fund - why not?
Discussion
Eric Mc said:
crankedup said:
Maybe, however should Government increase taxation this will have a negative impact on values and the dreaded S.D. S.D. is bringing in a healthy tax so risk of loosing on tax revenue stream to start a new one?
That's the type of dilemma they have to square. What is becoming more obvious to a lot of policy makers is the social impact the over reliance on land and property as a wealth generator has had on the UK. Tax revenue is only one aspect. The other is a skewing of an entire economy away from genuine productive activity - and the effect this has on all sorts of areas, such as education, employment, cultural attitudes etc.
I even think that reliance on construction has had a massive impact on immigration - making the UK a popular target for unskilled and poorly educated labourers from all across Europe.
In my parents time as property owners just after the WW11 property price inflation was almost zero for around 25 years, perhaps we are going to see this cycle repeated.
I am always taken by surprise when commentators tell us how so very little of our land has been built upon, most building has of course been in the London/ S.E. and as you mention attracting builders from abroad at low cost. This low cost has not been reflected in new house build prices though!
Mark Benson said:
On the upside, you can include BTL properties in a pension and avoid some of the income tax if you qualify.
Mark I presume you mean a SIPP? I thought that was only residential property that can be included not a residential BTL? I'm with the majority on here I've had one rental for the past 10 years and view it now as part of my pension pot. However it will act as a top up to other pots I won't be relying on it as such.
As others have said if it's paid off by retirement and the BTL sector was a lot different in 20 years you could cash it in, pay the CGT and live off the money.
What about other exposure to property? Holiday home for example let it during the peak months to cover your repayment mortgage use it yourself for a winter getaway. You can get company's to manage the whole thing now reducing the hassle as you can with a BTL.
I think expectations regarding how well property will behave over the next generation will need to be revised drastically downwards.
As has been mentioned, the hoped for values of the property owners are currently ahead of the ability of those who desperately need access to the properties.
Sooner or later, the market must reflect reality.
As has been mentioned, the hoped for values of the property owners are currently ahead of the ability of those who desperately need access to the properties.
Sooner or later, the market must reflect reality.
jdw1234 said:
I am not convinced that landlords have the ability to increase the rent to cover additional costs. Surely they are charging the max the market will stand now?
I am also not convinced rents have actually increased very much for quite a long time.
The market for anything is affected by the cost to supply. If it costs too much to supply, then less people will supply it. If the demand hasn't decreased, then the maximum the market will stand will increase.I am also not convinced rents have actually increased very much for quite a long time.
Personally rents in my area have gone up by about 15.20% in the past 4 years, but property has gone up by 30%. I'm no longer buying BTL houses as the returns don't make it viable.
98elise said:
jdw1234 said:
I am not convinced that landlords have the ability to increase the rent to cover additional costs. Surely they are charging the max the market will stand now?
I am also not convinced rents have actually increased very much for quite a long time.
The market for anything is affected by the cost to supply. If it costs too much to supply, then less people will supply it. If the demand hasn't decreased, then the maximum the market will stand will increase.I am also not convinced rents have actually increased very much for quite a long time.
There isnt a shortage of rental property.
Eric Mc said:
What is becoming more obvious to a lot of policy makers is the social impact the over reliance on land and property as a wealth generator has had on the UK. Tax revenue is only one aspect. The other is a skewing of an entire economy away from genuine productive activity - and the effect this has on all sorts of areas, such as education, employment, cultural attitudes etc.
Eric Mc said:
I do think that the very generous tax breaks available to those who invest in land and property are going to be cut back. Indeed, I have a strong views that the unfair generosity to investment in land and property has been one of the biggest factors in our decline as an industrial nation.
I think it is a whole area ripe for governments that are desperately short of cash and struggling to keep government borrowing under control.
I completely agree with your analysis. There is certainly a groundswell for taxation changes but major shifts in taxation from income/consumption to land is some way off in my view. I think it is a whole area ripe for governments that are desperately short of cash and struggling to keep government borrowing under control.
jdw1234 said:
98elise said:
jdw1234 said:
I am not convinced that landlords have the ability to increase the rent to cover additional costs. Surely they are charging the max the market will stand now?
I am also not convinced rents have actually increased very much for quite a long time.
The market for anything is affected by the cost to supply. If it costs too much to supply, then less people will supply it. If the demand hasn't decreased, then the maximum the market will stand will increase.I am also not convinced rents have actually increased very much for quite a long time.
There isnt a shortage of rental property.
In my area there is a short supply of rental properties. I only ever advertise for a day or so on Gumtree and get about 30 enquiries. Currently I'm buying no more though. Demand is there, but rents need to increase, or prices need to be lower to make it viable.
edh said:
I completely agree with your analysis. There is certainly a groundswell for taxation changes but major shifts in taxation from income/consumption to land is some way off in my view.
That's the crux of the matter. Politicians will be extremely reluctant to undermine the one area of the economy where voters have felt "comfortable". But, if this country is to move on and become viable as a modern, technical and world leading industrial power, it must move away from its love affair with land and buildings.As I said earlier, some tax changes have already happened and more are on the way. Politicians will be more relaxed about making such changes if they think there are votes to be garnered. Up to now, that hasn't been the case. But the times they are a a changin'.
98elise said:
jdw1234 said:
98elise said:
jdw1234 said:
I am not convinced that landlords have the ability to increase the rent to cover additional costs. Surely they are charging the max the market will stand now?
I am also not convinced rents have actually increased very much for quite a long time.
The market for anything is affected by the cost to supply. If it costs too much to supply, then less people will supply it. If the demand hasn't decreased, then the maximum the market will stand will increase.I am also not convinced rents have actually increased very much for quite a long time.
There isnt a shortage of rental property.
In my area there is a short supply of rental properties. I only ever advertise for a day or so on Gumtree and get about 30 enquiries. Currently I'm buying no more though. Demand is there, but rents need to increase, or prices need to be lower to make it viable.
Surely if the market wont take it, you will give up and either:
1). Sell to a landlord who has lower fixed costs (or sell at a price which makes the yield attractive to him/her).
2). Sell to an owner occupyer thus removing the demand for 1 rental property.
P.S. I dont mean you as in "98elise". I mean theoretically.
Eric Mc said:
edh said:
I completely agree with your analysis. There is certainly a groundswell for taxation changes but major shifts in taxation from income/consumption to land is some way off in my view.
That's the crux of the matter. Politicians will be extremely reluctant to undermine the one area of the economy where voters have felt "comfortable". But, if this country is to move on and become viable as a modern, technical and world leading industrial power, it must move away from its love affair with land and buildings.As I said earlier, some tax changes have already happened and more are on the way. Politicians will be more relaxed about making such changes if they think there are votes to be garnered. Up to now, that hasn't been the case. But the times they are a a changin'.
edh said:
Eric Mc said:
edh said:
I completely agree with your analysis. There is certainly a groundswell for taxation changes but major shifts in taxation from income/consumption to land is some way off in my view.
That's the crux of the matter. Politicians will be extremely reluctant to undermine the one area of the economy where voters have felt "comfortable". But, if this country is to move on and become viable as a modern, technical and world leading industrial power, it must move away from its love affair with land and buildings.As I said earlier, some tax changes have already happened and more are on the way. Politicians will be more relaxed about making such changes if they think there are votes to be garnered. Up to now, that hasn't been the case. But the times they are a a changin'.
The first thing most people do when they geta bit of cash is put it into property! Hardly good for the economy!
98elise said:
Avoidance (i assume you mean evasion) is a different matter. Additional punative taxes on rental income will also be evaded by the evaders, and will only hit the honest landlords already paying the taxes due.
Mine are all properly accounted for in my self assessment so would have to up my rent to cover the extra costs, or exit from the rental market as it would probably not make sense from an investment perspective.
Do you think that means they wont do it?Mine are all properly accounted for in my self assessment so would have to up my rent to cover the extra costs, or exit from the rental market as it would probably not make sense from an investment perspective.
jdw1234 said:
I am not convinced that landlords have the ability to increase the rent to cover additional costs. Surely they are charging the max the market will stand now?
I am also not convinced rents have actually increased very much for quite a long time.
That depends on the landlord I suppose - I know a chap who has a few rentals (three IIRC) and he is fair with regards to the rents charged and the increases, but for every one who is decent/fair I suspect there are those who aren't. When we were renting around five years ago our land lord was spot on, any issues were fixed straight away, the cost was reasonable as were the increases, couldn't complain at all.I am also not convinced rents have actually increased very much for quite a long time.
Edited by Axionknight on Wednesday 26th November 12:44
Eric Mc said:
I think expectations regarding how well property will behave over the next generation will need to be revised drastically downwards.
As has been mentioned, the hoped for values of the property owners are currently ahead of the ability of those who desperately need access to the properties.
Sooner or later, the market must reflect reality.
I don't think property will do much more than keep up with inflation for the next couple of decades. There will be blips both up and down, but it will keep up with inflation, and rents will rise by inflation plus a bit on average.As has been mentioned, the hoped for values of the property owners are currently ahead of the ability of those who desperately need access to the properties.
Sooner or later, the market must reflect reality.
Those desperately needing access, as you put it, to property will have to adjust their expectations dramatically downwards. They're not going to get the same sort of home they grew up in as a first buy. It'll have to be a one bed ex-council or new build flat. Half price houses aren't coming.
Those advocating reading the housepricecrash website should be aware that it's been wrong for nearly two decades and is loopy enough to make mumsnetters seem rational.
What type of downward expectation should those seeking a place to live make?
A shed?
A hovel?
A barn?
A tip supplied by a rack renter?
Ten in a room?
Should we re-embrace the accommodation standards of the pre-World War 1 era where it was deemed OK for poorer families and the lower paid to live in the most appalling circumstances.
The whole way this nation views property as a "financial investment" rather than a legal right to a home really needs a major readjustment. We made this adjustment once before (around 100 years ago) and the mindset needs readjusting again.
A shed?
A hovel?
A barn?
A tip supplied by a rack renter?
Ten in a room?
Should we re-embrace the accommodation standards of the pre-World War 1 era where it was deemed OK for poorer families and the lower paid to live in the most appalling circumstances.
The whole way this nation views property as a "financial investment" rather than a legal right to a home really needs a major readjustment. We made this adjustment once before (around 100 years ago) and the mindset needs readjusting again.
Eric Mc said:
I do think that the very generous tax breaks available to those who invest in land and property are going to be cut back. Indeed, I have a strong views that the unfair generosity to investment in land and property has been one of the biggest factors in our decline as an industrial nation.
.
You are probably right.
The easiest route to riches over the last few decades has been to get into property with as much leverage as you can get. Investing in the stockmarket in actual trading companies has been a far poorer choice of investment.
Eric Mc said:
What type of downward expectation should those seeking a place to live make?
A shed?
A hovel?
A barn?
A tip supplied by a rack renter?
Ten in a room?
Should we re-embrace the accommodation standards of the pre-World War 1 era where it was deemed OK for poorer families and the lower paid to live in the most appalling circumstances.
The whole way this nation views property as a "financial investment" rather than a legal right to a home really needs a major readjustment. We made this adjustment once before (around 100 years ago) and the mindset needs readjusting again.
AgreedA shed?
A hovel?
A barn?
A tip supplied by a rack renter?
Ten in a room?
Should we re-embrace the accommodation standards of the pre-World War 1 era where it was deemed OK for poorer families and the lower paid to live in the most appalling circumstances.
The whole way this nation views property as a "financial investment" rather than a legal right to a home really needs a major readjustment. We made this adjustment once before (around 100 years ago) and the mindset needs readjusting again.
Rising house prices are really just an increase in the cost of living for the generations who were not in a position to buy houses cheaply.
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