The future for the small BTL investor
Discussion
Eric Mc said:
Exactly. It seems that the Chancellor has assessed the public mood correctly on this one.
It's the old political trick - spot the sector of society that is not popular with the masses - and tax 'em.
A few years ago it was banks. Now it's Buy to Let Landlords.
And not forgetting small business owners.It's the old political trick - spot the sector of society that is not popular with the masses - and tax 'em.
A few years ago it was banks. Now it's Buy to Let Landlords.
Wonder who will be next?
I actually don't think that small business owners will fall into this category. It's just too wide a demographic and it's hard to pin any sort of "badness" on all of them.
For all the time I remember, politicians have only ever made public pronouncements in favour of small businesses. Of course, their actual policies have not always been helpful - but I don't think launching an attack on the small business sector would yield any benefits to a politician.
BIG business - on the other hand......
For all the time I remember, politicians have only ever made public pronouncements in favour of small businesses. Of course, their actual policies have not always been helpful - but I don't think launching an attack on the small business sector would yield any benefits to a politician.
BIG business - on the other hand......
Eric Mc said:
I actually don't think that small business owners will fall into this category. It's just too wide a demographic and it's hard to pin any sort of "badness" on all of them.
For all the time I remember, politicians have only ever made public pronouncements in favour of small businesses. Of course, their actual policies have not always been helpful - but I don't think launching an attack on the small business sector would yield any benefits to a politician.
BIG business - on the other hand......
You misunderstood my point.For all the time I remember, politicians have only ever made public pronouncements in favour of small businesses. Of course, their actual policies have not always been helpful - but I don't think launching an attack on the small business sector would yield any benefits to a politician.
BIG business - on the other hand......
They already have attacked the small business owner with the 7.5% dividend tax.
Targarama said:
IMO it still isnt 'that' much tax for a 'affordable' BTL and many will swallow it and just put the rent up a smidge to cover it.
Amortise the 3% over 10 year ownership and it's irrelevant on the man-maths most people use to do this.Or they just up their expectations for asset appreciation to cover it in order to fudge the numbers.
I think the removal of the tax shield has far wider implications as it makes the "buy-let-and-forget" numbers harder to fudge.
sideways sid said:
Surely the obvious answer to the OP's original premise is to think like a big investor and run a portfolio like a business, through a company!
It is, but I guess a majority of people already own their BTLs in their own names and to transfer them into a company name will be expensive/hard workaudi321 said:
sideways sid said:
Surely the obvious answer to the OP's original premise is to think like a big investor and run a portfolio like a business, through a company!
It is, but I guess a majority of people already own their BTLs in their own names and to transfer them into a company name will be expensive/hard workDon't forget that HMRC have a big computer and it's easy for them to track property ownership/tax declarations.
Ozzie Osmond said:
There is a already a raft of anti-avoidance Stamp Duty rules for company purchase of an expensive house. My expectation is that when we see the detail of the chancellor's new BTL proposals it will be difficult to wriggle out via a company which is not a genuine trading company.
Why do you think that?I think he will be quite happy to let people incorporate. It will raise some tax and force highly-geared landlords with BTL mortgages out the market. The ones who will incorporate successfully will likely be those who use commercial finance and who are probably already running a "proper" business.
The unfortunate thing is that in achieving the above he will be costing the genuine business owners quite a lot of money.
I still can't get my head around it all...
If I own four BTL properties - one outright and three with interest only BTL mortgages on - I am getting stung where? I think it's mainly that, presently, I write off my mortgage repayments on my self assessment - and I will no longer be able to do that? That will sting if that is the case... quite badly in fact.
If I own four BTL properties - one outright and three with interest only BTL mortgages on - I am getting stung where? I think it's mainly that, presently, I write off my mortgage repayments on my self assessment - and I will no longer be able to do that? That will sting if that is the case... quite badly in fact.
LDN said:
I still can't get my head around it all...
If I own four BTL properties - one outright and three with interest only BTL mortgages on - I am getting stung where? I think it's mainly that, presently, I write off my mortgage repayments on my self assessment - and I will no longer be able to do that? That will sting if that is the case... quite badly in fact.
You do not "write off your mortgage repayments" against your self assessment tax liability. You claim tax relief on the interest element of your mortgage repayments - which is not the same thing. Obviously, if a mortgage is an "interest only" mortgage the monthly repayments will all be interest so you will be claiming interest relief based on those monthly amounts.If I own four BTL properties - one outright and three with interest only BTL mortgages on - I am getting stung where? I think it's mainly that, presently, I write off my mortgage repayments on my self assessment - and I will no longer be able to do that? That will sting if that is the case... quite badly in fact.
In future you will still be able to reclaim the interest on your mortgage repayments - but the tax relief given will be restricted to 20% - which means you won't get as much of a tax reduction as you currently do.
mcbook said:
I'll probably get shot down for this but I believe the recent changes to BTL related taxation are a good thing.
It's fairly clear that the activity of BTL landlords has contributed to the house price growth that has made home ownership a dream for ordinary people in certain parts of the country. I see the recent changes as a way of cooling the BTL market and redistributing wealth.
Quite surprising from a Conservative government but what they're actually saying is "you're rich enough to own two (or more) properties so we're going to tax you a bit more". They're not brave enough to increase income tax so will raise some extra money by taxing BTLs.
A perfectly acceptable way to get some more money into the exchequer imo.
Certainly make it less attractive for investors and that's probably the point.
making it less attractive for the amateur property tycoon and the pointed toed brown shoed 'letting agents ' ... It's fairly clear that the activity of BTL landlords has contributed to the house price growth that has made home ownership a dream for ordinary people in certain parts of the country. I see the recent changes as a way of cooling the BTL market and redistributing wealth.
Quite surprising from a Conservative government but what they're actually saying is "you're rich enough to own two (or more) properties so we're going to tax you a bit more". They're not brave enough to increase income tax so will raise some extra money by taxing BTLs.
A perfectly acceptable way to get some more money into the exchequer imo.
Certainly make it less attractive for investors and that's probably the point.
despite the fact that some powerfully built PHer will be along to claim they do it out of the goodness of their heart ...
woowahwoo said:
Anyway, many people use BTL to replace a pension...
BTL should not be the automatic answer to every investment question. For many private landlords it's been little more than a speculative punt on capital appreciation of an illiquid asset. IMO it's a good thing the chancellor is clamping down on the bubble which has simply been driven by people exploiting the system. There's nothing wrong with exploiting the system but the chancellor is perfectly entitled to say "enough's enough".
Ozzie Osmond said:
woowahwoo said:
Anyway, many people use BTL to replace a pension...
BTL should not be the automatic answer to every investment question. For many private landlords it's been little more than a speculative punt on capital appreciation of an illiquid asset. IMO it's a good thing the chancellor is clamping down on the bubble which has simply been driven by people exploiting the system. There's nothing wrong with exploiting the system but the chancellor is perfectly entitled to say "enough's enough".
Taking out a btl mortgage provides a service. It increases housing supply!!
Oh, hang on, that might be economically illiterate bollo**s.
Carry on..
PS rents are bound to go up, the only answer is to build more etc. etc.
Don't miss the boat. You can't go wrong with bricks and mortar.
Supply demand supply demand supply demand ......
jdw1234 said:
Ozzie Osmond said:
woowahwoo said:
Anyway, many people use BTL to replace a pension...
BTL should not be the automatic answer to every investment question. For many private landlords it's been little more than a speculative punt on capital appreciation of an illiquid asset. IMO it's a good thing the chancellor is clamping down on the bubble which has simply been driven by people exploiting the system. There's nothing wrong with exploiting the system but the chancellor is perfectly entitled to say "enough's enough".
Taking out a btl mortgage provides a service. It increases housing supply!!
Oh, hang on, that might be economically illiterate bollo**s.
Carry on..
PS rents are bound to go up, the only answer is to build more etc. etc.
Don't miss the boat. You can't go wrong with bricks and mortar.
Supply demand supply demand supply demand ......
Ozzie Osmond said:
the chancellor is perfectly entitled to say "enough's enough".
The chancellor unfortunately also seems perfectly entitled to distort the market to let his corporate chums in so they can do their own speculative punts on the very same illiquid assets. We now have a situation where multinational property conglomerates (HQd in god knows where) can buy up and rent out flats at a huge tax advantage over individual British nationals. He's pulled the wool over your eyes.
Behemoth said:
We now have a situation where multinational property conglomerates (HQd in god knows where) can buy up and rent out flats at a huge tax advantage over individual British nationals. He's pulled the wool over your eyes.
Well, businesses of any size can claim back VAT on their inputs while small businesses and private individual's can't. Both of these differences illustrate there is a difference between "big business" and private individuals/small businesses.A long time ago home-owners got tax relief on their mortgage interest payments. That relief was removed, making it "unfair" that a BTL landlord was getting tax relief while an owner/occupier wasn't. This distorted the market with BTL landlords able to outbid private buyers when purchasing houses. The chancellor is rebalancing the system.
Behemoth said:
Ozzie Osmond said:
the chancellor is perfectly entitled to say "enough's enough".
The chancellor unfortunately also seems perfectly entitled to distort the market to let his corporate chums in so they can do their own speculative punts on the very same illiquid assets. We now have a situation where multinational property conglomerates (HQd in god knows where) can buy up and rent out flats at a huge tax advantage over individual British nationals. He's pulled the wool over your eyes.
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