Death of buy-to-let: landlords wake up to Osborne's 150pc ta

[anonymous-user]

liner33 said:

mph1977 said:

RWD cossie wil said:

I think most people will end up turning their BTLs into LTD company's, it's an absurd tax that would set a very dangerous precedent, ie taxing turn over not profit.

The housing crisis is down to the government not allowing enough planning for new homes & a huge population spike I. The last decade or so, bullying landlords won't help anyone.

and nothing to do with Brown;s raid on Pensions making Buy to let look attractive and certaing an army of amatuer property tycoons and huge numbers of bottom feeder letting agents charging thoudnas for less than 100 gbp of work at application.

Helped by the lack of council houses as well

Both spot on. The law of unintended consequences. Talking to people in the 30 and under bracket is interesting, if there is going to be any large change in the way things are done it'll be driven by them. They get fked for education costs, fked trying to get into the job market at EVERY level and then fked if they ever want to buy a house. No political party has yet proposed anything to actually help and only a fool expects them to just shrug and accept that it's quite right that pensioners should have more money than they can spend, their parents get massive lump sums from their grandparents property windfall while they work full time and can still barely afford rent.

fk it though, let's save a few million shafting disabled people and everything will be OK eh Dave?

ETA - Worth saying that in true PH fashion I myself am OK because we are all so wealthy, I don't have a dog in this fight particularly but I'm not so stupid I think the status quo can carry on for much longer.

Edited by dme123 on Saturday 22 August 12:53

[aka_kerrly]

Rick1.8t said:

Having said that post recession they have really tightened btl mortgage eligibility so i would be suprised if numbers of btl are growing at a huge rate anyway (there are plenty buying homes to let cash outright in this area though)

Criteria may have been tightened buy BTL is still far far too easy even for first time land lords compared to what a FTB goes through on residential mortgage.

Personally I would love to see a decline in BTL as there are far too many people who get involved with it when there are many many ways of investing in property without physically owning it with the added advantage of being able to sell off a bit of your holding or all of it far quicker than a house.

[mph1977]

liner33 said:

Helped by the lack of council houses as well

the housing issues created by B|TL are ina different sector of the market than the issues over the mis use of social housing

[Toltec]

RegMolehusband said:

What if you haven't bought-to-let but just let out your ex-marital home - do people like me get mopped up in this?

Depends if you are on high rate tax and have a mortgage on the property.

[T5R+]

The thing that really f*##s me off is those of us that pay our taxes get hammered.

However, there is a market of unregulated, cash-in-hand, no consent to lease, etc, etc out there that seem to go untaxed/punished,etc - when are they going to dealt with?

My guess is that, if those that are not on the radar paid their share ALL of us would be taxed less and the country in a much better place.

[Condi]

Same paper, day before...

'House Prices Soar in major UK cities'

http://www.telegraph.co.uk/finance/property/house-...

[Condi]

dme123 said:

They get fked for education costs, fked trying to get into the job market at EVERY level and then fked if they ever want to buy a house. No political party has yet proposed anything to actually help and only a fool expects them to just shrug and accept that it's quite right that pensioners should have more money than they can spend, their parents get massive lump sums from their grandparents property windfall while they work full time and can still barely afford rent.

We do... and no party other than the Lib Dems (who then managed to sell out all their support) have any policies to actually help the young generation. The amount of support pensioners get, and the amount of 'giveaways' they STILL get in almost every budget is frustrating to people under 30, who saw their grandparents buying their houses for 3 times earnings, who are on final salary pensions, and who can afford to go on cruises twice a year. The whole system is fked, but the young dont vote in enough numbers and there is an ever aging population who keep whichever party in power which gives them free stuff.

Its st. Very st.

[bigunit00]

I don't understand the logic of why interest expenses shouldn't be tax deductible ? Any other asset that generates an income can deduct interest expenses from debt so why not btl? If applied here why not too other assets in similar situation say in a business context? Seems an odd distinction to make.

[stuckmojo]

Very good. BTL landlords slot themselves in the place of owner/occupiers and - other than adding no value at all - raise the bar for accessibility to property owning.

[Ozzie Osmond]

This is all a lot of flapping about nothing. Sure, tax relief on BTL mortgages is now more limited so the landlord will have more taxable income. That is exactly what was intended by the Budget and it's about time too.

Taxable income from BTL is taxed exactly the same way as any other form of income and you get the exactly the same effects at the transition points between 20%/40%/45%.

If there's any group of people in this country who don't need sympathy it's BTL landlords!

[bigunit00]

Ozzie Osmond said:

This is all a lot of flapping about nothing. Sure, tax relief on BTL mortgages is now more limited so the landlord will have more taxable income. That is exactly what was intended by the Budget and it's about time too.

Taxable income from BTL is taxed exactly the same way as any other form of income and you get the exactly the same effects at the transition points between 20%/40%/45%.

If there's any group of people in this country who don't need sympathy it's BTL landlords!

So you don't think being allowed to deduct interest expense for a mortgage on the property is fair/reasonable?

I think people who are investing to better their situation should be encouraged. Ultimately it will mean less reliance on the welfare system and more chance of self funded retirement etc. Not sure i understand the angst towards people that decide to invest their own hard earned into investments like this.

[Condi]

bigunit00 said:

I think people who are investing to better their situation should be encouraged. Ultimately it will mean less reliance on the welfare system and more chance of self funded retirement etc. Not sure i understand the angst towards people that decide to invest their own hard earned into investments like this.

Simple, because young people are priced out the market due to demand for BTL's and instead of paying off their own mortgage they give the older generation both the return on capital as well as the uplift in property values, and so they are always getting further away from owning their own home. It just seems like the older generation (who are already well off) are earning that money off the back of the younger generation who are actually doing the work while receiving non of the support.

[delta0]

So all that has actually happened is they have removed tax relief for mortgage interest payments.

[akirk]

the article says:

telegraph said:

Smith & Williamson has calculated that any higher-rate taxpayer landlord whose mortgage interest is 75pc or more of their rental income, net of other expenses, will see all of their returns wiped out by 2020.

So mortgage costs above 75pc of rental income will mean the buy-to-let investments become loss-making.

For additional-rate (45pc) taxpayers, the threshold at which their investment returns are wiped out by the tax is when mortgage costs reach 68pc of rental income.

so basically over-levaraged 'investors' who aren't really investors because what they are doing is taking bank money, putting it into a property, using rent to pay the mortgage and playing the upswing in the market to make long term profit...

risky business model without much contingency, and therefore they get caught out...

if the mortgage interest (not capital repayment as well - just interest) is 68-75%+ of rental income they will be hit... wow that is seriously tight figures already... this won't dramatically hit those who have actually invested their own money into buy to let...

seems fair...

[PurpleMoonlight]

bigunit00 said:

So you don't think being allowed to deduct interest expense for a mortgage on the property is fair/reasonable?

I think people who are investing to better their situation should be encouraged. Ultimately it will mean less reliance on the welfare system and more chance of self funded retirement etc. Not sure i understand the angst towards people that decide to invest their own hard earned into investments like this.

If I were to borrow £200,000 and invest it on the stock market, would I get tax relief on the interest?

[Evanivitch]

bigunit00 said:

I think people who are investing to better their situation should be encouraged. Ultimately it will mean less reliance on the welfare system and more chance of self funded retirement etc. Not sure i understand the angst towards people that decide to invest their own hard earned into investments like this.

Except they are bettering their own position and then pulling the ladder up after them. Disadvantaging those that want to buy their first home, which causes greater reliance on the state as more people compete for fewer good houses in the rental market, and those that can rent can then ill afford to buy.

You can't even count om an inheritance these days, because people are living so much longer and losing all their equity to cover care costs.

I don't suggest for a minute people shouldn't do it, because self interest is natural to do, but the government has to realise the consequences and act accordingly.

[anonymous-user]

Condi said:

dme123 said:

They get fked for education costs, fked trying to get into the job market at EVERY level and then fked if they ever want to buy a house. No political party has yet proposed anything to actually help and only a fool expects them to just shrug and accept that it's quite right that pensioners should have more money than they can spend, their parents get massive lump sums from their grandparents property windfall while they work full time and can still barely afford rent.

We do... and no party other than the Lib Dems (who then managed to sell out all their support) have any policies to actually help the young generation. The amount of support pensioners get, and the amount of 'giveaways' they STILL get in almost every budget is frustrating to people under 30, who saw their grandparents buying their houses for 3 times earnings, who are on final salary pensions, and who can afford to go on cruises twice a year. The whole system is fked, but the young dont vote in enough numbers and there is an ever aging population who keep whichever party in power which gives them free stuff.

Its st. Very st.

Don't be despondent! I'm counting on you fkers to change things.

[nct001]

grumbledoak said:

Inevitable, indeed long overdue. With the comedy interest rates set to continue we have two entire generations being tucked by each other's grandparents.

It is not as simply as that. Where I work there are loads of 25 year olds getting married or whatever and frankly have aspirations beyond their financial reach. If you can't afford what you want, look at a different location.

When you buy your first house, make do and mend as previous generations have done. Not buy a part rent part buy / over priced shiny flat on an A road five miles from town next to a designer outlet. These are all over the UK and it's funny how the prices are all similar regardless of location.

My house was sold for £87k in 1997 I bought it aged 25 for £287k in 2007 and have just sold it in 2015 for £463k. It has increased in value at exactly the same rate since the mid 90s. And if you look at all the other houses in the area they a have all risen at the same rate. 1990 new build semi sold for £110k, 2003 worth £200k now worth £300k.

I remember thinking I have paid too much for this at £287k is was only £87k twenty years ago and I could have moaned and rented and stayed with parents or lived in shared accommodation. But I did what generations have done, bought a property, paid a mortgage and got on with my life and moved up the property ladder.

I have sold cars to people same age as me and they have said I would never by one of these houses (he was referring to his mums house) as it was not worth £200k... to this day they are worth £300k and his car is still parked outside mums. It just doesn't matter what he thinks it is worth it is what the next man will pay for it in 10 years time adjusted for inflation, wage increases etc etc etc

[otolith]

liner33 said:

Mind you ultimately the tenants will pay for this , if BTL landlords do sell up there will be less houses up for rent thus increasing demand.

If the overall housing stock remains the same, all you get is a shift from BTL to owner occupied. The reduction in rental stock mirrors the reduction in tenants.

[bigunit00]

Condi said:

Simple, because young people are priced out the market due to demand for BTL's and instead of paying off their own mortgage they give the older generation both the return on capital as well as the uplift in property values, and so they are always getting further away from owning their own home. It just seems like the older generation (who are already well off) are earning that money off the back of the younger generation who are actually doing the work while receiving non of the support.

Is the tax change really aimed at rectifying this problem? Surely it's up to the govt to resolve the real issue here which is the lack of supply of dwellings. A young person and someone buying a btl still have to come up with the deposit to buy the property in the first place. Older people just tend to have more options of raising that capital. Older people were young once as well.