Death of buy-to-let: landlords wake up to Osborne's 150pc ta
Discussion
There's a common belief that house prices only ever go up, and go up a lot, bu there's no fixed asset in the world that will continue to rise in value ahead of inflation year after year.
In many parts of the UK house prices are already past the point of affordability, yet people still expect double digit increases year on year. If the only justification for BTL investment is continued capital appreciation then there are a lot of investors heading for disappointment, especially when interest rates begin to return to more realistic levels.
In many parts of the UK house prices are already past the point of affordability, yet people still expect double digit increases year on year. If the only justification for BTL investment is continued capital appreciation then there are a lot of investors heading for disappointment, especially when interest rates begin to return to more realistic levels.
PurpleMoonlight said:
Rowley Birkin said:
Not refused at all. I am just not going to be drawn into a daft argument with you. We / I on the sole trader business pay 2 sorts of NI. iirc its class 4 for me, 1a for employees.
If HMRC accept your BTL's are a 'business' so as to demand Class 4 NI from you, are you sure that you will not be able to class all you interest payment as an expense of the business?RYH64E said:
especially when interest rates begin to return to more realistic levels.
Given that, even with the passing of control for rate setting to the BoE, interest rates are a political instrument, not an economic instrument, what is realistic?Looking at the current political and economic landscape, it isn't improbable to see interest rates at or near current levels for the foreseeable future (and I say that as someone with no mortgage and a few bob in the piggy bank)
ClaphamGT3 said:
RYH64E said:
especially when interest rates begin to return to more realistic levels.
Given that, even with the passing of control for rate setting to the BoE, interest rates are a political instrument, not an economic instrument, what is realistic?Looking at the current political and economic landscape, it isn't improbable to see interest rates at or near current levels for the foreseeable future (and I say that as someone with no mortgage and a few bob in the piggy bank)
As for long term rates, looking at long term trends you have to think that a base rate of 4 or 5% isn't outrageous, albeit unlikely to happen any time soon, but maybe we'll see 2 or 3% in the next few years. I remember paying a mortgage at 12.5% back in the 90s, I can't see that being repeated (unless Corbyn gets to be PM) but if I were in the market for a mortgage now I'd be budgeting on paying 5% at some point in the near future. The 1 or 2% deals available now can't last forever.
RYH64E said:
ClaphamGT3 said:
RYH64E said:
especially when interest rates begin to return to more realistic levels.
Given that, even with the passing of control for rate setting to the BoE, interest rates are a political instrument, not an economic instrument, what is realistic?Looking at the current political and economic landscape, it isn't improbable to see interest rates at or near current levels for the foreseeable future (and I say that as someone with no mortgage and a few bob in the piggy bank)
As for long term rates, looking at long term trends you have to think that a base rate of 4 or 5% isn't outrageous, albeit unlikely to happen any time soon, but maybe we'll see 2 or 3% in the next few years. I remember paying a mortgage at 12.5% back in the 90s, I can't see that being repeated (unless Corbyn gets to be PM) but if I were in the market for a mortgage now I'd be budgeting on paying 5% at some point in the near future. The 1 or 2% deals available now can't last forever.
Condi said:
Which is what frustrates me - if middle age people want someone to stash some cash for their pensions there are plenty of other investments which dont have the negative consequences on the market that the BTL boom has done. Why not buy a 60's mustang instead? % capital increase will probably be the same, if not more, and you can enjoy it at the same time!
But what about those people who've been saving for a mustang? They've seen prices slide up and up over the past decade, with no hope of their savings keeping pace with the market. There are thousands of 30-something's out there desperate to roll up to their local car show in a full on Eleanor replica, only to have their dreams ruined by the baby boomers and their overinvestment in the mustang market, skewing the whole thing completely. It's simply not fair. Stricter regulation and applying capital gains tax to classic cars is the only solution, possibly with a national rollout of council funded mustang ownership to those priced out of the U.S. Iron market.
/corbyn
anonymous said:
[redacted]
Great post!It was one of things that I was thinking, having had a similar "younger life".
The problem now is, that every "youngster" thinks it is their god given right to "spunk" all their money on crap, technology, booze etc and then complain they don't have enough money for rent, let alone saving for a property!
Work hard, make some sacrifices, and get on the property ladder. If it is too expensive where you grew up (your home town) move a little further.
Sorry for the harsh post but you make you choice and live with them!
IceBoy
Ps.
This is what I tell my two boys (aged 10+13) Your destiny is in your hands, look at the environment you live in now and start making your choices. Don't complain later.
I would and did make the sacrifices earlier in my working/social life so I could work hard, really hard, in my younger years....to retire and enjoy life later and not have to work so hard.
ClaphamGT3 said:
RYH64E said:
ClaphamGT3 said:
RYH64E said:
especially when interest rates begin to return to more realistic levels.
Given that, even with the passing of control for rate setting to the BoE, interest rates are a political instrument, not an economic instrument, what is realistic?Looking at the current political and economic landscape, it isn't improbable to see interest rates at or near current levels for the foreseeable future (and I say that as someone with no mortgage and a few bob in the piggy bank)
As for long term rates, looking at long term trends you have to think that a base rate of 4 or 5% isn't outrageous, albeit unlikely to happen any time soon, but maybe we'll see 2 or 3% in the next few years. I remember paying a mortgage at 12.5% back in the 90s, I can't see that being repeated (unless Corbyn gets to be PM) but if I were in the market for a mortgage now I'd be budgeting on paying 5% at some point in the near future. The 1 or 2% deals available now can't last forever.
Would tend to suggest the banks dont see 5% coming particularly soon. [caveat: I'm not saying the banks always call it right
]Rowley Birkin said:
I have worded that badly. Commercial finance from banks tends to be higher risk.
The bank has a repayment risk, but that risk is covered either by equity in the asset(s) or by personal guarantees if the loan is in a company. Some of the big commercial lenders pulled some horrible stunts during the financial crisis, when they wanted their money back - even when it wasn't due. Most of these tricks revolved around either destroying the borrower's equity or the borrower.
One Bank from Yorkshire, for example, decided to exit property and started leaning on borrowers to repay, even when facilities weren't due. Their favoured technique was to force revaluations and to put in place a valuer who they knew would lowball. Then demand a margin call which they knew the borrower couldn't meet and recall the loan due to breach of the LTV covenant.
One un coop erative bank, when it found itself in trouble did much the same. Except they just made it clear that they were going to demand annual valuations.
To the best of my knowledge, none of the BTL lenders did this stuff.
I'm not sure how relevant this is because they don't do just BTL, but I remember avoiding West Brom Building Society when I was taking out a mortgage earlier this year because they shafted a load of BTL landlords. Mine was a personal mortgage, and I'm not involved in landlording it over innocent tenants, but I still didn't like the precedent so used someone else. The case is still ongoing, more here: http://www.telegraph.co.uk/finance/personalfinance...The bank has a repayment risk, but that risk is covered either by equity in the asset(s) or by personal guarantees if the loan is in a company. Some of the big commercial lenders pulled some horrible stunts during the financial crisis, when they wanted their money back - even when it wasn't due. Most of these tricks revolved around either destroying the borrower's equity or the borrower.
One Bank from Yorkshire, for example, decided to exit property and started leaning on borrowers to repay, even when facilities weren't due. Their favoured technique was to force revaluations and to put in place a valuer who they knew would lowball. Then demand a margin call which they knew the borrower couldn't meet and recall the loan due to breach of the LTV covenant.
One un coop erative bank, when it found itself in trouble did much the same. Except they just made it clear that they were going to demand annual valuations.
To the best of my knowledge, none of the BTL lenders did this stuff.
Edited by Rowley Birkin on Tuesday 25th August 22:20
IceBoy said:
anonymous said:
[redacted]
Great post!It was one of things that I was thinking, having had a similar "younger life".
The problem now is, that every "youngster" thinks it is their god given right to "spunk" all their money on crap, technology, booze etc and then complain they don't have enough money for rent, let alone saving for a property!
Work hard, make some sacrifices, and get on the property ladder. If it is too expensive where you grew up (your home town) move a little further.
Sorry for the harsh post but you make you choice and live with them!
IceBoy
Ps.
This is what I tell my two boys (aged 10+13) Your destiny is in your hands, look at the environment you live in now and start making your choices. Don't complain later.
I would and did make the sacrifices earlier in my working/social life so I could work hard, really hard, in my younger years....to retire and enjoy life later and not have to work so hard.
emicen said:
Ten year fixes, with ~5 year tie ins, are out there at around 3.5%
Would tend to suggest the banks dont see 5% coming particularly soon. [caveat: I'm not saying the banks always call it right ]
speaking to my broker the other day (as need to renew mortgage on BTL). He reckons banks are offering 10 yr fixed at 4%.......so gives you some idea where they think cost of funding is going (up.....but not by that much)Would tend to suggest the banks dont see 5% coming particularly soon. [caveat: I'm not saying the banks always call it right
]Ozzie Osmond said:
Berz said:
I remember avoiding West Brom Building Society when I was taking out a mortgage earlier this year because they shafted a load of BTL landlords.
How does a bank shaft a landlord?s1962a said:
For a personal homeowner mortgage? Yes
For a business buy to let mortgage? It's a business decision, so doesnt matter what i think about it - it's their choice
I see where you're coming from and fair enough. That's usually my standpoint too but something feels off in this case, I can see why the landlords would feel hard done to but then would it really be appropriate to lump everyone with a rate increase instead of just the few. Meh, this is why I stay out of the fairness debates on here.For a business buy to let mortgage? It's a business decision, so doesnt matter what i think about it - it's their choice
bigunit00 said:
speaking to my broker the other day (as need to renew mortgage on BTL). He reckons banks are offering 10 yr fixed at 4%.......so gives you some idea where they think cost of funding is going (up.....but not by that much)
If the banks are offering long term fixed at 4% I hope they've learned the lessons of the last banking crash and bought forward for the same time scale but at a slightly lower rate. Someone, somewhere is taking a much bigger risk than I'd be prepared to take, with my own money at least...s1962a said:
For a personal homeowner mortgage? Yes
For a business buy to let mortgage? It's a business decision, so doesnt matter what i think about it - it's their choice
If it's a buisness decision then shouldn't they be allowed to offset any costs? as per any other type of business. For a business buy to let mortgage? It's a business decision, so doesnt matter what i think about it - it's their choice
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