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

[Condi]

RYH64E said:

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...

That wasnt why the last crash happened, at all. Interest rates were never a factor - twas the sale of loans which had undeclared or misrepresent risk positions, and so the banks had little idea how much risk they were buying.

[98elise]

PurpleMoonlight said:

The Moose said:

Of course it's not!

It's a bona fide operating cost - in the same way having the walls painted between tenants is also.

Or are you going to tell me that because a private bod can't claim tax relief on repairs BTL businesses should be taxed on that too? Give over - it's a ludicrous concept aimed at winning votes.

Why should someone purchasing a property as an investment have a distinct advantage over one doing so as a home?

An owner occupier can rent a room out in their property tax free. A BTL landlord doesn't get the same tax free allowance.

The new rules mean you can be taxed more than any gain you make. Thats a first as far as I'm aware.

[RYH64E]

Condi said:

RYH64E said:

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...

That wasnt why the last crash happened, at all. Interest rates were never a factor - twas the sale of loans which had undeclared or misrepresent risk positions, and so the banks had little idea how much risk they were buying.

I was thinking of the problems at Northern Rock where their reliance on cheap, short term funding rather than deposits led to failure when the markets dried up.

[dai1983]

Condi said:

Quite right. For most people the return on capital is negligible and is only there to cover costs until they come to liquidate the asset, relying on the value of the property increasing. I know that my friends own a £200k BTL, probably with about 75% mortgaged. Their profit after bills is £50/m - 1.2%. The only thing which makes it worthwhile is leveraged increased in property value which is probably about 6%. No 'business' would consider that a beneficial use of money.

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!

I'll be honest and say our figures are pretty similar to this but about 65% mortgaged. Like I said we didn't set out to become landlords and we actually still have a residential mortgage with permission to let. We usually pay any maintenance out of our own pockets but we had a new kitchen and boiler fitted about 18 months before it was let out. Obviously the investment grows with capital gains and as the mortgage capital is paid off.

To be honest I wouldn't rule out selling up and investing elsewhere as I do worry about something catastrophic happening or the property being void for long periods. As much as I'd love a small fleet of classic cars and bikes, that market also has its own bubble and risks. I'd also most definitely be precious about them and just keep them wrapped up in storage and I doubt I could persuade the wife either!

[nikaiyo2]

PurpleMoonlight said:

That's a business not a personal investment, the tax regime, including the tax payable on profit is different.

If I borrowed £100,000 and bought plc shares with it, would I get tax relief on the borrowing?

Yes, if you bought those shares through your ISA allowance, quite easy to set up a fund with the £100k in then drip it into your ISA fund year on year to maximize your allowance. So in 7 years you will have had 100% tax relief on that borrowing.

[PurpleMoonlight]

nikaiyo2 said:

Yes, if you bought those shares through your ISA allowance, quite easy to set up a fund with the £100k in then drip it into your ISA fund year on year to maximize your allowance. So in 7 years you will have had 100% tax relief on that borrowing.

No you wouldn't.

ISA is tax free growth not tax free input.

[tomjol]

anonymous said:

[redacted]

Or perhaps, instead of taking this typically British "I had to suffer so others better bloody well had too" attitude you could acknowledge that, quite aside from everything you're saying about all us damn youngsters pissing our money away (and let's not get into how a service economy relies on that spending), there's a genuine problem and it needs to be addressed.

Most people aren't looking for a fking property empire, they just want somewhere to live.

[Pheo]

anonymous said:

[redacted]

You realise there are probably a lot of people not doing all the above and still have no hope right? With house price inflation x5 earnings, inevitably people are going to struggle to raise the deposit.

[amusingduck]

anonymous said:

[redacted]

A lot of mortgages are cheaper than renting though, it's the deposit people struggle with. Especially if they don't have the bank of mum and dad to fall back on.

[TooMany2cvs]

Pheo said:

You realise there are probably a lot of people not doing all the above and still have no hope right?

Of course there are. Nobody's ever said there isn't.

Equally, nobody's ever said that absolutely everybody HAS to be able to afford to own property.

http://www.telegraph.co.uk/finance/property/news/1...
Property ownership in the UK fell for the first time in a century between 2001 and 2011! 64% owned their home in 2011, compared to 69% in 2001.

Well, hold on. Read past the headline. That 69% figure was a peak. In 1918, only 23% owned their own home. It wasn't until 1971 that it even reached 50%.

[BoRED S2upid]

I don't believe there is a lack of affordable housing take the south of England out of the picture and many cities up and down the UK will have 2-3 bed property on the market at less than £70k which is affordable for most hard working people.

[Pheo]

TooMany2cvs said:

Of course there are. Nobody's ever said there isn't.

Equally, nobody's ever said that absolutely everybody HAS to be able to afford to own property.

http://www.telegraph.co.uk/finance/property/news/1...
Property ownership in the UK fell for the first time in a century between 2001 and 2011! 64% owned their home in 2011, compared to 69% in 2001.

Well, hold on. Read past the headline. That 69% figure was a peak. In 1918, only 23% owned their own home. It wasn't until 1971 that it even reached 50%.

Excellent, so you're suggesting we go back to 1910. Slums, poor living conditions, people stuck in an endless cycle of poverty?

I don't disagree that there isn't necessarily a right to buy... but should there be a right to somewhere affordable, decent, safe, to live, which is stable? Thats not what the private rental market provides now, and thats only going to get worse - in tandem with properties becoming less affordable, private rental demand shoots up, landlords can charge more, rents go through the roof...

You seem to make out that the solution to house price inflation is to move everyone into private rental. Same problem, different market.

[furtive]

anonymous said:

[redacted]

In the South East. Other parts of the country seem to have plenty of room. The regional bias of the country needs to be addressed somehow to reduce pressure on the South East and to improve the standards of people living in less salubrious places

[TooMany2cvs]

Pheo said:

Excellent, so you're suggesting we go back to 1910. Slums, poor living conditions, people stuck in an endless cycle of poverty?

Would you care to point out where I said that?

Pheo said:

but should there be a right to somewhere affordable, decent, safe, to live, which is stable? Thats not what the private rental market provides now, and thats only going to get worse

s'funny, I thought this whole thread was based on rental yields being so low that it wasn't profitable to be a private landlord. Make your mind up.

Edited by TooMany2cvs on Thursday 27th August 18:56

[furtive]

anonymous said:

[redacted]

Well I don't think we should cover the entire South East with houses - it would be nice to spread it (and the wealth) about a bit more

[WindyMills]

anonymous said:

[redacted]

Just over 2% of land in the UK is "concreted" over, but I do kind of agree with you - it is the infrastructure that is always left lacking.
http://www.bbc.co.uk/news/uk-18623096

[Condi]

anonymous said:

[redacted]

Good - you have recognised that there is a structural problem with our housing market. Taking both points together, people buying second homes as a speculative investment (as that's what it is), is at the same time decreasing supply (by taking FTB properties off the market) and increasing demand (due to a self fulfilling prophecy of using more leverage to buy more houses!). I am by no means a communist or socialist or whatever, but when it comes to somewhere to live - which has been championed by governments since the 1970's - then it is impossible to say the open market is providing the most efficient solution.

TooMany2cvs said:

Well, hold on. Read past the headline. That 69% figure was a peak. In 1918, only 23% owned their own home. It wasn't until 1971 that it even reached 50%.

Fantastic. Lets hold 1918 up as the point we should be aiming for. FFS. Hang on, arnt we as a society meant to progressing? Granted progress isnt a straight time, but things like right to buy (note the word RIGHT, which several posters have said doesnt exist), are supposed to have moved us forwards.

So yes, we do have the RIGHT to buy, thanks.

anonymous said:

[redacted]

There is heaps and heaps of land which isnt used for anything productive. Only a very small amount of the country is used for housing, maybe more in the SE, but even within the SE there is heaps of space which could be used for buildings. Its NIMBY's with an attitude like that (probably living in houses build during the 1960s building boom) which has caused the problems for the housing market over the last 15 years.

Edited by Condi on Thursday 27th August 18:47

[TooMany2cvs]

Condi said:

Fantastic. Lets hold 1918 up as the point we should be aiming for. FFS.

Yes, Pheo already suggested that was what I meant. Perhaps you'd be so kind as to point out where I said that?

Condi said:

So yes, we do have the RIGHT to buy, thanks.

If you have a local authority tenancy - and, soon, perhaps, a housing association one - then, yes, with several caveats you DO have a "right to buy". Subject to various conditions, and subject to being able to raise the finance to take that right up.

But I don't think that's what you meant.

So, no, in the way I believe you're meaning, we do not have any kind of "right" to be able to buy a house

Condi said:

Its NIMBY's with an attitude like that (probably living in houses build during the 1960s building boom) which has caused the problems for the housing market over the last 15 years.

Actually, green belt legislation in the UK goes back to 1935, but we won't let such minor details get in the way.

Edited by TooMany2cvs on Thursday 27th August 19:01

[Condi]

TooMany2cvs said:

Condi said:

Fantastic. Lets hold 1918 up as the point we should be aiming for. FFS.

Yes, Pheo already suggested that was what I meant. Perhaps you'd be so kind as to point out where I said that?

It was implied when you used that as your reference point. As if 'that was good enough so we shouldnt need to aim any higher'. Otherwise why use 1918?

And as I said, I thought as a society we had progressed beyond that. Y'know with the NHS, minimum wage, other social benefits etc to try and give everyone an opportunity, rather than the privileged few.

[Pheo]

TooMany2cvs said:

s'funny, I thought this whole thread was based on rental yields being so low that it wasn't profitable to be a private landlord. Make your mind up.

Edited by TooMany2cvs on Thursday 27th August 18:56

Well I don't think I ever posted saying woe is me, as a landlord I've been sitting back thinking - oh you poor dears, how terrible for you