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

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

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oyster

12,577 posts

247 months

Wednesday 2nd September 2015
quotequote all
nct001 said:
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
You haven't done anything except ride a lucky wave.

Your property has far exceeded even the highest growth in prime London since 2007, so either you're a very shrewd investor or you're lucky.

Justayellowbadge

37,057 posts

241 months

Wednesday 2nd September 2015
quotequote all
oyster said:
You haven't done anything except ride a lucky wave.

Your property has far exceeded even the highest growth in prime London since 2007, so either you're a very shrewd investor or you're lucky.
Nope, swathes of London have risen by a greater percentage than that since 07.

Condi

17,085 posts

170 months

Wednesday 2nd September 2015
quotequote all
Justayellowbadge said:
oyster said:
You haven't done anything except ride a lucky wave.

Your property has far exceeded even the highest growth in prime London since 2007, so either you're a very shrewd investor or you're lucky.
Nope, swathes of London have risen by a greater percentage than that since 07.
Not very big swathes! Thats an average 8% per year increase in value over 8 years, including the dip in house prices from 2007-9. Also, how many 25 year olds can afford a £280k house? Maybe in 2007 with 95+% mortgages, but its a very different story today. Getting a 20% deposit today (£56k) is a huge ask to save above rent and bills.


Justayellowbadge

37,057 posts

241 months

Wednesday 2nd September 2015
quotequote all
Condi said:
Justayellowbadge said:
oyster said:
You haven't done anything except ride a lucky wave.

Your property has far exceeded even the highest growth in prime London since 2007, so either you're a very shrewd investor or you're lucky.
Nope, swathes of London have risen by a greater percentage than that since 07.
Not very big swathes! Thats an average 8% per year increase in value over 8 years, including the dip in house prices from 2007-9. Also, how many 25 year olds can afford a £280k house? Maybe in 2007 with 95+% mortgages, but its a very different story today. Getting a 20% deposit today (£56k) is a huge ask to save above rent and bills.

Just looking at the areas I know, Wimbledon, Wndsworth, Hammersmith, Brook Green and surrounding on Zoopla, I cam find any number that have doubled in the period since 2007.

98elise

26,372 posts

160 months

Thursday 3rd September 2015
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mph1977 said:
ClaphamGT3 said:
Willy Nilly said:
ClaphamGT3 said:
The 'already well off' are providing 'the less well off' with a better quality and a better choice of rental property than at any time in history. The 'less well off' should be grateful
Are the fk. What is happening is the first time buyers end up bidding against property speculators, then end up renting off them for more than they could have bought it for in the first place.
But they couldn't buy it, could they?
if the market at FTB levle wasn;t overheated by the BTL amateur tycoons they could ... but i know thisis PH and you're a powerfully built be -hgoateed director and f*** anyone else
BTL does not add much pressure to the property market. For each house that gets bought by a landlord, another family is now housed. BTL is not removing stock from the pool, its simply a different ownership model.

The same shortfall exists regardless. If the government decided tomorrow that BTL properties were to be sold cheaply to fheir tenants, and it had 100% take up, there would still be no more stock available to the rest of the market.

Regardless of the take up there will still be the same number of properties, and the same number of families (or individuals etc) wanting a home.

We have short supply regardless. Thats the problem.

gibbon

2,182 posts

206 months

Thursday 3rd September 2015
quotequote all
Justayellowbadge said:
Just looking at the areas I know, Wimbledon, Wndsworth, Hammersmith, Brook Green and surrounding on Zoopla, I cam find any number that have doubled in the period since 2007.
I have a flat that has comfortably doubled since 2010 in central east london.

PurpleMoonlight

22,362 posts

156 months

Thursday 3rd September 2015
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98elise said:
We have short supply regardless. Thats the problem.
It is, but people owning multiple properties and receiving a tax advantage to do so only serves to increase prices.

oyster

12,577 posts

247 months

Thursday 3rd September 2015
quotequote all
Justayellowbadge said:
oyster said:
You haven't done anything except ride a lucky wave.

Your property has far exceeded even the highest growth in prime London since 2007, so either you're a very shrewd investor or you're lucky.
Nope, swathes of London have risen by a greater percentage than that since 07.
Kensington/Westminster etc are up by approx 50% since 2007 and they are about the top performing.

So I stand by my assertion that the poster was lucky.

Unless you can find some figures to prove otherwise?

98elise

26,372 posts

160 months

Thursday 3rd September 2015
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PurpleMoonlight said:
98elise said:
We have short supply regardless. Thats the problem.
It is, but people owning multiple properties and receiving a tax advantage to do so only serves to increase prices.
How? No properties have been removed from the pool. The same number of people live in the same number of properties.

As I stated, if every BTL were converted to owner occupier overnight the number of available properties would be exactly the same.

The only thing that has changed is the ownership.

Addition taxation will just push rents up as it adds additional cost to the provider. That's simple economics.


mph1977

12,467 posts

167 months

Thursday 3rd September 2015
quotequote all
98elise said:
PurpleMoonlight said:
98elise said:
We have short supply regardless. Thats the problem.
It is, but people owning multiple properties and receiving a tax advantage to do so only serves to increase prices.
How? No properties have been removed from the pool. The same number of people live in the same number of properties.

As I stated, if every BTL were converted to owner occupier overnight the number of available properties would be exactly the same.

The only thing that has changed is the ownership.

Addition taxation will just push rents up as it adds additional cost to the provider. That's simple economics.
additional taxation will stop making BTL such an attractive investment for some and reduce price pressure, increase monbility perhaps allow current young professionals the dream of buying their own home ...

98elise

26,372 posts

160 months

Thursday 3rd September 2015
quotequote all
mph1977 said:
98elise said:
PurpleMoonlight said:
98elise said:
We have short supply regardless. Thats the problem.
It is, but people owning multiple properties and receiving a tax advantage to do so only serves to increase prices.
How? No properties have been removed from the pool. The same number of people live in the same number of properties.

As I stated, if every BTL were converted to owner occupier overnight the number of available properties would be exactly the same.

The only thing that has changed is the ownership.

Addition taxation will just push rents up as it adds additional cost to the provider. That's simple economics.
additional taxation will stop making BTL such an attractive investment for some and reduce price pressure, increase monbility perhaps allow current young professionals the dream of buying their own home ...
So let's say 100 landlords sell their properties on the open market. Now 100 more families need housing. You have created equal additional suppy, and demand. There is no magic additional supply added.

To reduce pressure you need additional supply.

I'm happy to be educated though. I don't think high house prices help anyone other than short term speculators.

PurpleMoonlight

22,362 posts

156 months

Thursday 3rd September 2015
quotequote all
98elise said:
How? No properties have been removed from the pool. The same number of people live in the same number of properties.

As I stated, if every BTL were converted to owner occupier overnight the number of available properties would be exactly the same.

The only thing that has changed is the ownership.

Addition taxation will just push rents up as it adds additional cost to the provider. That's simple economics.
The number of homes available is only part of the issue, the number of homes available to the owner occupier is a significant factor. The more available the lower the price. BTL landlords have driven up the price because they have a significant tax advantage over the owner occupier.

Rents won't necessarily go up. Not every landlord has a mortgage. Not every landlord will be subject to higher tax rates. Rents will have to continue to be affordable.

rufusgti

2,528 posts

191 months

Thursday 3rd September 2015
quotequote all
mph1977 said:
additional taxation will stop making BTL such an attractive investment for some and reduce price pressure, increase monbility perhaps allow current young professionals the dream of buying their own home ...
Reading the headlines yes. But speaking to financial advisors and accountants maybe not so much. I was quite worried for a guy in work who's been doing the classic, borrow from own home- BTL - add value - borrow out - BTL - add value etc etc. I think he's up to four or five, all on interest only. He has been told that it won't really effect him by his financial advisor. After reading the headlines he was ready to sell everything. Others are reporting the similar. All though I don't know the ins and outs of their portfolios so it's hard to paint an accurate picture.

liner33

10,641 posts

201 months

Thursday 3rd September 2015
quotequote all
PurpleMoonlight said:
The number of homes available is only part of the issue, the number of homes available to the owner occupier is a significant factor. The more available the lower the price. BTL landlords have driven up the price because they have a significant tax advantage over the owner occupier.

Rents won't necessarily go up. Not every landlord has a mortgage. Not every landlord will be subject to higher tax rates. Rents will have to continue to be affordable.
Most BTL landlords will have a mortgage because in the past it was more tax efficient.

If you buy a house for £200k and you want a 6% return on your investment then you need to charge £1k pcm , if Georgie boy is going to take a big chunk of your rental income in tax then you will need to increase rents to maintain your return

OR

Sell the house and invest the money elsewhere

But who is going to buy it ? FTB's cant get mortgages and people wont want it as a BTL investment any more, some people may choose to leave a property unlet and hope for capital growth



Ade07

489 posts

166 months

Thursday 3rd September 2015
quotequote all
liner33 said:
PurpleMoonlight said:
The number of homes available is only part of the issue, the number of homes available to the owner occupier is a significant factor. The more available the lower the price. BTL landlords have driven up the price because they have a significant tax advantage over the owner occupier.

Rents won't necessarily go up. Not every landlord has a mortgage. Not every landlord will be subject to higher tax rates. Rents will have to continue to be affordable.
Most BTL landlords will have a mortgage because in the past it was more tax efficient.

If you buy a house for £200k and you want a 6% return on your investment then you need to charge £1k pcm , if Georgie boy is going to take a big chunk of your rental income in tax then you will need to increase rents to maintain your return

OR

Sell the house and invest the money elsewhere


But who is going to buy it ? FTB's cant get mortgages and people wont want it as a BTL investment any more, some people may choose to leave a property unlet and hope for capital growth
I can assure you that most BTL landlords do not have mortgages, the majority of investors are cash buyers. Also, there are an awful lot of people who still want a BTL investment, and are still actively seeking more properties to rent out.

ClaphamGT3

11,269 posts

242 months

Thursday 3rd September 2015
quotequote all
PurpleMoonlight said:
98elise said:
How? No properties have been removed from the pool. The same number of people live in the same number of properties.

As I stated, if every BTL were converted to owner occupier overnight the number of available properties would be exactly the same.

The only thing that has changed is the ownership.

Addition taxation will just push rents up as it adds additional cost to the provider. That's simple economics.
The number of homes available is only part of the issue, the number of homes available to the owner occupier is a significant factor. The more available the lower the price. BTL landlords have driven up the price because they have a significant tax advantage over the owner occupier.

Rents won't necessarily go up. Not every landlord has a mortgage. Not every landlord will be subject to higher tax rates. Rents will have to continue to be affordable.
In reality, 100 mom-and-pop shop BTL landlords sell up, 90 of the properties will be bought by institutional investors looking for secure, asset backed, long-term return. The good thing is, they are less likely to be 'rogue' and more likely to maintain the property, the bad news is that they will push rents as far as they can and will be more selective about the tenants that they will accept. Who will lose out? The poorest in society of course.

Willy Nilly

12,511 posts

166 months

Thursday 3rd September 2015
quotequote all
98elise said:
PurpleMoonlight said:
98elise said:
We have short supply regardless. Thats the problem.
It is, but people owning multiple properties and receiving a tax advantage to do so only serves to increase prices.
How? No properties have been removed from the pool. The same number of people live in the same number of properties.

As I stated, if every BTL were converted to owner occupier overnight the number of available properties would be exactly the same.

The only thing that has changed is the ownership.

Addition taxation will just push rents up as it adds additional cost to the provider. That's simple economics.
Ever go to concerts?

What happens is, you fave band come to town amid much hype. Tickets go on sale at 9am, by 9:30 you manage to get on to the web site to find they have all sold out. Then at 9:45 there are 10,000 tickets on sale at £110 instead of £55 on various resellers websites. You reluctantly buy one, then the day comes for the concert only for you to find the place half full.

It's much the same as first time buyers find. Mr and Miss Firsttime-Buyer go for their first house together and end up bidding on a house Mr P.H. Powerfully-Built also wants as a rental. He out bids them, what with his huge mass of wealth, so they end up paying £1,100/ month as rent to Mr Powerfully-Built when they could have paid £700 as a mortgage if they bought it. The whole BTL thing where people speculate on the property markets looking for capital gains is a self fulfilling prophecy. They take a load of houses off the market which forces prices up and rents so they clean up while getting a tax break in the process. Win and indeed win.

Houses should be firstly and fore-mostly a home, not an investment

dazwalsh

6,095 posts

140 months

Thursday 3rd September 2015
quotequote all
98elise said:
So let's say 100 landlords sell their properties on the open market. Now 100 more families need housing. You have created equal additional suppy, and demand. There is no magic additional supply added.

To reduce pressure you need additional supply.

I'm happy to be educated though. I don't think high house prices help anyone other than short term speculators.
I think people are failing to grasp this concept, lack of supply = higher prices regardless of who owns what. Rents go up in tandem as people are priced out of ownership and into the PRS

Build more houses = prices become a bit more stable, rents drop as people can afford their 1 bed shoeboxes in London again. Investors look elsewhere and we avoid bubble burst round 2.

Hiking taxes on landlords will do sod all to change things around either. These taxes wont even have to be absorbed by the landlords it will just get passed onto the tenant because of the ridiculous demand.






98elise

26,372 posts

160 months

Thursday 3rd September 2015
quotequote all
PurpleMoonlight said:
98elise said:
How? No properties have been removed from the pool. The same number of people live in the same number of properties.

As I stated, if every BTL were converted to owner occupier overnight the number of available properties would be exactly the same.

The only thing that has changed is the ownership.

Addition taxation will just push rents up as it adds additional cost to the provider. That's simple economics.
The number of homes available is only part of the issue, the number of homes available to the owner occupier is a significant factor. The more available the lower the price. BTL landlords have driven up the price because they have a significant tax advantage over the owner occupier.

Rents won't necessarily go up. Not every landlord has a mortgage. Not every landlord will be subject to higher tax rates. Rents will have to continue to be affordable.
But to make those properties a available you have to make the current tenant homeless, who now needs a house. Prices will only come down when there are less buyers than available properties.

Perhaps if you can explain where the displaced tenants live then I would understand where all the additional capacity comes from.

From what you are saying we get cheaper houses, low rents, and extra tax revenue?




Edited by 98elise on Thursday 3rd September 23:09

Toltec

7,159 posts

222 months

Friday 4th September 2015
quotequote all
Slightly different, but related question.

If you buy a second property with a mortgage, between purchase and sale pay £20,000 of interest and gain £30,000 would your cgt liability be £10,000 or £30,000?