Greens and BTL
Discussion
So the Greens aren't going to get anywhere (long may that continue!) in this election but the BTL mortgage interest part of the quote below got me thinking, how could this be implemented? If the property is owned privately then I think that I can see how it could be introduced but if the property is owned in a company then I don't see how it could be implemented. Any accountants clear this up for me as I think about whether to buy BTL in my name or a companies as I can see Labour looking to do something similar when they next get in power.
"The Greens would aim to help the nine million private renters in Britain by capping rents, while the introduction of longer tenancies and a licensing scheme for landlords would provide greater protection for tenants.
The party would also make buy-to-let less attractive by removing tax incentives such as the deduction of mortgage interest as an expense and reforming the “wear and tear” allowance. The aim would be to reduce pressure on house prices."
http://www.insidepropertytoday.com/which-political...
"The Greens would aim to help the nine million private renters in Britain by capping rents, while the introduction of longer tenancies and a licensing scheme for landlords would provide greater protection for tenants.
The party would also make buy-to-let less attractive by removing tax incentives such as the deduction of mortgage interest as an expense and reforming the “wear and tear” allowance. The aim would be to reduce pressure on house prices."
http://www.insidepropertytoday.com/which-political...
I can't see it ever happening. offsetting loan or debt interest is normal for any business. A mortgage is the name for a loan secured against a property. It doesn't get any special treatment by HMRC. If it gets stopped for one then it needs to be stopped for all, and that would instantly put HA's out of business.
There is also the issue that any additional costs will be met by the tenants. BTL needs to turn a better profit than less risky investments to be worth it to the landlord. Typical yields are 5-6%, so if that dropped much more then a lot of landlords would sell up (which of course is the plan). That in turn would reduce the pool of rental properties so would push prices up.
Build enough houses, and prices will return to normality. That is the best solution and is something the government control (ie building land). Try looking for a building plot in your area, there will be very few.
There is also the issue that any additional costs will be met by the tenants. BTL needs to turn a better profit than less risky investments to be worth it to the landlord. Typical yields are 5-6%, so if that dropped much more then a lot of landlords would sell up (which of course is the plan). That in turn would reduce the pool of rental properties so would push prices up.
Build enough houses, and prices will return to normality. That is the best solution and is something the government control (ie building land). Try looking for a building plot in your area, there will be very few.
Edited by 98elise on Thursday 30th April 13:15
98elise said:
I can't see it ever happening. offsetting loan or debt interest is normal for any business. A mortgage is the name for a loan secured against a property. It doesn't get any special treatment by HMRC. If it gets stopped for one then it needs to be stopped for all, and that would instantly put HA's out of business.
There is also the issue that any additional costs will be met by the tenants. BTL needs to turn a better profit than less risky investments to be worth it to the landlord. Typical yields are 5-6%, so if that dropped much more then a lot of landlords would sell up (which of course is the plan). That in turn would reduce the pool of rental properties so would push prices up.
Build enough houses, and prices will return to normality. That is the best solution and is something the government control (ie building land). Try looking for a building plot in your area, there will be very few.
I agree with most of that, but the way I see it is that whilst buy-to-lets are such an attractive investment there will always be a cash buyer waiting for every new house that gets built. This keeps the prices up and out of reach of a significant portion of buyers who just want to buy a home, not an investment. There is also the issue that any additional costs will be met by the tenants. BTL needs to turn a better profit than less risky investments to be worth it to the landlord. Typical yields are 5-6%, so if that dropped much more then a lot of landlords would sell up (which of course is the plan). That in turn would reduce the pool of rental properties so would push prices up.
Build enough houses, and prices will return to normality. That is the best solution and is something the government control (ie building land). Try looking for a building plot in your area, there will be very few.
Consequently, more & more of these people are forced into renting as the alternative which increases the demand for rental properties, pushes rent up, subsequently making the buy-to-lets an even more attractive investment. And the cycle continues.
So whilst more houses certainly have to be built, I don't believe that this by itself will solve anything.
I believe that to have any impact on the rising prices, houses have to be made a significantly less attractive investment opportunity to reduce the number of investment buyers snapping up every available property. This would hopefully get more properties into the hands of those people who just want to buy a home.
I appreciate there will always be a big rental market out there for people who's circumstances make it the most convenient option, but I'd argue there is also a large chunk of people who are renting simply because they can't afford to buy. Certainly every single one of the individuals or families in my close circle of friends who are renting are doing so because they have been priced out of buying, and the rent they are paying is preventing them making much progress in terms of saving a deposit.
Conversely, all of the home owners in my circle of friends (I am 30) were those who either got significant financial help from their (home-owning) parents, either in the form of a deposit contribution or through living with their parents rent-free (or near enough rent-free) and thus able to put together a sizable chunk of savings with minimal living costs.
Tax policy is neither fair nor rational. However, it is very often used by politicians all the time to try and persuade us to behave in particular ways. Since the 1960s taxation policies have generally been very favourable to those who invested in land and buildings. Maybe its time that this whole philosophy was re-examined and perhaps the tax breaks for landlords replaced by better tax breaks for engineering and industry.
Eric Mc said:
Tax policy is neither fair nor rational. However, it is very often used by politicians all the time to try and persuade us to behave in particular ways. Since the 1960s taxation policies have generally been very favourable to those who invested in land and buildings. Maybe its time that this whole philosophy was re-examined and perhaps the tax breaks for landlords replaced by better tax breaks for engineering and industry.
Agreed, although considering how the R&D tax relief stuff went down with the rest of Europe I'm not convinced I can see anything like that happening whilst we are still sitting at that particular table.Sarnie said:
Centurion07 said:
Sorry, nothing useful to add other than when the subject of purchasing BTL's via a company or not comes up, the general consensus around here is using a company is a bit of a ballache, for lots of reasons.
It is a ballache.Feels like a good time to revisit this what with the 40% tax on privately owned BTL's being reduced and now the extra 3% stamp duty being announced which are the kind of measures I was expecting. Is the consensus still that it's not worth doing or have any of the mortgage lenders cottoned on to this and started offering for more lending to companies?
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