Death of buy-to-let: landlords wake up to Osborne's 150pc ta
Discussion
The governments and local authorities seem to constantly think up crazy ways to help ftb's. Shared equity, ftb's isa, etc etc. it just seems to firm up the lower end of the market. I don't think there's much they can do to help a ftb anymore than they have.
Don't worry. The market will correct. When interest rates go up you will see house prices fall, probably not to a level you're happy with but they will adjust. Yet because of the interest rate rise the property will probably cost you the same.
Don't worry. The market will correct. When interest rates go up you will see house prices fall, probably not to a level you're happy with but they will adjust. Yet because of the interest rate rise the property will probably cost you the same.
Condi said:
rufusgti said:
I don't think there's much they can do to help a ftb anymore than they have.
Disagree - they need to build more houses. http://www.jrf.org.uk/media-centre/shortage-homes-...
Condi said:
Disagree - they need to build more houses.
The government?Do you mean council houses? Or houses for first time buyers?
They won't do either, not this government. The most they will do is allow land to be built on. Which they have, at least in my area, 45k homes to be built. However the big firms then argue about the huge costs of building these homes. They will wait and wait and let prices rise before building.
The huge boom in post war council housing in this country is one of the best things the government has ever done. My parents remember a time when they were told they were mad buying their own property. That they could go and get one of the new council houses being built. Better quality than most of the housing stock we had at the time. It would be fantastic to see that again. The problem is nobody wants to pay for it because "council scum" bulls
t attitude. We have a housing shortage, we have people unable to afford housing. My job is in maintaining council properties, our local authority have 16k properties. Most of the tenants are hard working families, young families, retired couples. Most are extremely grateful for the homes they rent. It's certainly not all daily wail out there. It's just like renting a property of a very very good landlord that has to keep properties to a certain standard and offer secure and safe environments. The private rental sector really should take note and be pushed down the same path.
Condi said:
It was implied when you used that as your reference point.
You may have inferred it. I certainly did not imply it.All I did was point out that the current levels of home ownership might be a tidge down on the all-time high, but they're still pretty damn close, and FAR higher than historical levels, even within the life of the average middle-aged bloke, let alone the parents of the average first-time buyer.
Condi said:
If you didnt infer it, how do I imply it?
He just compared the ownership levels of now V 1918. No where in his posts did he mention that we should still live in slums with no NHS etc. Here's a Wikipedia page comparing levels around the world:
https://en.m.wikipedia.org/wiki/List_of_countries_...
I hear China, Russia and India are nice?
rufusgti said:
My job is in maintaining council properties, our local authority have 16k properties. Most of the tenants are hard working families, young families, retired couples. Most are extremely grateful for the homes they rent. It's certainly not all daily wail out there. It's just like renting a property of a very very good landlord that has to keep properties to a certain standard and offer secure and safe environments. The private rental sector really should take note and be pushed down the same path.
You don't work for Nottingham City Council then. Its properties are shocking.Despite that, they endeavour to enforce onerous standards upon private landlords, whilst charging them for the privilege. Which would be okay if they knew what they were doing; which they don't. We bought a property recently, licenced as an HMO by Nottingham, and it didn't even have 1/2 hour fire separation between floors.
anonymous said:
[redacted]
I'm sat in Adwick just outside Doncaster and did this search on rightmove. Within 3 miles of me, min 2 bed max 3, min £60k max £80k there were 129 results.My Mrs paid £109k for her nice 3 bed here. I paid £114k for mine at the other side of Donny. Both have conservatories and gardens. Mine has a large garage. Each of us bought our houses with no help. People just want everything and class luxuries as essentials.
If, on under £28k a year I can own outright a Noble, a vx220 track car and an Audi A4 and still save for a deposit for a £114k house then a family can save for a deposit without all that for a £70k house a piece of piss.
Zoobeef said:
I'm sat in Adwick just outside Doncaster and did this search on rightmove. Within 3 miles of me, min 2 bed max 3, min £60k max £80k there were 129 results.
My Mrs paid £109k for her nice 3 bed here. I paid £114k for mine at the other side of Donny. Both have conservatories and gardens. Mine has a large garage. Each of us bought our houses with no help. People just want everything and class luxuries as essentials.
If, on under £28k a year I can own outright a Noble, a vx220 track car and an Audi A4 and still save for a deposit for a £114k house then a family can save for a deposit without all that for a £70k house a piece of piss.
Precisely.My Mrs paid £109k for her nice 3 bed here. I paid £114k for mine at the other side of Donny. Both have conservatories and gardens. Mine has a large garage. Each of us bought our houses with no help. People just want everything and class luxuries as essentials.
If, on under £28k a year I can own outright a Noble, a vx220 track car and an Audi A4 and still save for a deposit for a £114k house then a family can save for a deposit without all that for a £70k house a piece of piss.
Sir Bagalot said:
bigunit00 said:
Here is a worked example assuming you, the landlord, pay 40pc tax.
NOW
Your buy-to-let earns £20,000 a year and the interest-only mortgage costs £13,000 a year. Tax is due on the difference or profit. So you pay tax on £7,000, meaning £2,800 for HMRC and £4,200 for you.
2020
Tax is now due on your full rental income of £20,000, less a tax credit equivalent to basic-rate tax on the interest. So you pay 40pc tax on £20,000 (ie £8,000), less the 20pc credit (20pc of £13,000 = £2,600), meaning £5,400 for HMRC and £1,600 for you. Your tax bill has therefore gone up by 93pc.
Now, say Bank Rate – and in turn your mortgage rate – rises by a small fraction, lifting your mortgage cost to £15,000, while your rent remains at £20,000.
You will have to pay £5,000 tax in this scenario, so you make no profit at all.
But how many Landlords pay 40%?NOW
Your buy-to-let earns £20,000 a year and the interest-only mortgage costs £13,000 a year. Tax is due on the difference or profit. So you pay tax on £7,000, meaning £2,800 for HMRC and £4,200 for you.
2020
Tax is now due on your full rental income of £20,000, less a tax credit equivalent to basic-rate tax on the interest. So you pay 40pc tax on £20,000 (ie £8,000), less the 20pc credit (20pc of £13,000 = £2,600), meaning £5,400 for HMRC and £1,600 for you. Your tax bill has therefore gone up by 93pc.
Now, say Bank Rate – and in turn your mortgage rate – rises by a small fraction, lifting your mortgage cost to £15,000, while your rent remains at £20,000.
You will have to pay £5,000 tax in this scenario, so you make no profit at all.
When I hit the upper tax bracket all our investments went into my Wifes name (whp pays basic rate)
Yes, I do trust my Wife
However, both Lady F and I are top rate taxpayers. My old home was leveraged to the hilt when we bought our new house, as a high mortgage interest component against the income made for a tax efficient way to do things, even if it meant relatively little actual income. Equity in my old home released to buy our new one (funded some of the deposit)
Whichever way you cut it, this will be a major problem for us
So our options in a couple of years will be:
1) raise the rent
2) pay down the mortgage on the old home at the expense of paying down on the new home
3) sell the old home
These are achievable, but not ideal. But as people who are not real BTL investors, who just happen to have two properties, selling it is not a terrible idea.
The idea was to keep my place in London forever, and hand it to our kids when they needed their first home, and have a nest egg/home at retirement. All this means is this will not be financially viable, and they'll just have to fend for themselves like every other first time buyer, and we'll buy a place abroad, taking money out of the UK.
All would, however, be worth it if it engineered a social change whereby young people could get on the ladder as starter flats are suddenly now cheap and cheerful in the south east.
Yeah, will it f
k.Oh, I forgot option 4)
Put it in a limited company, reduce taxable income through expenses, pay 19% corporation tax, and pay the rest out in dividends.
Not going to make a fortune, but may allow keeping it. CGT liability at end, and stamp duty at transfer. And the issue of mortgaging it as a non-occupier.
Put it in a limited company, reduce taxable income through expenses, pay 19% corporation tax, and pay the rest out in dividends.
Not going to make a fortune, but may allow keeping it. CGT liability at end, and stamp duty at transfer. And the issue of mortgaging it as a non-occupier.
Edited by Harry Flashman on Friday 28th August 14:36
Harry Flashman said:
Oh, I forgot option 4)
Put it in a limited company, reduce taxable income through expenses, pay 19% corporation tax, and pay the rest out in dividends.
Not going to make a fortune, but may allow keeping it. CGT liability at end, and stamp duty at transfer. And the issue of mortgaging it as a non-occupier.
Bear in mind the following:Put it in a limited company, reduce taxable income through expenses, pay 19% corporation tax, and pay the rest out in dividends.
Not going to make a fortune, but may allow keeping it. CGT liability at end, and stamp duty at transfer. And the issue of mortgaging it as a non-occupier.
Edited by Harry Flashman on Friday 28th August 14:36
1. BTL lenders don't much like Ltd companies.
2. You'll need to pay CGT and SDLT on transfer in, unless you can demonstrate that you're running a business rather than an investment portfolio.
I had a fully paid off vx220 turbo when I bought my first house, me and the ex had to save £14k each in 2010, I was 25. I then saved more and change the vx for the noble in 2011, again paid in cash. That house was sold at the start 2012 and we each got £7k back. So lost £7k each in the 18 months. I bought this place at the end of 2012 and bought my second vx soon after. Again cash.
The only thing I don't do much of is waste money on beer. I drunk, but not a few nights a week every week.
I'm currently saving again so me and the current Mrs can get a place together. Wether we both keep our current houses aswell is undecided.
The only thing I don't do much of is waste money on beer. I drunk, but not a few nights a week every week.
I'm currently saving again so me and the current Mrs can get a place together. Wether we both keep our current houses aswell is undecided.
Rowley Birkin said:
Bear in mind the following:
1. BTL lenders don't much like Ltd companies.
2. You'll need to pay CGT and SDLT on transfer in, unless you can demonstrate that you're running a business rather than an investment portfolio.
Which of course makes the plc transfer thing a non-starter for those caught by the new rules i.e. lots of leverage on a BTL mortgage.1. BTL lenders don't much like Ltd companies.
2. You'll need to pay CGT and SDLT on transfer in, unless you can demonstrate that you're running a business rather than an investment portfolio.
Well, sell in a couple of years, pay back the BTL mortgage. Use that return for the house for some other sort of retirement planning, investment for school fees etc etc.
Lots of us in the position of being forced to sell won't exactly be hard done by, and so I am not frothing at the mouth at this "attack on the middle classes". The BTL middle classes have had it very good, for a long time. We won't put up with austerity, but we won't pay more tax either. Not sustainable.
No, my issue is the lies around why this is happening. It is not to help people on the ladder. It's to get more money into central government. Forget the BTL tax itself - think of all that lovely SDLT that becomes due when everyone is forced to sell!
Not one bit of this will help get people on the housing ladder. So all of you folk getting excited about this being the great thing to save young people from a wilderness if renting, dream on. This is about tax revenue, disguised as a crusade.
It's admirable, in a dreadfully cynical way.
Edited by Harry Flashman on Friday 28th August 16:41
Harry Flashman said:
Rowley Birkin said:
Bear in mind the following:
1. BTL lenders don't much like Ltd companies.
2. You'll need to pay CGT and SDLT on transfer in, unless you can demonstrate that you're running a business rather than an investment portfolio.
Which of course makes the plc transfer thing a non-starter for those caught by the new rules i.e. lots of leverage on a BTL mortgage.1. BTL lenders don't much like Ltd companies.
2. You'll need to pay CGT and SDLT on transfer in, unless you can demonstrate that you're running a business rather than an investment portfolio.
Well, sell in a couple of years, pay back the BTL mortgage. Use that return for the house for some other sort of retirement planning, investment for school fees etc etc.
Lots of us in the position of being forced to sell won't exactly be hard done by, and so I am not frothing at the mouth at this "attack on the middle classes". The BTL middle classes have had it very good, for a long time. We won't put up with austerity, but we won't pay more tax either. Not sustainable.
No, my issue is the lies around why this is happening. It is not to help people on the ladder. It's to get more money into central government. Forget the BTL tax itself - think of all that lovely SDLT that becomes due when everyone is forced to sell!
Not one bit of this will help get people on the housing ladder. So all of you folk getting excited about this being the great thing to save young people from a wilderness if renting, dream on. This is about tax revenue, disguised as a crusade.
It's admirable, in a dreadfully cynical way.
Spot on, well said that man.
Edited by Harry Flashman on Friday 28th August 16:41
dai1983 said:
He just compared the ownership levels of now V 1918. No where in his posts did he mention that we should still live in slums with no NHS etc.
Here's a Wikipedia page comparing levels around the world:
https://en.m.wikipedia.org/wiki/List_of_countries_...
I hear China, Russia and India are nice?
Interesting you think the fact we are well down the list of owner-occupiers is acceptable for a country which revolutionised social support with the NHS, minimum wage etc. IMO its a poor statistic for such a developed nation as ours, especially when so many people are trying to get on the ladder. If people wanted to rent, fine, but people are forced into renting due to lack of affordable housing, some of which is bought by property speculators passing off as BTL landlords. Here's a Wikipedia page comparing levels around the world:
https://en.m.wikipedia.org/wiki/List_of_countries_...
I hear China, Russia and India are nice?
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