BTL tax changes kick-in next week.....anyone sold up?
Discussion
I was seriously looking at starting last year by buying a locally 2-3 bed modern house to rent for the long-term i.e. 30-40% deposit - rent covers mortgage = in 20yrs I own the property. Repeat 3-4 times.
But, seems too much hassle now the gov has got it in for the small time BTL investor. So, I've put this idea on pause and will watch with interest how investors get around these new regs - for example putting property into companies, setting up SPV's etc, although I fear these could be attacked at a future date. My money will continue to be invested through my ISA for now.
But, seems too much hassle now the gov has got it in for the small time BTL investor. So, I've put this idea on pause and will watch with interest how investors get around these new regs - for example putting property into companies, setting up SPV's etc, although I fear these could be attacked at a future date. My money will continue to be invested through my ISA for now.
By all accounts the key changes to Stamp and taxation are actually having the desired effect of deleveraging what had become an incredibly toxic element of the market and one that threatened absolutely everyone due to its systemic risk in default.
I suspect that only the most leveraged will start to close out or make large margin payments over the coming year as they are forced to recognise that their highly geared punts aren't profitable and the squeeze will obviously increase through to 2020.
I suspect that it won't be until the end of this year you start seeing punters' stock being sold off to more suitable investors or home owners though.
I suspect that only the most leveraged will start to close out or make large margin payments over the coming year as they are forced to recognise that their highly geared punts aren't profitable and the squeeze will obviously increase through to 2020.
I suspect that it won't be until the end of this year you start seeing punters' stock being sold off to more suitable investors or home owners though.
Personally I think it will impact those looking at getting into it much more than those who are already in. There's many people similar to me who are happy to run a BTL, and do the paperwork etc as it's relatively easy to understand, yet investing in other methods seems like a bit of a minefield when you don't have much knowledge or experience.
I'm thinking about selling up to be honest. Only 1 BTL (our previous house of 9yrs so CGT not an issue yet), currently with a mortgage around 60% LTV. It's not much hassle to run the place, but the tax changes will take our projected profits down by a reasonable amount so enough for me to reconsider (not taking into account the house value going up).
I suspect for me that I may be forced into selling up when it comes to remortgaging the place, as we just met the stress test requirement of incoming being 125% of the mortgage (based on a 6% mortgage). The fact that the mortgage is sub 3% makes it worthwhile at the moment, but I know they're now most stress testing the rent at 145% of mortgage, which means I may need to throw quite a few £k at it if I wanted to remortgage.
I'm thinking about selling up to be honest. Only 1 BTL (our previous house of 9yrs so CGT not an issue yet), currently with a mortgage around 60% LTV. It's not much hassle to run the place, but the tax changes will take our projected profits down by a reasonable amount so enough for me to reconsider (not taking into account the house value going up).
I suspect for me that I may be forced into selling up when it comes to remortgaging the place, as we just met the stress test requirement of incoming being 125% of the mortgage (based on a 6% mortgage). The fact that the mortgage is sub 3% makes it worthwhile at the moment, but I know they're now most stress testing the rent at 145% of mortgage, which means I may need to throw quite a few £k at it if I wanted to remortgage.
I had 3 BTL's, one owned outright and two with 60% LTV mortgages. I sold the wholly owned one last year and have used the proceeds to pay down the other two mortgages by 10% p.a as permitted by the terms of the 5 year deals.
The decision to sell was one of convenience (property was 70 miles away) but the decision to pay down the mortgages was driven by the new tax regime. If these changes hadn't come about I would have probably bought another property closer to home but now I'll focus on paying down the mortgages and in 3 years pay them off altogether. It seems therefore that the changes are having the desired effect
The decision to sell was one of convenience (property was 70 miles away) but the decision to pay down the mortgages was driven by the new tax regime. If these changes hadn't come about I would have probably bought another property closer to home but now I'll focus on paying down the mortgages and in 3 years pay them off altogether. It seems therefore that the changes are having the desired effect
Gassing Station | Finance | Top of Page | What's New | My Stuff