BTL - Another major blow
Discussion
Not sure if this has been covered but potentially serious as covers those who will be re mortgaging. They are really going for it!
http://www.telegraph.co.uk/finance/personalfinance...
http://www.telegraph.co.uk/finance/personalfinance...
The issue as I see it is that due to interest rates being low and staying low for what is likely to be another decade, BTL is a decent return in the medium term.
But it does tend to increase property prices by reducing the housing stock for buyers, simple supply and demand. Lots of landlords spread themselves a little thin to increase their stock. Interest rates pick up if the global economy sorts itself out, price of their mortgages go up, they decide to sell as the cost is high and they can now get 5% a year from their ISAs. This causes further sales to meet criterias therefore further falls... So on, so on
Just the thoughts of a naive 24 year old though
But it does tend to increase property prices by reducing the housing stock for buyers, simple supply and demand. Lots of landlords spread themselves a little thin to increase their stock. Interest rates pick up if the global economy sorts itself out, price of their mortgages go up, they decide to sell as the cost is high and they can now get 5% a year from their ISAs. This causes further sales to meet criterias therefore further falls... So on, so on
Just the thoughts of a naive 24 year old though
"The Government is still consulting on how larger investors – which it wants to encourage – can be identified and exempted from the charge."
Can anyone explain why the government wishes to encourage large BTL investors but seeks to discourage the smaller ones?
How is that fair, and what do the big ones offer that small ones don't, other than, presumably a poorer service for tenants and poorer quality homes??
Can anyone explain why the government wishes to encourage large BTL investors but seeks to discourage the smaller ones?
How is that fair, and what do the big ones offer that small ones don't, other than, presumably a poorer service for tenants and poorer quality homes??
Mr Noble said:
"The Government is still consulting on how larger investors – which it wants to encourage – can be identified and exempted from the charge."
Can anyone explain why the government wishes to encourage large BTL investors but seeks to discourage the smaller ones?
How is that fair, and what do the big ones offer that small ones don't, other than, presumably a poorer service for tenants and poorer quality homes??
Quite the opposite. The UK is almost unique in that most of our rental property is owned by individuals - take a look at Germany for example, where pension companies are big investors. Can anyone explain why the government wishes to encourage large BTL investors but seeks to discourage the smaller ones?
How is that fair, and what do the big ones offer that small ones don't, other than, presumably a poorer service for tenants and poorer quality homes??
http://www.ft.com/cms/s/0/7e682660-1019-11e5-bd70-...
The advantage of that, as is typical for anything German, is that institutional landlords are looking for a decent and secure long term return, not for flipping the property for a short to medium term gain. They want nice tenants, and they want to keep them long term, since that's the best way of protecting their return - which is based on the rental income, not house price increases.
The other big advantage to big investors like pension firms is that property only makes up one part of a very diversified portfolio. Unlike a lot of BTL investors, if the market did tank one day a pension firm would be able to hold on to its properties until the market recovered.
Mr Noble said:
"The Government is still consulting on how larger investors – which it wants to encourage – can be identified and exempted from the charge.
Can anyone explain why the government wishes to encourage large BTL investors but seeks to discourage the smaller ones?
How is that fair, and what do the big ones offer that small ones don't, other than, presumably a poorer service for tenants and poorer quality homes??
Excellent point. The small time investor is to be financially punished whereas wealthier landlords & investment companies will become richer.
Need further evidence, look no further than the rule for those with 15 properties or more will be exempt from the new SDLT change.
Yet the new measures are brought in to supposedly improve the housing crisis and clamp down on landlords. What b
ks, Osbourne is a .
Can anyone explain why the government wishes to encourage large BTL investors but seeks to discourage the smaller ones?
How is that fair, and what do the big ones offer that small ones don't, other than, presumably a poorer service for tenants and poorer quality homes??
Excellent point. The small time investor is to be financially punished whereas wealthier landlords & investment companies will become richer.
Need further evidence, look no further than the rule for those with 15 properties or more will be exempt from the new SDLT change.
Yet the new measures are brought in to supposedly improve the housing crisis and clamp down on landlords. What b
ks, Osbourne is a . Mr Noble said:
"The Government is still consulting on how larger investors – which it wants to encourage – can be identified and exempted from the charge."
Can anyone explain why the government wishes to encourage large BTL investors but seeks to discourage the smaller ones?
How is that fair, and what do the big ones offer that small ones don't, other than, presumably a poorer service for tenants and poorer quality homes??
Larger landlords run as a business and generally understand the laws surrounding quiet enjoyment etc ...Can anyone explain why the government wishes to encourage large BTL investors but seeks to discourage the smaller ones?
How is that fair, and what do the big ones offer that small ones don't, other than, presumably a poorer service for tenants and poorer quality homes??
Mr Noble said:
"The Government is still consulting on how larger investors – which it wants to encourage – can be identified and exempted from the charge."
Can anyone explain why the government wishes to encourage large BTL investors but seeks to discourage the smaller ones?
How is that fair, and what do the big ones offer that small ones don't, other than, presumably a poorer service for tenants and poorer quality homes??
It's pretty clear from various things this Government is doing that it doesn't like small businesses. And big business has the right connections to exert influence and get what it wants - plus they're handy for providing non-exec roles for ex-ministers.Can anyone explain why the government wishes to encourage large BTL investors but seeks to discourage the smaller ones?
How is that fair, and what do the big ones offer that small ones don't, other than, presumably a poorer service for tenants and poorer quality homes??
This topic has been covered in a number of threads over the past few weeks.
Essentially, the government has decided that it wants an end to property speculation at the level of the individual "buy to let landlord". Various economic advisors, think tanks and economic institutions have highlighted to the government that the over reliance on land, buildings and property to create wealth is having a detrimental societal impact and needs to be curtailed.
Essentially, the government has decided that it wants an end to property speculation at the level of the individual "buy to let landlord". Various economic advisors, think tanks and economic institutions have highlighted to the government that the over reliance on land, buildings and property to create wealth is having a detrimental societal impact and needs to be curtailed.
It's more the increased capital requirements for btl I was trying to point out. It's been generally accepted that interest only loans are the recommended way to go, however with these new Basel standards surly many who come to remortgage won't meet them if the property hasn't increase in value. Thats going to impact a massive amount of landlords. The way I read it if you've not got near 50% equity in the property you could be in trouble. Or am I just reading this wrong?
"Buy-to-let loans are set to get more expensive under global plans to crack down on the sector, amid fears of an unsustainable boom in the market.
Global officials at the Basel Committee, which sets financial standards for the whole world, want banks to hold twice as much capital against mortgages when the repayments are dependent on income from tenants, joining the Bank of England and the Treasury in warning of growing risks in the sector.
Under Basel Committee rules, banks have to apply a 35pc risk weighting to residential mortgage loans with a loan-to-value ratio of between 60pc and 85pc.
That measure defines how much capital a bank has to hold against the loan to make sure it can deal with a downturn in the economy when more loans migh not be paid back.
But the new plan would mean doubling that weighting to 70pc if the loan is dependent on rental income. This would, in turn, double the capital that would have to be held against the loan. Such a change would drive up the cost of lending and reduce the supply of buy-to-let mortgages for buyers."
"Buy-to-let loans are set to get more expensive under global plans to crack down on the sector, amid fears of an unsustainable boom in the market.
Global officials at the Basel Committee, which sets financial standards for the whole world, want banks to hold twice as much capital against mortgages when the repayments are dependent on income from tenants, joining the Bank of England and the Treasury in warning of growing risks in the sector.
Under Basel Committee rules, banks have to apply a 35pc risk weighting to residential mortgage loans with a loan-to-value ratio of between 60pc and 85pc.
That measure defines how much capital a bank has to hold against the loan to make sure it can deal with a downturn in the economy when more loans migh not be paid back.
But the new plan would mean doubling that weighting to 70pc if the loan is dependent on rental income. This would, in turn, double the capital that would have to be held against the loan. Such a change would drive up the cost of lending and reduce the supply of buy-to-let mortgages for buyers."
Edited by Casa1862 on Saturday 12th December 20:08
Edited by Casa1862 on Saturday 12th December 20:09
Sheepshanks said:
Mr Noble said:
"The Government is still consulting on how larger investors – which it wants to encourage – can be identified and exempted from the charge."
Can anyone explain why the government wishes to encourage large BTL investors but seeks to discourage the smaller ones?
How is that fair, and what do the big ones offer that small ones don't, other than, presumably a poorer service for tenants and poorer quality homes??
It's pretty clear from various things this Government is doing that it doesn't like small businesses. And big business has the right connections to exert influence and get what it wants - plus they're handy for providing non-exec roles for ex-ministers.Can anyone explain why the government wishes to encourage large BTL investors but seeks to discourage the smaller ones?
How is that fair, and what do the big ones offer that small ones don't, other than, presumably a poorer service for tenants and poorer quality homes??
Its going to be a very hard time for small businesses but even worse for employees of said small businesses as those business owners with enough cash in the bank will probably say "f*ck it" and close up shop and I also predict those who are not quite so honest will probably go bust in the process.
Lastly consumers are going to see major price increases. We are looking at c.20-30% increase in our main products over the next 4 years without taking into consideration increased raw materials costs.
Eric Mc said:
Accountants in practice are getting very concerned about the quarterly self assessment reporting. It looks like we'll never be able to have a holiday again.
You get 1 already???? I intend to submit my usual 5 tax returns on Christmas Day...means I get out of doing the washing-up.David
CoolHands said:
Basically just keeping the proles down. Can't have the little man making some money, got to keep it for the elite.
It's pretty crazy that every Tom,Dick and Harry has seen BTL as the default investment option, with much of the funding provided by HM Treasury through tax relief. I think the situation was well summarised a few days ago,Eric Mc said:
Various economic advisors, think tanks and economic institutions have highlighted to the government that the over reliance on land, buildings and property to create wealth is having a detrimental societal impact and needs to be curtailed.
The real problem in the system is IMO stupidly low interest rates which leave savers/investors short of places to put their money. davepoth said:
Quite the opposite. The UK is almost unique in that most of our rental property is owned by individuals - take a look at Germany for example, where pension companies are big investors.
http://www.ft.com/cms/s/0/7e682660-1019-11e5-bd70-...
The advantage of that, as is typical for anything German, is that institutional landlords are looking for a decent and secure long term return, not for flipping the property for a short to medium term gain. They want nice tenants, and they want to keep them long term, since that's the best way of protecting their return - which is based on the rental income, not house price increases.
The other big advantage to big investors like pension firms is that property only makes up one part of a very diversified portfolio. Unlike a lot of BTL investors, if the market did tank one day a pension firm would be able to hold on to its properties until the market recovered.
That's very interesting. I knew that many European countries had a much higher percentage of renters than the UK and as such it's not assumed that the only ones renting are students and layabouts, yet ripe for being ripped off by high rents and high annual increases.http://www.ft.com/cms/s/0/7e682660-1019-11e5-bd70-...
The advantage of that, as is typical for anything German, is that institutional landlords are looking for a decent and secure long term return, not for flipping the property for a short to medium term gain. They want nice tenants, and they want to keep them long term, since that's the best way of protecting their return - which is based on the rental income, not house price increases.
The other big advantage to big investors like pension firms is that property only makes up one part of a very diversified portfolio. Unlike a lot of BTL investors, if the market did tank one day a pension firm would be able to hold on to its properties until the market recovered.
Sheepshanks said:
It's pretty clear from various things this Government is doing that it doesn't like small businesses.
This. I've voted Conservative forever, but after 25 years of voting I'm seriously considering a change. The current gov are so anti small business it's unbelievable. Thatcher will be spinning.Mr Noble said:
"The Government is still consulting on how larger investors – which it wants to encourage – can be identified and exempted from the charge."
Can anyone explain why the government wishes to encourage large BTL investors but seeks to discourage the smaller ones?
How is that fair, and what do the big ones offer that small ones don't, other than, presumably a poorer service for tenants and poorer quality homes??
I've no idea but surely a decent small landlord is going to treat their tenants better than a pension company who will be putting their rents up every time they can. Can anyone explain why the government wishes to encourage large BTL investors but seeks to discourage the smaller ones?
How is that fair, and what do the big ones offer that small ones don't, other than, presumably a poorer service for tenants and poorer quality homes??
I haven't increased my rent in 3 years because I'm happy with the profit and don't have shareholders to think about.
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