Ministry of Silly Folly
Discussion
https://uk.yahoo.com/style/hunts-mortgage-rescue-d...
Are the tories really going to have to learn the hard way what happens if they succeed in badly damaging this mini-industry ?
Damaging the property letting mini industry has consequences far wider than simply financially damaging the owners of residential lets.
Are the tories really going to have to learn the hard way what happens if they succeed in badly damaging this mini-industry ?
Damaging the property letting mini industry has consequences far wider than simply financially damaging the owners of residential lets.
There is a mass exodus in my area. In the county city during a 'normal' period there are typically 5-10 Victorian terraces for sale in the cheaper SE area which has a high concentration of BTLs. At the moment there are over 25 for sale and more added daily - roughly a 1/3rd still tenanted and 1/3 empty.
I feel sorry for folks looking for rental housing. Of course rising interest rates will be behind some of it, but these anti-landlord interventions are extremely short sighted.
I feel sorry for folks looking for rental housing. Of course rising interest rates will be behind some of it, but these anti-landlord interventions are extremely short sighted.
TonyRPH said:
Are you a landlord?
Personally, I think there are far to many private landlords.
I don't know what the solution is though.
How many do you think is the right number? Would you prefer to have it concentrated in a few big corporate providers. That’s what’s happening, pension scheme and investment cos are developing huge numbers of build to rent flats. They’re not cheap (the projects I’ve seen) and as they are corporates all finance charges are offset. Personally, I think there are far to many private landlords.
I don't know what the solution is though.
So there’s a disparity between large corporate land lords and small non incorporated BTL types. Your average BTL landlord has to pay tax on profit that they haven’t actually made because not all of the mortgage interest counts as a cost. That’s just wrong … what businesses suffer that.
This new plan is further fiddling with the free market … which looks after residential occupiers for a period but doesn’t sort out high interest rates, which is the actual problem.
ETA: currently I am a landlord, a tenant and a homeowner. - so I have foot in all camps.
Edited by Austin_Metro on Sunday 2nd July 07:44
TonyRPH said:
Are you a landlord?
Personally, I think there are far to many private landlords.
I don't know what the solution is though.
Are there too many landlords or too many properties being rented out ? Personally, I think there are far to many private landlords.
I don't know what the solution is though.
Would you prefer one landlord? The council or a housing association, or a property letting company (a Plc? ) rather than 300 random landlords.
Or would you prefer less people were renting?
Clearly rents are going up becsuse the number of people chasing rental properties exceeds the supply. Make it more financially profitable, then supply would go up.
Portia5 said:
https://uk.yahoo.com/style/hunts-mortgage-rescue-d...
Are the tories really going to have to learn the hard way what happens if they succeed in badly damaging this mini-industry ?
Damaging the property letting mini industry has consequences far wider than simply financially damaging the owners of residential lets.
Given many landlords use IO mortgages (so don’t have the ability to switch to them anyway) I can’t see how those proposals would help if extended to BTL. Those on short fixes, especially if they’ve not been using income to pay down debt, could still face a refinancing event that would see them go from viable to non-viable. Are the tories really going to have to learn the hard way what happens if they succeed in badly damaging this mini-industry ?
Damaging the property letting mini industry has consequences far wider than simply financially damaging the owners of residential lets.
What do you think the government should be doing to help the sector?
Undoubtedly be the unpopular view, but, I think not for profit housing associations is the way forward for this country in providing good quality affordable housing to those who don’t want to / cannot buy.
All revenue is distributed in providing employment, ensuring homes are up to code & further upgrade / land / acquisition / newbuild.
Rents are fair & you won’t find yourself kicked out when the landlord decides he wants more money because his own costs are increasing or is returning from expatriate adventure.
Too many in the U.K. are playing amateur landlord having either fallen into it accidentally or watched a few homes under the hammer, it probably does need to be discouraged, yup unpopular view if it’s an income stream you’ve benefited from.
Providing a roof over someone’s head, a simple life necessity shouldn’t be monopolised by amateurs pocketing large profits IMO. Also why would the government step in on support, funded by the taxpayers to ensure profit remains for private landlords….likely underwater because they’ve taken too many £50k ‘bonuses’ out the rental property treating it as a bank. Think about it for a minute, it just doesn’t add up & we can’t keep bailing everyone out.
All revenue is distributed in providing employment, ensuring homes are up to code & further upgrade / land / acquisition / newbuild.
Rents are fair & you won’t find yourself kicked out when the landlord decides he wants more money because his own costs are increasing or is returning from expatriate adventure.
Too many in the U.K. are playing amateur landlord having either fallen into it accidentally or watched a few homes under the hammer, it probably does need to be discouraged, yup unpopular view if it’s an income stream you’ve benefited from.
Providing a roof over someone’s head, a simple life necessity shouldn’t be monopolised by amateurs pocketing large profits IMO. Also why would the government step in on support, funded by the taxpayers to ensure profit remains for private landlords….likely underwater because they’ve taken too many £50k ‘bonuses’ out the rental property treating it as a bank. Think about it for a minute, it just doesn’t add up & we can’t keep bailing everyone out.
Edited by Edible Roadkill on Sunday 2nd July 08:39
Pit Pony said:
Are there too many landlords or too many properties being rented out ?
Too many private landlords.Pit Pony said:
Would you prefer one landlord? The council or a housing association, or a property letting company (a Plc? ) rather than 300 random landlords.
Or would you prefer less people were renting?
I think that more council / housing association is required. From what I have seen there is a desperate shortage of housing supplied by councils / HA's.Or would you prefer less people were renting?
Obviously if more people were able to own their own property, that would be even better still - however for some that is neither financially viable nor is it necessarily a good idea.
Pit Pony said:
Clearly rents are going up becsuse the number of people chasing rental properties exceeds the supply. Make it more financially profitable, then supply would go up.
Despite the various schemes to build new houses (and incorporate affordable housing into the schemes) the housing shortage appears to be getting worse rather than improving.If the supply of housing (of any type) increased dramatically we would surely see a reduction in prices (if only in the rental market).
For what it's worth I'm a long term homeowner, so I'm in the fortunate position of not being dependant on the rental market.
LooneyTunes said:
It already is, if you incorporate as a business. Lots of people don’t want to do that though.
As pointed out though, a high number of amateurs are playing landlord who don’t understand tax, don’t understand the upshot of holding property within a business, couldn’t foresee interest rates could only go up from where they had been & don’t understand bleeding ‘profit’ from it over the years and not having liquidity to hand is not wise when the economic wheels come off. These type really should fold as it’s been nothing other than luck & easy times that they’ve managed to turn profit, they are definitely not the shrewd business head they portray. Edited by Edible Roadkill on Sunday 2nd July 08:59
^^^^^ I would say that you aren't far off the mark there in many cases, but as always there are exceptions.
My neighbour has a four or five BTL properties that he started buying as far back as 30 years ago. He is a builder and mortgaged them all up to the hilt to build his own 6 bedroom detached home and a neighbouring identical house to rent out.
He has been through a divorce so that threw a spanner in the plans that he had and the neighbouring 6 bedroom detached house was given up as part of the divorce settlement.
To compund things further, he hasn't re-invested any of the proceeds back into the rental properties so he can only get rock bottom rental incomes for them. He also failed to heed my warnings that interest rates wouldn't always be as low as he has become accustomed to in more recent years. His view was that they wouldn't increase much "because the government couldn't risk putting them up".
I am not fully aware of what his current situation is, but prior to the last two interest rate rises his BTLs were each costing him an average of more than £200 in interest only mortgage payments than he was receiving in rent. His home has a £250K interest only mortgage on it too, but by some stroke of luck the interest rates are capped below the current Bank of England interest rate. It is currently on the market because he desperately needs to unwind his position. His intention is to use the equity from the sale of his home to pay down the other mortgages one by one by moving into one house for a period to avoid Capital Gains Tax and then sell that to move to the next house.
Since moving into the neighbourhood 13 years ago I have seen him go from Billy Big Balls driving around in a brand new pimped up L200 pickup and owning 2 self built 6 bedroom houses plus 4 or 5 BTLs to the current situation where his house of cards has come crashing down. If he gets away with it he'll have still made a few quid but I'm sure that he has had many sleepless nights.
My neighbour has a four or five BTL properties that he started buying as far back as 30 years ago. He is a builder and mortgaged them all up to the hilt to build his own 6 bedroom detached home and a neighbouring identical house to rent out.
He has been through a divorce so that threw a spanner in the plans that he had and the neighbouring 6 bedroom detached house was given up as part of the divorce settlement.
To compund things further, he hasn't re-invested any of the proceeds back into the rental properties so he can only get rock bottom rental incomes for them. He also failed to heed my warnings that interest rates wouldn't always be as low as he has become accustomed to in more recent years. His view was that they wouldn't increase much "because the government couldn't risk putting them up".
I am not fully aware of what his current situation is, but prior to the last two interest rate rises his BTLs were each costing him an average of more than £200 in interest only mortgage payments than he was receiving in rent. His home has a £250K interest only mortgage on it too, but by some stroke of luck the interest rates are capped below the current Bank of England interest rate. It is currently on the market because he desperately needs to unwind his position. His intention is to use the equity from the sale of his home to pay down the other mortgages one by one by moving into one house for a period to avoid Capital Gains Tax and then sell that to move to the next house.
Since moving into the neighbourhood 13 years ago I have seen him go from Billy Big Balls driving around in a brand new pimped up L200 pickup and owning 2 self built 6 bedroom houses plus 4 or 5 BTLs to the current situation where his house of cards has come crashing down. If he gets away with it he'll have still made a few quid but I'm sure that he has had many sleepless nights.
Pit Pony said:
LooneyTunes said:
What do you think the government should be doing to help the sector?
b)my immediate impression is that gives a BTL landlord something of an advantage over an owner occupier, which is a category I thought the current government was in favour of?
Perhaps house prices will end up falling until enough of the current tenants can afford them and a new equilibrium will be attained. Would be a long fall....
Edible Roadkill said:
Undoubtedly be the unpopular view, but, I think not for profit housing associations is the way forward for this country in providing good quality affordable housing to those who don’t want to / cannot buy.
[/footnote]
There are countless bad experiences with both Housing Associations and council tenancies up and down the country, and neither can provide anything close to the quality demanded by tenants other than at the lower end of the market. Even at the lower end private tenancies can be of far higher quality and better managed than either LA or HA offerings.[/footnote]
LooneyTunes said:
Pit Pony said:
LooneyTunes said:
What do you think the government should be doing to help the sector?
Allow interest as a business cost for tax. Pit Pony said:
To sell to a business I'd have to pay capital gains tax on the previous increase in house price, and solicitors fees and get a buy to.let mortgage for a Ltd company and the ltd company would have to pay a solicitor and pay stamp duty I assume?
In most cases yes, unless you have a sizeable BTL portfolio that is your only source of income. Then you may be able to argue it's a trade and get relief on incorporation.xeny said:
a)that reduces tax take, which as a nation we are rather short of
b)my immediate impression is that gives a BTL landlord something of an advantage over an owner occupier, which is a category I thought the current government was in favour of?
Perhaps house prices will end up falling until enough of the current tenants can afford them and a new equilibrium will be attained. Would be a long fall....
(a) you’re right. It would reduce the tax take. But doesn’t it seem odd to you that a business expense cannot be set off against income unless you incorporate as a limited company? I (and countless others) pay tax on a fictional profit. b)my immediate impression is that gives a BTL landlord something of an advantage over an owner occupier, which is a category I thought the current government was in favour of?
Perhaps house prices will end up falling until enough of the current tenants can afford them and a new equilibrium will be attained. Would be a long fall....
(b) I think this misunderstands things. An owner occupier doesn’t receive a rent so there is no cost to set off.
Although, if you go back far enough (2003) owner occupiers used to get MIRAS. Mortgage Interest Relief … something … which was a tax break on mortgage interest payments. Taken away as Gordon brown considered it a middle class park.
Another poster suggested housing associations and councils takeover doing all of it. Good luck with that.
Portia5 said:
Edible Roadkill said:
Undoubtedly be the unpopular view, but, I think not for profit housing associations is the way forward for this country in providing good quality affordable housing to those who don’t want to / cannot buy.
There are countless bad experiences with both Housing Associations and council tenancies up and down the country, and neither can provide anything close to the quality demanded by tenants other than at the lower end of the market. Even at the lower end private tenancies can be of far higher quality and better managed than either LA or HA offerings.Tony RPH will like me; I checked out of being a landlord after 3 years.
I don't profess to know the rental/housing market in any detail, but what effect would net migration of 600,000 (in one year alone) have on UK housing stock? It's not going to stop and whatever ideas are suggested to reduce it get thrown out by lawyers.
I don't profess to know the rental/housing market in any detail, but what effect would net migration of 600,000 (in one year alone) have on UK housing stock? It's not going to stop and whatever ideas are suggested to reduce it get thrown out by lawyers.
Simpo Two said:
Tony RPH will like me; I checked out of being a landlord after 3 years.
I don't profess to know the rental/housing market in any detail, but what effect would net migration of 600,000 (in one year alone) have on UK housing stock? It's not going to stop and whatever ideas are suggested to reduce it get thrown out by lawyers.
But only if you sold it to the Joseph Rowntree trust. If you sold it to an evil capitalist landlord then … you’re just as much to blame!!! I don't profess to know the rental/housing market in any detail, but what effect would net migration of 600,000 (in one year alone) have on UK housing stock? It's not going to stop and whatever ideas are suggested to reduce it get thrown out by lawyers.
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