A return to MIRAS - what do you think?

CLAPTON

kennyboy66 wrote: »

Other than the millions of council homes in such a poor state that they were bought by the owners.;)

The difficultly is that BTL landlords have no track record of providing rented accommodation in a cost effective or efficient manner either. The BTL model has largely been around buying existing housing stock often competing with first time buyers.
Where BTL has provided new stock, it is mainly seen in the over supply of small city centre flats.

Home ownership is actually falling in the UK. If we believe that having a society of owner occupiers is a good thing then we should tweak the system to achieve this.

One obvious was would be to relax planning laws. It seems odd that we complain when village schools / pubs / shops shut when the obvious solution would be to build more family homes.
Another solution might be to make BTL a less attractive investment. They have done this in Ireland by limiting interest tax relief and I reckon it will happen here.

If I chose to borrow £100k to buy shares, I would not be able to claim interest relief against dividends. This is the real tax comparison with buying an investment property, not spurious guff about hairdressers and electricians.

I would certainly agree with you that we need to relax the planning laws so we can build more properties that people freely want to buy.

I think it's arguable whether home ownershsip is a good thing per se; certainly it's not the model in parts of Europe.
There is a real issue about reducing people's mobility once they become home owners.
I don't know if it is still true but at one time Wales had the highest proportion of home ownership buit also had the worst standard of housing as many owners couldn't afford to maintain or improve the housing stock.

The desirability of council property was certainly influenced by the massive discount in the purchase price rather the the quality of the build or the overall environment.. I know this very well as a family member bought a very nice three story, four bedroomed LA house in London for a very very modest price.

A little thought will perhaps show that the distinction between buying new build versa pre-existing stock is not a very significant differentiation for tax relief purposes.

I don't subscribe to the idea that buying shares is equivalent to running a rental business; once a few properties are owned then it may become a full time business

ukcarper

I would like to know what percentage of the property market is BTL I'm sure it has had an effect on prices but by how I’m not sure. Do you really think any Government will build social housing the only way it has been provided is by forcing private builder to include social housing on their estates and now building has dried up so has the provision of additional social housing.

gmang

Yes

kennyboy66 wrote: »

If I chose to borrow £100k to buy shares, I would not be able to claim interest relief against dividends. This is the real tax comparison with buying an investment property, not spurious guff about hairdressers and electricians.

Exactly. How many BTL landlords really see it as a business, and how many as a commodity that will acrue in value and provide regular income, just like shares.

roddydogs

No

Pointless Poll cause it aint gonna be brought back, how about "Do you think income tax should be less" vote now!

kennyboy66_2

No

CLAPTON wrote: »

A little thought will perhaps show that the distinction between buying new build versa pre-existing stock is not a very significant differentiation for tax relief purposes.

The point is, if BTL provided additional new rented housing then it would clearly be a social good. However apart from new flats, it hasn't.

What it does is move existing stock from owner occupied to rental stock. Now this may allow job mobility but I'm not sure if its very useful in many other ways.
The number of first time buyers who feel they are priced out of the market would suggest BTL has distorted certain segments of the market.

I'm not anti landlord but I strongly suspect that if home ownership continues on its downward path then discouragement of BTL via taxation will happen.

olly300

CLAPTON wrote: »

I don't subscribe to the idea that buying shares is equivalent to running a rental business; once a few properties are owned then it may become a full time business

And once you have a few properties you are going to need to hire plumbers, builders, gardeners, etc to maintain them. You are also going to have to advertise the properties when vacant providing income for the hated estate agents, online publishers or news agents.

Quite a few of my landlords due to their business of property rental gave other people jobs that wouldn't have existed if they hadn't brought houses to rent out.

CLAPTON

kennyboy66 wrote: »

The point is, if BTL provided additional new rented housing then it would clearly be a social good. However apart from new flats, it hasn't.

What it does is move existing stock from owner occupied to rental stock. Now this may allow job mobility but I'm not sure if its very useful in many other ways.
The number of first time buyers who feel they are priced out of the market would suggest BTL has distorted certain segments of the market.

I'm not anti landlord but I strongly suspect that if home ownership continues on its downward path then discouragement of BTL via taxation will happen.

I agree with some of the sentiment here and certainly BTL has been a pretty big part of the market.
As I've said if you think about it the distinction between new build and second hand purchase is a red herring.

But when the story is told properly, a combination of very very easy credit will almost certainly be the primary cause, the disillusionment with the pension industry will be significant, the government targets for the number of 'units' (i.e. flats rather than houses) will all be seen as an aberration plus of course the endless TV programmes showing everyone making easy money. In my view being able to offset mortgage interest against rental income will be seen as relatively small influence.

kennyboy66_2

No

CLAPTON wrote: »

I agree with some of the sentiment here and certainly BTL has been a pretty big part of the market.
As I've said if you think about it the distinction between new build and second hand purchase is a red herring.

It is anything but a red herring. There is no supply and demand flex for property in the UK.
Supply is effectively fixed because of planning constraints. BTL has therefore played a significant part in increasing price for certain types of properties.
It thus increases the supply of rented properties but not the overall supply of properties. Then demand for rental properties increases (as buyers are priced out) so rental prices don't fall to any extent (as they might if overall supply was increased).

dopester

No

Kohoutek wrote: »

Where would people live without BTL? Well houses would probably be cheaper for FTBs, some of which are probably prices out of the market and have to resort to renting for longer. It's not hard to see how people like Fergus Wilson were responsible for forcing prices up.

It's been argued Fergus and Judith Wilson didn't force up prices - and I agree with that. Only those who are buying at new market highs in an area push up prices, and the newspaper interviews he's given suggest he always tried to force a 'bargain' deal, compared to the highest prices being paid in the market at any particular time.

They did however continue to buy at higher market levels, if not setting peak prices, throughout the upwave in price rises - continually using the equity built up in their portfolio from those who did push up prices (those setting new highs).

The whole financing by drawing upon existing equity to borrow/buy has been a major problem.

CLAPTON

kennyboy66 wrote: »

It is anything but a red herring. There is no supply and demand flex for property in the UK.
Supply is effectively fixed because of planning constraints. BTL has therefore played a significant part in increasing price for certain types of properties.
It thus increases the supply of rented properties but not the overall supply of properties. Then demand for rental properties increases (as buyers are priced out) so rental prices don't fall to any extent (as they might if overall supply was increased).

Reread my post

Thats not what I said;
'red herring' was specifically referring to the distinction between buying new build versa existing stock.

I acknowledged there were several reasons for the higher prices; availability of credit being one and in my opinion a major one and yes BTL being another.

And I'm sure all those city centre apartments the BTL financed will find willing tenants/buyers in the future