Rip diy btl

The-mouth-of-the-south

The BTL market will go kicking and screaming until it eventually dies. When the great house price crash comes people will be able to buy a home and not have to rely on paying somebody else’s mortgage.

Emy1501

Well Dave said today that he did not think that people buying 2nd homes were a splendid investment for the economy when asked about the potential increase in CGT. Sounds to me that hes not keen on the idea of people making money from second homes but I suspect we will have to wait and see.

chucky

Conrad wrote: »

In the real world people will easily find ways aroundf CGT. I know of LL's who pretend to move back into the property for example, prior to selling. Others simply never sell.

there are simply too many alternative workarounds for this policy to have an effect on the property market

nollag2006

macaque wrote: »

...If a change in CGT rules can flush out these amateur BTL speculators, I see this as a very positive development.

Leaving aside your naieve view that the changes in CGT rules will increase the tax burden for all property investors, your desire to see BTL investors fail is a odd one for someone who describes himself as a "long term renter". A decrease in the supply of available rental properties would drive up rents massively.

Then again economics was never your strong point macque. How did that 70% crash peak to trough work out for you ???

:rotfl::rotfl::rotfl:

macaque_2

Cleaver wrote: »

When I was a landlord I was surpised that no tenants never asked anything about me. If they had asked for evidence that I had conset to let the property, I would have shown them. If they wanted to see the equity level I had in the house, I would have shown them. If they wanted a two year contract for security, I would have given it to them. If they wanted to speak with the person who rented the property before them for a reference, I would have been happy to provide contact details. If they wanted to see any evidence of insurance, checks or other documents then all they had to do was ask and I would have shown them.

When our first tenants left (they were renting for a year, as they had sold their house and were always planning to move to Italy to start a business) I asked them nicely whether they would be willing to write us a reference on how we'd been as landlords, as I think we gave them great service. They obliged and I left that reference with the letting agent to show to prospective renters who looked round our house. All good landlords who give good service should do this type of thing.

If I were renting a long-term property for me and my family then these are things I would be asking for. If your new landlord can't / won't provide these things then rent somewhere else. You're the customer, vote with your feet.

Does this not prove the point? In dealing with an amateur landlord, the renter has to try and determine the track record, financial stability, criminal record, integrity and in some cases even the mental health of the owner. This is no easy task. Even with the greatest care, the renter can often discover that the landlord has personal problems or harbours an intention to flip the property at the first convenient opportunity.

Not all professional landlords behave well, but as a group they represent a much lower risk for the renter and their track records are much easier to measure.

kennyboy66_2

The simplest way to reduce BTL demand would be to limit the amount of interest that could be offset against the rental income.

It would generate immediate tax revenue (as opposed to CGT changes), would penalise those who had geared themselves highly and would act as a barrier to entry for new entrants into the BTL market.

All in all, could be pretty attractive. I might drop my mate Gideon an e-mail.

We could also have a "grass a landlord" telephone line set up for all those landlords who may not actually declare their income. A bit like the benefit fraud hotline.

IveSeenTheLight

macaque wrote: »

I speak as a long term renter and my concerns are as follows:

1. On two occassions, landlords have assured me that they were looking for rental periods of 3 years plus only to sell the house after 12 months. One did not even have the courtesy to tell us they were selling. I have a family which means moving house is expensive and very disruptive.

The Landlord would have had to have provided you with 2 months notice for termination of lease.

macaque wrote: »

2. One amateur BTL rented us a house where many of the basic amenities were in very poor condition. He became very upset when we asked for essential repairs even though we were paying a high rent.

I assume you viewed the property before agreeing to the tenancy with high rent.
I'd be interested to know which basic amenities you refer to

macaque wrote: »

3. Some amateur BTLs have no idea about the basic rules. On several occassions I have had landlords access my home without my permission. One even let himself into the property whilst we were having dinner.

This is totally unacceptable. there's no excuse

macaque wrote: »

4. The tenant looks to the landlord for stability. Although I have not experienced it personally, I read on these forums about landlords with serious personality problems or financial problems.

Not sure by what stability you want.
How long did you sign up for your tenancy agreement?

macaque wrote: »

If new CGT rules shake out these cowboys, I shall be very pleased.

Doubt the CGT change, really affects the rules.
Many of the people you are referring to are in general reported here "recent" BTL amateurs and therefore does CGT apply to them.
Have the "recent BTL amateurs" made profits above the CGT allowance? If so by how much?

Lets say for example, they are currently sitting on a £30,000 profit (given they are "recent amateur BTL LL's")
After allowances, CGT is applicable on only £9,800.
18% tax is £1,764 while 40% is £3920
So they would lose out on £2,156.
It's certainly conceivable at the rate of HPI seen recently since Feb 09, that this could be found to be higher.

More likely it would encourage "long" term BTL LL's to cash in on their profits as they will have a higher profit

macaque wrote: »

P.S. For the sceptics, I rent out of choice and have no plans to buy.

As a long term renter by choice, you surely are very conversant with the pro's, con's and legislation regarding renting.
Everyone has their options and choices in life abd has to either live with those choices or if not happy, make plans to change those choices.

IveSeenTheLight

Generali wrote: »

CGT is a pretty complex area. For example, you don't pay it on gains from inflation, only from genuine growth in capital value. Also you get something called taper relief, that is the longer you hold an asset before selling, the lower the rate of CGT.

I don't believe it still works this way

IveSeenTheLight

The-mouth-of-the-south wrote: »

The BTL market will go kicking and screaming until it eventually dies. When the great house price crash comes people will be able to buy a home and not have to rely on paying somebody else’s mortgage.

In this world of yours, where does anybody who chooses to rent stay?

Blacklight

IveSeenTheLight wrote: »

Doubt the CGT change, really affects the rules.
Many of the people you are referring to are in general reported here "recent" BTL amateurs and therefore does CGT apply to them.
Have the "recent BTL amateurs" made profits above the CGT allowance? If so by how much?

Lets say for example, they are currently sitting on a £30,000 profit (given they are "recent amateur BTL LL's")
After allowances, CGT is applicable on only £9,800.
18% tax is £1,764 while 40% is £3920
So they would lose out on £2,156.

It's amusing how people have reacted to this news. They assume that a tax is payable on the whole amount of the profit and this is going to rise from 18% to 40%.

Whatever happens the government isn't going to change a tax rule so that someone is affected in such a brutal way, overnight.

If you've gone from paying £18k to paying £40k then £22k is a lot to lose out on, but you have to understand that at that level they'll still be walking away with over £100k in their pocket if they've held the investment for 10 years. Any less and the tax reduces even further.

I can't see it's really going to have much of an impact. Greater turnover of houses in a portfolio perhaps, but certainly no massive flood of ex-rentals on the market.