What if a load of Landlords decide to sell ?

chucky

pjread wrote: »

Because a fair few (not all admittedly) landlords go empire building by raising the max LTV they can get on each property, with some napoleonic world domination complex that works well on the ridiculous assumption values will *always* rise.

So a minority of landlords, who hold a greater than average number of properties, might well not have a great yield to begin with & just be playing the quantity game.

that's fine - but even if they continued buying the equity they wouldn't be that large so not that exposed to CGT.

also, if you were one of these 'empire builders' with large numbers of properties shouldn't you be trading out of a Ltd Co and not be liable to CGT anyway but Corporation Tax?

HAMISH_MCTAVISH

chucky wrote: »

people are assuming way too much here for a change.

if you're going to be liable to CGT you've obviously made a profit on the property which means that you should have a large amount of equity on your property.

if you have a large amount of equity your mortgage is going to be a small LTV which means that your yield is high - why would you need or want to sell if you have a high yield property?

Although I agree with you, it is at least theoretically possible that some landlords may want to sell their existing properties to lock in the capital gain at the lower rate of tax, IF they had planned on selling in the next few years anyway.

But longer term landlords will likely just hold, and a higher rate of CGT will make them hold for longer. So a CGT rise may temporarily increase supply of houses for owner occupation, but over the long term I rather suspect it will reduce supply.

pjread

chucky wrote: »

also, if you were one of these 'empire builders' with large numbers of properties shouldn't you be trading out of a Ltd Co and not be liable to CGT anyway but Corporation Tax?

Of course. and we all know people always do the sensible thing

PasturesNew

One in Ashford's been trying to sell ... for months. Doesn't look like a problem down there for tenants.... doesn't seem to have sold.

chucky

pjread wrote: »

Of course. and we all know people always do the sensible thing

the ones that haven't been sensible will have decisions to make - if i were over leveraged with a potential CGT exposure i just wouldn't sell.

if a large CGT rise is implemented, withing 9 months there will be loopholes that will be in these landlords favour, i can think of two potential ones already - it's just a matter of time and people have no need to be panic.

chucky

HAMISH_MCTAVISH wrote: »

Although I agree with you, it is at least theoretically possible that some landlords may want to sell their existing properties to lock in the capital gain at the lower rate of tax, IF they had planned on selling in the next few years anyway.

But longer term landlords will likely just hold, and a higher rate of CGT will make them hold for longer. So a CGT rise may temporarily increase supply of houses for owner occupation, but over the long term I rather suspect it will reduce supply.

good point - i hadn't thought of it from this point of view

new_home_owner_3

I wont be selling my btl property, but from a selfish point of view i do hope a load of landlords sell, ive seen a few btl properties by me go up for sale and there are hardly any rental properties especially houses where my property is.

I might only be making 300 pound a month now, but if in 2 or three years time all the btl properties in the area where my btl property is have gone, ill be able to charge a lot more rent....

It amazes me how many people panic with this news about capital gains tax going up lol, it just shows how amateur these landlords truly are and that they really wasnt ready to be a landlord in the first place.

We will have to wait and see, i think if i can make enough money a month, from my rental property and i can then give the house to my kids it will provide me with a long term income and my kids with a nice starter home.

And that will be a good 20 years away and capital gains could have done a complete turn around in that time.

IveSeenTheLight

Shakethedisease wrote: »

What will the government do about 'surge' in tenants with nowhere to rent ?

Am I the only one that thinks there may be a problem coming to a head here ?

If, and that's the issue, it's an if, there are a loads of properties sold off then it would have an impact on house price (that's not to neceassarily say there will be a decline in prices as BTL only account for something like 11% of mortgages)

If it happens then also it means there will likely be an increase in rental due to the reduction in supply. Some might believe that current renters simply will buy up the stack meaning rental demand would also reduce, however in reality there are many people who do not wish to buy or are not in a position to buy, meaning there will be a higher demand for rental.

I'm a LL of two properties and I have no intention of selling at this time.
My intention is to keep for a long time (probably at least another 5 governments terms) where I expect there will be further changes to come.
It's therefore not in my interest to sell at this time.

I wonder how much more interest there is.

You mentioned there is a lot of speculators in the last few years, but realistically of those, what profits have been seen.
It's possible after the allocation and deductions there's not a large effect on the CGT change and that they could earn more after years of inflation.

Time will tell