The Buy-to-let boom is back

Cleaver

ruggedtoast wrote: »

As I understand it BTLers dont pay any tax on their rental income up to the level of their interest payments.

BTL is taxed the same way as pretty much any other sole-trader or business out there. You take allowable expenses, take them away from your income, and work out your profit. You are then taxed at set rates on this profit. Yes, there are some differences, but this is bascially how it works. Are we saying that we want a completely different type of tax system for one unique business?

ruggedtoast wrote: »

In the boom this led to a proliferation of highly geared, high LTV Buy To Let mortgages which were a catalyst for spiralling house prices that shut many residential buyers out of the market.

I think there were dozens of factors that lead to house prices going stupid, and yes, BTL was one of them, but it was a minor one. The main reason was the whole damn country, investors and owners, all going mental over property. Lenders then fuelled this desire and the powers that be did nothing to stop it. Mass BTL is a symptom, not a cause.

ruggedtoast wrote: »

While the investor paid no tax on their gross rental income,

An investor does pay tax on gross rental income if they are making a profit.

ruggedtoast wrote: »

If there was enough housing around I dont think it would ever be brought up as an issue, but there isnt, and rightly or wrongly many people feel that buy to let investors are making housing scarcer not more available.

I agree, BTL investors make houses more scarce. But it isn't the main issue, is it? Residential buyers buying up property is the main reason for the boom in prices, encouraged by a perfect storm of lenders happy to help, government not doing anything about it and people not building enough houses.

BTL will fade away now anyway. It's been the fashion area of investing for a while and, like all fashion investments, it will go back to being an investment for serious people who will be financially savy and make money from it. Obviously it'll be flavour of the month again in a decade or two's time, but I don't think we'll see it at the same levels for a long time again.

RenovationMan

With the boom in BTL does anyone know what is happening to that awful ex-teacher couple who built up a huge BTL empire that then got into trouble?

COOLTRIKERCHICK

RenovationMan wrote: »

With the boom in BTL does anyone know what is happening to that awful ex-teacher couple who built up a huge BTL empire that then got into trouble?

are those the ones that had 100's of houses are were on tv a few years back, i think they were on the property auction programme?

Damaged

the_flying_pig wrote: »

Is that really true, though? 10% gross sounds great, net it'd be enough to cover a 20 year repayment mortgage fixed for 5 years... But 10% is emphatically not available in almost all cases... Simple maths tells you this, £160k is the Haliwide notional average property, but without thinking we can all instantly see that £16k pa (£1.3-£1.4k PCM) is higher than the average rent... Similarly, simple micro economics tells you that if a reasonably riskless 10% existed in anything other than very small quantities there'd be a gold rush of people desperate to take advantage of it, every landlord website and Sunday 'money' supplement would be trumpeting about it, etc, quickly pushing prices up and yields down. I'm not saying that examples of it don't exist anywhere but it's clearly not common enough to be worthy of discussion.

More generally though, H, same as everyone else I like free money and no-brainer moneymaking opportunities. If you can find me a 10% gross yield flat or house for sale within 10 miles of where I live now in SW12 I will (a) buy it; and (b) pay you a bounty of a grand or so.

Current Mortgage -£600 pm
Rental Income - £1175 pm

Definately possible.

RenovationMan

COOLTRIKERCHICK wrote: »

are those the ones that had 100's of houses are were on tv a few years back, i think they were on the property auction programme?

I'm not sure if that's them. They wear plaid suits and had some racehorses that never seemed to win anything. The bloke had a scottish name, Angus or Fergus or something.

Graham_Devon

It is them.

And basically, they are doing alright. Apparently.

RenovationMan

Graham_Devon wrote: »

It is them.

And basically, they are doing alright. Apparently.

That's good, they seemed like such a nice couple.

/sarcasm_off

the_flying_pig

Damaged wrote: »

Current Mortgage -£600 pm
Rental Income - £1175 pm

Definately possible.

what is the approximate market value of the house?

crash123

the_flying_pig wrote: »

I must admit that I briefly considered buying just one BTL last week given all the bad news about pensions etc. Figured I'd look close to home so that I'd be able to carry out any maintenance etc myself. Calculated gross yields for my street (SW London). A shade over 3%. Nearer 2% after maintenance, voids, and letting agent fees. looked at BTL mortgage best buy tables. Realised that, even with a big deposit and on interest only I'd be paying an awful lot into it every month. The whole thing would only stack up given a prolonged period of (1) high inflation; and (2) central bank inactivity, keeping rates below inflation. Decided I didn't particularly want to gamble on that. BTL for cash (or mostly cash, or a short hefty repayment driven mortgage) rather than leveraged, might be better but like most people I could not afford that (without skimping or overborrowing massively on my primary residence, which would be much the same thing). There was a good opportunity there 10 years ago, a great one at the end of the 90s. But not now.

agree. I have have looked at this and it does not stack up where I live.

Blacklight

crash123 wrote: »

agree. I have have looked at this and it does not stack up where I live.

Due to the fact you're looking at it in terms of gross yield percentage return pa.

Most amateur BTL'ers just think of the investment in terms of the fat check they get when they flog the place in a few years and live happily ever after.