Financial Transaction Tax - Does it make property more attractive to investors?

RenovationMan

shortchanged wrote: »

Just to put the record straight I'm not saying there is going to be zero HPI over the next 25 years, just that I feel there may well only be small growth such as that in line with inflation, that is if banks keep lending quite strict.
Which is why I don't really see property as the great 'investment' it was since 2005 ish onwards.

The whole point was that any HPI was immaterial because the property would not be sold and so the gains would not materialise. The 'investment' is putting down a 25% deposit, letting tenants pay the remaining 75% of the mortgage and then having perhaps a further 20 to 30 years of rental income to fund retirement. The property can then be passed onto spouse/children, which is more than can be said for an annuity.

I'll ask the same question of you shortchanged, as you also seem to be 'nay saying' almost as much as DervPro. Where are you investing for your retirement?

ILW

RenovationMan wrote: »

The whole point was that any HPI was immaterial because the property would not be sold and so the gains would not materialise. The 'investment' is putting down a 25% deposit, letting tenants pay the remaining 75% of the mortgage and then having perhaps a further 20 to 30 years of rental income to fund retirement. The property can then be passed onto spouse/children, which is more than can be said for an annuity.

I'll ask the same question of you shortchanged, as you also seem to be 'nay saying' almost as much as DervPro. Where are you investing for your retirement?

That does assume there will still be a private rental market in 25 years.

shortchanged_2

RenovationMan wrote: »

The whole point was that any HPI was immaterial because the property would not be sold and so the gains would not materialise. The 'investment' is putting down a 25% deposit, letting tenants pay the remaining 75% of the mortgage and then having perhaps a further 20 to 30 years of rental income to fund retirement. The property can then be passed onto spouse/children, which is more than can be said for an annuity.

I'll ask the same question of you shortchanged, as you also seem to be 'nay saying' almost as much as DervPro. Where are you investing for your retirement?

To answer your first question, are BTLer's actually paying off the capital on the mortgage if it is IO and the rent they obtain barely covers the mortgage.

And my retirement plans are a public sector pension, savings and endowments thanks.

RenovationMan

shortchanged wrote: »

To answer your first question, are BTLer's actually paying off the capital on the mortgage if it is IO and the rent they obtain barely covers the mortgage.

That's not an answer, that's a question. Oh, any my 'first question' wasn't a question, it was a statement.

shortchanged wrote: »

And my retirement plans are a public sector pension

Hence why you don't have to worry about investment returns like the rest of us, your retirement income is guaranteed by the taxpayer. Let's see what your pal DervProf makes of that:

DervProf wrote: »

The problem with this situation is that it is unsustainable. There is a limit to the amount of money that working people will be able to hand over to retired people.

Graham_Devon

RenovationMan wrote: »

I had already added property to my retirement strategy by buying a large house that I can downsize from and release tax free equity.

That might be the case now.

It's certainly not set in stone that it will be the case when you sell.

JonnyBravo

Graham_Devon wrote: »

That might be the case now.

It's certainly not set in stone that it will be the case when you sell.

Yes yes yes. As has been mentioned countless times already, no-one knows what legislation is possible in the future.

One can only go on what is already in force and what is likely in one's opinion.
In my opinion such a move is unlikely.
But what do you suggest is definitely, definitely safe from future legislation?

Or don't you have such knowledge and you're merely seeking to make yourself feel better with the thought that it might not work out for someone (who has probably wound you up with his smugness)?

RenovationMan

JonnyBravo wrote: »

Graham_Devon wrote: »

That might be the case now.

It's certainly not set in stone that it will be the case when you sell.

Yes yes yes. As has been mentioned countless times already, no-one knows what legislation is possible in the future.

One can only go on what is already in force and what is likely in one's opinion.
In my opinion such a move is unlikely.
But what do you suggest is definitely, definitely safe from future legislation?

It's interesting how often this comes up from the same sort of people...

DervProf wrote: »

At the moment.

You need to ask yourself why is taxation and regulation hitting the traditional pensions industry, and could similar taxation and regulation not hit the BTL pension industry at some point in the future ?

DervProf wrote: »

Do you not think that if more and more people start "saving" in property investment, rather than traditional pensions, that the government might see a reduction in revenue from taxes on those investments and look where the money is now being invested ?

So I'll ask you the same question that I asked DervProf. Again, this is a serious question:

RenovationMan wrote: »

You always 'nay say' discussions we have on investing with the above argument "What if this happens" or "what if that legislation comes in". The retort from many on here is "well you generally base your investment strategy on exiting legislation/events, not on things you may think will happen".

Serious question.

Where do you invest your money for retirement? If you apply the same 'what if' logic to your own financial decisions, do you not find yourself stymied and frozen into indecision/inaction because of all the possible future permutations that may or may not happen?

DervProf

RenovationMan wrote: »

You always 'nay say' discussions we have on investing with the above argument "What if this happens" or "what if that legislation comes in". The retort from many on here is "well you generally base your investment strategy on exiting legislation/events, not on things you may think will happen".

Serious question.

Where do you invest your money for retirement? If you apply the same 'what if' logic to your own financial decisions, do you not find yourself stymied and frozen into indecision/inaction because of all the possible future permutations that may or may not happen?

I know my comments may appear to be "nay saying", but they are merely intended to suggest other possible outcomes to scenarios that you and others might suggest. There is very little doubt in my mind that BTL investment may still be a wise move as far are retirement planning is concerned, and I don't think I`ve stated that it isn't. In fact, I am in a position where I could easily invest in BTL for my own retirement, but morally I can't bring myself to do it. Not only that, there are some arguments against investing in BTL, which I have explained in earlier posts. I genuinely believe that there is a reasonable chance that the government may target BTL investing to raise tax revenue.

As far a my own situation is concerned, being as you asked, I have a private pension plan which appears to be doing OK. As you know, I have a reasonable amount of savings, which I actively keep an eye on to ensure decent returns. I also stand to inherit from my parents, but I make no assumptions about that. I always knew that paying off my mortgage asap was going to be a good idea. A lot of what I earn between now and retirement will help keep me in my older age, if I make it that far.

And there's the thing. It's OK making all sorts of plans to be financially well off in retirement, but you have to consider that your health may not allow you to enjoy the fruits of your investments. And even if you do live 10, 20 or 30 years after retirement, you have to make sure you don't forfeit too much today for what may or may not happen tomorrow.

As JB has just said, you do have to make plans based on today, but it isn't quite as simple as that. As we have seen, planning for the future will always be a bit of a gamble. You have to assess the risks. I have simply stated a few of the risks.

DervProf

Nice !

RM thanked me !

:beer:

We all know it probably won't, but please enjoy the "ceasefire" while it lasts.

DervProf

shortchanged wrote: »

Just to put the record straight I'm not saying there is going to be zero HPI over the next 25 years, just that I feel there may well only be small growth such as that in line with inflation, that is if banks keep lending quite strict.
Which is why I don't really see property as the great 'investment' it was since 2005 ish onwards.

My initial reaction was to say that over 25 years, it is quite likely that HPI will be greater than inflation. However, I think you are right. If banks keep lending quite strict, then HPI will be kept in check. In fact, it is hard to see that house prices will outstrip inflation, unless banks get creative again. Even if they do, it'll probably end up in disaster (which might not have such a "painless" outcome as we appear to be experiencing).