Starter homes being bought by BTL LLs

IveSeenTheLight

Percy1983 wrote: »

Most other businesses involve a person or people doing some work for the money, BTL not so much so maybe it should be treated differently.

You'd be surprised whats involved.

But lets compare to a car / van hire.
What's the difference between renting a property and renting a car / van?

Mallotum_X

IveSeenTheLight wrote: »

BTL is a business and receives similar tax relief as other businesses, but let's presume that tax is payable over the mortgage interest as well.

How much would that impact on the profits?

What are the LL's options?
1) Sell.
2) Increase rents to cover the losses.

Let's presume it's 50 / 50.
Another 750,000 or so properties pass from LL's to owner occupiers.

You've then reduced the rental market significantly and restricted the options of properties that tenants may have.

Your also restricting new tenants to the rental market.

What's likely to be the impact on rents if there is reduced supply?

NEXT

If the demand falls in your example by the same amount as supply as the renters buy the properties then presumably there wouldnt be much impact on rents?

That change would be quite a "shock" to the system which would most likely mean a complete shift in supply/demand and impact on the wider economy. It may even kick start the economy with all those new owners spending cash on their new homes - white goods/carpets etc, then again it might not.

Regardless, there's unlikely to be any major change to the tax treatment of BTL just yet, although longer term I wouldn't rule it out.

shortchanged_2

IveSeenTheLight wrote: »

BTL is a business and receives similar tax relief as other businesses, but let's presume that tax is payable over the mortgage interest as well.

How much would that impact on the profits?

What are the LL's options?
1) Sell.
2) Increase rents to cover the losses.

Let's presume it's 50 / 50.
Another 750,000 or so properties pass from LL's to owner occupiers.

You've then reduced the rental market significantly and restricted the options of properties that tenants may have.

Your also restricting new tenants to the rental market.

What's likely to be the impact on rents if there is reduced supply?

NEXT

More houses available to buy for FTB'ers I would guess.

leveller2911

Conrad wrote: »

99% of us never get anywhere near a repossession hearing, we cope, both partners work, we rent a room, life goes on. Life always goes on, always will.

You guys are so damned bleak.

Not at all, realists and the reality is when you have Local Government (Councils) underwriting FTB mortgages then we are almost tipping over the edge and have just about run out of ideas on how to prop up the housing market.

Your a mortgage man, has there ever been a situation before where Joe Public has acted as guarator to the private mortgage market?. It may be a very small scale at the moment but I can see mission creep here.

This isn't the free market in action its being manipulated by Government in the same way as Shared Ownership and Shared Equity.

Percy1983

IveSeenTheLight wrote: »

You'd be surprised whats involved.

But lets compare to a car / van hire.
What's the difference between renting a property and renting a car / van?

Ok this is rather easy.

A car/van will depreciate with use, so its fair to charge for the use as its life is limited.

People buying cars/vans to rent out doesn't cause there to be a shortage of cars/van for others to buy and push prices up.

We don't all need a car/van to live, we all need shelter, so even if somebody did manage to corner the market we could all just not bother, with renting it rent or be homeless, hardly the same.

Turnbull2000

leveller2911 wrote: »

This isn't the free market in action its being manipulated by Government in the same way as Shared Ownership and Shared Equity.

Government intervention is part and parcel of our housing market. Those hoping for substantial price or rent falls should have taken that into account.

moneyinmypocket

We love you Percy we do we love you Percy we do oh Percy we love you

Home owners marching band??? Call me maybe?

paul1964_2

IveSeenTheLight wrote: »

You'd be surprised whats involved.

But lets compare to a car / van hire.
What's the difference between renting a property and renting a car / van?

Or you could compare BTL to the hotel trade (both are renting out space in a property). A hotel owner pays VAT and business rates. When a property is changed from standard residential use to hotel use, the owner needs permission from the local authority before operating as a business from that premises.

As BTL is a business, perhaps it should be subject to more of the costs and planning regulations associated with running a normal business.

IveSeenTheLight

Mallotum_X wrote: »

If the demand falls in your example by the same amount as supply as the renters buy the properties then presumably there wouldnt be much impact on rents?

This is a short term consideration. What about longer term.
Let me explain a little more.

My GIL had a council house for 40 years.
As she became more frail, the family wanted to put things in to help her live in the home, but the council refused, so the property was bought under the RTB scheme.

As you say, no immediate impact (1 less renter, 1 more owner), she became an owner rather than a renter, the refurbishments were made and she enjoyed the home for a few more years.

When she went into care the house was sold to another owner.

What has happened is that the rental stock has decreased and NEW entrants to the rental market (16 - 20 year olds etc) who could have had the option of the council / social home is restricted in both quanitity of choice and a shift more towards private rental.

Now were discussing a scenario where there are fewer supply as a result of decreased rental properties.

What's the impact on the rent going forward?

IveSeenTheLight

Percy1983 wrote: »

Ok this is rather easy.

Hmmm, you think so........

Percy1983 wrote: »

A car/van will depreciate with use, so its fair to charge for the use as its life is limited.

A Property life is also limited, it's just with maintenance and care that the property can last longer. There is a cost associated with maintaining property.

Why is it not therefore fair to charge for the use?

Percy1983 wrote: »

People buying cars/vans to rent out doesn't cause there to be a shortage of cars/van for others to buy and push prices up.

I don't own a van, but there have been occasions that I wanted to use a van so I rented one.
For those that don't want to / can't own, why shouldn't they have the option to rent?

Percy1983 wrote: »

We don't all need a car/van to live, we all need shelter, so even if somebody did manage to corner the market we could all just not bother, with renting it rent or be homeless, hardly the same.

I understand, needing shelter can be an emotional discussion.
The governments used to provide options through council housing to cater for many of these needs, yet decided to reduce their stock so that there are insufficient quantities in the system to cater for those that need to rent.

Remember council housing is still rented.

BTL is regarded as sucking the life out of people through greed, but it simply is a business that capitalised on the gap in the market created in a large part by the social housing sell off.

Quite simply, if property building had been kept up with the population growth and the government continued to offer council housing, there would not have been a gap in the market for rental properties.

In hindsight, had BTL not stepped in, I think it has been shown that prices were affected by 7% as a result, so property would be 7% cheaper.

You'd also probably have seen rents much higher as a result of the fewer supply