Get ready for more taxes on BTL

tomstickland

You have been caught, hook, line and sinker.

Rather a premature judgement to make.

HugoSP

Ad wrote: »

When prices fall those trapped in rented accommodation will be able to buy again as they would have previously. The balance will be restored.

.....that is assuming that those tenants have not been forced out on the streets as BTL investors have had to sell their housing stock quickly, and kick out the tenants to sell the houses with vacant posession.

What are these tenants supposed to in the time whilst they are homeless because BTL investors have been taxed out of a business that already has tight margins? Some 85% of landlords own less than 5 properties and it is these population that such a move will hurt badly. The remaining 15% of large investors who basically control the market will simply find a way of reducing their tax liability, as they have the flexability to do so effectively.

Yes, such a move would bring house prices down for the lucky ones who still have a roof over their heads and have a job etc. For the rest of the ex tenants who have had to move away or face huge rent increases to keep the investor in business, not to line his pockets, they may well not be in a position to buy.

These articals also seem to forget that some tenants choose to stay as tenants for a variety of reasons. Many people have chosen to take their equity out of bricks and mortar and speculate on a fluctuating market. You only need to read some of the posts here to confirm this.

Other people are transient workers. They may or may not have a share in or own a property somewhere in the country, however they need short term lets all over the country. One of my tenants has recently returned from oversees, and may want to go back out there again for several months. At which point he has the option of handing in his notice, and divesting himself of the burden of maintaining a home in this country.

Other tenants have no asparations to own a property at all. I have one such elderly tenant who simply wants to live as long as she can in her home. I suspect there will come a time when she has to move on, but again she can do so with the minimum of fuss.

I can appreciate FTB ers frustration but IMO the answer is to give them a significant advantage over BTL investors so that a gradual shift towards owner occupiers can take place. However this has to be done in such a way that it does not inadvertently push house prices up as a result of its introduction.

I have already muted one idea to provide incentives for BTL investors to divest their housing stock into the market in a way that can keep these houses affordable for the long term. However i fear that such a scheme will need the support of others.

To this end I propose that house puchase assistant loans be made available to some FTBers in areas of acute suppy and demand. These loans would be at 0% but would be charged against a share of the property. Hence any future sale would see the treasury benefit from a payback on a proportion of the sale proceeds.

To prevent such assistance loans pushing up house prices these loans would only be available for certain houses that met specific criteria. For example these would not be available for executive style 4 bed detached, but could well be applied to cheaper victorian terraced properties on a one by one basis.

In addition, to further protect this scheme from pushing up house prices, I would move that not all FTBers would be eligable for the same percentage figure. Eligability may be driven by need, income, occupation and area they choose to live in.

The government would not be giving away money but using public money to assist people who want to effectively own their own home and just pay a mortgage. Such home owners will control their own destiny and will not be at the whim of the evil BTL investor!

Housing associations do a similar scheme. However:

1. there is a rent element to pay. This scheme relies upon capital appreciation to protect the value of a loan.
2. only housing association owned properties or houses specifically selected by a HA at some point in their lives are eleigable. My scheme would have the potential of being applied to any 3 bed semi/terrace that a FTBer would like to buy.

thesaint

Ad wrote: »

Ah! A vested interest a sensible debate falls at the first hurdle and with reason.

A sensible debate? Don't kid yourself that you have created one.
Your ramblings do not stand up to any sort of scrutiny.

Graham_Devon

thelawnet wrote: »

Eh? A mass-selling of BTL homes would need a mass of buyers.

There cannot be any more buyers than there are renters evicted by the sellers. So there is no possible net increase in demand - 100 tenants evicted by the BTL selling, 100 tenants want to buy a house, 100 more houses on the market, and as pointed out elsewhere, a concomitant increase in supply due to the sale of 'buy-to-sits'.



My guess would be they would offer to buy the property at a substantially reduced price. There would be no reason to pay current market rents because clearly if you could previously get £1000/month, but now only £600/month because of income taxes levied on the rent. Clearly if the yield falls by up to 40%, so does the capital value of the property. The seller will be forced to sell due to losing thousands per year. Also BTL would still be viable - for the people buying off the distressed sellers.

So Mr. X, who owns one BTL flat worth £240,000, which he rents at £1,000/month and pays interest-only mortgage at £1,000/month, would sell it to Mr. Y, a new BTLer, for £144,000, who then rents it out for £1,000/month, £600/month after tax, and pays £600/month I/O mortgage.

BTL as a business proposition need not be affected at all: a 40% fall in capital values would mean the new buyers would get the same or better yields (depending on the buyer's own tax position).

So BTL is just as viable (providing you buy at the new price), so there is the same supply of property for tenants to rent.

Also some property would be affected more than others. Prime rental material, i.e. flats, whose price is largely linked to BTL, would suffer more than 5-bed detacheds, which already have poor yields and a limited rental market, and where the price is based on utility for a family owner.

Superb, lovely, everyones happy. Every single one of them of course can get a mortgage, they of course will be happy to buy (legal fee's, lack of being able to move on a whim if they have that kind of job, or just want freedom etc etc) and of course....I forgot, the landlord will just sell to the person already in the house, and to top it off, they will just sell it to them at a loss.

Ahhhh, everythings rosy.

I must point out though, that you missed out the mass of first time buyers currently living with shares, mum and dad etc etc, who will also want to be on the housing ladder. Who may already have the deposit and are just waiting for that opportunity. Who may of course already got a mortgage agreement in principle.

Yer, let's forget about those, because they obviously would not want to buy a house at a reduced price, and the landlord wouldn't want to sell it to a higher bidder and actually make something out of his investment.

I keep trying to say, if BTL are pushed out, by discriminating taxes, it's not going to make house buying ANY easier in the slightest. These landlords houses will NOT be worth 40% less.

There WILL be a first time buyer looking to buy those houses. NOT just the tennants.

In a rosy world maybe, those 100 renters can just buy their 100 houses at 40% less than the asking price....is that a law you would like aswell!? Make the landlords sell their houses off at break even or loss point and only be able to sell to the renters....regardless if theres 5 first time buyers making decent offers, outbidding each other.

I'm afraid it will be bye bye renters, go find yerself somewhere else, these FTB's have offered me my price. And guess what, you'll only have yourselves to blame. All it would mean, is theres now TWO sets out people clambering to buy a property. FTB's and (now) homeless renters....but the same amount of houses....what happens?! Yes of course, the price falls :rolleyes:

Like someone else said, if you think out of the box, you'll see your theory is flawed before it's even got to paper.

For every other landlord who maybe does not have to sell their home (owned outright etc) your rental will go through the roof, you will be paying his tax bills, which you have wanted. Shot yourselves in the foot again!

Pobby

Well possibly being older than most of the posters on this thread I will tell you what I have done.Got rid of my interest in btl.Loads of hassles,crumby tenants and a crooked,bone idle letting agent.Cleared my mortgage and debt.Apart from one very long standing stock investment and pensions I have gone to purely and simply high interest savings.

Right now most assets,including houses,appear to be wildly inflated and in my experience there is ALWAYS a market correction.Economics says as one asset class falls another one rises.Now what interests me is what that asset class will be.

Ad

thesaint wrote: »

A sensible debate? Don't kid yourself that you have created one.
Your ramblings do not stand up to any sort of scrutiny.

The recent news must be rather disconcerting?

Pobby

http://www.thisismoney.co.uk/news/columnists/article.html?in_article_id=421642&in_page_id=19&in_author_id=1865

Good link.I read an almost identical piece in another Sunday paper.However I guess this is going to happen more and more .So much for ``creative`` lending!

thesaint

Ad wrote: »

The recent news must be rather disconcerting?

Confession time, I didn't read any of the stories you provided links to

I know what they will say, just from your general attitude, you only seem to post one side of a debate, so why read the articles?

I don't live my life according to what the papers say. People will always rent properties, it's a business that will last longer than you and I.

silvercar

If let property was accepted as a business asset and rollover relief allowed, many landlords would be encouraged to sell their property. This increase in property on the market would help FTBs and stem the rise in house prices.

Many landlords can't afford to sell their property becuase they can't afford the CGT bill that immediately follows. Allowing the gain to be rolled-over to their next purchase would increase supply. With the same demand, basic economics results in price stability.

nelly_2

keeperbear wrote: »

In addition, any government trying to tax the pensions of BTLers would lose office. Why? Because the media would call it a stealth tax on ALL PROPERTY OWNERS.

And sinse when did introducing a stealth tax stop this goverment?

The media are allways calling them but they carry on reguardless!