Get ready for more taxes on BTL

kennyboy66_2

silvercar wrote: »

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.

Yes, giving more tax relief to landlords would really help first time buyers. It might however increase stamp duty if landlords were encouraged to "churn" their properties this way.

If they are rolling over their property, how exactly does demand stay the same yet supply increase ?

thelawnet

Graham_Devon wrote: »

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.

If an asset has lost value, then you don't have much option about selling at a loss. If I buy shares for £2 and then they fall in value to £1.50 due to adverse market conditions, then there's no reason not to sell them for £1.50 - due to new information/circumstances, the shares are clearly no longer worth what they were, so it would be stupid to say "I'm not going to sell these for a loss"

And with shares there's no cost to hold; otoh, a big monthly loss on a BTL is costing the owner money that he might not be able to afford, or might not want to afford, and seeing that the asset had lost value, if he had any sense he would likely sell at the new price.

And I didn't suggest all renters would buy, as I pointed out, BTL will be just as viable with taxes on reducing the capital value thereby maintaining post-tax yields (and of course professionals would likely seek out tax shelters), so there would not be a supply problem for people looking to rent.

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.

Indeed, you are quite right, those people would be very happy to see the value of flats/starter homes fall.

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 have no idea why you are mentioning this, nowhere did I suggest that the landlord would sell to the sitting tenant, merely that your suggestion that a mass sell-off off BTLs due to tax problems would cause prices to rise is absurd.

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.

I am not sure where you imagine all these people are living. Most first-time buyers ARE tenants (somewhere). And whether or not the fall would be 40% is hard to say - while yields would fall by not more than 40%, falling prices cause buyers to panic, driving prices lower, so it's hard to say what the net effect would be.

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!?

As well as what? I haven't requested any laws be passed. I was merely pointing out the absurdity of your wishful thinking, by illustrating that selling off BTLs cannot possibly increase demand for housing.

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:

Why would the FTBers be clambering over you to buy a property when they are not at the moment? Ah yes, because the price has fallen because of the drop in yield for BTLers. Hmm, yes. I think there might just be a flaw in your logic there.

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!

I would be paying nothing. I could buy a house tomorrow. I choose not to because of absurd overvaluations. If this situation changed, I would buy a place. And in reality the properties I rent (large houses) tend to have very small mortgages relative to their values, because nobody in their right mind would buy such a house for BTL, so any tax increase would have minimal impact on their yield (which I see often below 3%). The property by tax changes that would be affected would be the flats bought by BTL investors where the rent barely covers the I/O mortgage.

And as to supply, flats are being put up all over the country, there's a glut of supply, and they are the least desirable form of property (compared with a house), so their value is ripest for a fall.

tomstickland

If an asset has lost value, then you don't have much option about selling at a loss.

You can hold onto it and hope it rises back up in the future.

lynzpower

I dont want to own my own home again at this stage.

I musch prefer renting. I have the flexbility to do what I like ( eg OH has got a job over the other side3 of london, we are considering moving to be closer to his work. ) Likewise FIL has terminal cancer, so we could be leaving london altogether at some point.

The pressure this will put on the local authorities housing dept would be astonomical and you and me the taxpayers will have to pick the tab back up from this.

this is crackpottery and I know if Labour bring this in I shall never vote labour again ( not that im best fans of them at the mo of course LOL)_

Ad

Pobby wrote: »

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!

Beware posting any informative links here you maybe accused of being a crackpot or rambling complete nonsense. I say the last decade of rampant house price inflation has been utterly mad along with the ever increasingly insane attempts to get a foot hold onto the ladder.

Now some collective sanity is entering the media there are those that cannot face the fact that house prices may infact be heading in another direction.

The media is now waking upto the destructive consequences of ten years of rampant house price speculation. Accept it.

Gorgeous_George

It's a nightmare isn't it?

A crash of 70% will wipe out any gains on my BTL and even my residential mortgage will be about the same as my house value. Still, as I do not intend to sell either property, I can sleep tonight without worrying too much.



GG

Ad

thesaint wrote: »

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.

Thats a shame it may have been enlightening. I always appreciate different points of view even if I disagree. :beer:

wecanhelpu

Gorgeous_George wrote: »

It's a nightmare isn't it?

A crash of 70% will wipe out any gains on my BTL and even my residential mortgage will be about the same as my house value. Still, as I do not intend to sell either property, I can sleep tonight without worrying too much.



GG

me, me, me, me, me

What a t0sser

Alan_M_2

thelawnet wrote: »

If an asset has lost value, then you don't have much option about selling at a loss. If I buy shares for £2 and then they fall in value to £1.50 due to adverse market conditions, then there's no reason not to sell them for £1.50 - due to new information/circumstances, the shares are clearly no longer worth what they were, so it would be stupid to say "I'm not going to sell these for a loss"

There's a misconception here that is repeated throughout this thread and many other I've read.

I'm impartial in this argument, I don't own a house, I rent (by choice). But I have finances involved in other things which have and are continuing to be far more fruitfull than having bought a home in the same period.

I happen to feel I'm on the outside looking in at an overvalued asset class, but the entire nature of the housing market is so irrational I've no idea where it's going.

Back on the point - the example highlighted with share above assumes your £2 share that has dropped to £1.50 was actually bought for £2. This is actually ignoring all the investors that bought that £2 share 4 years ago at £1 and a few lucky ones that bought 7 years ago for 50p.

Effectively there is a large proportion of investors in BTL that due to capital increases in value have a very comfortable cushion in their property, in some, enough to ride out as much as a 40% correction.

I don't believe a correction would lead to a catastrophic implosion in the BTL market, it will on some cases, particularly those that have bought recently without doing their homework.

So that's one misconception dealt with....I've noticed another, that there's some belief that rental values are inexorably connected to property values. They aren't - they are far more closely related to income and affordability, which during a term of house price stability appears to be inexorably linked to the value of any given property - which I suppose it is in a way.

However once the cyclic housing boom starts it's merry way again, it's noticeable that rents do not increase proportionately, as unlike mortgages they can't be spread over longer periods or offset, or low start or interest only. They are effectively capped by earnings (in a way mortgages used to be before the lenders got creative).

The rent/value index of a property is a far better guide to value than anything (personal opinion) even salary multiples are not providing the same gauge as they used to due to the availability of extended terms which somewhat skew the figures.

The bottom line is there's something wrong somewhere and I have a feeling it's all going to end in tears, when or how that occurs I haven't got a clue.

Ad

Alan_M wrote: »

There's a misconception here that is repeated throughout this thread and many other I've read.

I'm impartial in this argument, I don't own a house, I rent (by choice). But I have finances involved in other things which have and are continuing to be far more fruitfull than having bought a home in the same period.

I happen to feel I'm on the outside looking in at an overvalued asset class, but the entire nature of the housing market is so irrational I've no idea where it's going.

Back on the point - the example highlighted with share above assumes your £2 share that has dropped to £1.50 was actually bought for £2. This is actually ignoring all the investors that bought that £2 share 4 years ago at £1 and a few lucky ones that bought 7 years ago for 50p.

Effectively there is a large proportion of investors in BTL that due to capital increases in value have a very comfortable cushion in their property, in some, enough to ride out as much as a 40% correction.

I don't believe a correction would lead to a catastrophic implosion in the BTL market, it will on some cases, particularly those that have bought recently without doing their homework.

So that's one misconception dealt with....I've noticed another, that there's some belief that rental values are inexorably connected to property values. They aren't - they are far more closely related to income and affordability, which during a term of house price stability appears to be inexorably linked to the value of any given property - which I suppose it is in a way.

However once the cyclic housing boom starts it's merry way again, it's noticeable that rents do not increase proportionately, as unlike mortgages they can't be spread over longer periods or offset, or low start or interest only. They are effectively capped by earnings (in a way mortgages used to be before the lenders got creative).

The rent/value index of a property is a far better guide to value than anything (personal opinion) even salary multiples are not providing the same gauge as they used to due to the availability of extended terms which somewhat skew the figures.

The bottom line is there's something wrong somewhere and I have a feeling it's all going to end in tears, when or how that occurs I haven't got a clue.

Recent home owners are certainly paying a high price.