if Goerge Osbourne takes away tax benefit for BTL won't rents just go up?

antrobus

chucknorris wrote: »

The market rent rate is a function of supply and demand, if the ability to claim mortgage interest was withdrawn (it won't be) there would be a very significant reduction in supply. So rents would increase, not so much because landlords put the rents up, but because the supply of property available for rent would be reduced.

There could well be a very significant reduction in the supply of rented housing, but I would anticipate little change in the supply of housing overall. Presumably, landlords who withdraw property from the rental market will sell, and the buyers of said property will live in it themselves, thereby reducing the demand for rented property.

chucknorris

antrobus wrote: »

There could well be a very significant reduction in the supply of rented housing, but I would anticipate little change in the supply of housing overall. Presumably, landlords who withdraw property from the rental market will sell, and the buyers of said property will live in it themselves, thereby reducing the demand for rented property.

Obviously! That's exactly what I said, you seem to have missed this bit of my post:


'because the supply of property available for rent would be reduced'


I never said that housing would be reduced, I said rents would fall because the supply of rented property would fall.

Thrugelmir

Graham_Devon wrote: »

Offsetting mortgage interest payments. Claiming for wear and tear - even if there wasn't any cash spent on wear and tear. Loopholes that allow the richer end of BTL to avoid capital gains.

Tax breaks for BTL's are estimated to "cost" the rest of us £5bn a year. (Inter generational Foundation report in 2013).

Though this article in 2015 puts the total tax loss at £14bn
http://www.theguardian.com/politics/2015/may/26/landlords-14bn-tax-breaks-buy-to-let-expansion-mortgage-interest

BTL is a business like any other. Too simplistic to say that people let property just for tax breaks. Whether it will remain a fad is another matter. As historically was the domain of the capital rich. Leveraging with debt is a double edged sword. I would question how many people fully understand the risks involved. Until it's too late.

chucknorris

mwpt wrote: »

Why would the supply of property to rent be reduced? Landlords selling up? Does that mean a reduction in price for buyers? And if someone buys, that is one less person wanting to rent.

Not in London (where my property is) where rental accommodation is required because not everyone stays there long enough to buy, or doesn't know initially if they are going to stay long enough or couldn't afford it anyway, the London rental market will always be strong. I think I might actually be better off! My average mortgage rate is only 1%, so losing 0.4% tax relief on that is insignificant, and probably worth losing if it gets rid of some landlords without low margin tracker mortgages, and when rates go back up I'm probably going to sell anyway, so I don't feel threatened by that (in fact if they went up tomorrow, I would seriously looking at selling right now).


EDIT: But it aint gonna happen, there is no way that mortgage interest offset against tax is going to change.

caronoel

How are you managing a 1% mortgage rate Chuck?

CLAPTON

mwpt wrote: »

Why would the supply of property to rent be reduced? Landlords selling up? Does that mean a reduction in price for buyers? And if someone buys, that is one less person wanting to rent.

rather depends

certainly if a person currently flat sharing buys a property and then shares with mates then no change in demand for properties

but if e.g. a FTB currently flat sharing buys a property and lives in it my themselves or with just a partner then it's likely there will be see an increase in prices for rental properties.

lisyloo

How are you managing a 1% mortgage rate Chuck?

Very nicely thankyou, I should imagine :-)

caronoel

lisyloo wrote: »

Very nicely thankyou, I should imagine :-)

Wouldn't we all love it too?

:beer:

chucknorris

caronoel wrote: »

How are you managing a 1% mortgage rate Chuck?

As you can imagine loving it! I have to pinch myself to check it isn't a dream, I reckon you probably know that feeling?

PixelPound

HappyMJ wrote: »

Yes rents will have to increase and therefore the HB bill so no gain there.

HB won't go up if the gov't is cutting it. Not all rents will go up as the whole market isn't BTL, so any that do raise their rents will risk not letting them or tenants moving elsewhere.