What do you think will be the imapct of B2L tax rises?

Conrad

I've spent a few weeks talking to LL's about this and the main points coming out thus far;


+ Some small time Landlords (particularly the 1 off person that let her place due to moving to a new place of work) will be forced to sell


+ Big LL's, property funds, foreign property funds and LL's banding together setting up holding companies will buy up this stock and more as they are not going to be subject to the new taxes. 'Lets kick out the small LL's and buy up the Monopoly board'


+ Rents will definitely rise to accommodate the extent of tax rises and the big investors (above) will want to cash in on this general rent rise to, only they wont be paying the new taxes, win win


+ LL's are busily dreaming up new 'costs' to help offset the tax.


+ The proportion of LL's that rarely / never raised rents (I've met this type - they cant bare to risk unsettling a long term tenant and are happy with rent) are now forced to increase them

Thrugelmir

Big LL's already exist. I'm not referring to the Ferguson's either. Property magnates tend to keep low profiles out of public view. As not everyone is leveraged to the hilt.

Strikes me that the BTL boom has nearly gone full circle. BTL became of age when prices were rising rapidly. No one cared about profitability of the letting. The real gains were in the capital appreciation.

Now with the gnarling and gnashing of teeth with regards to the change in taxation rules. The lack of trading profitability has become an issue. Despite interest rates being at record low levels.

The pain for many has only just begun.

At least the change in rules levels the playing field. HRT's get an obscene advantage over FTB's.

padington

It only effects one fifth of the landlord market place ( if memory serves me correctly) because it doesn't affect companies and forigners. So prices won't tank. Some rents will go up by the mom and pop landlords or some will sell. The reality in the next five years, I believe, is those that 'held' will be very glad they did because (in the South east at least ) the capital appreciation will be large.

China, I think, agree's.

Corbyn or an unknown unknown, i reckon, will be the biggest threat to HPI. Expect some jitters / decent dip / crash in 2019 if old Ben gets close to the next ballot box especially if storms on the horizon look pressing also.

Thrugelmir

padington wrote: »

It only effects one fifth of the landlord market place

I doubt that this is the end of the changes.

cells

the tax changes are not crippling in a low interest rate environment.

a 1% increase in interest rates would be a bigger drain on the sector.

Conrad

Thrugelmir wrote: »

Big LL's already exist. I'm not referring to the Ferguson's either. Property magnates tend to keep low profiles out of public view. As not everyone is leveraged to the hilt.

Strikes me that the BTL boom has nearly gone full circle. BTL became of age when prices were rising rapidly. No one cared about profitability of the letting. The real gains were in the capital appreciation.

Now with the gnarling and gnashing of teeth with regards to the change in taxation rules. The lack of trading profitability has become an issue. Despite interest rates being at record low levels.

The pain for many has only just begun.

At least the change in rules levels the playing field. HRT's get an obscene advantage over FTB's.

Pain how so?
Yes a few as I mentioned will want to sell, no biggie. Most will adapt I think. No way I'm selling.

Are you watching the million pound property show? Lots of aggravating Owners cooing about thier HPI.

Edit, I just heard the owner of the Scottish mansion on the market for five years saying she didn't buy to advance herself, in which case reduce the bloody price, but oh no, that would be giving it away despite her only paying £400 k and now it's on for £1.5k. Sure love, this is not bout making a profit....
They are in serious mortgage arrear btw

padington

Thrugelmir wrote: »

I doubt that this is the end of the changes.

Osborne wont kill the golden goose. He'll just carefully nick a few eggs to ensure the market keeps a sure and steady upward projection.

Think of it like interest rates, if the market can handle more tax, it will get more.

He was bold with the BTl market because he forsee's, I think, mamouth house price inflation forces heading our way. Those forces (rising wages, endless QE, UK entering economic strong periods of growth, weak emerging markets looking for sanctuary, massive immigration, growing soft power, competitive taxed economy ) should negate the extra head winds.

He basically took a sail down because the winds were becoming too strong.

Thrugelmir

Conrad wrote: »

Are you watching the million pound property show? Lots of aggravating Owners cooing about thier HPI.

A wise old saying.

“Bull markets are born on pessimism, grown on skepticism, mature on optimism and die on euphoria.”

-Sir John Templeton

padington

You've been cryptically calling top for about five years thrug, the logic hasn't worked so far.

Generali

I suspect a fall in house prices (or a lower rise than would otherwise be the case) and an increase in rents.

The policy I suspect will meet its basic aim which is to push people away from renting and into OO.

cells

Generali wrote: »

I suspect a fall in house prices (or a lower rise than would otherwise be the case) and an increase in rents.

The policy I suspect will meet its basic aim which is to push people away from renting and into OO.

I don't think its at all likely to push people away from renting and into owning.

If they want ownership to rise then the clearing price needs be be affordable by more would be FTBs. That either means a significant rise in wages (v.unlikely) a significant fall in house prices (v.unlikely) or a significant increase in what FTBs can bid (unlikely for now)

So if the mortgage rules were changed so people could get for example joint 6x income stressed at pay rate then more FTBs could become owners.

Another option is to further put negative pressure on BTL but that needs to be finely tuned.

Or of course if they want fewer renters and more owners the lands biggest landlord (the state) needs to sell more of its rentals