Buy-to-let investors will need 50pc deposit - or no mortgage

Graham_Devon

cells wrote: »

In some parts of London BTL are the majority buyer

For example in hackney 40% of the stock is social so that is out. 40% is rented 20% is owned.

That means nearly 70% of transactions are BTL buyers.

If BTL is removed from the market or even reduced the clearing price would have to go down.

You haven't allowed for foreign investment and "buy to leave empty".

There was an article about this on the BBC News only yesterday. One recent block of apartments is completely sold out. However, 46% of it remains empty. It's foreign owned by investors. They hold onto it in "new" condition as their potential buyers when they sell don't want to move into a used apartment.

martinsurrey

chucknorris wrote: »

This is getting ridiculous, who the hell is going to invest in rental property (I wasn't going to anyway):

1. Higher deposits.
2. Mortgage interest tax expense capped at 20%.
3. Wear and tear allowance scrapped (although investors who never claimed it probably don't realise what an advantage it was.
4. An additional 3% stamp duty.

Maybe cash buyers (takes out 1 and 2) but they can't be a large proportion of the market.

Corporates

1. B2B lending is easier to come by
2. 100% allowable against corp tax
3. Indexation allowance more than makes up for it
4. Not for the corporate.

me and the wife are picking out company names...

martinsurrey

Graham_Devon wrote: »

You haven't allowed for foreign investment and "buy to leave empty".

There was an article about this on the BBC News only yesterday. One recent block of apartments is completely sold out. However, 46% of it remains empty. It's foreign owned by investors. They hold onto it in "new" condition as their potential buyers when they sell don't want to move into a used apartment.

That is London centic and is a tiny percentage of the market.

the North East has over triple the %age of long term empty properties than the South East and London.

stator

Great news for tenants. Fewer have-a-go slumlords. House prices will either come down or professional corporate landlords will increase.

Graham_Devon

HappyMJ wrote: »

Down? Why down? Rents will go up due to restricted supply.

Rents, outside London (and within to some extent) are pretty much capped by housing benefit caps.

Remove housing benefit and the whole BTL scene would implode on itself overnight. So we can't really ignore the HB subsidy and its limits when it comes to vague assumptions that rent will always go up.

Rent will only go up where tenants can pay it.

In 4.7m individuals cases, housing benefit pays a portion or all of the rent. You are very limited in how much rents can go up in these 4.7m cases without simply losing a tenant and having to find someone else, privately who can pay the increased rent.

cells

chucknorris wrote: »

I've been wondering about the affect that this will have, for the very reasons that you cite.

Places like Hackney Islington Tower-Hamlets etc must be ~70% BTL

If BTL was removed or even curtailed then the clearing price would have to fall to the point where other buyers (FTB/Movers) could afford to buy. However FTB/Movers can not really afford those areas at current prices or even at -20% prices.

So my guess is that volumes will drop maybe lots. The BTL landlords selling to other BTL landlords in those places might think .... i'm not giving it away ... and just hold on for longer. Of course there will always be some sellers (death divorce) so prices will be lower than they other wise would be without the additional taxes/regulations

cells

Graham_Devon wrote: »

Rents, outside London (and within to some extent) are pretty much capped by housing benefit caps.

Remove housing benefit and the whole BTL scene would implode on itself overnight. So we can't really ignore the HB subsidy and its limits when it comes to vague assumptions that rent will always go up.

Rent will only go up where tenants can pay it.

In 4.7m individuals cases, housing benefit pays a portion or all of the rent. You are very limited in how much rents can go up in these 4.7m cases without simply losing a tenant and having to find someone else, privately who can pay the increased rent.

Housing benefits cuts or removal will only have a very marginal impact. What it will do is to have groups of people move about (those who need HB will be displaced to cheaper parts and those who do not need it will take their place)

Also most housing benefits go to councils and HAs not to private landlords. Also a lot of private landlords will pass 40% of it straight back to HMRC and will pay HMRC a big CGT bill down the line too while the HB going to councils/HA stays there as they pay no taxes

Graham_Devon

martinsurrey wrote: »

That is London centic and is a tiny percentage of the market. .

I know. I was responding to a poster who was commenting on London BTL specifically.

michaels

London/SE housing shortage view:

I can't see how it will work out overall - in theory less demand from landlords = lower prices and thus more pportunity for OO.

However we also think that rented propoerties have a higher proportion of people per bedroom so any switch to OO would seem to exacerbate the housing shortage and thus drive up rents possibly to the point where landlords are back able to compete on price again?

So is the final outcome more or less OO? and higher rents?

chucknorris

michaels wrote: »

London/SE housing shortage view:

I can't see how it will work out overall - in theory less demand from landlords = lower prices and thus more pportunity for OO.

However we also think that rented propoerties have a higher proportion of people per bedroom so any switch to OO would seem to exacerbate the housing shortage and thus drive up rents possibly to the point where landlords are back able to compete on price again?

So is the final outcome more or less OO? and higher rents?

There will be a much stronger case for buying investment properties with a limited company going forward, although how long that loophole remains open is anyone's guess.

I wasn't even aware that indexation is still allowed with corporation tax, until Martin mentioned it above.