Not a time to be a buy-to-let landlord

Electrum

http://moneyweek.com/not-a-time-to-be-a-buy-to-let-landlord/

Try to sell now, take the pain or it will be far worse the longer you leave it.

Cash strapped governments need an easy target, oh there you greedy LandLords !!!!!!!!!!!

mayonnaise

:rotfl::rotfl::rotfl:

purch

Good idea.

I'll sell up and invest the money in a 10 year Gilt instead.

That'll only reduce my annual income by 400% :eek:

Electrum

purch wrote: »

Good idea.

I'll sell up and invest the money in a 10 year Gilt instead.

That'll only reduce my annual income by 400% :eek:

Well get ready for a lot more taxes one way or another,

cells

Electrum wrote: »

Well get ready for a lot more taxes one way or another,

A flat in London purchase five years ago might have had a £2.5k stamp duty and in April its going to be closer to £30k stamp duty (higher taxes and higher prices resulting in more taxes)

So thats a huge huge increase in tax >10 x in the space of ~5 years

Of course this will put some people off and transactions will fall but the overall tax take from BTL is going up substantially in april and then again the april after

mystic_trev

Electrum wrote: »

Well get ready for a lot more taxes one way or another,

What Taxes? My are all owned and paid for. I pay income tax on the Rental income but that's not changing. So if I'm not buying anymore, and have no mortgages, what additional Taxes am I going to be paying?

Electrum

cells wrote: »

A flat in London purchase five years ago might have had a £2.5k stamp duty and in April its going to be closer to £30k stamp duty (higher taxes and higher prices resulting in more taxes)

So thats a huge huge increase in tax >10 x in the space of ~5 years

Of course this will put some people off and transactions will fall but the overall tax take from BTL is going up substantially in april and then again the april after

And the April after that and so on....

"Its example has a landlord with an 80% loan-to-value (LTV) mortgage getting £10,000 in rent and paying £8,000 in interest. On his £2,000 profit he currently pays 40% of £2,000 (£800) leaving him a net gain of £1,200. However, come 2020 his tax bill will be calculated on his turnover minus a 20% tax credit. 40% of £10,000 is £4,000. The relief comes to 20% of the interest (£8,000×20%=£1,600). The result is a £2,400 tax bill. Add that to his mortgage interest and you will see that his annual profit of £1,200 turns into an annual loss of £400. Ow."

http://moneyweek.com/merryns-blog/buy-to-let-dont-do-it/

Electrum

mystic_trev wrote: »

What Taxes? My are all owned and paid for. I pay income tax on the Rental income but that's not changing. So if I'm not buying anymore, and have no mortgages, what additional Taxes am I going to be paying?

Wrong, it is changing and will change a lot in the future.

Look at that picture and think about the cash strapped government looking under every stone for ideas where to get more income from?

Electrum

The Telegraph gets it too. They ran an article this week looking at a higher-rate taxpayer with a £240,000 mortgage on a £300,000 property. He has a five-year interest-only fixed rate mortgage at 3.99%. That costs him £800 a month. He then gets in £1,000 in rental income giving him a current annual profit of £1,440. However, that isn’t going to last long.

Assuming his rental income doesn’t rise very significantly, his profit falls to £0 in 2019 and becomes a loss of £480 in 2020. There is a calculator for all this on the Telegraph’s site.

A large part of the UK population still doesn’t seem to think it matters. A YouGov/Brewin Dolphin survey suggests that the vast majority still think that buy to let is a great investment – particularly for retirees. Maybe they’re right. Maybe rents will rise super-fast from here as wages begin to rise. Or maybe capital gains will be such that no one much cares about cash flow – if you are making 20% a year on a house perhaps you can just keep borrowing against that house to cover your cash flow issues? But we aren’t so sure.

Not many people are brave enough to lose money on an investment in cash terms every month. And rising housing supply in the UK (note that 75% of developers think it is getting easier to get planning permission here) suggests to us that at some point capital gains will disappoint. Getting into buy-to-let now – with borrowed money – seems like a risk that really isn’t worth taking.

http://moneyweek.com/merryns-blog/buy-to-let-dont-do-it/

When prices start to fall a little, they will avalanche as the savvy investors start heading for the exits as soon as they realise that the govt can't afford to backstop their 'business' any further.

Electrum

mystic_trev wrote: »

What Taxes? My are all owned and paid for. I pay income tax on the Rental income but that's not changing. So if I'm not buying anymore, and have no mortgages, what additional Taxes am I going to be paying?

My own children are only a few years away from when they will be establishing careers and starting families and I want to see a serious reduction in BTL vulture culture before then. I have not raised them to work their butts off so idle landlords don't have to.

Why do you think that you, as a speculator and an investor, deserve special treatment - or even equal treatment. What do you bring to the party?

Electrum

This one LandLord summed up the situation very well......

"I am a hard working buy to let landlord who has built up a portfolio of properties over the past 10 years

I have many happy families living in my houses.

This new tax is a sabotage on hard working landlords because we are and easy target this will mean we are going to end up paying more in tax than profit making private landlords the only business taxed in this way in the developed world. Any decent person knows that it is unfair to tax u on income you haven't earned its like a teacher working all week and having there whole salary taxed and given to the government

This has ruined my business and I am starting to sell up making long term tenants and families looking for alternative accommodation and in some cases the supply will not be there all because of this bonkers tax grab that is going to create mass evictions and homelessness you mark my words.

99% of landlords are hardworking decent people who provide a valuable service the idea that we starve first time buyers is false as majority of my tenants like the freedom of renting and some cannot afford it and never will be able to due to lenders asking for large deposits"