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

cells

Garethgrew wrote: »

Even if they have, the amount property has gone up since 1990s there will be considerable cap gains taxes owed to the government in the even of mass forced selling by LLs.

The crash-wishers never think more than a step forward

If there was a crash of say 25% much of the north and midlands home to more than half the property in England would be back to 2002 prices. So no CGT from the landlords who got in over the last 13 years who will be the majority.

Even many longer term labdlords would have nothing to pay. If a landlord bought the property in 1996 and another in 2006 and was forced to sell in 2016 in a crash. Likely outcome is that the 2006 property would make a loss which can be used to offset the gain in the 1996 property and no CGT.

Also any crash in prices will lead to normal homeowner's with a mortgage paying substantially more. Their 80% LTV mortgage after a 20% crash will become a 100% LTV mortgage so their interest rate nay jump from 2.5% to 5% overnight

westernpromise

Garethgrew wrote: »

Even if they have, the amount property has gone up since 1990s there will be considerable cap gains taxes owed to the government in the even of mass forced selling by LLs.

The ones selling will tend to be those without any significant gains and a large LTV mortgage.

bobbymotors

All this talk of the demise of BTL is nonsense.

It is an undeniable fact that you can't buck the market. Rents always have, and always will, be governed by supply and demand.

If fewer BTL properties are available then, assuming demand stays the same, then rents will go up.

The problem we have in the UK is that we are a small country in which lots of people want to live and (mostly) work.

Since they aren't making any more land, over the long term both house prices and rents will continue to increase.

Although there will be the odd 'crash' along the way, it is simply how a free market works.

HappyMJ

bobbymotors wrote: »

All this talk of the demise of BTL is nonsense.

It is an undeniable fact that you can't buck the market. Rents always have, and always will, be governed by supply and demand.

If fewer BTL properties are available then, assuming demand stays the same, then rents will go up.

The problem we have in the UK is that we are a small country in which lots of people want to live and (mostly) work.

Since they aren't making any more land, over the long term both house prices and rents will continue to increase.

Although there will be the odd 'crash' along the way, it is simply how a free market works.

Higher population equals higher demand for land and therefore higher prices for that land. People can still only afford to pay so much so they buy less land and build upwards. Building upwards means you can fit more people on a parcel of land. Other countries I've lived in with a lot of land and the standard house is a sprawling 4 bedroom detached bungalow all on 1 floor on nearly a quarter acre block of land with a double garage. We don't have the land for that so a typical UK house is a 3 bed semi on 2 floors with a tiny garden and on street parking.

mwpt

bobbymotors wrote: »

All this talk of the demise of BTL is nonsense.

It is an undeniable fact that you can't buck the market. Rents always have, and always will, be governed by supply and demand.

If fewer BTL properties are available then, assuming demand stays the same, then rents will go up.

The problem we have in the UK is that we are a small country in which lots of people want to live and (mostly) work.

Since they aren't making any more land, over the long term both house prices and rents will continue to increase.

Although there will be the odd 'crash' along the way, it is simply how a free market works.

In a nutshell, are you saying that you cannot lose on a BTL investment and property is underpriced?

westernpromise

cells wrote: »

The crash-wishers never think more than a step forward

Also any crash in prices will lead to normal homeowner's with a mortgage paying substantially more. Their 80% LTV mortgage after a 20% crash will become a 100% LTV mortgage so their interest rate nay jump from 2.5% to 5% overnight

Correct - anyone who was on a short fix would find as it ended that they now need a 100% or even a 125% mortgage in a falling market. Nothing of the kind will be available, meaning they'll be stuck on their lender's SVR, with zero chance of switching or remortgaging (nor of selling either, of course) until values recover.

I was stuck on the Halifax's SVR for ten years on exactly that basis. Meanwhile new entrants got shiny new three-year-fix mortgages from the Halifax at SVR minus two or three or four percent, all cross-subsidised by me.

Apathy

Apathy wrote: »

I read in an article that if your not paying 40% tax bracket (and if your total income from the rent and your jobs salary dosent exceed it either) this dosent affect he tax reflief on people in the 20% tax bracket unless i'm mistaken? Obviously the stamp duty and wear and tear has changed but that's not my point.

Bump

10char

mwpt

westernpromise wrote: »

Correct - anyone who was on a short fix would find as it ended that they now need a 100% or even a 125% mortgage in a falling market. Nothing of the kind will be available, meaning they'll be stuck on their lender's SVR, with zero chance of switching or remortgaging (nor of selling either, of course) until values recover.

I was stuck on the Halifax's SVR for ten years on exactly that basis. Meanwhile new entrants got shiny new three-year-fix mortgages from the Halifax at SVR minus two or three or four percent, all cross-subsidised by me.

So, some people were worse off while others gained. Pretty much exactly the same as now with high HPI, just in reverse. Neither side deserves to gain or lose more than the other, it is a pity our housing market seems designed to make it so.

Also, curiously (or not in my opinion), you previously claimed that a housing crash would result in people being unable to buy anyway. But now you're saying new entrants had it good. Can't quite work out your agenda.

cells

mwpt wrote: »

So, some people were worse off while others gained. Pretty much exactly the same as now with high HPI, just in reverse. Neither side deserves to gain or lose more than the other, it is a pity our housing market seems designed to make it so.

Also, curiously (or not in my opinion), you previously claimed that a housing crash would result in people being unable to buy anyway. But now you're saying new entrants had it good. Can't quite work out your agenda.

i think his argument was that crashes only really happen in recessions and during times when real interest rates jump (in 2007-2009 real interest rates were high even if the central bank rates were low) and as such even though prices are a tad lower mortgage rates (and deposits required) are a lot higher hence the ability to buy does not improve much

this seems to make logical sense, how many people who could not afford to buy in 2007 were able to and did buy in 2009? probably some people as other factors might of helped them (eg got a pay rise or a better job or family gifted deposit etc) however clearly the crash that happened did not lead to a a land of milk and cookies for the crash-wishers because we are where we are and they are wishing for another crash.

buglawton

About the effect of the tax rises on rent levels.

I'll make a comparison with petrol here, because there's 'inelastic demand' for it. That means that history has proven that when price of petrol rises and falls, the amount of it consumed does not vary nearly as much as for things with 'elastic demand' like restaurant meals. Government tax hikes get absorbed by sellers and to a very large extent, buyers.

Living space demand may be a bit elastic but I think history shows it to be more like petrol than restaurant meals.

Hence, tenants are (regrettably) going to have to absorb the lions share of the tax hikes. Just like we blame the nasty oil companies for profiteering on our fuel, landlords are going to get the flak of course.

If the tax raised (including the existing large revenues from those on the 40% level already) were being ring-fenced for projects and policies to improve housing stock at the bottom and mid levels, then maybe it wouldn't be all bad.

However, I suspect no such ring fencing is happening and taxes will continue to be poured into HS2, Trident etc. instead.