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

HAMISH_MCTAVISH

westernpromise wrote: »

The Chinese won't sell. They never do. When did you ever read a newspaper story about the Chinese selling something?

It's an interesting concept.

I'm broadly inclined to agree that investors from some parts of the World are heavily motivated to never sell, as a property asset in a western democracy with strong legal rights is more an insurance play for their family in the event of unforeseen circumstances at home than a profit play.

Now obviously that could change, China (or anywhere else) over many decades could reform it's political and legal systems, but its not likely in the foreseeable future and you don't ditch long term insurance because the short term asset value fluctuates.

chucknorris

HAMISH_MCTAVISH wrote: »

It's an interesting concept.

I'm broadly inclined to agree that investors from some parts of the World are heavily motivated to never sell, as a property asset in a western democracy with strong legal rights is more an insurance play for their family in the event of unforeseen circumstances at home than a profit play.

Now obviously that could change, China (or anywhere else) over many decades could reform it's political and legal systems, but its not likely in the foreseeable future and you don't ditch long term insurance because the short term asset value fluctuates.

My wife is Vietnamese, she says that people in Vietnam often store part of their wealth in either gold or US dollars, because they don't trust the Gov (even now, but probably to a lesser extent than when she left there in the 70's). I remember in the 90's a colleague from Serbia told me that her mother's bank account was raided to fund the civil war over there. We might not like what our Gov does sometimes, but at least they don't literally steal from us.

MFW_ASAP

HAMISH_MCTAVISH wrote: »

It's an interesting concept.

I'm broadly inclined to agree that investors from some parts of the World are heavily motivated to never sell, as a property asset in a western democracy with strong legal rights is more an insurance play for their family in the event of unforeseen circumstances at home than a profit play.

Now obviously that could change, China (or anywhere else) over many decades could reform it's political and legal systems, but its not likely in the foreseeable future and you don't ditch long term insurance because the short term asset value fluctuates.

I agree with this, plus I think that people in the UK have such an unbending faith in 'bricks and mortar' that they will continue to invest in BTL, even if it means that they suffer a loss in the first few years until their mortgages have been reduced.

Where else will they invest their retirement money? The negative press around traditional pensions, stock markets, and investment bankers is far, far worse than any negative press around the BTL changes.

chucknorris

Electrum wrote: »

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 !!!!!!!!!!!

I can't pretend the changes were welcomed (or expected) but they are not devastating, the effect of the changes to our property profit based on our 2015 tax return (submitted last week) are:

£105k current profit
£97k post changes

As the base rate will probably be much higher when the changes have been fully implemented, it is more realistic to assume a higher base rate:

£85k current profit (with 3.5% base rate)
£67k post changes (with 3.5% base rate)

I'm not getting your 'must sell now' message though, as it happens (for other reasons) I might be selling soon anyway, but nothing much to do with the tax changes.

Of course I realise that the changes will be worse for someone with higher gearing.

wotsthat

anchovypizza wrote: »

It is only anecdotal, but I have seen four instances now where BTL landlords are selling up, all in the Hertfordshire and South Cambridge area, with three fold or more what you would put into the bracket of disgruntled.
I seriously think this is going to play out like much of the media reporting is reporting things, to start with anyway. Some of the early birds who got in on the act in the early 2000's will pocket the profit with the attitude of "all good things come to an end", good luck to them for their insight or even luck.

Then there will be those who came into the game late or the ones that kept leveraging as high as they could get away with. They will probably stick it out for a while, seen the same thing with share buying, they get in when the money has been made and stick with their horse until it is too late. These are the guys now hiring lawyers, starting petitions and basically throwing their teddies out of their pram on 118 as they threaten homelessness and rent rises to tenants.

Will be an interesting year.

Sounds like wishful thinking. I don't see how taxing some housing is going to reduce the cost of housing overall.

We're going to see an interesting game of deckchair shuffling is about all. Made more interesting because only a relatively small numbers of landlords have been selected for taxing and future sole trading BTL's will likely be deterred from entering because of the stamp duty changes. They've ample time to exit at leisure but I don't really see a mass exodus - some incorporation, some passing of houses to lower taxed spouses, some paying down of debt etc.

I'll shed no tears if the 118 club all go bust - they have even less self awareness than the HPC crew. Wouldn't be too surprised to see the changes watered down to be honest.

mwpt

wotsthat wrote: »

Sounds like wishful thinking. I don't see how taxing some housing is going to reduce the cost of housing overall.

Fewer BTL landlords competing against OOs.

mwpt

westernpromise wrote: »

The Chinese won't sell. They never do. When did you ever read a newspaper story about the Chinese selling something?

Ha ha.

Like the first day of trading in the new year.

buglawton

Except for quick casino-style wins, Chinese investors don't trust their own highly rigged stock market. They'd much rather invest in property in a country with a more-or-less functioning Rule of Law.

wotsthat

mwpt wrote: »

Fewer BTL landlords competing against OOs.

Probably so but there will be more ltd companies competing against OO's instead. Will one balance out the other? I don't know.

It's deckchair shuffling - same number of people and same number of houses.

The market will decide how they're to be allocated but I doubt OO's will be holding street parties anytime soon to celebrate just how cheap houses have become.

westernpromise

buglawton wrote: »

Except for quick casino-style wins, Chinese investors don't trust their own highly rigged stock market. They'd much rather invest in property in a country with a more-or-less functioning Rule of Law.

And when they do buy a foreign asset, or company, or whatever, they don't sell it.