Why do people resent buy-to-letters so much?

chucknorris

BananaRepublic wrote: »

The tax system is not much better for owners. I got no mortgage interest tax relief. None. Where you pay more is CGT which is only fair and just.

Of course it is much better for owners, an owner can rent out a room and the first £7,500 rent is tax free! Landlords don't get any mortgage interest tax relief on their own homes either!

BananaRepublic

chucknorris wrote: »

Of course it is much better for owners, an owner can rent out a room and the first £7,500 rent is tax free! Landlords don't get any mortgage interest tax relief on their own homes either!

Those are very stupid remarks. My point stands.

BananaRepublic

chucknorris wrote: »

But you would be wrong, you are far too emotional about property, and it is interfering with your logic. You can't see the difference between a business comprising of say 10 houses rented to students or a block of student flats. Both provide student accommodation, yet one of those businesses you don't even accept that it is a business, never mind that mortgage interest should be an allowable expense. Or would you argue that both are not businesses?

How condescending. It is an issue of fairness, something you will never see as all that matters is your wealth. Clearly George Osborne and his boss agree with me.

The more I participate in this forum, the more I am starting to dislike BTL landlords. The total self interest and self aggrandising exaggerations of many here is a turn off.

Incidentally, one thing we do need is more protection for landlords against bad tenants.

chucknorris

BananaRepublic wrote: »

Those are very stupid remarks. My point stands.

They are not stupid at all, if you are not capable of grasping the fact that owner occupiers pay no tax, and in fact can be in a position to actually receive tax free income, yet a landlord pays both income tax and capital gains tax then you don't understand the situation at all.

chucknorris

BananaRepublic wrote: »

How condescending. It is an issue of fairness, something you will never see as all that matters is your wealth. Clearly George Osborne and his boss agree with me.

The more I participate in this forum, the more I am starting to dislike BTL landlords. The total self interest and self aggrandising exaggerations of many here is a turn off.

Incidentally, one thing we do need is more protection for landlords against bad tenants.

You haven't answered my question, I don't think you understand what a business is. The fairness doesn't enter into it, it was a tax change, pure and simple, and there is no use crying over spilt milk, I accepted it and moved on more or less when it was announced. I haven't got a problem with that, what I am saying is that renting out property is a business, and I really can't understand why you say that it isn't.

Mrs_pbradley936

Very low interest rates combined with the introduction of Buy to Let mortgages and Assured Short Hold tenancies changed property from housing into a sound investment.

So if you have say 10K to invest, rather than putting into the Building Society or bank you might have been advised (quite legitimately I might add) to buy a flat to rent out. Your £10K was the deposit, the rent pays the mortgage and after a few years you have a property paid for by someone else as well as a huge capital gain. Makes me want to cry when I think that in many cases Housing Benefit is buying private landlords their portfolio. All perfectly legal and a cracking investment at the tax payers expense!

If having bought the first one things go smoothly then people would logically think of buying another one (or another few). If you have your own house and a BTL it will not be long before you have sufficient equity for additional properties. That is how it currently works and if it becomes an unsound investment the BTL landlords will take their profits and invest in something else that pays more.

chucknorris

Mrs_pbradley936 wrote: »

So if you have say 10K to invest, rather than putting into the Building Society or bank you might have been advised (quite legitimately I might add) to buy a flat to rent out. Your £10K was the deposit, the rent pays the mortgage and after a few years you have a property paid for by someone else as well as a huge capital gain. Makes me want to cry when I think that in many cases Housing Benefit is buying private landlords their portfolio. All perfectly legal and a cracking investment at the tax payers expense!

They would be taking on a lot of risk, fair enough if they understand that, but I suspect that many do not. If you invest in just one property and it isn't part of a diversified portfolio, you are putting all (or most of) your eggs in one basket. If you get a problem tenant, you could end up in serious financial trouble. Investment property (excl my home) is now only 48% of my overall portfolio, as I have been really making an effort to diversify for the last decade. Every year going forward the property investment percentage of my overall portfolio decreases by over 1%.

Mrs_pbradley936

Ethics and morals do not enter into it. If it is legal and profitable any given scheme will attract investors. If it stops being profitable then those investors will take their money elsewhere.

If lots of property comes on to the market then prices will fall - whether or not they will ever fall low enough for those without a large deposit to snap them up is another issue.

cells

BananaRepublic wrote: »

The tax system is not much better for owners. I got no mortgage interest tax relief. None. Where you pay more is CGT which is only fair and just.

I suspect the BoE are looking with interest at what will happen as a result of the changes to BTL taxation. I would not be surprised to see MITR on BTL disappear entirely if future events are not the catastrophe that you and other BTL landlords predict.

why not get rid of MITR as you call it, on all activities?

Why should companies who have residential property have it?
Why should companies/individuals who have commercial property have it?
Why should companies/individuals who have industrial property have it?

So the target is only one type of building only owned by one type of entity. I do think the courts would throw it out if it was properly challenged. It is simply stupid and the government only targeted this one group because they were probably hoping that the sector is spread out over a large number of people owning a small number of homes.

cells

Mrs_pbradley936 wrote: »

Very low interest rates combined with the introduction of Buy to Let mortgages and Assured Short Hold tenancies changed property from housing into a sound investment.

So if you have say 10K to invest, rather than putting into the Building Society or bank you might have been advised (quite legitimately I might add) to buy a flat to rent out. Your £10K was the deposit, the rent pays the mortgage and after a few years you have a property paid for by someone else as well as a huge capital gain. Makes me want to cry when I think that in many cases Housing Benefit is buying private landlords their portfolio. All perfectly legal and a cracking investment at the tax payers expense!

If having bought the first one things go smoothly then people would logically think of buying another one (or another few). If you have your own house and a BTL it will not be long before you have sufficient equity for additional properties. That is how it currently works and if it becomes an unsound investment the BTL landlords will take their profits and invest in something else that pays more.

As chuck said apart from the rental risk (bad tenants etc) you also have capital rsk which is very real.

Data from the land registry:

If you bought the average property in the NE in Oct 2005 it would have cost £116,459. Say you put £30,000 down as a deposit. You then decided to sell it ten years later in Oct 2015. The price you got was £100,393.

So instead of making loads-a-money your £30,000 investment has become just £13,934. You also probably need to take off £2,000 for buying and selling solicitors fees and £1,000 for estate agent fees. So this investment into BTL took your £30,000 investment and left you with only £11,000 ten years later!

That is a very poor investment. You have lost two thirds of your capital in nominal terms and even more in real terms.


And that is not the only region. Prices in the North west were £120,69 a decade ago now they are £115,835. Prices in Yorks and Humber were £127,088 ten years ago and they are £122,058 now.
Those 3 regions are home to nearly 30% of the population and 30% of the housing stock. Instead of making a mint they lost capital and because it is a geared investment they lost even more of their capital.

So instead of BTL being a fanatic investment with no risks, it is a investment with very real risks. People concentrate on London and say this is a joke people made lots of money and its risk free but thats like looking at apple stocks and claiming the stock market is far too profitable and all stock investors have made a killing in the past.


Roughly speaking over the decade.
30% of BTL homes have made a big nominal capital loss
20% have made a loss in real terms
20% have made a good nominal return
30% have made a very good real return