The Next Nail in the Coffin

westernpromise

MARTYM8` wrote: »

Yes - but in London the position is different. There are two types of renters - those on low incomes claiming housing benefit - and a lot of young professionals on (above) average salaries (£80k for a single person or couple) who simply can't stretch to paying £400,000 for a one bed flat as they haven't saved a £100,000 deposit. The deposit they need for a one bed flat is the same as the average London house price just 15 years ago.

Would be useful to see the figures excluding tenants on housing benefit.

Saying that £20,000 in savings isn't much when you think about it - do they have pensions or are their homes their pensions?:D

I don't think you can read a lot into the absolute value of the averages - that £20k could be one guy with £100k and four others with nothing. Likewise the average tenant's financial position could, as you suggest, be a blend of housing benefit renters and £80k professional renters so that the average of them doesn't actually exist.

What struck me as interesting was that landlords are likelier to be better educated and older than their tenants. One doesn't need to look much further than that to understand why landlords own more property than tenants.

HENRY78

Anything that makes it harder for portfolio landlords to outbid an OO is a good thing. Hope it works.

westernpromise

padington wrote: »

Central London now has an unusual tax burden which has netted less tax because of the increase in stamp duties among other things for prime properties. This should really be repealed because it was an inefficient tax but it bought votes and changing it may lose votes.

This.

It's had two further baleful effects. One is that since SDLT is so crippling on modest London houses, you don't sell a house that's too small and trade up; you extend it into a bigger house. This results in fewer houses for sale and reduces the supply of smaller houses, which get turned into bigger houses, both of which tend to force prices up.

The other is that because of its inane structure, it has been getting more and more tax-efficient to buy (eg) three £1 million flats rather than one £3 million flat. It's £142,500 cheaper, in fact, so it encourages proliferation of a certain type of property (which is then left empty). As a result, Sergei and Svetlana Publikov have been doing just that.

CLAPTON

HENRY78 wrote: »

Anything that makes it harder for portfolio landlords to outbid an OO is a good thing. Hope it works.

the issue is nearly always : does it work?
good intentions are not enough.

cells

HENRY78 wrote: »

Anything that makes it harder for portfolio landlords to outbid an OO is a good thing. Hope it works.

Landlords only proxy bid for tenants so your statement should read. Anything that makes it harder for tenants to outbid a would be OO is a good thing

mwpt

cells wrote: »

landlords are a risk because when rates go up their costs will go up which might make them sell, so lets put their costs up via the tax system so they sell now to avoid the problem of landlords selling....oh wait!?

You're not being honest here. You said you have no plans to sell right now because of the changes. So if the changes cause some highly leveraged landlords to consolidate and deters some from continuing to MEW at fantasy valuations to expand, then it is doing exactly the job they want which is to move toward preventing future risk.

I don't know why we need to invent all sorts of other narratives when the actions they've taken fit with the words they've said.

cells

mwpt wrote: »

You're not being honest here. You said you have no plans to sell right now because of the changes. So if the changes cause some highly leveraged landlords to consolidate and deters some from continuing to MEW at fantasy valuations to expand, then it is doing exactly the job they want which is to move toward preventing future risk.

I don't know why we need to invent all sorts of other narratives when the actions they've taken fit with the words they've said.

If interest rates go up over the next 2-3-4-5 years, will the new tax changes make it more or less likely that they sell up?

The narrative that this is to reduce or prevent risk is BS. It does the complete opposite, it makes it MORE likely that they would have to or want to sell up as interest rates go up.

This is a tax grab and quite a significant one its got not much at all to do with preventing risks so why pretend? If anything the tax changes imo create a window around 2019-2021 whereby a correction/crash in prices could occur as the interest tax changes join forces with increasing BOE rates

ruggedtoast

According to The Telegraph 2 years ago, 1 in 5 properties was owned by BTL landlords.

http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/11179073/Buy-to-let-boom-one-in-five-homes-now-owned-by-landlords.html

Predicted to rise to 1 in 3 in a decade or so.

Its not hard to see why even the Tories are finally trying to do something about this. They have spent vast amount of political capital over the years trying (and mostly succeeding) in making people who rent feel like life's biggest failures.

If a 1/3 of households are resentful renters, even with their gerrymandered constituencies and paid off media the Tories are going to struggle against Labour in the next two elections.

As someone said earlier, they appear to be moving toward a model of large commercial landlords rather than the one man band.

Regardless of what BTL landlords may think about themselves, the Tories really don't care much about small time investors going to the wall. They didn't in the 80s, or the early 90s, and they don't now.

The banking industry has been well and truly paid off. It is not dependent on BTL to underpin its loan book anymore.

Highly leveraged investors with a their mobile phones pre programmed to divert their tenants calls to voicemail are in for a rough ride.

mwpt

cells wrote: »

If interest rates go up over the next 2-3-4-5 years, will the new tax changes make it more or less likely that they sell up?

The narrative that this is to reduce or prevent risk is BS. It does the complete opposite, it makes it MORE likely that they would have to or want to sell up as interest rates go up.

This is a tax grab and quite a significant one its got not much at all to do with preventing risks so why pretend? If anything the tax changes imo create a window around 2019-2021 whereby a correction/crash in prices could occur as the interest tax changes join forces with increasing BOE rates

Sorry, I disagree with your opinion. The BoE are acting on measures to curb lending into this sector and reduce risk ratios, this has nothing to do with a tax grab.

Generali

I've been looking at some of the tax changes and they're quite interesting.

If you take a 2 bed terrace in Stoke-on Trent for £100,000, that's going to cost £3,000 extra in SDLT. It's going to take something like 30 weeks of gross rent just to recover that. If you buy a £500,000 place in Wood Green then it's an extra fifteen grand, probably more like 35 weeks gross rent.

What I hadn't appreciated is that the extra 3% SDLT is payable on the entire purchase price, it's not at the margin.

If you are into BTL for a capital gain then the 3% is a drop in the ocean. If you have to make it work as a business then that 3% is a pretty nasty chop into your profits. Once you've paid for conveyancing and so on your entire first year of gross rental income is likely to be going to someone other than you.