Debate House Prices


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The Next Nail in the Coffin

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Comments

  • chucknorris
    chucknorris Posts: 10,793 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Ok, you got me, it is quite pleasing posting on here (and HPC) sometimes, but not all the time. Yes, at your age you would want to still be invested in the markets, fair enough, I was half joking anyway about cashing in the trackers, it is the property you should cash in (unless you really get some kind of buzz out of being a landlord) IMO.

    I think you know the answer to that, I am waiting for the right time to get out, and that will be when the base rate gets to about 2.5%, my low margin tracker mortgages will help provide exceptional rental profit until then. I am retiring this summer (very recent decision), that means I have plenty time to do things, so being a landlord for a few more years will be fine.

    But even that might change, if we really like the Isle of Man, if we do, I will then look into making the most of the tax system there, it isn't impossible that I find something that is more profitable than BTL immediately. It might even be worth selling up here, and buying there, the advantages would be:

    there isn't any stamp duty there
    there isn't any capital gains tax there
    corporation tax would only be 10%
    dividend income paid from an isle of man company is tax free

    If I started a non property company, the corporation tax would be 0% (it is only 10% fro property and banking). BUT I am hoping to slow down, not empire building (so possibly not).
    Chuck Norris can kill two stones with one birdThe only time Chuck Norris was wrong was when he thought he had made a mistakeChuck Norris puts the "laughter" in "manslaughter".I've started running again, after several injuries had forced me to stop
  • westernpromise
    westernpromise Posts: 4,833 Forumite
    Ok, you got me, it is quite pleasing posting on here (and HPC) sometimes, but not all the time. Yes, at your age you would want to still be invested in the markets, fair enough, I was half joking anyway about cashing in the trackers, it is the property you should cash in (unless you really get some kind of buzz out of being a landlord) IMO.

    Investment advice from the man with a 125% BCR.

    Worth what it cost, I suppose :rotfl::rotfl:
  • cells
    cells Posts: 5,246 Forumite
    Jason74 wrote: »
    Or, it needs restrictions on BTL funding (potentially including capital raising against main residence to buy other properties) combined with more discouragement of BTL through the tax system, more regulations for landlords, and much stiffer penalties for non compliance. That would take landlord demand out of the market, and cause prices to adjust to whatever level was affordable for owner occupiers based on current mortgage rules.

    I'm not saying such an outcome is likely, but it would certainly be another way to change the OO / BTL balance without looser lending.


    A certain number of households need to rent. Let's say 10%

    We also have the social sector which is about 18%

    That leaves a max of 72% of households who can become owners.

    Currently we are at about 10% less than that max figure.


    So we are talkibg about 3 million households that might be able to go from renters to owners.

    For that to happen we need a few things.


    One. We need landlords to sell. But thankfully landlords always sell so that's not a problem.

    Two. We need more homes built so renters living in HMOs or with their parents can split and move into the additional stock

    Three. We need would be owners to be able to buy. There are two parts to that. The mortgage and the price. Price is important but not all that important. The mortgage side (regulations) are critical.

    Price can be cheap, eg much of the north and Midlands or even very cheap like stoke or Doncaster but people can't become owners if they can't get a mortgage. Even if the price falls 10% they still can't. If it falls another 10% they still can't. This is why 100% owner mortgages are needed and why self cert is needed.



    If you think its as simple as a landlord selling to their tenant at whatever the tenant has in their bank account you've a long time waiting
  • cells
    cells Posts: 5,246 Forumite
    Generali wrote: »
    So BTL Landlords are having imposed on them:

    - Higher SDLT
    - Higher CGT
    - Effectively increased income taxes (can't imagine that there are vast numbers of BTL Landlords that are Kosher that aren't paying a higher rate of income tax)
    - Stricter limits on housing benefits (please let's not try to pretend that HB isn't a huge subsidy to the BTL market as a whole!)

    Now there are going to be limits on borrowing as well.

    It feels like the only tax that hasn't been increased (or not decreased) selectively on BTL LLs is VAT and excise duty!

    It feels a lot like an all-out attack on BTL-ism to me, probably with the aim of increasing owner occupation. It seems obvious to me: if a BTL LL can't afford to own the house because his taxes go up then he'll become a forced seller or not be able to enter the market in the first place. In the short term that means an increase in supply to the OO market although in the long term probably lower supply overall as fewer new-builds are put up.

    Housing benefits are no more a subsidy to BTL than the £70pw Job Seekers Allowance is a subsidy to Tesco.

    Clearly taxes are going up there is no doubt there.
    My point of difference with your view is to see this as a certainty to shrink the rental sector.

    My view is that the changes won't shrink the rental sector. What is likely to happen IMO is that the growth of rental will slow and possibly stop. If build rates don't go up this will likely result in higher rents but static prices which should push yields up.

    I am with Hamish Theory. That renting has grown due to mortgage rationing. This males sense as renting has grown in the midlands and north too where prices have crashed in real terms over the decade.

    So over the next few years we will see if mortgage rationing and a lack of enough new builds causing renting to increase can be overcome by taxing landlords more. Personally I don't this k so. I know one guy for instance who can put down about 40% but couldn't get a mortgage. If I am taxed more he Still can't get a mortgage and short of a 60% crash in prices that does not change.
  • cells
    cells Posts: 5,246 Forumite
    michaels wrote: »
    At least in London/SE you can not house the population at typical OO occupancy levels so how is this going to work out?


    This is double true for inner London. If a landlord with 4 working tenants is to sell up to a couple with 1.5 workers what's going to happen to transport and wages and jobs.

    I simply can't see how renters using 30sqm a head can become owners at 40sqm a head without 10sqm a head of new builds.

    If some renters become owners of will surely just mean the remaining renters will need to use even less apace per head. They won't want to do that anymore than they already are and will bid higher rents to avoid it
  • padington
    padington Posts: 3,121 Forumite
    edited 28 March 2016 at 4:15PM
    The new taxes on BTL property are politically and econonomicaly motivated. Politically because it's popular. Economic because the government plans to increase property prices come what may and they know that on the whole it won't cause much difference apart from netting a lot more taxes and making more Tories by making more owner occupiers.

    These taxes are a testament to the idea that the government is behind lots more house price inflation.

    If not they would be engineering a tsunami of a housing crash with these new taxes plus large prospective interest rate rises.

    They are not planning this.

    They chose Carney partly to pump the economy through house prices whilst making the environment more protective against a bank collapse because that was his track record.

    This is all that is happening.

    The moment it looked like interest rates had to seriously rise and that was effecting prices they would immediately relax property taxes.

    They have in effect collected themselves more Amo for when things go wrong whilst paying down the deficit, creating a way to increase general ownership and giving themselves more room to move should things go wrong and more importantly making it more politically acceptable to keep letting house prices rise because this has partly been the reason we have kept the wolf from the door.
    Proudly voted remain. A global union of countries is the only way to commit global capital to the rule of law.
  • CLAPTON
    CLAPTON Posts: 41,865 Forumite
    10,000 Posts Combo Breaker
    padington wrote: »
    The new taxes on BTL property are politically and econonomicaly motivated. Politically because it's popular. Economic because the government plans to increase property prices come what may and they know that on the whole it won't cause much difference apart from netting a lot more taxes and making more Tories by making more owner occupiers.

    These taxes are a testament to the idea that the government is behind lots more house price inflation.

    If not they would be engineering a tsunami of a housing crash with these new taxes plus large prospective interest rate rises.

    They are not planning this.

    They chose Carney partly to pump the economy through house prices whilst making the environment more protective against a bank collapse because that was his track record.

    This is all that is happening.

    The moment it looked like interest rates had to seriously rise and that was effecting prices they would immediately relax property taxes.

    They have in effect collected themselves more Amo for when things go wrong whilst, paying down the deficit, created a way to increase general ownership and giving themselves more room to move should things go wrong and more importantly making it more politically acceptable to keep letting house prices rise because this has partly been the reason we have kept the wolf from the door.

    certainly true the government is determined to keep housing prices high, which is why they import 300,000 extra people every year.
  • westernpromise
    westernpromise Posts: 4,833 Forumite
    One possibility that deserved serious thought is that the government and the regulators have
    misaligned objectives and no clue what to do.

    Driving small landlords out of the market does not help anyone if nobody is on hand to step in to replace them (which nobody is). Insisting on affordable housing as a component of every development is not helpful if development becomes uneconomic. And so on.
  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
    10,000 Posts Seventh Anniversary Name Dropper
    CLAPTON wrote: »
    certainly true the government is determined to keep housing prices high, which is why they import 300,000 extra people every year.


    Which just reduces the quality of life for people like Paddington as London becomes ever more flooded with migrants. The boomers who own outright and the young who can`t get a job are going to vote for a Brexit leaving the over-leveraged bubble borrowers high and dry I`m afraid. :rotfl: Only a total moron would applaud ever higher houses prices as their city becomes a holding area for ever more desperate economic migrants.
  • HornetSaver
    HornetSaver Posts: 3,732 Forumite
    1,000 Posts Fourth Anniversary Name Dropper Combo Breaker
    Dear Mr. Osborne.

    Can you please delay your plans to gather up all BTL landlords into camps for 18 months or so? I need time to get my deposit together.

    Best wishes

    HornetSaver

    x


    I jest of course, and as cells rightly says measures to cool off the BTL market have been tried before and merely had a temporary effect, until the growing demand pressures in certain parts of the coutry offset the handicap of the new measure. Nonetheless, the government truly do look like going for the jugular with landlords who are relatively highly leveraged, don't they?
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