New taxes on BTLs - hill of beans?

Pixie5740

jdw2000 wrote: »

5 years to break even?

But that doesn't factor in the primary reason for the BTL: capital appreciation.

Solely banking on capital appreciation is not wise from either a business or investment point of view. You need a BTL that can at least wipe its own face.

jdw2000

Pixie5740 wrote: »

Solely banking on capital appreciation is not wise from either a business or investment point of view. You need a BTL that can at least wipe its own face.

£1000 pm in rental income, and £350pm in mortgage costs is a better margin than I was running my own BTL on for many years.


What's your definition of wiping it's face?

Pixie5740

Her gross rental yield isn't particularly attractive < 5% and as you've already had your own BTL you know that there are more costs than just mortgage interest. Add to that the fact that your friend has borrowed 100% of the purchase price and that makes her very vulnerable to interest rate changes.

Each to their own.

getmore4less

jdw2000 wrote: »

Those number are broadly correct.

Apparently the interest-only mortgage actually costs about £350 pm, not £400. It's 2.29% or around that figure. But I don't suppose that changes the bigger picture greatly.

I suspect that rate has come with some substantial fees and is not a lifetime tracker.

how long is it 2.29% and what is the follow on rate?

I see this going T*Ts up when the remortgage in X years gets refused.

AnotherJoe

jdw2000 wrote: »

£1000 pm in rental income, and £350pm in mortgage costs is a better margin than I was running my own BTL on for many years.

What's your definition of wiping it's face?

Its more than £350 because there also the extra £75k residential mortgage shes got. Thats maybe another £150 month. Tax would be another £1,000/year or £80/month. So its now up to £600/month.

The £400 left over from the £1,000 can start paying off the £10k SDLT.

getmore4less

jdw2000 wrote: »

£1000 pm in rental income, and £350pm in mortgage costs is a better margin than I was running my own BTL on for many years.


What's your definition of wiping it's face?

What about the interest on the other £75k borrowed on th emain residence?


can't type fast enough.

Crashy_Time

http://www.knightfrank.com/research/london-map-december-2016-4323.aspx

tim123456789

Bluebirdman_of_Alcathays wrote: »

Nearly all LLs make profit? Otherwise it's just a big gamble on capital gains, and people aren't THAT stupid.

but it's not a huge profit


When I did it, I (foolishly) self managed and after costs got about 3K per year in taxable income but spent an awful lot of time looking after it.


I calculated I could earn just as much, with less aggro, working the same extra hours as overtime in my day job.


And then I made a 40K capital gain when I sold up.


The profit's all in the capital gain that you make, not the year on year income.


And, like I previously said, despite people cautioning otherwise (OK perhaps I did go back a few years too many) there appears to be no end to this upward trend in market prices.


I don't like the way that, seemingly deliberate, restrictions in availability are causing this never ending increase in prices, but intervention to cause reductions is political toxic

getmore4less

OK closest I could find is virgin money BTL.
2.29% 2y tracker, followon 4.74% £995 fees

might even have with £500 cashback.

http://uk.virginmoney.com/mortgages/find/Find-A-Mortgage/2yr_everyday_tracker_cashback_8ftn?buyertype=buytolet/
not as bad as I thought,

do they know the deposit is borrowed money?

Virgin critera on BTL is 145% cover at 5.5% so needs £14k rental

tim123456789

Ulfar wrote: »

It also doesn't factor in a chancellor in the future reducing or eliminating the 20% tax credit on mortgage interest payments. We all know how the current government is treating tax credits.

The technical terminology is that this is not a "tax credit", it is a business expense.


That they have restricted it to only being usable against the standard rate, does not change that


tim