Is Buy to Let dead?

Philuk

caronoel wrote: »

The point about mortgage interest is key.

My LTV on my BTL portfolio is about 15% currently and will go to nil within 5 years so the effect on low leveraged LLs is almost nil.

Rents are forecasted to rise dramatically over the next few years:
https://www.theguardian.com/business/2017/feb/09/uk-rents-rise-faster-house-prices-next-five-years-rics-survey

Irrespective of your marginal tax rate (I am on 45%), BTL still makes sense if you've got a sufficiently large deposit and can identify a property with yield of at least 5%

Section 24 is a game changer, anyone earning 43k+ and relying on a mortgage to finance his portfolio will find themselves sitting on negative net yields. This will trigger a sell off which may them turn the market and takes many BTL into negative equity. Even if the Gov website stipulates that only 15% of BTLer will be worst off after the change, the momentum that the tax relief change will create at the margin will snowballs and result in heavy equity destruction. I guess if you are long with no mortgage, you might plan for a different exit strategy, but for amateur landlord, banks won't follow them if the LTV goes through the roof when it comes to refinancing. That's even before considering potential interest rate rise (I know, they are set ad-eternum to 0% but who knows, one day...)

anselld

ognum wrote: »

You are actually incorrect. The whole of the stamp duty can be deducted before a gain is calculated

https://www.gov.uk/capital-gains-tax-businesses/work-out-your-gain

I am not incorrect. If you deduct the full stamp duty you reduce the gain, thereby saving the tax ... 28% or 18% of the SDLT paid. You can never recover the full SDLT.

MyOnlyPost

ognum wrote: »

You are actually incorrect. The whole of the stamp duty can be deducted before a gain is calculated

https://www.gov.uk/capital-gains-tax-businesses/work-out-your-gain

anselld wrote: »

I am not incorrect. If you deduct the full stamp duty you reduce the gain, thereby saving the tax ... 28% or 18% of the SDLT paid. You can never recover the full SDLT.

Anselld is correct.

A gross gain of £100k with no SDLT CGT of 28% = £72,000 net and £28,000 Tax
A gross gain of £100k - £5k SDLT and 28% CGT = £68,400 net and £26,600 Tax

Tax Saving is £1400, not surprising as this is also 28% of £5,000

ognum

MyOnlyPost wrote: »

Anselld is correct.

A gross gain of £100k with no SDLT CGT of 28% = £72,000 net and £28,000 Tax
A gross gain of £100k - £5k SDLT and 28% CGT = £68,400 net and £26,600 Tax

Tax Saving is £1400, not surprising as this is also 28% of £5,000

Yes you are correct, I miss read what was written. My error.

Tax will never be fully recoverable but can be set against any gain, if any.

Crashy_Time

http://www.propertytribes.com/poll-putting-up-rents-due-s24-t-127628529.html#pid281119

Crashy_Time

MyOnlyPost wrote: »

Juicy, nobody here knows where you live, how much rent you pay or what house prices are in your area. As stated you have the freedom to move area to where you can afford to buy

I do know where you can buy houses for £40,000 (cheaper in really bad areas) and in the same area you can rent a flat for £300 pcm so assuming a couple both on minimum wage most should be able to afford to save up a £4,000 deposit whilst renting. As I said earlier if you had a REALLY good credit score you could buy a house with a personal loan in some areas.

Can you link or name any of the areas?

ThinkingOutLoud_2

Crashy_Time wrote: »

Can you link or name any of the areas?

So using right move - http://www.rightmove.co.uk/property-for-sale/find.html?searchType=SALE&locationIdentifier=REGION%5E61462&insId=1&radius=40.0&minPrice=&maxPrice=50000&minBedrooms=&maxBedrooms=&displayPropertyType=&maxDaysSinceAdded=&_includeSSTC=on&sortByPriceDescending=&primaryDisplayPropertyType=&secondaryDisplayPropertyType=&oldDisplayPropertyType=&oldPrimaryDisplayPropertyType=&newHome=&auction=false

Rentals that would be basic but Ok for a couple seem to be available for £250-300 on the same.

Not many other places in the UK are at this level though.

Tiners

In my area I'm certainly seeing a number of rental properties coming on to the market this year, mostly being chopped straight into auction.

For the past few years all I've seen is properties mostly being bought for letting out.

Quite a dramatic u-turn.

Crashy_Time

ThinkingOutLoud wrote: »

So using right move - http://www.rightmove.co.uk/property-for-sale/find.html?searchType=SALE&locationIdentifier=REGION%5E61462&insId=1&radius=40.0&minPrice=&maxPrice=50000&minBedrooms=&maxBedrooms=&displayPropertyType=&maxDaysSinceAdded=&_includeSSTC=on&sortByPriceDescending=&primaryDisplayPropertyType=&secondaryDisplayPropertyType=&oldDisplayPropertyType=&oldPrimaryDisplayPropertyType=&newHome=&auction=false

Rentals that would be basic but Ok for a couple seem to be available for £250-300 on the same.

Not many other places in the UK are at this level though.

Link doesn`t work, but I know flats at 400-450pm are easy to find if you go with private landlords long term.

ThinkingOutLoud_2

Crashy_Time wrote: »

Link doesn`t work, but I know flats at 400-450pm are easy to find if you go with private landlords long term.

Sorry about the link. no idea why.

Just plug East Ayrshire and the other parameters into rightmove ... examples of both come up.