"Housing Market Slumps"

Pennywise

No doubt the change in rules for tax relief on mortgages for buy to lets will be having an impact. Under the new rules, you can actually end up paying more tax than profit if you're a higher rate taxpayer. Suddenly, it's less attractive for those dabbling with a house or two to let as they have to pay in each year, rather than the rental income just about covering costs for the highly geared.

westernpromise

Windofchange wrote: »

If you had a crystal ball that said in 5 years time your house has doubled in value you'd pile in hey.

Which of course nobody does, so it's not a particularly useful insight.

If it were obvious that a place were going to inflate to twice its current price, then that would be the price now. Why would I sell a place for £100k when it's nailed on to go to £200k? So £200k is the price now, and as a result, when people buy, the price always feels a bit toppy.

The only time it is possible to buy is now. You can't buy in the past or the future. You can only wait and buy when the future is now. To see how that's worked out for other people, have a read of the comments at housepricecrash or read anything posted by Crashy Time.

westernpromise

Pennywise wrote: »

No doubt the change in rules for tax relief on mortgages for buy to lets will be having an impact. Under the new rules, you can actually end up paying more tax than profit if you're a higher rate taxpayer. Suddenly, it's less attractive for those dabbling with a house or two to let as they have to pay in each year, rather than the rental income just about covering costs for the highly geared.

I wouldn't bet the farm on that. The people worst affected are those with

• a large number of buy to lets
• whose rents take them into higher rate tax
• who have high LTV mortgages, but who
• do not have spouses into whose name they can transfer the income.

That I suspect is a very small list. Maybe 100 guys will have to sell 30 houses each. In places like Accrington and Burnley. Big deal.

If you've got one buy to let with a piddling mortgage and the rent is 6% of your income, you couldn't care less. This is far more typical.

At some point I think a lot of the taxes on transactions will simply have to be unwound. These are far more damaging to mobility than raids on BTL because they effectively penalise moving house. Sell a £1.5 million house in London and buy another £1.5 million house in London - nearer schools, or work, or grandparents, or whatever - and you'll pay about £2k to move, £20k to an estate agent and about £3k for various costs. Call it £25k. The stamp duty on that is then another £100k, i.e. there is a 400% tax on the transaction costs. Look no further for why we've all stopped moving house.

michaels

davomcdave wrote: »

There must come a tax point where extending is cheaper than moving, especially after the previous government made extending easier to get planning permission for in 2013.

Hasn't it always been cheaper to extend than to move?

Locally you can look on a map view at planning application made in the last 15 years - almost every road at least 90% of houses have had at least 1 application in that time and every road always has at least 1 skip/set of scaffolding and very often half a dozen.

GreatApe

the additional taxes are significant and will be about £3 billion a year.

If all uk residential BTL were a single company, it would have total assets of some £1.1 trillion with £0.2 trillion debt and some £50 billion net income before taxes and ~£35 billion after taxes

dear chancellor has added an additional burden of some £3 billion annually so net income after taxes is down about 10%. Of course this is not distributed evenly (landlords who already owned outright see no additional burden while those who are purchasing today will see a much bigger upfront cost than this 10% suggests)


S24 should not have happened but I do see some logic in the additional stamp duty.
I would have gone with +5% for the additional stamp duty and not messed around with S24 changes

GreatApe

michaels wrote: »

Hasn't it always been cheaper to extend than to move?

Locally you can look on a map view at planning application made in the last 15 years - almost every road at least 90% of houses have had at least 1 application in that time and every road always has at least 1 skip/set of scaffolding and very often half a dozen.

I recall reading somewhere that the UK was apparently the EU capital of refurbihment and extensions. I cant seem to find it on gogole. It seemed to make sense we had some of the lowest new builds per capita so the population were extending/improving more per capita

It is probably a part of our productivity problem.

BikingBud

westernpromise wrote: »

Which of course nobody does, so it's not a particularly useful insight.

If it were obvious that a place were going to inflate to twice its current price, then that would be the price now. Why would I sell a place for £100k when it's nailed on to go to £200k? So £200k is the price now, and as a result, when people buy, the price always feels a bit toppy.

The only time it is possible to buy is now. You can't buy in the past or the future. You can only wait and buy when the future is now. To see how that's worked out for other people, have a read of the comments at housepricecrash or read anything posted by Crashy Time.

That's exactly what has happened, the belief is that property will "always" increase so what does it matter if i pay £50k above the street average?

We can all afford it due to the complete absence of any affordability controls and people getting fraudulent and interest free loans until we then realise we have screwed the next generation and those beyond. And we all then say !!!!!! how did we get here?

Zxcv_Bnm

BikingBud wrote: »

That's exactly what has happened, the belief is that property will "always" increase so what does it matter if i pay £50k above the street average?

We can all afford it due to the complete absence of any affordability controls and people getting fraudulent and interest free loans until we then realise we have screwed the next generation and those beyond. And we all then say !!!!!! how did we get here?

That doesn't follow. If a house is offered at £200k and the perception is that in a year's time it'll be worth £150k, then it will sell for £150k.

The price of today is always the perceived future price which is why in the 90s you couldn't give houses away except to landlords.

GreatApe

BikingBud wrote: »

That's exactly what has happened, the belief is that property will "always" increase so what does it matter if i pay £50k above the street average?

We can all afford it due to the complete absence of any affordability controls and people getting fraudulent and interest free loans until we then realise we have screwed the next generation and those beyond. And we all then say !!!!!! how did we get here?

Primarily the local economy sets prices.

London is booming so prices boomed. The north is still in recession so prices have gone nowhere for 10-12 years

BikingBud

Where did £200k and £150k come from?

House prices have been bid up, way ahead of inflation, because people feel they will always increase. It is completely irrational and will cost us all many billions in the future as we scrabble to pay off the debt.

We don't grow the cabbages and potatoes to support the profligacy, we just think things have a value but we cannot back that up. We simply cannot pay the bills as we have nothing to sell.