Why the bad news for landlords is just beginning

Electrum

economic wrote: »

agree. but i dont see much happening with building a significant number of houses in inner london. over the next year or so i am looking out for a good london investment property in zone 2-3 (buy it cheap - profits are made on the purchase price).

Taxes are paid on the purchase price and continued ownership.

Read that artivcle at the start of the thread, cash strapped governments want to tax things that cant be moved or hidden, and property is the target next few years to come.....

ukcarper

GreatApe wrote: »

What's wrong with moving?
The rental market is now sufficient enough in size that you can likely find something of the size and quality you are after close to where you want to be.

If anything the biggest pro of renting is that it does not fix you to one place. You can move closer to your work or closer to the kids school etc.

Moving costs of renting can be close to zero while the moving costs for an owner can be closer to £30k in London.

Tenant fees are rightly going so the only cost is the actual move which for most people will just be the fuel they burn moving stuff in their cars. Maybe if you have larger appliances and items you might need to rent a man and van for a day and £150 nothing really.

Also most landlords try their best to keep tenants so I don't think its common to be forced to move.

Trying to get a property in good school catchment area might not be so easy.

I agree it can be an advantage to rent in some circumstances, but if you have children it can be unsettling for them.

GreatApe

economic wrote: »

agree. but i dont see much happening with building a significant number of houses in inner london. over the next year or so i am looking out for a good london investment property in zone 2-3 (buy it cheap - profits are made on the purchase price).

are you sure a pension isn't better in your situation considering you said you are likely to inherit property? You can access a pension at 55 which may seem a long way off but if your in your mid 30s its only 20 years out which is probably the sort of time frame any investor should be looking at. The dividends and gains are tax free and pensions are also outside of IHT

Assuming you are a higher rate payer I would look a lot more into pensions at this stage. You could of course buy shares that are property related like British Land or Segro or one of the other many UK reits and you can opt for one that is geared if you want a geared investment.

GreatApe

ukcarper wrote: »

Trying to get a property in good school catchment area might not be so easy.

I agree it can be an advantage to rent in some circumstances, but if you have children it can be unsettling for them.

the children wont care one bit if they move house. owners with kids do move house, do you go lecture them about how unsettling it is for them to put their kids through that?

If anything renters have a lot more choice on where they can rent and when they can move and the costs of doing all that are lower than for a homeowner.

economic

ukcarper wrote: »

Trying to get a property in good school catchment area might not be so easy.

I agree it can be an advantage to rent in some circumstances, but if you have children it can be unsettling for them.

i dont think its the end of the world for children. lol. unsettling a bit maybe. but then so what? its not like moving causes health problems does it?

economic

GreatApe wrote: »

are you sure a pension isn't better in your situation considering you said you are likely to inherit property? You can access a pension at 55 which may seem a long way off but if your in your mid 30s its only 20 years out which is probably the sort of time frame any investor should be looking at. The dividends and gains are tax free and pensions are also outside of IHT

Assuming you are a higher rate payer I would look a lot more into pensions at this stage. You could of course buy shares that are property related like British Land or Segro or one of the other many UK reits and you can opt for one that is geared if you want a geared investment.

i am not working at the moment. the job market is quite tough now compared to few years back. so rather then putting money aside in a pension i rather have it accessible now.i realise the tax benefits of pension however income from pensions are taxed so with the income from inheritances i dont see the point of this. i rather have the 20k cash to stick into an isa every year. then growth and income in an isa is tax free. i think this would be better for me then a pension.

GreatApe

economic wrote: »

i am not working at the moment. the job market is quite tough now compared to few years back. so rather then putting money aside in a pension i rather have it accessible now.i realise the tax benefits of pension however income from pensions are taxed so with the income from inheritances i dont see the point of this. i rather have the 20k cash to stick into an isa every year. then growth and income in an isa is tax free. i think this would be better for me then a pension.

Yes if you draw down a pension you will have to pay tax at the marginal rate which means no benefit if you are putting in and drawing out at the same marginal rates of tax but a good benefit if you are putting in at a higher rate tax payer and drawing out as a nil or lower rate. The one possible big 'advantage' I can see is that if a person dies especially before age 75 then the pension is outside IHT and the receiver gets the pension with no tax on it at all afaik

So putting £20k a year into an ISA for say 20 years would get you for arguments sake £0.8m including returns and reinvestment. The same for a higher rate taxpayer in a pension would be worth £1.33m. If you died at that point, your £800k in an ISA would be hit with a 40% inheritence tax and you will have less than £500k to pass on. Your pension the whole £1.33m would pass on tax free if you died before age 75, if after age 75 then the receiver of the pension pays their marginal rate on any they draw from the inherited pension pot

or at least that is my understanding of how it works

ukcarper

economic wrote: »

i dont think its the end of the world for children. lol. unsettling a bit maybe. but then so what? its not like moving causes health problems does it?

It's not the end of the world but it's not ideal especially if you have to move out of catchment area. I take it you don't have children.

ukcarper

GreatApe wrote: »

the children wont care one bit if they move house. owners with kids do move house, do you go lecture them about how unsettling it is for them to put their kids through that?

If anything renters have a lot more choice on where they can rent and when they can move and the costs of doing all that are lower than for a homeowner.

I take it you don't have children.

economic

GreatApe wrote: »

Yes if you draw down a pension you will have to pay tax at the marginal rate which means no benefit if you are putting in and drawing out at the same marginal rates of tax but a good benefit if you are putting in at a higher rate tax payer and drawing out as a nil or lower rate. The one possible big 'advantage' I can see is that if a person dies especially before age 75 then the pension is outside IHT and the receiver gets the pension with no tax on it at all afaik

So putting £20k a year into an ISA for say 20 years would get you for arguments sake £0.8m including returns and reinvestment. The same for a higher rate taxpayer in a pension would be worth £1.33m. If you died at that point, your £800k in an ISA would be hit with a 40% inheritence tax and you will have less than £500k to pass on. Your pension the whole £1.33m would pass on tax free if you died before age 75, if after age 75 then the receiver of the pension pays their marginal rate on any they draw from the inherited pension pot

or at least that is my understanding of how it works

yes i heard it does work like this. however i dont expect to have children and i expect to use all my money before i die.