Buyers - wait till April for real bargains

Doc_N

On 6 April 2008 the recently announced Capital Gains Tax changes take effect. From that date second/third etc home owners get a very large cut in the CGT they have to pay on the sale of a property.

All the tax planning advice is telling them to wait until 6 April before selling, to minimize their CGT.

If they heed that advice, (and some of them won't be able to wait that long before bailing out) April is going to see another huge flood of BTL houses on the market.

That's going to lead to even more of an oversupply of houses on the market than there is now, with prices falling still further.

More good news for Fist Time Buyers.

scope

Time will tell.. We've heard the "prices will drop" for the last 5 years - generally well they havent.. Where I live they continue to go up..

Running_Horse

I've said before, if current unsold houses meet next year's new crop, pressure may finally force prices down. But unlike the last crash, many people do not need to sell, and will stay put for a year or two. With less houses coming to market, prices may not fall as much.

Who knows? Who cares? Time will tell.

michaels

Isn't there an opposite pressure on people who have had properties for a while and can currently benefit from taper relief to sell before April?

PasturesNew

scope wrote: »

Time will tell.. We've heard the "prices will drop" for the last 5 years - generally well they havent.. Where I live they continue to go up..

I can only go on your location as declared in your public profile beside your name, but here's "your area" and there are lots of significant price drops IMHO

http://www.propertysnake.co.uk/site/location/1171

scope

PasturesNew wrote: »

I can only go on your location as declared in your public profile beside your name, but here's "your area" and there are lots of significant price drops IMHO

http://www.propertysnake.co.uk/site/location/1171

A drop in asking price doesnt mean a drop in house prices. I bought my house in March and have followed the market ever since. That includes rightmove and houseprices.co.uk, and am amazed prices are still going up. It seems prices have gone up about 20k in the last 6 months.

This is the price drop of the highest drop property in my area:

08 Jul 2007First day listed (price £410,000)08 Jul 2007Price changed from £299,995 to £315,000 08 Jul 2007Price changed from £350,000 to £410,000 08 Jul 2007Price changed from £315,000 to £350,000

Doesnt really seem right, does it? I'd take the numbers on propertysnake with a pinch of salt. Its showing as down 26% from 410k to 299k, but it all happened in the same day.. eh?

m00m00

michaels wrote: »

Isn't there an opposite pressure on people who have had properties for a while and can currently benefit from taper relief to sell before April?

most of the people who will be struggling in BTL are the recent entrants who won't benefit from taper relief to any great extent.

the people who would gain most from taper relief are the people who will have bought before the current bubble, and the rents they are getting will certainly easily cover the mortgages and more, in most cases.

macaque_2

scope wrote: »

A drop in asking price doesnt mean a drop in house prices. I bought my house in March and have followed the market ever since. That includes rightmove and houseprices.co.uk, and am amazed prices are still going up. It seems prices have gone up about 20k in the last 6 months.

This is the price drop of the highest drop property in my area:

08 Jul 2007First day listed (price £410,000)08 Jul 2007Price changed from £299,995 to £315,000 08 Jul 2007Price changed from £350,000 to £410,000 08 Jul 2007Price changed from £315,000 to £350,000

Doesnt really seem right, does it? I'd take the numbers on propertysnake with a pinch of salt. Its showing as down 26% from 410k to 299k, but it all happened in the same day.. eh?

Would it be a problem for you if prices went down?

hearts

PasturesNew wrote: »

I can only go on your location as declared in your public profile beside your name, but here's "your area" and there are lots of significant price drops IMHO

http://www.propertysnake.co.uk/site/location/1171

From what I can see these are all new builds. So the original price was a guestimate by the developer. When they dont achieve this price they then reduce to find its level.
A true reflection of the market cannot be gained by looking at these. ;-)

Biggie

I agree for a true reflection we can only look at past data of sold house not what they come at the market,

though the asking price does reflect the sentiment of the market.

Red_Cat

I think that people in the "recent" BTL phenomenon have been entering that segment of house ownership for a decade. So assuming that they want to sell, they would be on the end of the taper providing them with less than 18% CGT charge.

Bear in mind that these people having bought properties a few years ago, would have enjoyed good growth on the estimated value of their properties and so generally, prices would have to go down a substabtial way before they were less than what they were acquired for.

It tends to be the latecomers to the BTL pary who will have most to lose, as their properties wil not have appreciated as much, and if they are newbies, they may well be getting cold feet and feel compelled to sell if prices decline.

If my understanding of tax law is correct, within two years of owning an additonal propery, you have to declare one as your main residence. So a good strategy, for a seller would be to declare the second property as the main residence and sell without CGT liability at all.