Viewing 40 posts - 1 through 40 (of 82 total)
  • Looks like the government hate campaign against BTL landlords may backfire
  • Gary_M
    Free Member

    Us nasty landlords will make even more money

    The cost of renting in the UK could rise faster than house prices over the next five years, surveyors have warned.

    At the end of that period tenants could find themselves having to pay at least 25% more than they do now, according to the Royal Institution of Chartered Surveyors (Rics).

    Simon Rubinsohn, Rics chief economist, blamed government moves to discourage buy-to-let landlords.

    ahwiles
    Free Member

    It’s not a hate campaign, it’s still a state-sponsored gravy train.

    matt_outandabout
    Full Member

    It always was going to upset a market – rented and buying.

    trail_rat
    Free Member

    Im fairly sure they must have employed a rocket scientist to see this…….

    Im sure stw predicted this when announced.

    Only folks benifiting are the gov tax coffers

    dragon
    Free Member

    I dunno how you worked out you’d make more money, and even if you do the government will be taking more in tax anyway.

    Gary_M
    Free Member

    Im sure stw predicted this when announced.

    Yes I said the same the other day, if you restrict supply, then unless demand changes, price will go up. The government strategy of trying to get more people to buy houses suggests that they don’t know why many people rent rather than buy.

    I dunno how you worked out you’d make more money, and even if you do the government will be taking more in tax anyway.

    Rent goes up, profit goes up, I won’t pay more tax unless the tax rate for landlords changes.

    binners
    Full Member

    You can’t blame landlords.

    Its Governments of both colours that have manipulated the housing market for their own short-term political ends, that have created this absolutely dysfunctional car crash. And now it is just no longer sustainable

    Someone at some point has to get a grip and acknowledge that the primary objective of housing should be to actually put roofs over peoples heads, rather than provide returns for investors, and an artificially inflated cash machine for lucky baby boomers to borrow against to buy more shiny things.

    I doubt this will help. It needs a proper house building program, not more politically motivated tinkering

    nickc
    Full Member

    Someone at some point has to get a grip and acknowledge that the primary objective of housing should be to actually put roofs over peoples heads, rather than provide returns for investors

    Massively this.

    tthew
    Full Member

    I won’t pay more tax unless the tax rate for landlords changes.

    Effectively this is happening. I’m not a landlord, but I believe that from 2017 you’ll be paying tax on the whole of the rental income, rather than the difference between mortgage payments and income. (feel free to correct me if I’m wrong)

    Gary_M
    Free Member

    But you’re assuming that everyone who has a BTL has a mortgage on it. And the people who don’t make much profit, so the tax changes will have a big impact on them, will be selling their properties. Which will restrict supply, which will push the price up of rented accommodation. Obviously that’s a very simplified look at it, as demand will fall as suddenly many renters will be able to afford a house (yeh right).

    tthew
    Full Member

    Yes, I know the new rule favours those who don’t. I’m sure most BtL-ers have some kind of loan, usually interest only. – edit – I hope the final point of your sneaky edit comes true, enabling those who would prefer to buy to get on the ladder.

    This may be the bubble-busting event for an overheated market that the financial crash didn’t quite make happen. Houses are far too expensive, and have been for years.

    Gary_M
    Free Member

    Yes, I know the new rule favours those who don’t. I’m sure most BtL-ers have some kind of loan, usually interest only.

    yes but the new rules will only filter out people with a BTL who are making minimal, or no, profit and are relying on increase in the house price to turn a profit. If they start making a loss they’ll sell.

    MSP
    Full Member

    But you’re assuming that everyone who has a BTL has a mortgage on it

    BTL means they do have a mortgage on the property, if they don’t then they are just a landlord.

    There may be some short term pain, but ending the BTL market as it is needs to happen. It will be much worse if the current situation is allowed to continue.

    Frankly creating a market so reliant on mass loans for investment has just been **** insanity.

    Gary_M
    Free Member

    Some people may have ‘bought to let’ and paid the mortgage off, BTL has become a catch all phrase for small scale landlords.

    scotroutes
    Full Member

    yes but the new rules will only filter out people with a BTL who are making minimal, or no, profit and are relying on increase in the house price to turn a profit. If they start making a loss they’ll sell.[/quote]If they start selling then supply will increase and prices will fall?

    eddie11
    Free Member

    I don’t think landlords can complain too much. Government are also doing their level best to murder the low cost competition from housing associations and councils.

    matt_outandabout
    Full Member

    If they start making a loss they’ll sell.

    a) Or find themselves in negative equity, so facing the choice of loss of capital or monthly cost.
    b) Perhaps enough will sell, causing the market to deflate.
    c) See A

    ernie_lynch
    Free Member

    the primary objective of housing should be to actually put roofs over peoples heads, rather than provide returns for investors

    Well yes but I would be very careful about attempting to make a clear distinction between the two.

    Britain experienced its biggest house building programmes in the years following WW2 when the country was completely skint. This was only made possible through borrowing, and the borrowing in turn was made possible due to the certainty of returns for investors.

    binners
    Full Member

    Calling this a hate campaign is a tad melodramatic. The housing market in its present state is a ticking time bomb sat at the heart of the economy. The BofE are trying to slowly deflate another potentially catastophic housing bubble and prevent it from exploding and taking half the economy with it.

    If you think these proposals are bad, how do you think that alternative scenario would play out for you financially?

    Gary_M
    Free Member

    If they start selling then supply will increase and prices will fall?

    Supply of houses will increase, not supply of houses on the rental market.

    Calling this a hate campaign is a tad melodramatic.

    It was tongue in cheek.

    If you think these proposals are bad, how do you think that alternative scenario would play out for you financially?

    I didn’t say it was bad, a restriction in supply, and the subsequent increase in rent due to restricted supply, of rental accommodation suits me fine.

    ernie_lynch
    Free Member

    The housing market in its present state is a ticking time bomb sat at the heart of the economy.

    Yep. I’ve heard it said that when, not if, the bubble of unaffordable rent collapses/bursts, the devastation wrought will be unprecedented. It will among other things totally shaft those who have based their retirement plans on income from rented property.

    Gary_M
    Free Member

    It will among other things totally shaft those who have based their retirement plans on income from rented property.

    Meanwhile serious property investors who don’t have mortgages on their properties, for example large corporations, will be sitting pretty. So the little guy gets shafted, big business wins. It’s almost as if the tories planned it that way.

    ernie_lynch
    Free Member

    the subsequent increase in rent due to restricted supply, of rental accommodation suits me fine.

    You don’t seem to appreciate that housing rents can’t simply to continue to rise indefinitely.

    Well not continue to rise above the rate of increase to wages/income.

    People simply can’t afford rent which exceeds their income. Obviously.

    scotroutes
    Full Member

    It’s OK. the Government will just have to increase benefits accordingly.

    Gary_M
    Free Member

    You don’t seem to appreciate that housing rents can’t simply to continue to rise indefinitely.

    Well you would think that, but restricting supply won’t benefit the tenants that’s for sure.

    ernie_lynch
    Free Member

    It’s OK. the Government will just have to increase benefits accordingly.

    Won’t they just.

    IanMunro
    Free Member

    The UK’s population is growing by 500,000 a year. That’s a lot of houses that need to be built for supply to start outstriping demand.

    jimdubleyou
    Full Member

    … for example large corporations, will be sitting pretty. So the little guy gets shafted, big business wins…

    Do many large corporations hold large numbers of residential properties as rental portfolios?

    ernie_lynch
    Free Member

    Well you would think that

    No I can guarantee that. As I said, people simply can’t afford rent which exceeds their income.

    The sky is not the limit.

    binners
    Full Member

    … for example large corporations, will be sitting pretty. So the little guy gets shafted, big business wins…

    Are you somehow unfamiliar with the usual beneficiaries of neoliberal economics?

    binners
    Full Member

    Do many large corporations hold large numbers of residential properties as rental portfolios?

    like this?

    ernie_lynch
    Free Member

    Here’s an interesting quote :

    Housing is the first of the social services. It is also one of the keys to increased productivity. Work, family life, health and education are all undermined by crowded houses. Therefore, a Conservative and Unionist Government will give housing a priority second only to national defence. – Conservative Party election manifesto 1951

    And they were true to their word :

    jimdubleyou
    Full Member

    Do many large corporations hold large numbers of residential properties as rental portfolios?

    Like this?

    [/quote]

    No, I was more thinking of your FTSE 100 types. I haven’t heard of many big corporations that make private housing rentals their business.

    Britain’s biggest buy-to-let landlords after their hobby “simply got out of control”

    Quite

    pjt201
    Free Member

    Gary_M – Member

    It will among other things totally shaft those who have based their retirement plans on income from rented property.

    Meanwhile serious property investors who don’t have mortgages on their properties, for example large corporations, will be sitting pretty. So the little guy gets shafted, big business wins. It’s almost as if the tories planned it that way.[/quote]

    That’s exactly what the bank of england (if not the government) want to do – BTL (not being a landlord, but taking an interest only mortgage and gambling on the house price increasing without taking out any other endowment) as a retirement plan is massively risky in the current financial climate and they have realised that the vast majority of people would be better off without this (well actually BoE see the risk to the financial institutions who have lent the money – when these properties turn into negative equity the banks can’t recover their initial outlay as it’s an interest only purchase).

    brooess
    Free Member

    OP – I’m sure you well know that the effort to kill BTL is as much about trying to prevent a bursting of the bubble in the housing market as anything political – read what Mark Carney has to say about it – there’s simply way too much debt underpinning it, whatever your individual setup.

    Given that both government and consumers are in more debt than we were in 2008, another housing-led bust will lead to far worse consequences than last time in terms of people’s livelihoods… we’ll be in a desperate state – which will hit people poorer and older more than the average STWer and BTL landlord…

    I’ll give you that Osborne is a highly political creature and both his boosting of house prices and undermining of BTL have, IMO, highly political objectives, but BTL is a crisis in the making and I don’t think you can dismiss the very real negative consequences that another bust will have for us all just because it spoils the plans you have for yourself…

    Besides all this ‘rent will go up’ is propaganda – no-one knows what will happen – there’s more to housing than supply and demand. it’s more about supply of ability to pay.
    As the letting agent I spoke to last week said, rent comes from post-tax pay, not credit supply so tenants can’t just be forced to spend more like mortgage payers can. Landlords need to remember that – if people can’t afford the rent they’ll just make other arrangements like staying with friends, parents, or emigration…

    Super high rents and mortgages are killing the real economy because it reduces the amount of disposable income we have – especially with wages largely stagnant for 10 years.

    BLTers need to remember there’s a bigger picture than their own desire for enrichment or pension provision and when they UK is in such a parlous state I don’t think complaining is going to go down to well amongst the masses – take a look at the comments on any news story on house prices and BTL and you’ll get a feel for the sentiment

    Happy Xmas…

    konabunny
    Free Member

    he people who don’t make much profit, so the tax changes will have a big impact on them, will be selling their properties. Which will restrict supply, which will push the price up of rented accommodation.

    …but will increase the supply of houses for sale, which will depress sale prices, which will cause some people to buy instead of rent which will cause rental demand to fall which will cause rents to fall AND the lower purchase prices will cause some people to buy to let which will increase supply of rental properties which will cause rents to fall, which will cause some people to rent instead of buy which will…

    It’s a dynamic and complicated market with all sorts of oddball human “noneconomic” behaviour. You can’t just say that x will cause y and then everything stops.

    ernie_lynch
    Free Member

    What konabunny says plus BTL actually amplifies the house price cycle beyond limits which would otherwise occur.

    BTL investors tend to enter the market if house prices are rising and exit if they are falling.

    This bandwagon buying and selling mentality acts to amplify the motion of prices, decreasing demand further when prices are going up and conversely releasing more supply into the market when prices are on their way down.

    In a rising house price environment, this positive feedback loop could lead to more people taking on more debt to buy more expensive houses, which could pose a risk to financial stability.

    When prices fall, landlords would be likely to try to sell their properties, especially if it meant rental income fell below the amount of interest necessary to service their mortgages. This would depress prices further.

    http://www.moneyobserver.com/news/21-12-2015/government-warns-buy-to-let-risks-to-economy

    cumberlanddan
    Free Member

    There a really simple solution to all this though isn’t there – build council houses and make them available to everyone.

    If the BTL brigade and other private landlords had decent, affordable competition which was based on demand rather than profit, they would have to step in line or go bust.

    How did a council house turn into something undesirable? The whole point of them was that you would have a manual worker and a bank manager side by side – was that just the tories or did something else happen?

    It does annoy me slightly that i’m with binners on this one…

    DrJ
    Full Member

    It’s OK. the Government will just have to increase benefits accordingly.

    Or they can work a few hundred more hours.

    http://www.independent.co.uk/news/uk/home-news/iain-duncan-smith-s-christmas-message-to-poorest-families-make-up-for-benefit-cuts-by-working-200-a6782586.html

    ransos
    Free Member

    The whole point of them was that you would have a manual worker and a bank manager side by side – was that just the tories or did something else happen?

    It’s something that we can in all honesty blame Thatcher for: her first Tory government stopped building new council houses, then allowed people to buy the existing stock for pennies, then kept the capital receipts rather than letting councils re-invest in new-build.

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