The end of BTL for new investors?

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The end of BTL for new investors?

Post by Tokyo Sexwale @ Thu Nov 26, 2015 8:33 am

The chancellor has introduced a new additional 3% SDLT on additional/second homes to deter people (pensioners mainly I assume) from buying more BTLs.

Is this finally the end for the individual investing in BTLs? With this and the new changes in tax relief on mortgages, it make all but the highest yielding properties quite unattractive.

How do you see this panning out in the future? Do you think existing BTL owners will be the lucky ones who got in early and will be able to continue owning their portfolios till retirement or will the chancellor continue on the anti-property investment drive and make these unattractive to own too?

Or will BTL places just take a small hit on purchase price to cover the SDLT?
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Re: The end of BTL for new investors?

Post by Clown Ice Skater #4 @ Thu Nov 26, 2015 8:48 am

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Re: The end of BTL for new investors?

Post by Dirk @ Thu Nov 26, 2015 9:05 am

I don't think it will TS. I think over time the price of BTLs will relative drop a little compared to what it would have done to get the net yield to the same point. But that will be hidden behind much bigger changes

CIS- much less than half of the revenue will be from London

Osborne is throwing special measuyres at London such as these interest free loans that will put prices up a bit as it will be more affordable (a small amount). All that money is largely irrelevant.

London is a fixed area. There are a limited amount of brownfield sites. Demand exceeds supply. So the only way to resolve that is to have smaller housing units. That is politically untenable.

So the alternative is to make people not want to live in London, which means moving some jobs elsewhere, e.g. Civil Service.
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Re: The end of BTL for new investors?

Post by Tokyo Sexwale @ Thu Nov 26, 2015 9:06 am

Clown Ice Skater #4 wrote:As is often the case, they are targeting the wrong area, IMO. BTL isn't inherently bad or immoral, but the lack of regulation around the private rental market is a problem.


Agreed. An alarming stat I heard the other day was that the 'average' BTL landlord owned 1 investment property and was not a higher rate tax payer.

Which average they've used for that I'm not sure but I suspect a lot of landlords who fit that description attempt to do it all on the cheap and cut corners at every opportunity. Some of the flats I've seen (and bought) have been well below standard not just in terms of regulations but also just general upkeep and yet the landlords have been making decent yields and decent capital gains.
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Re: The end of BTL for new investors?

Post by Ghost @ Thu Nov 26, 2015 9:16 am

I imagine those who want to stay in this market, or get into it, will factor the extra purchasing cost into their calculations, and offer less when buying.
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Re: The end of BTL for new investors?

Post by Käsemeister @ Thu Nov 26, 2015 9:32 am

Some of the "best" BTL are below SDLT threshold anyway which renders it rather irrelevant.
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Re: The end of BTL for new investors?

Post by Tokyo Sexwale @ Thu Nov 26, 2015 9:34 am

Käsemeister wrote:Some of the "best" BTL are below SDLT threshold anyway which renders it rather irrelevant.

I think I read that the new rule applies on £40k+ purchase prices.
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Re: The end of BTL for new investors?

Post by Bodhi @ Thu Nov 26, 2015 9:36 am

Tokyo Sexwale wrote:
Clown Ice Skater #4 wrote:As is often the case, they are targeting the wrong area, IMO. BTL isn't inherently bad or immoral, but the lack of regulation around the private rental market is a problem.


Agreed. An alarming stat I heard the other day was that the 'average' BTL landlord owned 1 investment property and was not a higher rate tax payer.



Won't the majority of the 1 property BTL landlord's be earning a base rate salary and taking dividends though?
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Re: The end of BTL for new investors?

Post by Tokyo Sexwale @ Thu Nov 26, 2015 9:37 am

Bodhi wrote:
Tokyo Sexwale wrote:
Clown Ice Skater #4 wrote:As is often the case, they are targeting the wrong area, IMO. BTL isn't inherently bad or immoral, but the lack of regulation around the private rental market is a problem.


Agreed. An alarming stat I heard the other day was that the 'average' BTL landlord owned 1 investment property and was not a higher rate tax payer.



Won't the majority of the 1 property BTL landlord's be earning a base rate salary and taking dividends though?

Tax brackets don't discriminate on how you're paid, just what you're paid.
Last edited by Tokyo Sexwale on Thu Nov 26, 2015 9:37 am, edited 1 time in total.
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Re: The end of BTL for new investors?

Post by Dirk @ Thu Nov 26, 2015 9:39 am

Tokyo Sexwale wrote:
Käsemeister wrote:Some of the "best" BTL are below SDLT threshold anyway which renders it rather irrelevant.

I think I read that the new rule applies on £40k+ purchase prices.

they apply on anything

So if a property is 0 rated for SD, then they will now be 3% as a BTL; if they were 2% SD; they would now be 5%.

Its 3% up on whatever it was (in the case of BTLs only)
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Re: The end of BTL for new investors?

Post by dirtyboy @ Thu Nov 26, 2015 9:41 am

Will this apply to a Limited Company?
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Re: The end of BTL for new investors?

Post by Dirk @ Thu Nov 26, 2015 9:42 am

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Re: The end of BTL for new investors?

Post by Il Duce @ Thu Nov 26, 2015 10:50 am

I think that BTL landlords will just pass on the increases by bidding lower on properties and also raising rents.
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Re: The end of BTL for new investors?

Post by Rod Rammage @ Thu Nov 26, 2015 11:02 am

An extra 3% is nothing, really.

£600 on a £200k house, for example. Or £30k on a £1mil house. It wouldn't put you off.

The interest / tax thing is much more of a deterrent and IMO kills BTLs where you are borrowing a high proportion of the purchase price.

Still makes sense as an investment if you can buy cash though, when you consider yield and capital growth.
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Re: The end of BTL for new investors?

Post by So caring @ Thu Nov 26, 2015 11:06 am

Rod Rammage wrote:An extra 3% is nothing, really.

£600 on a £200k house, for example. Or £30k on a £1mil house. It wouldn't put you off.

The interest / tax thing is much more of a deterrent and IMO kills BTLs where you are borrowing a high proportion of the purchase price.

Still makes sense as an investment if you can buy cash though, when you consider yield and capital growth.

6k not £600...which could easily be a year's 'profit'.
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Re: The end of BTL for new investors?

Post by Tokyo Sexwale @ Thu Nov 26, 2015 11:11 am

I wrote:
Rod Rammage wrote:An extra 3% is nothing, really.

£600 on a £200k house, for example. Or £30k on a £1mil house. It wouldn't put you off.

The interest / tax thing is much more of a deterrent and IMO kills BTLs where you are borrowing a high proportion of the purchase price.

Still makes sense as an investment if you can buy cash though, when you consider yield and capital growth.

6k not £600...which could easily be a year's 'profit'.
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Re: The end of BTL for new investors?

Post by Rod Rammage @ Thu Nov 26, 2015 11:12 am

So caring wrote:
Rod Rammage wrote:An extra 3% is nothing, really.

£600 on a £200k house, for example. Or £30k on a £1mil house. It wouldn't put you off.

The interest / tax thing is much more of a deterrent and IMO kills BTLs where you are borrowing a high proportion of the purchase price.

Still makes sense as an investment if you can buy cash though, when you consider yield and capital growth.

6k not £600...which could easily be a year's 'profit'.


Spastic.
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Re: The end of BTL for new investors?

Post by Tokyo Sexwale @ Thu Nov 26, 2015 11:12 am

Carnage!
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Re: The end of BTL for new investors?

Post by Rod Rammage @ Thu Nov 26, 2015 11:17 am

<shakes head>
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Re: The end of BTL for new investors?

Post by Monty @ Thu Nov 26, 2015 12:39 pm

Gosh! I'm glad Rammage usually sticks to fat burds & not economics.
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Re: The end of BTL for new investors?

Post by Bodhi @ Thu Nov 26, 2015 12:42 pm

:rofl:
Idiots!!
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Re: The end of BTL for new investors?

Post by Clown Ice Skater #4 @ Thu Nov 26, 2015 12:44 pm

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Re: The end of BTL for new investors?

Post by span @ Thu Nov 26, 2015 1:31 pm

Rod Rammage wrote:
So caring wrote:
Rod Rammage wrote:An extra 3% is nothing, really.

£600 on a £200k house, for example. Or £30k on a £1mil house. It wouldn't put you off.

The interest / tax thing is much more of a deterrent and IMO kills BTLs where you are borrowing a high proportion of the purchase price.

Still makes sense as an investment if you can buy cash though, when you consider yield and capital growth.

6k not £600...which could easily be a year's 'profit'.


Spastic.

:laugh:
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Re: The end of BTL for new investors?

Post by Rod Rammage @ Thu Nov 26, 2015 3:00 pm

Monty wrote:Gosh! I'm glad Rammage usually sticks to fat burds & not economics.


:blush:

The zero on my keyboard is broken, sadface.
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Re: The end of BTL for new investors?

Post by Darthdeathdealer @ Thu Nov 26, 2015 3:13 pm

Tokyo Sexwale wrote:The chancellor has introduced a new additional 3% SDLT on additional/second homes to deter people (pensioners mainly I assume) from buying more BTLs.

Is this finally the end for the individual investing in BTLs? With this and the new changes in tax relief on mortgages, it make all but the highest yielding properties quite unattractive.

How do you see this panning out in the future? Do you think existing BTL owners will be the lucky ones who got in early and will be able to continue owning their portfolios till retirement or will the chancellor continue on the anti-property investment drive and make these unattractive to own too?

Or will BTL places just take a small hit on purchase price to cover the SDLT?


I rent my place, my landlord has already shit a chicken and tried to get shot of the place (to no avail as yet). He did give me first refusal, but I really don't need a mill stone around my neck like that right now.
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Re: The end of BTL for new investors?

Post by Il Duce @ Fri Nov 27, 2015 12:42 pm

Darthdeathdealer wrote:
Tokyo Sexwale wrote:The chancellor has introduced a new additional 3% SDLT on additional/second homes to deter people (pensioners mainly I assume) from buying more BTLs.

Is this finally the end for the individual investing in BTLs? With this and the new changes in tax relief on mortgages, it make all but the highest yielding properties quite unattractive.

How do you see this panning out in the future? Do you think existing BTL owners will be the lucky ones who got in early and will be able to continue owning their portfolios till retirement or will the chancellor continue on the anti-property investment drive and make these unattractive to own too?

Or will BTL places just take a small hit on purchase price to cover the SDLT?


I rent my place, my landlord has already shit a chicken and tried to get shot of the place (to no avail as yet). He did give me first refusal, but I really don't need a mill stone around my neck like that right now.


That's promising.
Hopefully it'll get rid of the fvcking "one house" chancers.
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Re: The end of BTL for new investors?

Post by thekungfury @ Fri Nov 27, 2015 12:45 pm

Why would someone who already owns a property want to sell up due to these new SD rules? Makes no sense at all.
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Re: The end of BTL for new investors?

Post by Darthdeathdealer @ Fri Nov 27, 2015 12:47 pm

thekungfury wrote:Why would someone who already owns a property want to sell up due to these new SD rules? Makes no sense at all.


He used to use it as some sort of tax breaker, for his business. It's changed enough for him to not see it as useful anymore, I guess.
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Re: The end of BTL for new investors?

Post by Tokyo Sexwale @ Fri Nov 27, 2015 12:52 pm

thekungfury wrote:Why would someone who already owns a property want to sell up due to these new SD rules? Makes no sense at all.

Exactly.
Darthdeathdealer wrote:
thekungfury wrote:Why would someone who already owns a property want to sell up due to these new SD rules? Makes no sense at all.


He used to use it as some sort of tax breaker, for his business. It's changed enough for him to not see it as useful anymore, I guess.

Oh that makes even less sense now.
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Re: The end of BTL for new investors?

Post by Dirk @ Fri Nov 27, 2015 12:56 pm

thekungfury wrote:Why would someone who already owns a property want to sell up due to these new SD rules? Makes no sense at all.

I assumed it was the changes to the tax rules on interest that was making him sell rather than SD
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