Reply With QuoteLarge developers renting direct on the up, that wing be good for renters price wiseOriginally Posted by Montello
Although if enough part-time BTL landlords sell up then the price of properties should drop and make them more affordable to current tenants :0)
Large developers renting direct on the up, that wing be good for renters price wise
The BTL landlords would sell the small houses and use the money to buy themselves a nice big house to live in and that would push price upwards. If they didn't do that, they would use the money to help buy their kids a house.
The simple fact is that we are a little island with not enough properties for the population. Prices will remain high because it's a case on many people wanting to occupy too few houses.
Any update?
Has the offer come in? Any update?
Landlords leaving the PRS is only a small slice of the total market so not enough to shift prices down but is enough to push rents up. Worst of both worlds for people who rent but want to own. Note not all tenants want to buy.
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Had two offers, both asking price, but the people need to sell their homes so it’s still on the market.
Edit. I’ll also add as small time and accidental landlords sell up the quality of the rental stock will fall. Most small timers care about their one or two properties and deal with maintenance issues. Housings associations and corporate landlords are less caring in my experience.
Last edited by Montello; 18th March 2023 at 23:30.
The relaxation of the pension lifetime and annual allowance has finished property speculation for good.
Now the wealthy can put a tax free £5k per month into the highly efficient tax wrapper, or get taxed to the hilt on a BTL.
The current banking crisis is also going to shift the risk appetite of the banks, and lending will get tighter.
Oh, and interest rates are still climbing.
Perfect storm is coming.
For tenants I assume you mean.
Many people become property investors by accident.
New relationships where both parties have a property and inheritance.
The idiots on YouTube trumpeting their BTLs are not representative of the PRS.
Property investment is still unique as it allows leverage.
That said I can’t see many people choosing to grow their BTL exposure so more rent increases will make life even harder for those who need/wish to rent.
Rents are or have peaked. Evidence is stacking up on this. Next step is rents fall; wages not keeping up with inflation, high prices across the board, general uncertainty and job losses (a few thousand at Credit Suisse London will be gone by the year end).
Gearing is fantastic in a rising market, but ruinous in a falling market.
BTL is now taxed to the hilt. Do yourself a favour and direct £5k per month tax free into your pension. You can stick £180k into your pension next year if you have fully carry forward. Watch it grow tax free and IHT friendly. Go back into property in a few years when the sh1tstorm subsides.
Any daydreaming thoughts I had of buying a small place on the coast has gone. Pensions are now so attractive I am piling everything into those.
I’d get that bungalow sold. Don’t waste your time with unproceedable buyers, and don’t chase the market down. Take an offer and get rid quickly.
And mr noble has gone quiet on the FTBs he has paying full whack for the BTL he is offloading.
Last edited by noTAGlove; 19th March 2023 at 14:58.
Your Uber bear position on the market is noted.
I’m not wasting any time with unproceedable buyers, the bungalow is still in the market. If I had a buyer in a position to buy I’d snap their hand off not because I fear market implosion but just because it’s a job I’d rather have done.
I wish I had £5k per month to add to a pension.
I only have 2 investment properties, neither are mortgaged. I’d like to exit but I don’t really want to evict good tenants.
Being a landlord is a pain and I’d rather not be one but the implications of exit are not trivial.
Last edited by Montello; 19th March 2023 at 15:05.
It is not just that I am bearish, but I strongly believe pension is a much better investment than property at the moment, given the recent announcements. that has not been the case for very many years.
Withdraw up to £50k pa out of your pension at an effective tax rate of 15% (given 25% can be taken as cash) and zero NI. Load up your pension with 40%+ tax relief.
For those who can't afford to do it, as long as you are earning higher rate tax, you can use sale of assets or other savings to fund it. All that matters is that you have earnings at least cover the contribution. It doesn't have to come from your earnings.
I am in a race at the moment to reallocate cash to my pension given the new rules and before April 5th. I'm cashing in all I can and it is a race, and a difficult one at that.
Pensions are the new BTL.
Edit : with personal allowance the actual tax rate on a £50k pa pension is only <12% if the cash free lump sum is taken, and no NI to pay. If you contribute salary sacrifice to you pension you also get the 2% NI relief, so 42% tax relief between £50-£100k, 62% tax relief for £100-£125k and 47% tax relief for £125k+. No brainer at the moment compared to property.
Last edited by noTAGlove; 19th March 2023 at 15:37.
Well it is when you are bearish but if you were bullish you’d get a big loan and pile in.
You are basically market calling an asset class. Time will tell.
Never let the tax tail wag the investment dog.
Last edited by Montello; 19th March 2023 at 17:34.
Academic question if I may. If a BTL landlord decides to sell up all his properties to invest in a pension, will he have to pay capital gains tax on the properties and then have only the net amount to put into the pension? That would be a disincentive.
If you sell an investment property to have to pay CGT regardless of what your plans are for the proceeds.
Yep, no escaping CGT. But is that a disincentive? You can keep the property until you die, but then it is subject to IHT, so no escape.
And, there are no pockets in shrouds, so presumably a BTLer wants to sell the property at some point and drawdown the profits. If so, no point doing that in your 60s or 70s as you have little earnings, so cannot recycle it into your pension for significant tax relief.
Best time to do it is when you still have a sizeable taxable income. Yes, you have to pay the CGT, but you can recycle the gains straight into your pension for 40 to 62% tax relief.
You can debate what is best for a BTLer to do now, but going forward new BTL is dead. The pension changes have made it very attractive for high earners who where already close to the LTA (or not).
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Are you piling it all into REITs 😂
Haha.
It is this years annual allowance and a good chunk of carry forward which I haven't been able to use because of the previous limit on LTA. But since LTA has been scrapped, and my existing pension is all DB, it makes sense for me to back up the truck and go all in.
Given the febrile nature of the markets I am going to stick it in the deposit fund for now (3% risk free return net of fees), and then drip feed it into investment products over the next 6+ months.
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Nice position to be in, who’d have thought the LTA would get scrapped, giving more tax breaks to the most wealthy … no wonder they have to screw the rental market to help out the 1%
The biggest benefit of scrapping the LTA will presumably be IHT avoidance.
Soz, I’ve not been reading up on here as much lately. Kids getting older, lots going on.
I did spend the last two weeks slightly nervous that my FT buyers were going to flake on me, but we exchanged on Friday and complete this Wednesday. Very pleased.
Bit of CGT to pay (£50kish) and then I’ll whack the rest into Argo.
Well played!Soz, I’ve not been reading up on here as much lately. Kids getting older, lots going on.
I did spend the last two weeks slightly nervous that my FT buyers were going to flake on me, but we exchanged on Friday and complete this Wednesday. Very pleased.
Bit of CGT to pay (£50kish) and then I’ll whack the rest into Argo.
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Good result, maybe reconsider the last bit mind …Soz, I’ve not been reading up on here as much lately. Kids getting older, lots going on.
I did spend the last two weeks slightly nervous that my FT buyers were going to flake on me, but we exchanged on Friday and complete this Wednesday. Very pleased.
Bit of CGT to pay (£50kish) and then I’ll whack the rest into Argo.
Edit. Although had you done that at Christmas you’d be pretty happy now.
Last edited by Montello; 19th March 2023 at 23:19.
Haha. Quite right. I took the opportunity, at Christmas, to average down my big crap Argo holding.
Will try to be sensible with the new funds.
Might have another go with SMT now it’s down low, but mostly safe tracker funds. Got to make it to August before we can use the funds to pay our own mortgage down.
My recent SMT investment is down 12% following the SVB collapse :-(
Assume you're not accruing any more in the DB?
Last edited by gunner; 20th March 2023 at 12:33.
For DB only the maximum 5% RPI increase as per the current scheme rules, even though inflation is higher. So nothing that counts towards AA.
The DB scheme closed to all employees nearly two years ago. Now we get an additional percentage payment of our salary which we can do what we like with.
With the previous LTA limit I have been taking it as cash, but that is now changing.
NTL - take your point about the new attraction of pension.
But what about people who need income? You cannot touch those funds until you drawdown...am I missing something?
I have some BTL and was pretty brave in buying another last week...big risk this time, yes...but it should provide a monthly income which is important to us at this stage.
I could instead have used that cash to pile extra into pension - but then cannot touch the money for a long time. Perhaps age is a factor here, anyone closer to retirement age / 55 and yes it is a different equation!
Everyone's situation is different, which is essentially my point (unless I am missing something).
Longer term, I would look to re-mortgage that BTL when rates sort themselves out, (yes I know it could be years) and would hope that I would get most of the money back out of it. Therefore, more flexible than pension and a monthly income.
Income? Isn't that generally why we all go to work? Or is that just fools and horses.
Of course, one size does not fit all. Horses for courses and all that. And I get the whole gearing aspect of BTL to provide an income which is unique. As good as gearing can be for wealth with ever increasing prices, it can be crippling during price falls, especially if it creates difficulty with re-mortgaging.
But directionally, mortgage rates aside, BTL is being hammered by the Government of the day through taxation and legislation.
On the other directional side, the Government of the day is now being extremely tax friendly to pensions.
Typically it is best not to push water uphill, and be friends with, rather than fight Government policy.
As always YMMV.
From my perspective it's only fools and horses, tongue in cheek, sorry but that's just the honest based on my personal experience...I/We worked in the beginning as we all must to survive, saved the excess hard, used that for BTL's, stopped work at 39, moved to Spain by 40, been here coming up 12 years now, happy days.
Pensions, I'm not keen...it's your money, hard earned, but you can't get at it for years, also I recollect how GB pension returns compared badly with those in other parts of Europe, dunno if that's been addressed...hmm, maybe I'm just a bit of a control freak. That said I've got a couple of small work ones from back then.
Rather than another BTL or 2 in UK though, I've gone for joining in an urban renewal/development project in the USA.
Last edited by Passenger; 20th March 2023 at 15:19.
Bravo Sir. As one of the 'good guys', I'm genuinely happy for you.
I'm trying to build a passive income from BTLs so that I can ease off the gigs and have a life. This week I am working every single day for the next two weeks. Its not sustainable in the long term.
Thank you and the very best of luck to you. I firmly believe there's no point working yourself to death...and all the money in the world won't buy another minute of time.
Huge opportunity for maxing the pension pot to minimise IHT as that sits outside of the allowances ... I can see people using this for IHT avoidance.
I wonder if JH even considered that ...
I know the 40% tax threshold is quite a bit higher in England than in Scotland but if you are at the present LTA and start lumping in will your pension not then likely breach the higher rate threshold and you end up paying tax anyhow.
That is true if you only get 40% tax relief on the way in and pay 40% tax on the way out. Only benefit the. Is the tax wrapper and IHT.
That said if you only plan to limit your pension income to £50k and pay 20% tax (don’t forget the personal allowance and no NI to pay), you take a 25% lump sum (I know that has frozen at £286,275) or earn at marginal rates of 45% or 60% tax, then combined with the tax wrapper and IHT it is juicy benefit.
Plus if you move abroad to a lower tax country, it makes sense too as you pay less tax on the way out.
Just got to work the system to maximise the benefit. But, they are there and they are considerable.
Hold my beer
Very much so. A nice tax break for the most wealthy in society.
A major future problem for those who now go all in with pension contributions and end up way past the “old” LTA, is that if Labour get into power and reverse the rule change, everyone is screwed.
They’ve already said they will reverse it for everyone except senior consultants/doctors etc.
Unlikely Labour will reverse. Maybe a cap at £1.5 or £1.8M. I would like to see how they differentiate fiscal policy between doctors and everyone else.
History tells us that fixed protection is usually offered as retrospective taxation is not practical.
Getting a bit outside of the topic and G&D rules, but you’d have to expect a new Labour government to hit the most wealthy in some ways just for the PR, a pensions heist would be close to the top of the list, as would screwing landlords.
They’ve already said they will reverse parts of this. I think I read this last week.
Sure. Just making hay while the sun shines. It has been pretty rainy for most of the last decade.
Ironically, history tells us Labour that had by far the most generous pension allowances.
It was the Tories that really cut the AA and LTA very hard.
I wouldn’t read into to much of what the opposition says 24 hour after a budget. Not heard anything about it since.
It is not changing my plans.
I wouldn’t either in your shoes. No point trying to make plans based on a political forecast. That’s harder to get right than forecasting property prices.
Interesting. Any investment in the lifestrategy 60% fund?Hold my beer
The last few days have not given me any confidence in my predictions.
I am worried that inflation targets will be sidelined to keep the banking and debt system afloat. If this happens this puts more risk on pensions, and make assets (including BTL more desirable).
Difficult to follow and investment plan when there is zero forward guidance, and the central banks seem to be making it up as they go along. I think it is just cross my fingers time.
The next few months are going to be interesting.
No I've kind of got a LS 90 fund by having both the 100 and 80 but most of my holding is in the HSBC tracker although I'm no longer contributing to HL, I've a separate pension with another provider (NEST) where my workplace pension goes
And that’s the crux, this thread is pages of discussion over the future of property. A range of opinions all equally plausible. But ultimately no one actually knows.
That’s the problem with market forecasting, everyone loves to do it and most people get it wrong.
My own attempts at market calling that I actually backed with serious money stand at 2 wins and 1 painful fail.
One thing I have learned is that attempting to call markets and time investments is near impossible and I believe there is plenty of research that states time in the market is the over riding king.
Diversification is the only sure bet so I now try and back a range of assets, including property hence my interest in this discussion.
Labour would differentiate for the doctors in the same way it’s been done for Judges. I’ve no idea why the chancellor didn’t just add Docs/GP/etc to this scheme.
See the first point on page 8 where it says there is no LTA for judge’s pensions.
Labour agree that there are other segments of the workforce who should be included in a scheme like this but they’ve said they strongly disagree that everyone should benefit. They would reverse it for all except those they think deserve it.
https://assets.publishing.service.go...accessible.pdf
Last edited by mr noble; 21st March 2023 at 08:00.
Why are some professions more worthy of a tax break than others?
Tax unregistered schemes do not have a limit on AA and LTA, but contributions do not receive tax relief and you can't claim the 25% tax free lump sum. Ouch!! I imagine it screws up IHT tax benefits too. Seems like all the major benefits of contributing to a pension are lost.
Any sensible judge will ditch their current scheme for a tax-registered scheme, where they still get unlimited LTA but now all tax relief and source and the 25% lump sum and IHT benefits.
Good luck Labour imposing these vastly inferior schemes on doctors. I reckon they'd be retiring in droves, more than they where before the recent announcement. And probably retiring all at once given the step change in benefits if Labour brought in the scheme. I am not worried by this.
https://www.mypension.com/moj/jps-2022/
I can choose massive tax relief and benefits of contributing to a pension OR virtually no/negative gross yield on a BTL at current house prices, house price falling, and all the day-to-day crap of having to manage a property and tenants.
I know where I would rather be investing my money at the moment, and given the number of unfurnished flats (without a chain) on Zoopla for sale in my part of the country, it looks like I am not the only one.
Well, they’re not really, are they. But they had to do something to stop judges retiring early purely because of the LTA. The consequences to the judicial system would have been dire otherwise.
Same goes for the senior consultants. They’ve of huge value to the NHS, so if that’s what it takes to keep them working for a few more years, so be it.
I’m no great supporter of another tax break for the rich, but I think people don’t realise how easy it is/was to hit the LTA if you’re in a good job for most of your career.
Last edited by mr noble; 21st March 2023 at 10:05.
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