You seem rather intent on blaming BTL owners. The government has introduced a highly unfair and unorthodox taxation policy on BTL that has hugely penalised small, and often accidental, landlords. I agree with the point that anyone entering the arena post-2017 should have been alert to the risk resulting from interest rate rises.Originally Posted by noTAGlove
Blamed landlords in my recent posts? For what? Don’t be too defensive. I haven’t blamed anyone. I have just called it out for what it is; an underperforming investment.
It is not only new landlords post-2017, but pre-2017 landlords who had full taxation information available in 2017, but chose to continue with their investment.
As I say (without blame) just investment moral hazard.
It’s not just an underperforming asset though is it?! We’re talking about people’s homes.
Tell that to jwillans who is presumably going to ditch his tenants for tourists. And I don’t blame him if he is in negative or very low yield. He is not a charity.
It maybe people’s homes, but what matters to the landlord is their investment.
Last edited by noTAGlove; 12th August 2023 at 10:58.
Wrong on every point I'm afraid. The property became a BTL in 2004, has not been leveraged further and is high yield (even though the rent is significantly below market rates). My current tenant is planning to move out early 2024 hence the AirBnb consideration. Finally, while the property is an investment, I care significantly for the welfare of tenants and have made decisions in tune with this to my financial detriment.
Agreed, it’s a tax on revenue rather than profit.
It doesn’t mean that a rise in interest rates means a higher tax payment though, however anyone chooses to describe it.
Mortgage interest is no longer a deductible expense so has no more relevance on the tax calculation than a holiday in the Bahamas.
But, the BTL you own is an investment, full stop. You can dress it up all you like, but it is an investment. It doesn't mean you can't be also be caring, which sounds like you are.
You would not own it, just to offer the service as just a random act of kindness. You do it for captial appreciation and investment yield. Everthing else is just fluff.
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I think you have your facts wrong. See. https://www.nrla.org.uk/download?document=1578 landlords are not adding to their stock. Quite the reverse.
Landlords are selling up … the sector is in decline and has been since section24 was deleted.
I think it’s unhelpful to beat up on landlords and blame them for the UK housing market as they are only 17% of the market and so don’t drive prices, that is driven by owner occupiers and it’s government policy of under supply that has created the issue, see the stats I posted a few pages back.
I also don’t think BTL is an investment, it’s more like running a small business as the levels of effort are far higher than buying a fund in your SIPP.
I don’t understand why people should get all morally outraged that people profit from running a business providing housing. How is it any different to profiting from providing food or a cure of cancer? The outrage just doesn’t make any sense. All sorts of life essentials create profit for their providers, why this constant digging at landlords?
Any recent BTLs will most likely have been bought inside a limited company and so Shacks analysis isn’t relevant.
This government drive to penalise small time privately owned landlords will do nothing to bring down house prices and will really hurt tenants. I think there are already signs the even someone as thick as Gove has finally realised how grim the outlook is for tenants and I can see the renters reform act getting kicked further down the road.
We're getting out of btl the government have made it clear that they consider private landlords to be the enemy.
Everyone i know is getting out if they're mortgaged and even those who own outright.
Our tenants who were happy and wanted to stay are in for a rough ride and are looking at significantly higher prices than what they pay us.
As the market shrinks and the demand increases then its only tenants who will pay the price.
Yes we invested to make money but its a lot tougher than most people think and the hate for landlords is strong.
Once all the landlords are gone I wonder if tenants will be worse off or better off.
Time will tell.
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Nosey question so don’t feel compelled to answer but where will you put your sale proceeds as an investment next? Drip feed into his and hers ISAs for a few tax years, pension fund?
https://www.theguardian.com/business...rge-buy-to-let
I think it’s pretty clear that tenants will be considerably worse off as remaining landlords will raise rents to cover costs.
The landlord sell off isn’t driving down prices that are holding up better than I thought they would.
The government is responsible for creating a housing crisis with their anti landlord policies.
To be honest we haven't thought that far ahead, once everything is done and I know what we actually have after the dreaded capital gains and fees etc .
Then I'll be looking for something for the money, but right now the focus is to get out unscathed!!!
Basically in life if you do the opposite to me then you'll be fine
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That’s the reason I asked. My mum has a BTL and if she sold it she has no idea where she would put the money but it looks like the BTL game for just one property it up.To be honest we haven't thought that far ahead, once everything is done and I know what we actually have after the dreaded capital gains and fees etc .
Then I'll be looking for something for the money, but right now the focus is to get out unscathed!!!
Basically in life if you do the opposite to me then you'll be fine
Could potentially pay off the mortgage and not have the mortgage interest aspect to worry about it or spread it into an ISA over X years but no clear answer.
In my ISA I try do half stupid/opposite and half obvious and hope it works out one day!
TBH the Government’s position has been very clear for 6 years. See the attached Guardian article from 2017. Out of interest, why have you and your friends only just recognised this now? Did you stress test you BTL investment for higher interest rates compounded by taxation changes?
https://www.theguardian.com/money/20...-let-landlords
May I respectfully say the Government is not your problem. No BTLer was whinging in 2021 or early 2022 when interest rates where 0.5%, because you could still make very good money on BTL even with the change in taxation.
The current problem is that the current high interest rates exacerbates the taxation issue.
As I said in an earlier post, plenty where still piling into BTL (including on this forum) in 2022 in full knowledge of the Government changes.
I suggest interest rates is your problem. As an investor whose returns are dependent on low interest rates you won’t get a lot of sympathy, just like I won’t from some of my poor investment decisions.
Sorry, but you are wrong, I posted a link to the data above. Landlords are not “piling in” quite the opposite as restated in the Guardian article also linked above. Digest the facts, one or two jumping in on this forum isn’t statistically relevant.
The recent period of ZIRs has just frothed up property as a whole not just the BTL section.
BTL was perfectly viable before ZIR at rates of 7%, it’s the political decision to delete section 24 that’s the issue not the return of interest rates to their historical levels.
Plus the political decision to impose impossible EPC targets, require EICRs, Legionella assessments, fire risk assessments, deletion of section 21 plus all the other elements of the renters reform act. All these requirements add significant cost and time requirement.
It is most definitely the political changes the is making BTL unattractive not the rise in interest rates. Landlords have been complaining about the political changes for 8 years, it’s not new.
I know you are frustrated that your kids can’t get on the property ladder but blaming landlords is missing the true villains, our political overlords who sold off all the local authority property for a song and then threw the towel in on house building creating a massive shortage as the population grows. The recent interest rate freaky period is just transitory …
Interest rates are an issue but not the main reason, we've been in the game a long time 18 yrs plus and I've had interest rates between 4 and 6 % before.
The legislation is what is killing btl, yes we should have got out sooner but we were in it for the long game, now I just don't have the appetite for it so we're out.
If you know of people piling into btl then that seems strange because everyone i know is running for the hills.
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Never heard any complaints on this thread when BTL mortgage rates were sub 2%, and all the Government changes were happening or being signalled well in advance. Maybe that is because everyone was enjoying their Covid capital appreciation beanfeast.
Now at 7%, and with the cost of servicing interest only debt more than trebling, and house prices in reverse, it is all the Governments fault.
Let’s be honest. Very few got out of BTL between 2017-22 because the alternative was a risk free 0.5% savings rate in a bank, and you could still make an order of magnitude more in BTL. Until 2023 of course, when it all reversed.
Hindsight is a wonderful thing.
If you were a BTL landlord you’d have been aware of all the issues creating problems long before this thread even started. This thread really was a discussion about the market, and as it stands prices are holding up with just a few % drop off from the recent peak.
If section 24 hadn’t been deleted the increased interest rates would be no problem just as they were before ZIRs. The problem for landlords is definitely political. My BTLs are not mortgaged but all the new regulations loaded onto me by politicians is a major headache, that’s nothing to do with interest rates is it …
See post #2019.
You can endure a lot more BTL hassle when you only get 0.5% risk free return from a bank, but an order of magnitude greater return from a BTL. Yep, that was 2009 through 2022.
Nobody wants the hassle when the BTL returns you less than the 6% risk free you can now get in a bank.
It’s not just about yield is it, capital growth is the long term benefit and I forecast property will double from its current level just as it has many times in the past. Cash will still be cash.
The much forecast crash in prices hasn’t happened and prices are already going up again … see actual data in post #1985
Last edited by Montello; 14th August 2023 at 23:02.
Well embrace the Government changes. If you are correct then they are only a minor inconvenience on the way to the moon. Good luck.
Peter and his friends above clearly didn’t get that memo, as they are bailing. Funny, there have been a few similar stories like that in the press recently
Trouble is they are not a minor inconvenience they are a complete PITA and if the EPC changes go through it will render a vast proportion of the rental stock unrentable.Well embrace the Government changes. If you are correct then they are only a minor inconvenience on the way to the moon. Good luck.
Peter and his friends above clearly didn’t get that memo, as they are bailing. Funny, there have been a few similar stories like that in the press recently
As Peter said he was fine before the political changes even at high interest rates.
Politicians have trashed the market which is creating the exodus.
The market is already adjusting and rents are sky rocketing, tenants are in a horrible fix created not by interest rate hikes but by political change. Granted ZIR had masked the impact of the policies and that is now revealing the mess.
Most conservative MPs are landlords so it does make you wonder why the change has been made
If you have one or two and are doing ok it’s time to get back in your box
If you have a few or a serious number your rent payment is about to jump and some more stock will come on the market for you to gobble up. You will have yours in a company or trust, not in your own name.
It’s not about BTLs it’s about keeping the divide as clear and as binary as possible.
Do you have any data to substantiate that statement, BTL has generally been a middle class activity (likely Tory voters by majority) Tory MPs are typically from the elite and I doubt would get their hands grubby with a private BTL far more serious ways to get wealthy than an individual property.
Personally I view the assault on landlords as a smokescreen, seems many are falling for it.
The average house price index is a very blunt instrument. You'd struggle to find many places at the moment where prices are going up, most are still coming down.
Errr … it’s an average. If the average is going up then more must be going up than down. It’s simple maths…
Wonder how flats Vs houses move the avg price. More flats than houses in the UK (I’d guess) and they seem to be the ones having the harder time with values. Wonder if it’s even weighted? Be interesting to see if there is an avg house price by property category? 1 bed flats, 3 bed mid-terrace, or simply houses Vs flats. That would be quite interesting .
Ask yourself an average of what?
We are not talking about say the FTSE where every component has a transparent daily price at which point it is simple maths. It is a market where few transactions are completing and most stock is not regularly valued (un-like commercial property) so limited actual data-points and the methods used are basic and currently misrepresenting what is really happening on the ground. Pure folly to say that average prices are going up at the moment unless you mean that the two sales this month are in the south east and not north west so the prices were higher!
Only about a fifth of Britain's housing stock is flats. And I'd guess a large percentage of these are in inner cities.
The reality is it's NOT a tax on higher rate income, it's a restriction on reliefs against rental profit. You can choose to view its consequences however you like but factually it still isn't a tax on income.
It’s an average of all UK residential property sales, simple as that.
A market is defined by sales, not valuations or asking prices. Actual sales.
Read the report here including the volumes on which the average is based. Note also the NE is the fastest growing area.
https://www.ons.gov.uk/economy/infla...eindex/may2023
Last edited by Montello; 15th August 2023 at 13:11.
Mean, median or mode?
Not that it matters because there are situations with all three where the figure can go up whilst the majority of the actual prices go down.
So your statement above is no a given.
Edit : feel free to totally ignore me as I’m just being incredibly pedantic!
Last edited by Dave+63; 15th August 2023 at 13:43.
The methodology is detailed in the link provided. I think the ONS have a decent grip on these matters.
Given the volume I think the average is meaningful as do the ONS I guess otherwise the wouldn’t bother publishing.
Skewed Londoner then. Round here they only build up.
Must more turnover in flats than houses. A broker told me before 1 bed flats change hands every 5 years whereas houses it’s much much longer.
Like I said, I was bring a pedant and merely observing that your statement doesn’t necessarily hold true.
Even in the housing market, it is conceivable that a smallish area is booming whilst a much larger area is in decline. This can cause the average (specifically the mean in this instance) to raise off the back of fewer properties more than offsetting the decline of the majority.
Maths it is, but it’s certainly not simple!
Last edited by Dave+63; 15th August 2023 at 14:16.
Makes sense, we see mainly what's outside our front doors.
I'd guess flats are often a first step on the ladder before buying a house to settle down in.
´´Never let the tax tail wag the investment dog´´ something I was told while doing my FPC 1...
Personally for keeping our small boots on the UK´s BTL ground, still a nice little earner.
Sorry, got my data mixed up. Think landlord was the second highest occupation for conservative MPs at one point but can’t find the exact snippet now.
https://www.opendemocracy.net/en/dar...ate-landlords/
https://www.landlordzone.co.uk/news/...ampaign-group/
Seem to recollect old Tony Blair is balls deep into it as well.
39 properties as of 2019 worth approx £30m
Bought a company in the British Virgin Islands which somehow ended up with them owning a house in Marylebone worth £6.5m and no stamp duty. A nice £300k saving which went towards paying the hard workers at BDO and Blake Morgan.
If only NatWest could allow the same on a mortgage application I could save £50k next time I move.
Being balls deep in anything is preferable to Cherie.
We´re all in it together! Uhuh.
Aye that Cherie...um, no thanks.
Last edited by Passenger; 15th August 2023 at 15:01.
All true of course but given the index is calculated off a relatively large base as described here:
The provisional UK HPI estimates for May 2023 are based on approximately 25,000 records for England, which currently represent roughly 41% of monthly property transactions, as published by HM Revenue and Customs (HMRC). The provisional estimates for May 2023 also include approximately 6,000 records for Scotland (80% of transactions) and approximately 1,000 records for Wales (45% of transactions). This represents the number of records that are available at the time of calculating the UK HPI and not the number of transactions that have taken place. As time progresses, more records will become available for May 2023 and will be used to revise the UK HPI in line with our published revision policy.
Given the relatively large size of the data set I think that any odd pockets of high or low transactions would be lost in the dataset as a whole ... i think it's fair to say the index is a reasonable benchmark of the UK market as a whole; the link provides much further detail for those who wish to drill down into specifics.
The real shortcoming of the index is of course the lag between the data they gather and the current state of the market ...
Ok so between 20 & 25% that's more than I would have guessed at ... seems for once they are not feathering their own nests ... but then given their remuneration packages they are not short of a few quid ...
Just take a moment to pause and think about that method. So most properties are unique and most are sold infrequently, even then there is no control over whether a property has been improved, declined, etc.
There is substantial method error, it just happens to be the best proxy they have, doesn't mean it is right and certainly does not reflect the view of most operating at the market coalface right now, far from it.
Please explain as I don’t understand your points, what parts of the ONS methodology is in error?
I have noted the lag between the data on sales and the current market and asking prices / offers but that’s unavoidable.
Disagree. The market is all assets, whether they transact or not and the transactions in this case are a tiny percentage of that market.
As already mentioned, the HPI may be the best estimate available but that doesn’t make it definitive.
Last edited by gunner; 15th August 2023 at 22:45.
That’s the same as any asset, a thin trade sets the price. True of all stocks and shares etc
I’m not sure what definitive would mean in this context but the HPI from the ONS is what it is, an average indicator of house sales. It’s a board indicator of the UK market. Of course much regional variation and the lag due to the sales times.
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