Buy to Let..................Ho Ho Ho

[Mega]

Annihilation of buy-to-let and the politics of envy

The people who most hate buy-to-let are those who wish they'd done it themselves – and that's the crowd the Tories are playing to









By Richard Dyson

10:31AM GMT 26 Nov 2015
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The Tories' complete annihilation of buy-to-let as a form of investment – unexpected, unwelcome, unreasoned – is a play to the politics of envy.



Private landlords are deeply unpopular. Caricatured as exploitative and greedy, they've become the arch-villain in Britain's broken housing market, the biggest obstruction to younger people who want to become home owners.


Landlords force tenants to pay extortionate rents, goes the argument, while driving house prices ever further out of their reach.

• New buy-to-let stamp duty: How much will you pay?

• How the 'mini budget' affects you
These investors are parasites, enriched and engorged with the cash of the young and poor. And they are abetted by vastly generous tax breaks. Or so it is said.

The Telegraph, almost entirely alone, has questioned the Tories' attack on buy-to-let ever since George Osborne announced the withdrawal of mortgage interest relief for private property investors in July.

Every article we have published since, especially where we feature individual landlords who make their case, has resulted in a flood of abuse on social media and elsewhere.

150,000	500	5,000	4,500
250,000	2,500	10,000	7,500
350,000	7,500	18,000	10,500
450,000	12,500	26,000	13,500

Interestingly, the rage and spite are directed only at private landlords – at the middle class, ordinarily well-off families who have decided to buy a second property to let as part of their pension planning, or because they want eventually to give it to their child.

The bile is also directed at landlords who make small, full-time businesses out of running a portfolio of properties (often in areas where there is high tenant demand but little demand from owner-occupiers).

But the most telling point is that there is no such vilification of corporate buy-to-let.
• Buy-to-let stamp duty rise 'final nail in coffin' for small landlords
• Death of buy-to-let: landlords wake up to Osborne's 150pc tax
Big institutional investors, such as insurance firms, asset managers or pension funds, that want to go into buy-to-let on an industrial scale don't attract any criticism whatsoever.
Nor have they been hit by any of the Tory policies.

These industrial-scale buy-to-let investors will continue to enjoy full tax relief on mortgage interest, long after it has been withdrawn from individual, middle-class investors.
And industrial-scale buy-to-let will also be exempt from the huge rise in stamp duty announced in yesterday's Autumn Statement and effective from April 1, 2016.

The truth is that the people who most condemn buy-to-let tend to be those who wish they had done it themselves.

They would still do it if they could afford to, and if the Tories hadn't killed it.
It is about envy.
• Autumn statement 2015: Buy-to-let landlords sacrificed again with 3pc stamp duty hike to 'help first time buyers'
• Death of buy-to-let: landlords wake up to Osborne's 150pc tax
It's not in human nature to envy a faceless, gigantic insurance company that owns 6,000 flats. But it is human nature to envy the couple next door who also own two buy-to-lets further down the street.

That's why, when people attack private landlords (or, arguably, any group of wealthy individuals), they do so with such visceral emotion.

Browse buy-to-let articles on the internet and see for yourself. The rage, the glee, the torrents of vindictive spite – what else but envy could provoke all that?

In a peculiar twist, the Tories are now playing towards this angry crowd. Mr Osborne will raise billions of pounds in additional revenue from a group whose striking unpopularity is motivated in the large part by envy of wealth and success.

One irony in this situation is that so many Tory MPs are themselves landlords. Another is that so many private landlords are Conservative voters.

But the biggest irony of all is that property investors were terrified, ahead of the general election, at what a Labour victory might mean for their businesses.
Could Labour – in whatever guise – have delivered any more devastating an attack on their interests?

[Mega]

Re: Buy to Let..................Ho Ho Ho

This prick is talking bulsh1t..............its a Ponzi scam that MEGA was forced to fund. Now at last the tide is beginning to turn. They need the taxes & BTL can't move offshore!

So more to come i hope.
Mike

[santafe2]

Re: Buy to Let..................Ho Ho Ho

It appears to me your government is doing non-professional "buy to let" entrepreneurs a favor by making the barrier to entry more expensive. At current prices, London property is not an investment, it's a gamble waiting for a bigger sucker.

As I reviewed the article you posted and the one below, it appears most of these buyers are making an emotional decision and not a great business decision. Even the writer below doesn't understand the business as he leads with "landlords are in shock...". Current landlords aren't shocked, if anything, they're happy as this new tax is meant to raise the barrier to entry for other small entrepreneurs. This tax may be sold as a tax to help the little guy but it feels more like a tax to protect the large corporate property owners. If it does both, what politician doesn't want that win-win.

All that said, property will cease to be the go-to investment for mid-range savers if/when interest rates normalize. Until then, this is just another unintended consequence of ZIRP.




Do new stamp duty taxes mean bye-bye buy to let?

Landlords are in shock after a second huge tax assault on buy to let by the chancellor which will force investors to pay thousands more in stamp duty on new properties – on top of the loss of tax reliefs unveiled in July.

A new 3% additional stamp duty rate on any property bought as a buy to let or as a second home, will see the tax on a £175,000 purchase jump sixfold from £1,000 to £6,250 (see table below). For someone buying in London, say a two-bed flat for £400,000, the stamp duty rises from £10,000 to £22,000.

Not only will prospective landlords have to pay far more than conventional residential buyers, they also face much heavier taxes on their profits. The maximum tax relief will drop from 45% and 40% to just 20%, so that an investor with a £150,000 buy-to-let mortgage on a property worth £200,000 is likely to see his or her net annual profit collapse from £2,160 a year to just £960.

Once letting fees and “voids” (the short periods when the property isn’t tenanted) are included, any profit is likely to disappear. If interest rates rise many landlords are likely to start making losses.

But first-time buyers, until now elbowed aside by buy-to-let landlords, are jubilant. Duncan Stott of PricedOut, which campaigns for affordable house prices, says: “We welcome the continued tax clampdown … it is good to see action against investors who price out aspiring first-time buyers.”

It is good to see action against investors who price out aspiring first-time buyers

The chancellor’s statement initially left many experts confused about precisely how the new stamp duty rates will be applied. Treasury documents released immediately after the speech implied that the first £40,000 would be tax free. But it was later confirmed that while purchasers who buy a property below £40,000 won’t have to pay the additional 3%, for all purchases above that, the 3% extra tax applies on the entire price. Currently, the rate for stamp duty is 0% on properties up to £125,000, then 2% on any sums over and above £125,000 to £250,000. Properties sold at £250,000 to £925,000 pay 5%, then it is 10% above that. These rates remain the same for standard residential buyers – but 3% extra will be added if the property is to be used as a buy-to-let or second home.

Figures prepared for Guardian Money by Old Mutual Wealth show that the tax bill for landlords buying and renting in 2017 will be triple the amount today. It gave the example of a property bought for £300,000 with a £240,000 mortgage which produces rent of £14,000 a year and where the mortgage interest is £9,000 a year.

Buying in the current tax year would cost the landlord £5,000 stamp duty and £1,600 tax, or £6,600 in total. The £1,600 bill comes from paying 40% tax on the £5,000 profit he makes on the rent minus the mortgage interest.
If the same landlord buys in 2017, the stamp duty will be £14,000 and the tax payable on the income will be £3,400, making a total of £17,400.

In addition, the chancellor has introduced a new rule requiring landlords to pay capital gains tax within 30 days of selling a property, although the CGT rates remain the same.

Old Mutual Wealth tax specialist Gordon Andrews says: “These changes clearly have a profound impact on the after-tax profits available to buy-to-let investors. Many will feel they can accept a smaller yield in the hope that, in the long run, house price increases result in a significant capital gain. On the other hand, some will feel that the squeeze makes it significantly less appealing and will look to invest elsewhere.”

Some estate agents are predicting a short-term surge as the new rates don’t come into force until April 2016.

Ed Heaton from buying agent Heaton & Partners says: “There will be an inevitable rush of people trying to secure properties before next April, although this has to be in the context that the changes to the tax review have already made buy to lets a less attractive proposition to those with mortgages.”

The chancellor may have been tempted to tax buy to let more heavily as his last tax raid had little – if any – impact on the number of investors piling in. Figures from the Council of Mortgage Lenders released in early November, showed that the number of buy-to-let mortgages granted had jumped by 36% over the previous 12 months, compared with a 10% increase for first-time buyers. However, this week’s rise in stamp duty could stop this growth in its tracks.

Private rented sector expert David Lawrenson of LettingFocus.com says: “Landlords may be wondering why they have been singled out for this uniquely harsh treatment. After all, it hardly seems like joined-up government from Osborne.
Some will feel that the squeeze makes buy to let significantly less appealing and will look to invest elsewhere

“First, he allows people to take cash from their pensions and, naturally, many folks said they might put it directly into residential property investments. Then, the sudden about-turns. All of a sudden Osborne is a landlord’s worst enemy – almost desperate to lose their million-odd votes.” Lawrenson reckons the chancellor has been “got at” by campaign groups such as Generation Rent who, he adds, “have been increasingly supported by Conservative-voting mums and dads” who fear that high prices and landlord buying is preventing their children from getting on the property ladder.

Judged by his autumn statement speech, Osborne appears to be listening to these mums and dads. “There is a growing crisis of home ownership in our country. Fifteen years ago, around 60% of people under 35 owned their own home; next year it’s set to be just half of that,” he said.

Landlords are now threatening retaliatory rent rises to offset the increase in taxes. Fewer landlords will come into the market, they argue, which means there will be a lack of supply, and rents will rise.

http://www.theguardian.com/money/201...tumn-statement

[Mega]

Re: Buy to Let..................Ho Ho Ho

Yes, but just when will rates for savings return?
Mike

[GRG55]

Re: Buy to Let..................Ho Ho Ho

Yes, but just when will rates for savings return?
Mike

Don't hold your breath waiting for that.

No matter what the government does, they always deliberately leave loopholes open. The BTL investment money is just going to flow elsewhere instead. And the government always finds new and creative ways to make all taxpayers subsidize a few.

Read it and weep Mega:

Why holiday homes will be the next buy-to-let boom

The new tax applying to buy-to-let doesn’t touch holidays homes – and the returns can be far higher

7:55AM GMT 08 Nov 2015

...If you operate under the “furnished holiday letting” rules, you can offset all expenses including full mortgage interest against the rental income. This compares with the scaling back of tax relief on buy-to-let from 2017...

...Furnished holiday lets also qualify for entrepreneurs’ relief, cutting any potential capital gains tax take to 10pc. Otherwise any taxable gain will be hit by an 18pc deduction below the higher rate threshold or 28pc above.

Finally, if you have been actively involved in the business by, for example, providing a laundry service or breakfast, it may be possible to get business property inheritance tax relief on death...


Supply of homes for sale plummets to 'lowest since 1970s', warns Nationwide

Nationwide urges policymakers to build more homes to prevent runaway house price growth as supply evaporates

8:41AM GMT 27 Nov 2015

A "dearth" of properties for sale in the UK has pushed supply down to its lowest level since the 1970s, according to Nationwide.

The lender urged policymakers to press on with plans to build hundreds of thousands of new homes, which it said were needed to keep pace with increasing demand and support a "sustainable increase in housing market activity"...

...George Osborne doubled the Government's housing budget in theAutumn Statement this week to £2bn a year and said it would pour more cash into a series of programmes to build 400,000 new homes across England by 2020.

The Chancellor said the policy was part of a "bold plan to back families who aspire to buy their own home", with half the homes earmarked for first-time buyers to be sold at 80pc of their market value...

[jk]

Re: Buy to Let..................Ho Ho Ho

"furnished holiday homes" sounds like an invitation to air bnb [which, of course, is blamed for being a major contributor to high real estate and high rental costs in e.g. san francisco]