Buying a house (and renting)

Years ago I would've been against this but it has my full support now.

https://www.thetimes.co.uk/article/brighton-moves-to-deter-interest-in-second-homes-phgbbsjfd

speedboatchase wrote:Years ago I would've been against this but it has my full support now.

https://www.thetimes.co.uk/article/brighton-moves-to-deter-interest-in-second-homes-phgbbsjfd

Aw yiss.

non-paywalled version: https://archive.ph/sIIvB

That archive site is so handy for getting around the paywall.

https://archive.ph/zMxpX

Rate rise makes it cheaper to rent than buy

House prices and mortgage interest rates having risen so much means private renting is now back to being slightly cheaper than the mortgage payment itself.

https://archive.ph/2022.06.18-084420/https://www.telegraph.co.uk/property/buy-to-let/landlords-will-lose-money-next-year-buy-to-let-britain-falls/

Landlords will lose money by next year as buy-to-let Britain falls apart

Lovely heatwave reading.

Grumpy David wrote:That archive site is so handy for getting around the paywall.

https://archive.ph/zMxpX

Rate rise makes it cheaper to rent than buy

House prices and mortgage interest rates having risen so much means private renting is now back to being slightly cheaper than the mortgage payment itself.

https://archive.ph/2022.06.18-084420/https://www.telegraph.co.uk/property/buy-to-let/landlords-will-lose-money-next-year-buy-to-let-britain-falls/

Landlords will lose money by next year as buy-to-let Britain falls apart

Lovely heatwave reading.

That second link, finally some good news!

Henry Bates*, 58, is a landlord with 65 properties across south-east London. “Since the tax changes, we basically don’t make a profit,” he said.
Rate rises will further eat into margins as Mr Bates’ fixed-rate mortgages expire. He is remortgaging one house at a rate that is a whole percentage point higher. He has also opted to take out some equity from the property.

Don't make a cash profit he means. Still making equity. Time to sell some properties Henry.

It should be law to register as a Housing Association if you own more than two properties.

Also Housing Associations should be bound by legislation to make a certain % of their properties available to social housing tenants.

If government aren't going to commit to housebuilding (preferably on land that the "gentry" have stolen for millenia) then these seem like quick obvious wins to me.

Tomous wrote:

Henry Bates*, 58, is a landlord with 65 properties across south-east London. “Since the tax changes, we basically don’t make a profit,” he said.
Rate rises will further eat into margins as Mr Bates’ fixed-rate mortgages expire. He is remortgaging one house at a rate that is a whole percentage point higher. He has also opted to take out some equity from the property.

Don't make a cash profit he means. Still making equity. Time to sell some properties Henry.

"Basically didn't make a profit"

So at worst he broke even. While having his mortgage (on what I assume to be expensive properties) paid off for him.

Grumpy David wrote:That archive site is so handy for getting around the paywall.

It was your good self that alerted me to its existence!

This was someone on that article.

This is a movement gathering momentum.
I think if Labour get into power in the near future (which given the way the government is operating is not so unlikely), one of the first things they will do is restrict second home ownership by law.(Edited)

I'm not here to talk Politics... but if this hypothetical left wing dream were to happen, would it be a good idea?

I personally would be all for it (even though I may actually need(want-it would make my life a lot easier to accommodate my dad in my house) a second home at some point). However, what would the knock on effects be. Would the rental Market become almost instantly defunct?

I guess if something like this were to come into effect it would have to be introduced gradually. First, target the multi-millionaires who own dozens of houses and work backwards until you get to the guys who own 2 or 3 and use it for some extra side-cash.

What is with these greedy, hoarding banana splits. That prick who owns 65 properties in London, why does he have to be such a twat about it? Sell it all off and enjoy your, what, £40m at worst, live your life, do amazing things most could only dream of, make other people happy. But no, instead he just wants to keep it all for himself so he can feel like some sort of tinpot emperor? Wanker!

Edit - the mist has subsided and I realise now he'd probably end up with a lot less than £40m due to paying off mortgages, but no doubt he would still have a huge sum due to property value increases. And he would have lost the burden of being a morally reprehensible sack of gooseberry fool, too – that's got to be worth something.

Curls wrote:This was someone on that article.

This is a movement gathering momentum.
I think if Labour get into power in the near future (which given the way the government is operating is not so unlikely), one of the first things they will do is restrict second home ownership by law.(Edited)

I'm not here to talk Politics... but if this hypothetical left wing dream were to happen, would it be a good idea?

I personally would be all for it (even though I may actually need(want-it would make my life a lot easier to accommodate my dad in my house) a second home at some point). However, what would the knock on effects be. Would the rental Market become almost instantly defunct?

I guess if something like this were to come into effect it would have to be introduced gradually. First, target the multi-millionaires who own dozens of houses and work backwards until you get to the guys who own 2 or 3 and use it for some extra side-cash.

I can't see Labour restricting second home ownership by law even under a Corbyn type leader. No chance at all of them doing it under Starmer.

I've never understood why local councils don't implement something like 200% Council tax on second homes.

Moggy wrote:

Curls wrote:This was someone on that article.

This is a movement gathering momentum.
I think if Labour get into power in the near future (which given the way the government is operating is not so unlikely), one of the first things they will do is restrict second home ownership by law.(Edited)

I'm not here to talk Politics... but if this hypothetical left wing dream were to happen, would it be a good idea?

I personally would be all for it (even though I may actually need(want-it would make my life a lot easier to accommodate my dad in my house) a second home at some point). However, what would the knock on effects be. Would the rental Market become almost instantly defunct?

I guess if something like this were to come into effect it would have to be introduced gradually. First, target the multi-millionaires who own dozens of houses and work backwards until you get to the guys who own 2 or 3 and use it for some extra side-cash.

I can't see Labour restricting second home ownership by law even under a Corbyn type leader. No chance at all of them doing it under Starmer.

That's why I used those specific words, hell would more likely freeze over. But I was trying to spark opinions.

Curls wrote:

Moggy wrote:

Curls wrote:This was someone on that article.

This is a movement gathering momentum.
I think if Labour get into power in the near future (which given the way the government is operating is not so unlikely), one of the first things they will do is restrict second home ownership by law.(Edited)

I'm not here to talk Politics... but if this hypothetical left wing dream were to happen, would it be a good idea?

I personally would be all for it (even though I may actually need(want-it would make my life a lot easier to accommodate my dad in my house) a second home at some point). However, what would the knock on effects be. Would the rental Market become almost instantly defunct?

I guess if something like this were to come into effect it would have to be introduced gradually. First, target the multi-millionaires who own dozens of houses and work backwards until you get to the guys who own 2 or 3 and use it for some extra side-cash.

I can't see Labour restricting second home ownership by law even under a Corbyn type leader. No chance at all of them doing it under Starmer.

That's why I used those specific words, hell would more likely freeze over. But I was trying to spark opinions.

Oh I know. And I don't think many here would disagree with you.

But it's pie in the sky. The best we can hope for is the building of new council houses. And even that's unlikely.

I'd merge NI contributions into income tax.

It's absurd that the over 65 are exempt from NI for what is a de facto income tax.

And that "unearned" income like rental income is only liable to income tax rather than income tax and NI Contributions.

65 properties in SE London must have a portfolio value of at least 23 million assuming they are all flats around 350k each.

Even if mortgaged to the max BTL LTV of 75% that's equity amounting to almost 6 million.

With that many BTLs it's not even a relatively passive income either, bound to be fairly regular turnover of tenants, minor wear and tear to sort out, remortgages with annoying solicitors to deal with and tax is based on revenue rather than profit after mortgage deductions.

I'd much rather cash out at the age of 58 given the choice!

Grumpy David wrote:With that many BTLs it's not even a relatively passive income either, bound to be fairly regular turnover of tenants, minor wear and tear to sort out, remortgages with annoying solicitors to deal with and tax is based on revenue rather than profit after mortgage deductions.

It's profit, not revenue. You're allowed to deduct all expenses, such as wear and tear costs and remedial work, plus letting agent fees, etc.

Lagamorph wrote:I've never understood why local councils don't implement something like 200% Council tax on second homes.

My only worry with these policies is that it pushes up rents for tenants though in principle they sound good.

poshrule_uk wrote:

Lagamorph wrote:I've never understood why local councils don't implement something like 200% Council tax on second homes.

My only worry with these policies is that it pushes up rents for tenants though in principle they sound good.

Landlords are greedy, they charge what they can not what it costs. Also BLT don't pay council tax, the occupier does.

Personally my opinion is that second homes are a consumption good, and consumption is generally good. We should just build more houses rather than fiddle at the margins (holiday lets should be regulated by councils/banned along with Air Bnb), if you want to own a hotel buy Hilton Shares/build a hotel.

Imrahil wrote:

Grumpy David wrote:With that many BTLs it's not even a relatively passive income either, bound to be fairly regular turnover of tenants, minor wear and tear to sort out, remortgages with annoying solicitors to deal with and tax is based on revenue rather than profit after mortgage deductions.

It's profit, not revenue. You're allowed to deduct all expenses, such as wear and tear costs and remedial work, plus letting agent fees, etc.

If you bold the last 3 words then the sentence is clearer than omitting that.

The biggest cost is by far the interest only mortgage monthly payment which can't be deducted following the changes George Osborne introduced many years ago but were introduced gradually.

The tax credit that is applied cancels out the impact of this if total income from all sources doesn't exceed 50k.

Most BTLs are not purchased mortgage-free and typically a person in a position to buy a BTL will either already be a HRT payer or become one when adding in the rental payments.

Landlord on 50k before rental income:



Landlord on 30k before rental income (revenue doesn't push the LL into HRT status):



Someone with 65 BTLs in South East London is going to be in the additional rate tax bracket of 45% and won't have the first 12.5k income exempt from taxable income so the 50k scenario likely understates the level of tax due.

And whilst he could own some (most likely not all) via SPV LTD companies the interest rates on these are higher than on the standard BTL mortgage so a reduction in tax is offset by higher interest payments in the first instance.

Grumpy David wrote:

Imrahil wrote:

Grumpy David wrote:With that many BTLs it's not even a relatively passive income either, bound to be fairly regular turnover of tenants, minor wear and tear to sort out, remortgages with annoying solicitors to deal with and tax is based on revenue rather than profit after mortgage deductions.

It's profit, not revenue. You're allowed to deduct all expenses, such as wear and tear costs and remedial work, plus letting agent fees, etc.

If you bold the last 3 words then the sentence is clearer than omitting that.

The biggest cost is by far the interest only mortgage monthly payment which can't be deducted following the changes George Osborne introduced many years ago but were introduced gradually.

The tax credit that is applied cancels out the impact of this if total income from all sources doesn't exceed 50k.

Most BTLs are not purchased mortgage-free and typically a person in a position to buy a BTL will either already be a HRT payer or become one when adding in the rental payments.

Landlord on 50k before rental income:



Landlord on 30k before rental income (revenue doesn't push the LL into HRT status):



Someone with 65 BTLs in South East London is going to be in the additional rate tax bracket of 45% and won't have the first 12.5k income exempt from taxable income so the 50k scenario likely understates the level of tax due.

And whilst he could own some (most likely not all) via SPV LTD companies the interest rates on these are higher than on the standard BTL mortgage so a reduction in tax is offset by higher interest payments in the first instance.

Thank you very much for taking the time to put together this very informative post.