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My question is this: What will the PRS look like in 5 years time or 10 years time?
I think if we look back over the past 10 years I'm not sure any of us could have imagined the changes we face
If I had said to you ten years ago 40% Tax payers could only offset 50% of their interest ?
No Wear & Tear Allowance
No Tenants fees
... and we must register for Data Protection
.... and now we join a redress scheme
3% loading on stamp duty on a purchase over £40K
Council Tax charged on void property etc etcJust a few changes that have landed on our business
Looking forward, I don't see it getting any better
We could face the following:
> some sort of Rent Control
> some sort of property Licence on all rented property
> some sort of S24 on Ltd Co
> and further changes to S24 where all interest will not be deductible
We are now getting close to part 3 of S24
My own question is this when will BTL get to the point when its not worth doing?
I can see the appeal of Capital Growth on Property, but what will the cost be for holding that property?
It's OK saying in twenty years time my property will be worth 100% more
But in that 20 years you have to run the investment and the more costs growing from the list above will make this harder to achieve
If rent controls come in how will you cover all the costs?
I feel the most vulnerable sector is HMOs. If we face much higher cost and regulation and future landlords no longer purchase Property in the UK to rent who will purchase an HMO?
It's a frightening thought BTL may not be around in the years to come and Investors who would have purchased property will invest elsewhere
None of us know and that has to be a worry when you're planning long term
The Tories have done us no favours, but if Labour came to power it could be the end of all BTL and we will go back to a sector which is tiny.
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
Its a rhetorical question as nobody knows.
Residential letting has changed beyond recognition over the past decade as you have stated. I believe the changes in other landlord sectors have been far less and may well remain stable for the next decade. I have had very few changes as a lodger landlord, holiday lets appear stable, Serviced Accommodation is relatively new and is growing, commercial legislation is stable although the market is not. There are still plenty of reasons to invest in property.
"My own question is this when will BTL get to the point when its not worth doing"
In the SE and for new entrants I would say we're probably already there. If you're a new co. entrant its going to be tough to gain an income
I was told yesterday I needed to put in 50%.
On a £400k property that's £200k + enhanced SD of £22k + legals etc.
Lenders don't want to lend for SE purchases any more, unless the above tickles your fancy.
That’s a lot of cash for a deposit
I think it can still be done in the north but is it worth the hassle
i know I could buy more but I just don’t wish to commit to leveraged BTL anymore
I have 6 BTLs, and been doing it for 5 years now. Having just done my figures for the tax return, you're right, Adam, I'm already there (in the midlands). One made quite a loss, and the profit from the other 5 isn't much. Time to do something different.
I think we all forget the time and energy we have to commit
today i was out the house at 8am arrangeing things in my BTL world
I have never minded doing the job but I can see profits stagnating as tax hits me harder and harder
BTL is becoming bloody hard and a worry. I’m glad I have what I have it’s time to sit and watch
Interesting to hear an honest view , I expect many are in the same boat. Still not too late to exit and reinvest elsewhere.
It again is very simple, with a shortage of housing they need to home people other wise the basic fabric of society breaks down. That's why the US years ago set up the ginnie mae mortgages. Why, because if you allow people to buy their own houses they look after them hence the area.People don't riot when if effects their own pockets.The rise in BTL was based upon people seeing the equity market collapse in 2007 together with their pensions, equity investments etc. They saw property as a safe haven and have control over their own financial affairs.Low interest rates and failure of the government to fully take on board the implications of this new investment sector resulted in many properties being brought by individuals, and with the demand for this new investment sector resulted in many forced to rent. .Now they can see the damage it has done to home ownership ( first time buyers competing with experienced landlords who have ready access to funding) and the resultant massive increase to rents.Over time the BTL market will become like the dinosaurs-extinct.Why do you think all these regulations and new taxes are coming in - to make it less attractive and in fact close down the sector completely.Those of us who have been renting for years have had the major benefit now its over so over time it will end.I give it less than 10 yrs to survive and 5 yrs with a Labour government.Don't think otherwise as you are only fooling yourselves and probably taking form a long and wrong position.
I've asked before, but how many BTLs do you have Douglas?
I have only one HMO left which I have owned for over 30 years but am mow thinking of converting to flats for personnel reasons.One other comment I failed to make was that with the ending of the LIBOR rate ( due to several years of rate fixing scandals ) the new system will not doubt result in higher rates through the backdoor.All those borrowing linked to libor ( $300 trillion in loans) will have to have their documents reviewed . B of E is proposing a SONIA- Sterling Overnight Index Average- to replace libor.
Thanks Douglas. I thought you might not have any BTLs from your comments, now I just see you're pretty disilusioned like a lot of us!