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  • Buy-to-Let

    I'm a LANDLORD.....GET ME OUTTA HERE

    Judging by some of the reaction to Clause 24 and the beautiful 3% investment Levy we've been hit with today, I sort of get why plenty of landlords are shouting for Ant and Dec to come and rescue them with a glass of champagne and a room in a 5 star hotel whilst they shout...I'M A LANDLORD, GET ME OUTTA HERE. I too have felt at times like getting OUTTA HERE.

    BUT........Is this not just part of the game, of living in a democracy where the rules change daily to suit a politicians whims to please the crowd. Luckily we don't live in ancient Rome or we'd be getting fed to lions right now.

    Sometimes you win (and we've had it good), sometimes you lose (and boy are we being royally shafted right now). The lack of a credible opposition has made this easy for Georgie boy, shoed in for 2020 anyway, so why not play to the populist left. He can always reduce the pain in future when he's leader and claim it as a tax reduction!!!!!!!

    I'm as pissed off as the next person but just as with chicken little the sky is not falling in, simply the rules have changed (and this time not in our favour, unlike the 0.5% base rate) so we simply have to adapt. I believe worse is to come, then at some point it will get better. Staying in the game is whats important.

    In a game of snakes and ladders, we all cheer when we land on a ladder, especially the big one that takes us straight to the top. Most of us who persevere will get to the top but with many a frustrating snake along the way to drag us down over and over again.

    Those that throw a wobbly and abandon the game at every snake, no matter how unfair or big the snake is, will simply never reach the top as they are no longer in the game.

    Just adapt your strategy and muddle your way to the top. You'll get there eventually. And with luck, you may hit that big ladder and shoot straight to the top (capital growth) earlier than you thought.

    The end goal of the game has not changed, the government has just removed a few ladders and replaced them with snakes. Tread carefully and you'll still reach the end game.

    Just my 2 penneth worth Big Grin
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    Hi Paul,

    Thank you for such a positive post. Much needed and a morale booster. Smile

    The problem is that the margins in BTL have pretty much been completely eroded.

    Would anyone stay in a business that was running at a loss?

    The purpose of a business is a vehicle to make money.

    If people cannot see a small reward (profit) for taking on the financial risk of a tenant not paying the rent, then what is in it for landlords?

    And what incentives for new landlords to invest in the PRS?

    It's a real conundrum.
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    A property portfolio can make a loss as long as it's paid for from other net profit I bet houses bought now at market value will make you good money in 15 years time as long as you can keep hold of them my portfolio makes good money I figure make net profit elsewhere moving forward to pay for it we moved into Hmos 7 years ago we are now buying in limited companies pound for pound debt we make much more now than we did I not happy stamp an obvious ploy a message I voted conservative I never will again but it's here we have to take action and yep I am pissed off it probably means I will sell some of my fruits before they are fully ripe therefore not hitting part of my original goals beats working for asda though and it ain't gonna be easy..holiday lets next V..
    Kim
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    I am not too concerned, as others have said the extra stamp duty is only a few months worth of rent. I will be watching closely how this affects capital values and whether FTBs really do take up any slack from BTLers.

    My tenants are mainly professional EU visitors on 3 year contracts etc, not potential buyers, so it will be interesting what affect this has on rents.

    At the end of the day there has been a massive expansion in BTLs in the last couple of years, so some moderation of that is probably a good thing for everyone. I imagine the BoE have been pressing for something like this in the interests of stability.
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    The additional stamp duty creates a higher barrier to entry imho. People already have to put in 25% deposits and pay substantial acquisition costs.

    I wonder how this will affect the "Get rick quick" gurus/wealth creation industry?
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    Personally V, the stamp duty is less of a barrier for me.

    I'll simply offer what I was going to, then deduct the extra stamp duty from the offer and make it clear as day to the agent the offer would have been X, it's now X minus the stamp duty.

    Probably lose a few more, but so be it. On the plus side, each offer reduced will mean one peed off vendor and one more less Tory voter.

    However, i'm hoping that properties that are renovated and sold on will be exempt. It would be crazy not to as FTB'ers can't buy a lot of properties needing a lot of work until the work is done.

    As for the guru's, they'll put some form of positive spin on it. I remember the MX days, remortgage the next day, maximise cash out, negative cashflow, do it 100 times but don't worry as prices will double every 7 years making you a multi millionaire.

    As long as there are dreamers, the dream makers will keep making the dreams.
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    Thanks Paul, good positive and lateral thoughts and much needed so keep 'em coming! Smile

    The issue I see is that those with deep pockets will survive - water off a duck's back.

    However, since the advent of BTL, property has been a way for the ordinary "man on the street" to create some wealth and financial stability for themselves and their family.

    Now is seems the balance is swinging back to only wealthy people with additional substantial income being able to get involved in property. It is almost like the clock is being turned back in some respects. HuhHuh
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    But that's half the problem. They want to keep the "man or woman in the street" firmly in their place.

    Personally, Clause 24 has had an effect, but not disastrous based on last years accounts due to myself and the wife both working in the business full time. It will push us both into the higher rate tax bracket and hurt more when rates go up, hence it's pay down time.

    If we were both still in day jobs, it would make sense for us to leave them. What it has done is made it completely pointless to go back to day jobs additionally, which was something we were mulling over to pay back quicker.

    It's also stopped us wanting to grow the portfolio any more. As we don't live in London/SE, that means the large pool of LHA/Low paid who only want to rent will have a lot less properties to choose from going forward. Rents will go up, the poor will be poorer, probably worse off than they would have been if the tax credit changes had gone through.

    Another possibility is I can see cash rich Investors moving north to make the numbers stack better, thus pushing up prices and rents. Great move George, but as long as London is OK, who cares as that's the centre of the universe is it not!!!!!
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    This is what I think George Osborne's economic logic is:

    Interest rates are low and look like they are going to stay low for a while longer.
    Safe investments are paying next to nothing.
    BTL was looking the best option for people planning for retirement.
    BTL is booming.
    However unless people are careful when interest rates rise they may find themselves unable to pay their mortgages and their may be lots of defaults.
    That might cause a crash.
    LLs with lots of leverage are the biggest risk, so limiting the tax relief on mortgages will help by discouraging them, but it has to be phased in to allow existing LLs time to adjust.
    Raising stamp duty will slow the rush into BTL and cause people to think more carefully about it.

    Personnally I went into BTL as the best way to generate an income from my inheritance/savings. It is working. The reduction in tax relief would have no direct effect on me until 2019. I am planning to make my next purchase through a company and to sell one property in 2019 because of it. I was hoping to buy 1 or 2 more after that. It is looking more likely to be just 1 now.
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