X

Sign Up

or

By signing up I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Sign Up

Sign Up With Facebook, Twitter, or Google

or


By signing up, I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Log In

or


Don't have an account? Sign Up

Forgot Password

To reset your password just enter the email address you registered with and we'll send you a link to access a new password.


Already a PT member? Log In

Don't have an account? Sign Up

  • Tax

    1 in 4 landlords to exit due to Section 24

    It seems that perhaps the view of many LL  will be far more sanguine than Govt ever expected.

    This on the basis that S24 will hardly affect the majority  of S24 LL  who own an average of two properties

    The biggest effect is on larger LL  who may have geared up and expanded.

    They are the ones who are under  the S24 cosh.

    They are necessarily  better informed which is why they are up in arms about S24 as it will affect them big time.

    The smaller LL  will just wonder what all the fuss is all about and carry on noticing a slight increase in their tax bills; but nothing to cause them to sell up

    They might increase rents a bit; but that will be about their only reaction.

    Most of these LL  are lowly geared and aren't that bothered with the changed tax regulations.

    I can't see how forcing a few larger LL  out of business is going to 'level the playing field'

    If this 1 in 5 malarkey was the intent of S24 then Govt won't mind if not many LL  sell up.

    It seems to me therefore that Govt  was just trying to remove some of the froth from the market.

    It doesn't mind a LL  with a couple of properties; but it does those with 20 or 30.

    These are the LL  types who have necessarily  worked hard at becoming a very successful  LL.

    Govt clearly doesn't want this sort of LL.

    They prefer the very little LL  who usually by definition is a bit of an amateur.

    It has still left the corporate loophole available for LL  who wish to be more than an amateur

    I can't help thinking that Govt will suck all the very successful and larger LL  into corporate status before hitting them with  S24 type taxes.

    It seems gearing up is no longer worthwhile

    Rather pay down debt and Govt wil leave you alone with your 2 or 3 properties.

    0
    0

    It's not what happens, it's what you do about it that determines the results, leverage is still a useful tool in the right hands.

    0
    0

    I would suggest it is irrelevant what LL  do with leverage  providing they restrict themselves to 2 or 3 properties.

    Govt clearly doesn't want  large LL  cleverly using leverage to increase their portfolio size.

    Perhaps they incorrectly see such portfolio  LL  as a threat to the housing market.

    Therefore it seems that reducing leverage  on a smaller number of properties makes for less interference from Govt.

    Based on the way things are going and if I had the opportunity  I would rather 3 unencumbered  properties than 6 leveraged ones.

    Yes I reduce my capital gains possibilities;  but in return I am not taxed out of business!

    It is a calculation  that many other LL will be making.



    0
    0

    Perhaps they incorrectly see such portfolio  LL  as a threat to the housing market.

    What they (actually the BoE) wrote was that such LLs are a threat to the financial market, i.e. the banks. As large borrowers who tend to be optimisitic (the pessemistic ones don't become large) in the event of a future crisis they might find themselves overextended and go bankrupt. Given that the last crash was caused by the underestimation of mortgage risk, it is natural that they are concerned. They dealt with residential mortgages through MMR, then came for BTL ones.

    0
    0

    Well that's most of us have done, sold some of our lower yielding properties and used the funds raised to deleverage better performing properties, or use the funds to cover potential costs associated with transferring your portfolio to a LTD company.

    0
    0

    Of course such responses make eminent business  sense in light of all the recent and possible project cost burdens imposed  on LL.

    Of course the real suffers of this pragmatic response by LL  are tenants.

    They have reduced rental stock to choose from which tends to have detrimental  effects on tenants; principally increased rents.

    If rents are controlled LL  will continue to deleverage and sell off properties reducing rental supply even more

    So you will end up with rent controlled properties.

    But there won't be enough of them around to meet demand

    As happened before the HA introduced the AST.

    There is little point in controlling costs for consumers if by doing so the supply is substantially  reduced to the point where even with a controlled rent there are no properties to rent!!!!!

    Something  socialists have yet to work out.

    0
    0