An end to property?

[AtW]

At the moment what seems to be the best solution for them is to move all the business to Limited Cos.

You can't do it easily - bank would have to agree, and in any case interest rate will be much higher, plus stamp duty to pay, inheritance tax implications, capital gains etc - after that selling house will be even harder because it would be Ltd that owns it, plus don't be surprised if Ltd that own housing stock will face higher corp tax in the future... to build new affordable housing

[CloudWalker]

Finally bought my house , Never moving again. too much stress

[MicrosoftBob]

Surely we will know when property is doomed, ATW will finally buy a house

[AtW]

Surely we will know when property is doomed, ATW will finally buy a house

Going to rent for another 6 months, the end is nigh...

[ChimpMaster]

You can't do it easily - bank would have to agree, and in any case interest rate will be much higher, plus stamp duty to pay, inheritance tax implications, capital gains etc - after that selling house will be even harder because it would be Ltd that owns it, plus don't be surprised if Ltd that own housing stock will face higher corp tax in the future... to build new affordable housing

Yes there are a lot of poorly educated property-types out there. Selling existing properties into a Ltd structure would be financially unviable and in any case you would be looking at more expensive mortgages - so you end up paying the bank more rather than paying more tax.

Some are considering buying properties from now on, into a Ltd company. This might work to some extent but you're still stuck with expensive mortgages, which are around 4.5% compared to sub-3% for personal BTL loans. And in any case, why do this now when the Finance Bill hasn't been approved yet?

I'm not a fan of the modern BTL phenomenon, the zero-money-down-wanna-be-millionaire types. That's not investment, that's just messing with the system as far as I see it. So anyone that is over-leveraged will be hit by the new rules and a lot of people will lose everything over this unless they reduce their exposure. The aim from now should be to invest for the long term and not to have huge debts on the properties, i.e. go for a more responsible LTV ratio.

Perhaps the government will reduce the multiples BTL investors can borrow. and then force all BTL loans to be repayment, like they did with resi mortgages a while back. That will ensure people aren't stretching or over-paying, and it's allows resi purchasers to compete on a more level playing field.

[AtW]

Also banks would probably want to get director's personal guarantee of the loan made to the company, so there will be no Limited benefit from running Ltd.

Also no nice tax free CGT from selling property when it's in Ltd.

Basically Gideon fooked over BTL crowd.

But this will be good for his rich mates who own large offshore companies that specialism in property - they'll snap up those BTL houses and make a killing - nice 18% corp tax and no dividend tax since money will be retained in offshore location. Lovely.

[AtW]

Bank of England could have increased rates to deal with the bubble, it's totally under their control and in fact it's their fecking job.

[fpinela]

Yes there are a lot of poorly educated property-types out there. Selling existing properties into a Ltd structure would be financially unviable and in any case you would be looking at more expensive mortgages - so you end up paying the bank more rather than paying more tax.

Some are considering buying properties from now on, into a Ltd company. This might work to some extent but you're still stuck with expensive mortgages, which are around 4.5% compared to sub-3% for personal BTL loans. And in any case, why do this now when the Finance Bill hasn't been approved yet?

I'm not a fan of the modern BTL phenomenon, the zero-money-down-wanna-be-millionaire types. That's not investment, that's just messing with the system as far as I see it. So anyone that is over-leveraged will be hit by the new rules and a lot of people will lose everything over this unless they reduce their exposure. The aim from now should be to invest for the long term and not to have huge debts on the properties, i.e. go for a more responsible LTV ratio.

Perhaps the government will reduce the multiples BTL investors can borrow. and then force all BTL loans to be repayment, like they did with resi mortgages a while back. That will ensure people aren't stretching or over-paying, and it's allows resi purchasers to compete on a more level playing field.

Lenders will adapt and create products specifically for ltd cos. I have no doubts about that as the market will always adjusts to the demand. Actually, it is already happening, in the last years it became easier and cheaper to get financing though a company, but it is still obviously much more expensive than a mortgage by an individual. It is also more complex to manage, add accountancy fees and all the bureaucracy (that we know) on top and 99% of the landlords would never consider it.

Moving an existing portfolio of properties to a company can be a nightmare but for people who is looking at btl as an investment oportunity it seems the best option to start with. It is expensiver as you said, but if the rule goes ahead lenders will create even more products for ltd cos. There's some advantages as well, the biggest is that all the money generated can be reinvested without being taxed before. As an investor (not the standard landlord who has to take the money out to live) this is great and allow you to expand a portfolio much easily. I'm not quite sure about what is the most tax efficient, but probably dividend through ltd will also be better.

But you're absolutely right, Landlords currently leveraged with LTV > 75%, which is probably the most common, will be crucified with the new tax rules. If their exposure to the mortgage is not as much, it will have consequences, but they will take it and carry on. Potentially, It will be an interesting time to be a buyer with a lot of landlords struggling to re-pay mortgage interests and trying to sell their portfolios.

Interesting times coming.

[AtW]

It's all over...



BTL now is VB6 15 years ago...

[AtW]

Interesting times coming.

May you live in interesting times...