An end to property?

[DimPrawn]

Buy-to-let: the next big threat to UK financial stability, warns Bank of England - Telegraph

The Bank of England has warned that Britain's buy-to-let market poses an increasing threat to financial stability, as rising property prices expose vulnerabilities that could magnify a housing market crash.

The Financial Policy Committee, led by Governor Mark Carney, said landlords were more sensitive to booms and busts, buying rapidly when prices rise but also selling properties quickly during a downturn.

It noted that buy-to-let mortgage lending had increased by over 40pc since 2008. "Over the same period, the stock of owner-occupier mortgage lending rose by only 2pc," it added.

Really? No tulip Carney.

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[OwlHoot]

Can't say I'll shed any tears if many overstretched BTL landlords came a cropper with falling property values and/or rising interest rates.

At least that may give more owner-occupying buyers a chance to get into the market.

But what is the alternative to BTLers? Large institutional landlords, which a Corbyn-led Labour government could simply nationalise?

[LondonManc]

It strikes me that it's more the case that the BoE are worried that people have little faith in the future pensions market compared to the long-term stability of property investment. As much as I'd take a BTL property on now, I'd be looking at it primarily as pension income and only seeking to cover its own costs in the short term with any annual profit a bonus for at least a decade.

[PrettyBoyBrown]

This is a signal to the government

This is a signal from the BoE to the government that they need to control inflation on BTLs in order to help the BoE to keep interest rates low, which is necessary to continue the recovery.

[vetran]

At least that may give more owner-occupying buyers a very slim chance to get into the market.

FTFY

But what is the alternative to BTLers? Large International institutional landlords who pay little or no UK TAX, which a Corbyn-led Labour government could moan impotently at?

[fpinela]

I am not a property investor but it is a subject of interest for me and landlords are struggling a lot with the new budget plans announced.

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

Apparently, with the new plan, Landlords will have to pay tax over turnover and not profit, i.e., if one property is making £20k/year but the mortgage interest + expenses is
£15k, currently is taxed only in £5k (like any business). With the new changes, taxes are applied to revenue and mortgage interests cannot be deducted, so it would be taxed at £20k.


Big discussions at the moment are how to incorporate properties portfolio under limited cos.

[BrilloPad]

Carney to be sacked and replaced with someone who will do as Osborne says?

If property prices done not rise at 10% a year we only have immigration as a growth industry.

[centurian]

Apparently, with the new plan, Landlords will have to pay tax over turnover and not profit, i.e., if one property is making £20k/year but the mortgage interest + expenses is
£15k, currently is taxed only in £5k (like any business). With the new changes, taxes are applied to revenue and mortgage interests cannot be deducted, so it would be taxed at £20k.

The plans only restrict interest, not other costs (repairs, maintenance, insurance, letting fees) - and even then, only restrict to 20%. - and phased in over 4 years. BUY-to-let landlords will see little difference. MORTAGEDTOTHEHILT-to-let landlords will be crucified.

However, I do see what you describe as being a possible next step - that all costs associated with renting out residential property are disallowed for tax purposes - as that could also be applied to any LtdCo earnings derived from renting out residential property (housing associations would likely be an exception).

It's the nuclear option, but if all the BTL-ers incorporate, I'm pretty sure it will become a possibility.

[Zero Liability]

This is a signal from the BoE to the government that they need to control inflation on BTLs in order to help the BoE to keep interest rates low, which is necessary to continue the recovery.

Or at least the pretence of a recovery.

[PurpleGorilla]

An end to property?

After 15+ years of unrestricted lending and ZERO interest from government to take the heat out of a hot market, the bird has friken flown.



But too many people (particularly London media and government types) have made too much money to care.

So we are now in the situation where home ownership is down, houses are assets and commodities rather than homes, and renting is expensive and subservient due to a lack of rent control and tenant rights.