Budget 2015

jimmybell said:
However, if a system is broken - you don't keep it broken for fear of hurting the few (relatively well off) and leaving those in need to suffer, you make change, and change isn't always good for everyone. I'm surprised they actually made a change, usually once a system is in place its nigh on impossible to revert it because of backlash, even if it's wrong.
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i agree but the thing is if i was well off as a landlord, would i need a mortgage?

the tax relief was and always had been seen as a cost from a business perspective other examples things like 10% wear and tear which landlords can claim back, claiming back full costs for repairs, claiming back full costs for painting a property these are all examples of what they government states you can claim back on your year end accounts. if they were to suddenly decide non of these were to apply too, then where would that leave people who had made the investment based on what they had been told and what had been the norm for decades?

i understand what people say about the btl market etc but getting rid of the btl market would not necessarily lead to more housing being available. people would still be out there who couldnt afford to buy a house such as those on benefits.

anyhow it has been done now so like most things, the ones who adapt will survive and every action has a reaction so i have no doubt that things will change over a period of time again
 
Why should a landlord be able to claim back for repairs, painting a property, etc when home owners have to pay for it themselves with no help?
I didnt know this was the case and if it is I definately dont think its right.
The way I seen the buy to let thing was someone could basically get another property, have the bank fund it in the first place and the tennants pay the mortgage for you with a bit left over for yourself.
After the mortgage is finished you have a property that you own but havnt actually paid for.
I may be wrong.
 
Nictrix said:
Why should a landlord be able to claim back for repairs, painting a property, etc when home owners have to pay for it themselves with no help?
I didnt know this was the case and if it is I definately dont think its right.
The way I seen the buy to let thing was someone could basically get another property, have the bank fund it in the first place and the tennants pay the mortgage for you with a bit left over for yourself.
After the mortgage is finished you have a property that you own but havnt actually paid for.
I may be wrong.
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You don't claim it back as such, you take it off the earnings. for example, you let out a house, you get 5k in rent. the tenants leave and leave damage worth 2k which you have to repair to be able to let out the property again. hmrc says you can deduct that from your earnings and only pay tax on 3k.

Also, if a tenant ruins your house and it's not in a lettable condition, repairs and such are business costs or to put in a way that you would understand a taxi business cannot run without roadworthy cars, houses cannot be let without repairs done. It's a business not a personal endeavour. furthermore you can sell your home and not be charged capital gains tax whereas this isn't the case with a rental property so before you start shouting it's not fair, have a better understanding of what you are talking/ complaining about!

when you repair your own personal house, you are doing it for yourself to live in. when you repair a house that has been damaged by tenants, it is of no benefit to you other than to be able to let it out again and earn something from your investment. you are never going to live in that house to benefit from it being nice and everything working properly. or to put it another way, you pay for the repairs on your own car you use for your personal errands, however if it was a company car, you use for business would you be expected to pay for the repairs even though you use it??
 
The tax changes on buy to let are a total kick in the teeth for Landlords. If there had been prior warning of this then we simply would not have bought our latest property. It's now going to cost us money to run it. I can see a lot of landlords selling stock over the next 2 years, as a result of these changes, to reduce what will for some become crippling mortgage payments that they could not have planned for. The ones that remain will however be able to increase their rent substantially as a result of less stock. So long term the Tenants will pay for this. Economics of the mad house. :thumbsdown:
 
Or...If that did happen then BTL landlords could free up cheap housing stock,correcting house prices for FTB's to have a chance of getting a home?

Mortgages have been at there lowest for years and years,its unprecedented..... So if your not planning for the BOE base rate to increase and its going to cripple you then i would get out now...


I remember when people where happy enough to own one house... :roll:
 
UK is a funny market with BTL, in other European countries it is generally institutional investors like pension or insurance companies that do this, which is much more controlled and is to a good standard.

What I have seen from BTL here in the UK (student places specifically), is that the landlords want the maximum profit for the lowest investment (preferably 0) and houses are often in a poor state.
 
you're right pvr, a majority of landlords are in it for the money. well investment is maximum return for least capital put in and thats how they see it

personally, i will do that little bit more as i prefer my tenants to stay longer and a happy tenant, is a settled tenant. i have mostly houses i rent but i do single room lets in one of my properties and in the last 6 months have had to get rid of 2 tenants who were making life difficult for other household members. the other tenants were impressed as many landlords would just turn a blind eye and let them sort it out amongst themselves or let individuals just leave of their own accord. i'm pretty hands on and put in a lot of hours to make sure things are done right. i had a phonecall earlier at the said house where one of the guys said there was a leak in the kitchen, i was over there within 2 hours with a plumber to sort the leak. it was caused by someone pouring food down the kitchen sink and the water coming out of the washing machine overflow pipe which was linked to the sink. got the blockage removed, told everyone not to do it again and went on my way. an unneccesary and unexpected expense, not to mention ruining my quiet evening

many people look in from the outside and think its easy but in reality it is a 24/7, 365 commitment and you never know what issue or cost is around the corner. its made twice as hard when local councils bring in silly regulations and governments impose new legislation on you. things you would never need to do in your own personal home. in some areas of nottingham, hmo's are now any houses with more than 2 people in them as opposed to the 4 that it used to be. getting a hmo license will cost you about £900 just to apply for it, then you have to get the house up to a certain standard with fire doors, special locks, special safety windows to name a few things and to top it off, the license will need to be renewed whenever the local council feels like it, it doesnt even have a set time frame. how ludicrous is that!
 
I'm not defending the removal of tax relief on mortgage interest for BTL, but it is worth setting in context why the government decided to do it. The BTL mortgage market accounts for 15% now (£200bn) and is looking decidedly dodgy. Many of those mortgages are interest-only and the government is concerned about the impact of the predicted rise in interest rates on those particular borrowers. With some justification i have to say. So they are deliberately trying to dampen down demand and take some heat out of the market.
 
Envy you are right about the time and effort spent keeping your tennants happy and it is a shame for you when there are rule changes but you seem to have glossed over the fact that once the mortgage is finished you will own a property worth xyz which you havnt paid for if you had a BTL mortgage.
Other people have paid for it for you unless you stumped up the cash to buy the properties outright yourself.
Its not like you are doing all the running around for free, you will be paid hansomely at the end and no doubt earn a bit from each tennant along the way as well.
 
Nictrix said:
Envy you are right about the time and effort spent keeping your tennants happy and it is a shame for you when there are rule changes but you seem to have glossed over the fact that once the mortgage is finished you will own a property worth xyz which you havnt paid for if you had a BTL mortgage.
Other people have paid for it for you unless you stumped up the cash to buy the properties outright yourself.
Its not like you are doing all the running around for free, you will be paid hansomely at the end and no doubt earn a bit from each tennant along the way as well.
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Yes that's correct. Same as any one having a business on the side isn't it?

Any its not like he is getting the money for free, he is paying to borrow it.
 
CornishRob said:
Nictrix said:
Envy you are right about the time and effort spent keeping your tennants happy and it is a shame for you when there are rule changes but you seem to have glossed over the fact that once the mortgage is finished you will own a property worth xyz which you havnt paid for if you had a BTL mortgage.
Other people have paid for it for you unless you stumped up the cash to buy the properties outright yourself.
Its not like you are doing all the running around for free, you will be paid hansomely at the end and no doubt earn a bit from each tennant along the way as well.
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Yes that's correct. Same as any one having a business on the side isn't it?

Any its not like he is getting the money for free, he is paying to borrow it.
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I like to be educated so maybe it could be explained how anybody with a BTL mortgage is actually paying for it themselves?
Surely the rent being paid more than covers the monthly cost of the mortgage payments?
Basically the only mortgage payments the landlord would have to make would be any months there are no tennants?
 
Well its like any business isn't it?

The person renting it is paying to have use of the house or whatever? Is it not the same as leasing a car? or going on a days fishing trip? At the end of it, someone will have an asset. Finance company with the car, or fisherman with his boat, which he probably purchased with a loan? The slight difference maybe with a car is its a depreciating asset, rather than an appreciating one like houses generally at the moment.

To get a BTL, the landlord will have to invest the money. Maybe say 25% of the value then mortgage the rest, then he will obviously have the risk of it not being let and every other cost.

The rent may not always cover the mortgage cost, but the idea is it should. Risk with mortgage rates etc.

Its just another business on the side isn't it. The reward is in the risk as with anything.

Also don't forget that there is a need for rental housing stock. Don't just assume that all rental housing is bad, as some people will want it for a short term housing solution.
 
Nictrix said:
I like to be educated so maybe it could be explained how anybody with a BTL mortgage is actually paying for it themselves?
Surely the rent being paid more than covers the monthly cost of the mortgage payments?
Basically the only mortgage payments the landlord would have to make would be any months there are no tennants?
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ok, let me educate you. to get a btl mortgage you have to pay a 25% deposit so on the cheapest houses it is a minimum of 15k..... where does this come from on start up..... banks wont lend you money unless you have a job. i worked hard for 8 years in order to save enough for my first 2 buy to lets. the deposits came to 45k. i paid this out of my pocket from my own earnings. once i bought the houses, i had to start paying my mortgages immediately even though i had no tenants and the houses needed some work. again the money to do them up to a good standard came out of my own pocket. so lets say 55k total invested. tenants came in and paid £450 a month per house so £900 pcm. interest per month was £500, so im making £400 pcm. on a 55k investment...... at this rate it would take 14 years just to recoup the investment without paying off any of the mortgage.... but we are not finished yet. you have to do all the maintenance for the house ie blocked drains, broken taps, faulty boilers, insurance, gas safety checks etc. so that £400pcm is down to about £200 pcm sometimes even less. now you have to see how many hours you have put in to earn that £200. its a lot of running around i can tell you and its easy to say no work goes into earning your money when thats far from the truth as you can get

yes properties do go up in price but thats the point of doing it in the first place but they go up after approximately 20 years according to trends but who is to say if they will or not, also if they do appreciate, you will have to pay capital gains tax on the sale price. like cornishrob says, its a business. you buy stock to sell stock, if you dont have stock to sell you cant make a profit and if you have bad stock or something is stolen (rent isnt paid) you lose out. it doesnt come easy, you have to invest time and money to get a reward. in the last 6 months i have had 6 tenants break their contracts and leave on different properties for which i had to then do repairs, advertising and viewings to get the houses rented out again

anyway, thats the life i live and if you havent experienced it for yourself then you really arent in a position to judge or critique
 
envy said:
Nictrix said:
I like to be educated so maybe it could be explained how anybody with a BTL mortgage is actually paying for it themselves?
Surely the rent being paid more than covers the monthly cost of the mortgage payments?
Basically the only mortgage payments the landlord would have to make would be any months there are no tennants?
Click to expand...

ok, let me educate you. to get a btl mortgage you have to pay a 25% deposit so on the cheapest houses it is a minimum of 15k..... where does this come from on start up..... banks wont lend you money unless you have a job. i worked hard for 8 years in order to save enough for my first 2 buy to lets. the deposits came to 45k. i paid this out of my pocket from my own earnings. once i bought the houses, i had to start paying my mortgages immediately even though i had no tenants and the houses needed some work. again the money to do them up to a good standard came out of my own pocket. so lets say 55k total invested. tenants came in and paid £450 a month per house so £900 pcm. interest per month was £500, so im making £400 pcm. on a 55k investment...... at this rate it would take 14 years just to recoup the investment without paying off any of the mortgage.... but we are not finished yet. you have to do all the maintenance for the house ie blocked drains, broken taps, faulty boilers, insurance, gas safety checks etc. so that £400pcm is down to about £200 pcm sometimes even less. now you have to see how many hours you have put in to earn that £200. its a lot of running around i can tell you and its easy to say no work goes into earning your money when thats far from the truth as you can get

yes properties do go up in price but thats the point of doing it in the first place but they go up after approximately 20 years according to trends but who is to say if they will or not, also if they do appreciate, you will have to pay capital gains tax on the sale price. like cornishrob says, its a business. you buy stock to sell stock, if you dont have stock to sell you cant make a profit and if you have bad stock or something is stolen (rent isnt paid) you lose out. it doesnt come easy, you have to invest time and money to get a reward. in the last 6 months i have had 6 tenants break their contracts and leave on different properties for which i had to then do repairs, advertising and viewings to get the houses rented out again

anyway, thats the life i live and if you havent experienced it for yourself then you really arent in a position to judge or critique
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well, that put me off B2L for life. thanks :p

It's clearly not all pimms and strawberries, but there is the other side to large scale b2l .. and that is that (as i have recently experienced) you're no longer just competing against developers (cash buyers) in competitative property markets (read: London), you're also dealing with well sorted, organised and generally more savvy B2L guys and girls, and as a first time buyer, frankly - it's already hard enough. The alternative as a FTB, ironically, is to rent and help the very people you're trying to compete to purchase with!

Saying that - B2L investors often rennovate before letting, so it can i guess contribute towards gentrification, and even if its badly done, some rennovation on a shitty street is nicer than none (presumably a non-b2l owner may do the same but has less incentive to do so for extra rental income).

swings, roundabouts, etc.
 
envy said:
Nictrix said:
I like to be educated so maybe it could be explained how anybody with a BTL mortgage is actually paying for it themselves?
Surely the rent being paid more than covers the monthly cost of the mortgage payments?
Basically the only mortgage payments the landlord would have to make would be any months there are no tennants?
Click to expand...

ok, let me educate you. to get a btl mortgage you have to pay a 25% deposit so on the cheapest houses it is a minimum of 15k..... where does this come from on start up..... banks wont lend you money unless you have a job. i worked hard for 8 years in order to save enough for my first 2 buy to lets. the deposits came to 45k. i paid this out of my pocket from my own earnings. once i bought the houses, i had to start paying my mortgages immediately even though i had no tenants and the houses needed some work. again the money to do them up to a good standard came out of my own pocket. so lets say 55k total invested. tenants came in and paid £450 a month per house so £900 pcm. interest per month was £500, so im making £400 pcm. on a 55k investment...... at this rate it would take 14 years just to recoup the investment without paying off any of the mortgage.... but we are not finished yet. you have to do all the maintenance for the house ie blocked drains, broken taps, faulty boilers, insurance, gas safety checks etc. so that £400pcm is down to about £200 pcm sometimes even less. now you have to see how many hours you have put in to earn that £200. its a lot of running around i can tell you and its easy to say no work goes into earning your money when thats far from the truth as you can get

yes properties do go up in price but thats the point of doing it in the first place but they go up after approximately 20 years according to trends but who is to say if they will or not, also if they do appreciate, you will have to pay capital gains tax on the sale price. like cornishrob says, its a business. you buy stock to sell stock, if you dont have stock to sell you cant make a profit and if you have bad stock or something is stolen (rent isnt paid) you lose out. it doesnt come easy, you have to invest time and money to get a reward. in the last 6 months i have had 6 tenants break their contracts and leave on different properties for which i had to then do repairs, advertising and viewings to get the houses rented out again

anyway, thats the life i live and if you havent experienced it for yourself then you really arent in a position to judge or critique
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You are right I cant judge as I am in no position to ever have £45k to stump up in the first place.
What I can see from your rough figures is that after 14 years your initial input is paid plus giving you around £33K , then for the next 11 years your mortgage will be paid by someone else, you are earning at least £3600 a year after your expenses, so after that 11 years you have made around £40K. Total over the 25 years is around £73K but at the end you still have your properties owned fully by yourself that you really have only paid a small percentage of.
Sounds to me like too much of a headache to deal with and only worth it if you survive to the end of the mortgages.
However if there was no money in it , you wouldnt do it and neither would anybody else.
If there was no outlay, no mortgage and tennents for the full 25 years you would earn £270K
 
yes spot on. it is a very long term investment but also you have to put in a lot of hard work too. for me, it is now my primary job as i have been out of contract since january. however, i still get by and i hope that in 20 years time, it will pay off but who knows what the stupid government will do next to clip my wings and eat into my retirement plan

lol if there was no outlay, no mortgage and full occupancy it would be great but on the 270k, you would still need to pay your taxes and life is never that easy. i've put almost 200k into my properties
 
jimmybell said:
well, that put me off B2L for life. thanks :p

It's clearly not all pimms and strawberries, but there is the other side to large scale b2l .. and that is that (as i have recently experienced) you're no longer just competing against developers (cash buyers) in competitative property markets (read: London), you're also dealing with well sorted, organised and generally more savvy B2L guys and girls, and as a first time buyer, frankly - it's already hard enough. The alternative as a FTB, ironically, is to rent and help the very people you're trying to compete to purchase with!

Saying that - B2L investors often rennovate before letting, so it can i guess contribute towards gentrification, and even if its badly done, some rennovation on a sh***y street is nicer than none (presumably a non-b2l owner may do the same but has less incentive to do so for extra rental income).

swings, roundabouts, etc.
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yeah definitely. if you have a busy worklife and family, it can be too much for sure. i really struggle sometimes if im seeing someone as it gets in the way of dealing with tenants and things are left on the back burner costing me money at the expense of a relationship

even savvy b2l peeps have to put in a lot of work to renovate properties. it looks easy but imagine how many tradesmen you have to deal with, the cost of materials, getting things done right, costs can easily escalate out of control. however, if you buy right, you can flip a property without much work but those opportunities are few and far between and you have to price it right too. personally, flipping hasnt appealed to me as you have a lot of money tied up until you sell

im selling my residential house at the moment to upgrade and its a pain in the bum. its been listed for a week and ive had a viewing everyday, its at the cheaper end of the market at 115k, semi, 3 bedrooms, front and rear garden with drive, no work needed whatsoever, immaculately decorated and people are still umming and aaaaring about it. although i have had a couple of lower offers and someone else is doing a second viewing shortly, nothing is as straight forward as it looks nowadays lol
 
Sadly in London it's a very different story, usually a house is sold within the first 2-3 viewings, and it's reasonably common to be sold the same day with the first viewer :/ Hence why there's so much animosity to professional developers who walk in and offer cash, often as a FTB you wont even hear about properties before they're already sold. Plus the estate agents add an extra layer of complexity with their varying commission schemes not always (as you'd expect) tied to the sale price etc - so you never know who's out to get what from you.
 
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