Friday, Feb 22, 2008
Do you remember the changes to miras tax relief in Aug 88? what happened next?
msn: win-win for landlords under new capital gains tax laws
And if the property market remains stable for the moment, some property investors will be tens of thousands of pounds better off if they decide to sell their property after April 1 2008. Even if investors decide to ride out the market uncertainty the opportunity to maximise and profit from their rental yields leaves landlords in a win-win situation.
Posted by sold out @ 01:38 PM (958 views) Add Comment
14 Comments
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1. drewster said...
"... rising demand for rental homes ..."
I'm tired of seeing this old mantra being repeated everywhere. With city job cuts and Poles going home, I fail to see how demand for rental homes can continue to rise? Anyone care to shed light on this?
2. hpwatcher said...
I suppose they think all the FTB's who cannot afford to buy, will choose to rent somewhere.
3. paul said...
"With April around the corner and predictions of a fall or at least a faltering housing market, it is likely that many investors will hold out until April before putting any properties on the market"
Ahaa. Now we see the truth of it.
Saying this is good news for landlords is like saying that rising floodwaters are good news for homeowners that like sailboating!
Its completely missing the point that landlords that have held property for a long time will rush to sell before the deadline and new landlords .will rush to sell after the deadline!
4. C'mon Correction said...
I agree huge supply around; in my area rents seem to be falling again. We moved into our house last summer £625 rent a month for a property "worth" £220k, we thought we had a good deal. Looking in the local papers this week, and the ads section is full of rentals and some good deals particularly at the top of the market, pokey little flats are still priced too high. For instance - A 4 bed detached house 300 yds down the road from me is available to rent from March onwards for £850 a month - it would be "worth" £380k+, anyone stupid enough to even think of buying should just do the maths comparing renting to servicing mortgage debt.
"Buying is dead money".
5. Rollonapril2008 said...
I love it...this is when it will blow-up big time! - http://www.housepricecrash.co.uk/forum/index.php?showtopic=60093
6. hpwatcher said...
I agree. There are tons of places to rent...so many daft BTL's trying to become multi millionaires.
In on local paper, there are more places to rent than buy.
7. jack c said...
In answer to Sold out's question - from memory NIgel Lawson the then Chancellor stated he was planning to abolish double tax relief (MIRAS) - there was an anomoly where cohabiting couples could claim double relief @ the time and consequently a mad rush took place to get on or up the housing ladder before the proposed tax change took place. This led to a boom which was subsequently followed by a huge bust - I guess what youre driving at is the possibility of a repeat with BTL
Incidentally during the Lawson boom bust one of my mates had a 2 bed semi house in P'boro which was on the market for £70K - he declined a £68K cash offer and within weeks was forced to take £62K in order to move back up North - within 18 months that house was back on the market @ £45K !
8. str 2007 said...
@ C'mon Correction - you don't say where in the country you are.
For reference the rents in Marlow Bucks would be roughly double those you quote against house values of + 50-60%. So in actual fact a slightly better return on investment. But I'd still rather be renting right now with the level house prices are at.
9. Djia977 said...
I dont quite get this idea that we will see higher prices for rented property. Sure, there could be more demand as first time buyers rent while waiting for prices to meet them, and there will be demand from people who unfortunately lose their homes. BUT, what is going to happen to all those repossessed properties? Arent they most likely going to be added to the already supply of homes to let, giving a net effect of zero?
Surely the only supply/demand equation we need to look at is 1) the supply of new homes, 2) the demand from new family units.
I think the issue 2 is most important as it is becoming clear that the increase in migration is slowing and reversing, and secondly family breakups may become a little bit rarer with less home equity to fight over.
10. C'mon Correction said...
str -
Those are prices in Cardiff, in one of the most affluent areas in South Wales. Average prices in south wales are around the £165k mark with rents around around £500 -£550 pcm. We moved out of a large 2 bed flat in a very nice area which we rented for £450 pcm.
Average wage is quite low here compared to most of England. And renting is significantly cheaper than a mortgage and has been for the last 3+ years.
Sounds like Marlow rents are higher; I think south wales rents are really determined by low wages here, a lot of people commute to cardiff from the south Wales valleys and that really drives down wages and hence drives down rents because people just simply can not afford to pay anymore. Another local factor i believe is we have a big over-supply of flats and a bloated btl market here.
11. mark wadsworth said...
As Paul says, the CGT changes are yet another scam to try and stave off the inevitable HPC. let's not forget that Nulab invented Real Estate Investment Trusts a year ago to enable small savers to lose half their money buying overpriced commercial property off the real pro's who bailed out in time. In any event, those who have owned for a long time will pay MORE if they wait until after April, because they lose indexation allowance and taper relief. But those people are less likely to want to sell, as their mortgages will be paid off by now. It is the recent total mug BTLers who are being conned into waiting for another few months.
As to CC and STR's spat, I have sold-to-rent in a fairly posh area just outside Greater London, the rental yield my landlady is getting is about 4%, i.e. less than her mortgage. And via the BBC link 'Prices in your area' I see that values have fallen 7.5% in the last three months alone. Buying a house? Dead money!
The real problem is that when somebody really wants to sell, the first thing he does is chuck out his tenants. But then the price drops and drops and the owner gets more and more desperate and even less likely to look for tenants. So we sell-to-renters may end up laughing on the other side of our faces. That's the problem with booms and busts. On the way up, flats stand empty because the owner is making money anyway. And on the way down, people keep flats empty on the off chance that a cash buyer comes along.
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13. Alex228 said...
my local corner shop is totally wallpapered with "house to let" "room to let "ads.
that Peterborough
14. new user 2007 said...
Most BTL entered this in the last 3 years and these people will all benefit from the CGT change. I thought that the govt made the CGT changes on the grounds that, along with HIPS, they could stall a house price crash that would have occurred amid the growing credit crisis (even before the crunch income multiples had reached a limit) and unsustainable house prices.
The stalling solution would have worked for them, they thought, as long as the credit markets opened up by April (I do not say return to normal as the easy credit over the last five years was the abnormal part, not what markets are doing now) and buyers returned. This has not happened so the the new BTL is merely waitnig until April to sell. The long term house investors are going to lose out hugely as they will pay more CGT.
Without the HIPS and CGT the sellers market would have remained normal. There seems to be some confusion about this supply issue. Papers seemed to make it sound like a crash requires a surge in sellers (I think this will happen in April). It does not, it merely needs seller numbers returning to normal i.e. the levels before July and demand to remain as it is now. The CGT is a trigger for sellers returning, no such trigger exists for buyers.
The inconsistency of Mr Law shows through yet again. BTL look at capital plus rent surplus to find the gross yield. I have not seen any change in rent prices so I do not believe that part. Why would BTL buy in this market? Rent in my entire area is below the interest payments with a 25% deposit. And no capital appreciation. The ones who gain most in April are also the ones who are subsidising tenants and so will sell.
He is inconsistent (I am assuming gross yields count) as I think that FTB will not purchase, BTL are stupid if they do and if more FTB. He is saying home owners and FTB are going to rent instead, so rents should go up (even though we have a suprlus of rental housing) BUT then he is also saying that prices will rise...SO RENTS WILL GO UP BECAUSE MANY HAVE STOPPED BUYING BUT PRICES WILL NOT FALL AS PEOPLE ARE BUYING.
His logic is all the problems more silly as housing problems are evident even before our weakening economy, people coming onto higher rates, more bankruptcies, April etc...are taken into account.