Wednesday, May 12, 2010
Bye Bye Buy To Let
FT: House prices could fall on back of CGT rise
Property experts warn that their interests may be damaged by these efforts to rein in their wanton destruction of the economy.
Posted by paul @ 10:33 PM (1596 views) Add Comment
14 Comments
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1. confused76 said...
Paul, thanks this is great news!!
MWAUHAHHHA AHHAHH
2. Sarah said...
I'm so disheartened to hear Law and Boulger squealing like pigs, not.
3. mr g said...
MWAUHAHHHA AHHAHH?
I thought English was the language of communication on HPC?
4. confused76 said...
I can't believe the load of £¬@p below, the entire btl is predicated on capital gain, not income (usually net negative)
"Liam Bailey of Knight Frank said most second home owners buy for the long-term. “Ultimately people buy second homes as something to use, rather than for capital gains,” he said.
Stephen Ludlow, of ludlowthompson.com, a London letting agent, said buy-to-let investors were more interested in long-term, high-yielding investments rather than short term capital appreciation.
“Buy-to-let investors are usually looking for a steady income for their retirement and intend to leave the property to their children so capital gains tax is not so important,” he said.
According to some property experts, the new tax change could also have a positive impact on the UK property market. James Hyman, partner for residential sales at Cluttons, said it “could give the London market the supply it has been crying out for over the last 18 months"
5. taffee said...
'experts warned prices could fall'
oh no you mean the species known as young people could buy into society...disgrace
6. alan_540 said...
About bloody time!
7. vacuouspolitician said...
Lets hope so. However seeing is believing ...we should have already had a reasonable correction in HP but all we have seen is the pound devalue and stoking up of inflation. There will always be ways round this because the people 'who matter' don't want a house price collapse.
8. Jayk said...
Most BTLers do not pay CGT on profits anyway, only tax relief on losses. If they don't straight evade it, they just change the designation of their primary home to avoid it (the public has spent the last year whining about MPs doing this, but it's a popular technique in this country, stealing money from the taxpayer). HMRC have neither the time nor the inclination to monitor individuals to see if investors repeatedly do this sort of thing, and there is no law against it anyway.
So, for the majority of BTLers, this increase will be utterly meaningless.
Part of the answer to this problem is to force investors in property to register as such and declare their first home for tax purposes, and force one part of the transaction process (whether that be buyer, seller, solicitor or agent) to inform HMRC of a house sale/purchase.
9. need-a-crash said...
@3. confused76
Totally agree rental income still barely covers an interest only mortgage. There probably are BTL who are in it for the relatively long term but that's only because they want even bigger capital gains.
The guy from Cluttons seems to have the right idea "it could give the London market the supply it has been crying out for over the last 18 months" ie. that volume is ultimately what estate agents need.
10. mark wadsworth said...
“Ultimately people buy second homes as something to use, rather than for capital gains,”
Good news. In that case they won't mind paying tax on a windfall gain, or worry about tax changes which would lead to selling prices falling? Or are they just complete hypocrites?
11. sirmungo said...
This is good news, but small news. House prices have weathered the biggest storm in 70 years, I doubt an increase in CGT will make a big difference to the average house price. What we need is interest rates to rise to reflect inflation. Currently, we need house prices to fall by 3-4% per year just to stop the purchasing power of our house deposits from falling. Even if house prices remain flat for the next 3 years, we’ll be 10% worse off.
We need big nominal falls in house prices NOW and I can’t see it happening, money will just be created to prop up the nominal value of assets. I’m now trying to buy before I can’t buy anything with my cash.
12. mander said...
I think George Osborne should go ahead and propose interest on debt to be made non-deductable. CGT only applies if properties are sold and I do not see that happening and more tax revenue collected this way.
13. sirmungo said...
mander @ 10. The Tories have proposed this in the past, but guess who lobbied (at any cost no doubt) against it? Private Equity!
Good article in the FT a few months back by John Plender "Its time to stop punishing prudence"
Not that debt matters anymore, Gordon removed the Boom Bust cycle and left us with his legacy of Boom Boom Bail.
14. mander said...
sirmungo,
http://www.ft.com/cms/s/0/dacbd320-376b-11df-9176-00144feabdc0.html is good read. In America interest on debt becomes non-deductible for third home or more and Canada is the best example of financial stability where interest on debt is non-deductible. I understand people have interests here but we need to put before financial stability and that will be achieved this way because debt will not be used to inflate assests. Instead the debt will be used by very responsible business people and so the banking system will not go bankrupt again.