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topliner

Btl, It All Right Nothing's Wrong!

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oh dear. schooled by the market, going to be.

Who's worse when it comes to ramping - The Times or the Daily Express?

The Express will every so often do a sensationalist front page ramping spread, but the time on the other hand has an almost constant stream (just follow Newsnow.co.uk/Property) of subtle and not so subtle property propaganda. I choose the Times. This is the paper that ran a front page and editorial praising BTL. I stopped buying it from that day.

I can't wait for the day that the newspapers die. They'll disappear along with selfish Baby Boomers they cater for.

Edited by Turnbull2000

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his smaller “bread-and-butter†flats (many ex-housing association, picked up at auction) are as in demand as ever.

Why are those being sold off?

I noticed this on Homes under the Hammer the other day. Someone purchased a Peabody Trust flat to flip (try saying that p*ssed).

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BTL is predatory capitalism, I know what, Ill buy up all the food in the country and charge everyone a fortune just so they dont starve. Then Ill leave half of my food to rott in the sun, just so that I dont have to "give it away" at "crazy prices".

Of course you cant buy up all the food, that would be stupid, only if the government limited the amount of food in the country could you limit supply in such a way, as they do with housing. If food was really expensive, the government would issue everyone witrh food loans, pushing up the price of food as everyone begins to spend more and more money for less and less food.

Lets see, what else can we play monopoly with, this is just like the board game, that is what it is like to be a youngster now a days. Its like you arrived at someone elses game of monopoly and they already have all the properties. Try as you might to haggle Old Kent road off them, they want 4 times its face value. Dont buy it? fine, you'll loose.

Silver for me seems like the next best bet at constricting supply to make it appear there is a greater demand. Its a metal which is deemed precious, but also has an industrial use needed in lots of new technologies. So, whats to stop the billionaires from create a huge SILVER fund with hundreds of billions, then just buy up all the silver and store it in a fort knox type vault, might as well use all that fiat currency for something right?

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BTL is predatory capitalism, I know what, Ill buy up all the food in the country and charge everyone a fortune just so they dont starve. Then Ill leave half of my food to rott in the sun, just so that I dont have to "give it away" at "crazy prices".

Of course you cant buy up all the food, that would be stupid, only if the government limited the amount of food in the country could you limit supply in such a way, as they do with housing. If food was really expensive, the government would issue everyone witrh food loans, pushing up the price of food as everyone begins to spend more and more money for less and less food.

Lets see, what else can we play monopoly with, this is just like the board game, that is what it is like to be a youngster now a days. Its like you arrived at someone elses game of monopoly and they already have all the properties. Try as you might to haggle Old Kent road off them, they want 4 times its face value. Dont buy it? fine, you'll loose.

Silver for me seems like the next best bet at constricting supply to make it appear there is a greater demand. Its a metal which is deemed precious, but also has an industrial use needed in lots of new technologies. So, whats to stop the billionaires from create a huge SILVER fund with hundreds of billions, then just buy up all the silver and store it in a fort knox type vault, might as well use all that fiat currency for something right?

BTL only works because all interest is tax deductible. One measure would be to restricted interest deductibility based on loan to asset value and take out the high leverage tax advantage.

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http://property.timesonline.co.uk/tol/life...icle6741396.ece

Apparently the crunch was all a storm in a teacup.

Proud BTL'rs march on regardless.

If interest rates stay as they are, in one year we will be able to pay back just over 10% of the capital, as well as the much-reduced interest, on our various loans. So, by the time rates start to go up (and I think it will be a while) we will have significantly reduced what we owe. I hope in < 7 years we will be debt-free. Then, unless living in houses goes totally out of fashion, we have a steady income for life and few worries.

Obviously, the recession could get worse and society might collapse, but then again, it probably won't.

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BTL only works because all interest is tax deductible. One measure would be to restricted interest deductibility based on loan to asset value and take out the high leverage tax advantage.

Net income from investment property is treated exactly the same as any other business. Interest on business loans is a cost of doing business. You only pay tax on the actual profit you have made. This seems to me to be as it should be.

If an asset is used to make money in a business, then the finance cost is a deductable expense. Its true for all businesses.

If I am a taxi driver, I can deduct the interest on my car loan, or leasing payments, from the money I earn when calculating my taxable income.

Its the same for loan interest on property - whether residential, retail, hotel, B & B, whatever.

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I note that Shona in the pic in the article is standing in front of a property that is currently losing her money......

Not one already let to stable reliable tenants. One that she is paying a mortgage and council tax on.

Says it all really!

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If interest rates stay as they are, in one year we will be able to pay back just over 10% of the capital, as well as the much-reduced interest, on our various loans. So, by the time rates start to go up (and I think it will be a while) we will have significantly reduced what we owe. I hope in < 7 years we will be debt-free. Then, unless living in houses goes totally out of fashion, we have a steady income for life and few worries.

Obviously, the recession could get worse and society might collapse, but then again, it probably won't.

I suspect when rates do go up though it'll be in big rapid jumps rather than a few basis points every couple of months. It'll be a cashflow game then and it'd be difficult for LLs if it coincided with them having say above average voids.

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nothing wron with BTL.

Leverage based on an unfair tax advantage without a trade conduit is simply stupidity. like overfishing...benefits no-one.

I mean, when all FTB are priced out, where are the capital gains going to come from?

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If interest rates stay as they are, in one year we will be able to pay back just over 10% of the capital,

2 negative things:

voids

real terms capital losses

1 (quite big) positive thing, as you have alluded to:

real terms debt redution thru inflation and low IRs

Edited by Si1

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Obviously, the recession could get worse and society might collapse, but then again, it probably won't.

straw man exaggerated argument

the economy could get worse and the economy not collapse, we could get stagflation and high IRs

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Net income from investment property is treated exactly the same as any other business. Interest on business loans is a cost of doing business. You only pay tax on the actual profit you have made. This seems to me to be as it should be.

That is why you will find yourself in disagreement with most on here.

Of course profitable landlords are required to provide rental accommodation for those that want to and need to rent, however you cannot get away from the fact that in recent years the BTL boom caused by such an unfair market and easy credit has denied young couples access to property to start a family.

Any business needs a healthy business environment and society in which to operate, the BTL business has if you'll excuse the saying; shat it's bed and will inevitably collapse because of it and of course bring down the rest of the housing market with it.

Going back to the article: The fact that we still have fervent ramping in the press just confirms to me that we are not even at the end of the beginning of this crash :)

Edited by Bubble&Squeak

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Net income from investment property is treated exactly the same as any other business. Interest on business loans is a cost of doing business. You only pay tax on the actual profit you have made. This seems to me to be as it should be.

If an asset is used to make money in a business, then the finance cost is a deductable expense. Its true for all businesses.

If I am a taxi driver, I can deduct the interest on my car loan, or leasing payments, from the money I earn when calculating my taxable income.

Its the same for loan interest on property - whether residential, retail, hotel, B & B, whatever.

its not the same loan and in most markets, business does not compete with the end user they compete FOR the end user with other businesses.

BTL directly competes with the end users and gets a tax break for doing so. and cos there are so many BTLS they are also competing with each other.

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If BTL has distorted the market in some areas (which I think it has) then I don't think it's because "tax-breaks" have encouraged it. Even with the "tax-breaks", for BTL to work you need either a 10% yield, or to be buying when prices are below the long term trend. In most areas there hasn't been any property available that fits this description since about 2003 at the latest. The reason people still did it was simply down to ignorance and fraudulent advice from the likes of NR and B&B.

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If BTL has distorted the market in some areas (which I think it has) then I don't think it's because "tax-breaks" have encouraged it. Even with the "tax-breaks", for BTL to work you need either a 10% yield, or to be buying when prices are below the long term trend. In most areas there hasn't been any property available that fits this description since about 2003 at the latest. The reason people still did it was simply down to ignorance and fraudulent advice from the likes of NR and B&B.

the main reason it was done in the latter years was purely that it was by far the biggest leverage you could get on an investment during a credit bubble, it makes perfect sense to leverage to the sky BTL was the best way to do this. Unfortunately now we have a credit deflation and likewise the worst type of investment is anything leveraged as it will bankrupt you. Unfortunately the BTL crowd still think we are in the bubble (muppets)

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the main reason it was done in the latter years was purely that it was by far the biggest leverage you could get on an investment during a credit bubble, it makes perfect sense to leverage to the sky BTL was the best way to do this. Unfortunately now we have a credit deflation and likewise the worst type of investment is anything leveraged as it will bankrupt you. Unfortunately the BTL crowd still think we are in the bubble (muppets)

I agree.

I'm still seeing people in the EA wanting to BTL because of "the pathetic interest we are getting in the Bank", without actually doing the calculation and seeing "the pathetic return that you get from BTL" when the value of your asset is static.

tim

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If BTL has distorted the market in some areas (which I think it has) then I don't think it's because "tax-breaks" have encouraged it. Even with the "tax-breaks", for BTL to work you need either a 10% yield, or to be buying when prices are below the long term trend. In most areas there hasn't been any property available that fits this description since about 2003 at the latest. The reason people still did it was simply down to ignorance and fraudulent advice from the likes of NR and B&B.

no.

using affordability criteria, the loan the FTB could afford was limited by their income after tax.

the BTL could take the GROSS income from the let.

so if both were earning say 20K the FTB only had funds on say 15K and multiply up

the BTL could claim the full 20K and multiply up.

Edited by Bloo Loo

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