What First Time Buyers Really Need Is Lower Prices

[red]

On Monday, property website Rightmove reported that asking prices fell by 1.1% in September. That's the third decline in a row. Meanwhile, in August, gross mortgage lending fell to £11.4bn, down 14% on the month, and the worst total for the month of August seen in ten years.

On the other hand, it's been a great week for people who like the idea of paying more money for their clothes and food. Cotton hit a new high, at a time when retailers are already warning of rising clothing prices. And of course, we've all heard about surging grain prices.

Does that sound daft? It is. But it makes no more sense to cheer rising shelter costs than it does to be pleased about rising food or clothing prices.

And yet, we still can't seem to get our heads around the idea that falling house prices might actually be a good thing.

Love it.

http://www.moneyweek.com/investments/property/money-morning-uk-property-house-prices-03812.aspx?utm_source=newsletter&utm_medium=email&utm_campaign=Money%2BMorning

Get your comments in...

[workingnomad]

...and so do buy to let landlords

[Dorkins]

...and so do buy to let landlords

BTL landlords pay 40% income tax on the rent they collect. FTB mortgagees don't pay that tax. The playing field is not level, it tips towards people buying houses to live in. It's one of the few tax distortions that benefits ordinary people.

[gimble]

BTL landlords pay 40% income tax on the rent they collect. FTB mortgagees don't pay that tax. The playing field is not level, it tips towards people buying houses to live in. It's one of the few tax distortions that benefits ordinary people.

It's the other way round isn't it? BTL landlords don't pay tax on the income that pays the interest part on their loan, mortgage interest is a tax deductable expense for BTL landlords. Owner occupiers in paid employment DO pay income tax on their salaray BEFORE they can use it to pay the interest on their loans. Correct me if I'm wrong.

[olliegog]

BTL landlords pay 40% income tax on the rent they collect. FTB mortgagees don't pay that tax. The playing field is not level, it tips towards people buying houses to live in. It's one of the few tax distortions that benefits ordinary people.

that is a distortion of the facts.

They only pay 40% tax if they are a higher earner.

They get to offset rent received against the interest paid, the allowable expenses etc which a FTB does not (who have to pay the mortgage out of taxed income)

they get a generous CGT allowance each year before the tax kicks in

I could go on but I am sure you know these things.

+ 1 and apologies to Gimble who was there before me but said essentially the same

Edited September 23, 2010 by olliegog