Jump to content
House Price Crash Forum
Sign in to follow this  
ReJoyce

Btl Budget ...

Recommended Posts

"Budget 2011: Buy-to-let opportunities opened up by stamp duty reforms

The UK is set for the return and major expansion of buy-to-let in the housing market after plans were unveiled for tax cuts on bulk purchases of residential properties."

http://www.telegraph.co.uk/finance/budget/8402403/Budget-2011-Buy-to-let-opportunities-opened-up-by-stamp-duty-reforms.html

If this pans out and supply remains restricted (as it is around here) then I think they might have managed to put a prop under the whole thing - incredible!

regards

J

Share this post


Link to post
Share on other sites

I'm sure the government policy makers read HPC and get their ideas from here.

Why has the UK bubble not burst?

printy printy

historically low interest rates

Where else do you put your money

Record high gold prices

inward migration

low levels of new house build

Building land restrictions

Over generous housing benefit system

Fright flight money (Arab / Former SU money pouring into the UK)

to name but a few reasons <_<

Share this post


Link to post
Share on other sites

"Budget 2011: Buy-to-let opportunities opened up by stamp duty reforms

The UK is set for the return and major expansion of buy-to-let in the housing market after plans were unveiled for tax cuts on bulk purchases of residential properties."

http://www.telegraph.co.uk/finance/budget/8402403/Budget-2011-Buy-to-let-opportunities-opened-up-by-stamp-duty-reforms.html

If this pans out and supply remains restricted (as it is around here) then I think they might have managed to put a prop under the whole thing - incredible!

This is a trivial change that is going to make **** all difference to the number of BTL purchasors in the market.

tim

Share this post


Link to post
Share on other sites

This is a trivial change that is going to make **** all difference to the number of BTL purchasors in the market.

tim

Not so sure - since prices are set at the margin and a few percent here or there can change the investment from loss to profit these changes could have an effect imo. It will depend on whether these institutionalised investors (remember the banks already own lots of residential property ...) seem property as a good long term hedge. I can imagine, for example a bank with a load of houses bundling them up and selling them to a pension fund.

Alternatively, a new development could be sold as a block to a pension fund at below market rates due to the bulk discount now that they can invest this way.

regards

J

Edited by ReJoyce

Share this post


Link to post
Share on other sites

Actually, thinking about it. This might help things out. How many individual btl's, the ones who have priced us out, actually buy in bulk? Not many I would think. But it might make it cheaper to buy up those empty streets in the north. Buy 'em up, do 'em up and rent them out. Result is more properties in play and a stronger supply overall. These would be new rental properties and not ones anyone would normally buy.

Small fry, anyway.

Share this post


Link to post
Share on other sites

This is a trivial change that is going to make **** all difference to the number of BTL purchasors in the market.

tim

I think you're right, it is a small difference, 4% in their example. I can't see that being enough to attract institutional investors or funds, especially when there is still a large downside risk. Current rental yields, especially on newbuilds don't make this attractive enough either. Most rental properties currently yield less than the FTSE, and recession plus higher costs and more redundancies on the way don't make for good conditions for these yields to improve. I can see a few funds starting up and people will pile into them only for the returns to never outweight the charges and capital loss.

Share this post


Link to post
Share on other sites

More from the Telegraph ...

"Hidden boost for house prices in the Budget"

http://blogs.telegraph.co.uk/finance/ianmcowie/100009899/hidden-boost-for-house-prices-in-the-budget/

A big tax break will mean extra money flowing into the market and that will help to stabilise prices in my humble opinion of course.

It must be bad news - the Landlords associations are very happy!

regards

J

Edited by ReJoyce

Share this post


Link to post
Share on other sites
Guest

I guess it depends on how this is applied. The thing that sticks out to me is the 'bulk purchase' part. Is it averaged out across lots of individual transactions, or is it truly a ‘bulk buy’ deal?

What I like/hope to think is that this will mean that institutional investors, pension funds etc, enter the market and buy up new builds in bulk from the home builders. I think this is a mechanism to encourage a smaller number of large scale professional landlords rather than lots of small scale amateurs.

I can't see a pension fund running around buying up lots of individual residential properties, rather I see it as them approaching Barrats and saying, yes we'll buy that block of flats off you (Which then funds them to go off and build another block or two). I can also imagine them saying - "Ohh, we'll want a x% discount for the bulk buy".

I guess what I'm saying is that I hope that this actively encourages a lot of new building, will decrease the ratio of amateur BTL slumlords and increase the ratio of professional landlords. And hopefully mean larger volumes of transactions at lower prices.

I could of course be deluded. It wouldn't be the first time.

Edit: The professional tend to be much better at calculating the value of an investment, i.e. the sum of the discounted future cashflows. I.e. they would be primarily looking a yield not captial growth and basing their offers on that, as opposed to the average dumb "it's my pension, houses only ever go up" amateur.

Edited by Guest

Share this post


Link to post
Share on other sites

Aviva, Britain’s biggest insurer, confirmed that it is considering setting up a £1bn residential property fund to take advantage of the new taxbreak and others are likely to follow suit.

The hunt for yield continues.

Looks like Osborne may have found a way around the bankrupt banks by mainlining straight into the pension funds.

Banksters being disintermediated from the BTL market?

Would dovetail with falling owner-occupancy rates, perhaps leading to a cartelised corporate residential rental sector and gradual move towards a European model?

I could see this having an appeal for surplus SWFs too in the longer run. i.e. You'll rent from the Chinese govt.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 311 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.