How Osborne Could Kill Btl

[Neverwhere]

Great article by Dominic Frisby in MoneyWeek, How George Osborne could kill off Britain’s buy-to-let business, extract below:

Is Osborne hunting for the capital gains jackpot?

Osborne isn’t just targeting landlords for extra income tax. In 2012-13, the Treasury took in £3.9bn from capital gains tax (CGT) on property. The Office for Budget Responsibility (OBR) is projecting £9bn for 2018-19. That’s some rise, and not all of it can come through house price inflation. So how is the Treasury going to get that money?

Perhaps the answer is from buy-to-let landlords.

Most buy-to-let investors don’t sell. They see nowhere better to put their money. They don’t want to take an untapered 18% or 28% CGT hit. It’s usually better business to do nothing and keep collecting rent.

Osborne’s changes might change that attitude. They will make the day-to-day business of buy-to-let less profitable. Tighter lending would cap house price gains. Is this part of a plan to make the buy-to-let model less viable, so that – in true ‘ministry of nudges’ fashion – many choose to sell, allowing Osborne to claim his CGT?

A very British subprime

If that’s the plan, then there could be a problem. And my thanks go to the posters on a thread at website House Price Crash for alerting me to this.

Rather than sell to realise their gains, many buy-to-letters remortgage. They extract the capital and use it to buy more properties. Remortgaging now accounts for two thirds of all buy-to-let mortgage transactions, according to the latest Mortgages for Business Complex Buy to Let Index.

Of course, when a landlord remortgages, CGT is not payable. There has been no disposal in the eyes of the taxman. Even so, those who remortgage and use the money for something else – be it another property, or a treat – are extracting the gains.

How many of those people have put any of that money aside to pay future CGT? Not many, I suspect.

[Venger]

Yes; great article + thanks to ladeeda + others for alerting it to me. She obviously knew I would like it.

I rarely get people (from outside HPC) alerting me to HPC news (it's usually the other way around), but had a few message telling me to read this article.

[honkydonkey]

Yeah great, sums it all up really. The worm has turned.

[up2late]

Miles Shitside is owning the comments... LOL

[Neverwhere]

The comment section is pretty d@mn good! As with all the various landlord fora most of the landlords posting seem to be totally oblivious to the fact that this tax change is not happening in isolation, despite this being clearly set out in the main article:

Osborne has since said he is considering further measures to curb the boom, including handing more power to the Bank of England to limit lending. The Bank itself said it was worried about buy-to-let back in the spring, and promised to ’monitor things’.

Tighter lending is now being clearly signposted. If the easy credit taps are switched off, that will cap house price inflation – which is the only thing that has been compensating for low yields.

[Venger]

Miles Shitside is owning the comments... LOL

It was like watching Steven Seagal in a huge bar fight against a load of thugs.

Pierre was thrown all over the place, with parasite position on show each time. From providing homes as business glory to BTLers as entrepreneurs saving the economy, to investments for investors old age.

Perhaps we'll have less dancing-boy forgiveness and excuses for the BTLer side, now more HPCers are reading their psyches. Too many have spent years actively kissing up to the BTLers as victims of advertising, just wanted a pension, 'media'.... for loads of properties, loads of debt and giving them clean-pass for their openly greedy ruthless attitudes.

[Blod]

Yeah great, sums it all up really. The worm has turned.

That worm appears to be the BOE and Treasury.

They now see how much BTL is sucking out of the economy and are starting to expunge this drag economic activity.

[Confusion of VIs]

I am not sure the changes will have as much impact as most people on here think, as they will only impact a small minority of BTL investors. I don't have the numbers but suspect that most BTLers fall into two groups

- basic rate taxpayers: if you or your husband/wife is a basic rate taxpayer (and the higher rate threshold will be £50k by the time the changes have been fully implemented) you won't be affected

- cannot sell as no money to pay CGT: profits long since MEWed away and no provision made for paying CGT ( the two BTLers I know both fall into this category and plan to keep them until the die)

I also think Osborne is trying to limit the growth of BTL rather than reduce it, as I don't think setting off a HPC would do his leadership ambitions any good at all.

[thecrashingisles]

I am not sure the changes will have as much impact as most people on here think, as they will only impact a small minority of BTL investors. I don't have the numbers but suspect that most BTLers fall into two groups

- basic rate taxpayers: if you or your husband/wife is a basic rate taxpayer (and the higher rate threshold will be £50k by the time the changes have been fully implemented) you won't be affected

- cannot sell as no money to pay CGT: profits long since MEWed away and no provision made for paying CGT ( the two BTLers I know both fall into this category and plan to keep them until the die)

I also think Osborne is trying to limit the growth of BTL rather than reduce it, as I don't think setting off a HPC would do his leadership ambitions any good at all.

1 - If your rental income plus other income goes above the threshold then you will be directly affected. Even if not you will be indirectly affected by the tougher climate for BTL, tighter lending criteria, etc.

2 - These people will go from cashflow neutral to cashflow negative. They may be planning to keep them until they die but don't have deep enough pockets to hang on to them.

[davidg]

Miles Shitside is owning the comments... LOL

First couple of comments were ok but he soon became a frothing at the mouth loon like his nemisis Pierre.

[Bland Unsight]

I also think Osborne is trying to limit the growth of BTL rather than reduce it, as I don't think setting off a HPC would do his leadership ambitions any good at all.

However being able to prevent one given the disconnect between the asset price and what people can actually pay with their earnings would be convincing evidence that his birth had in point of fact been the Second Coming.

BTL has always been a mug's game. Jumping into a bubble and riding it for a bit and declaring yourself a genius is idiotic. Proposing that an obviously societally destructive mug's game with an intrinsic Ponzi character is likely to be a permanent feature of the economy is sub-idiotic. The gig is up. Quit whilst you're ahead, if you can.

If you've f**ked yourself by MEW-ing the money you need to pay the CGT, then get out anyway, because when prices move down it'll only be worse.

The only smart move is to hit the exits first. Sell now, sell everything.

Edited July 31, 2015 by bland unsight

[Bland Unsight]

First couple of comments were ok but he soon became a frothing at the mouth loon like his nemisis Pierre.

Nemesis. Why did you impute frothing? It seem to me that they were having a lot of fun with it. Good to remind the BTL scum how hated they are. It may discourage them from organising their putative march on Downing Street. It's another up vote for Miles from me.

[davidg]

Nemesis. Why did you impute frothing?

By reading his less and less coherent rants.

[Venger]

I am not sure the changes will have as much impact as most people on here think, as they will only impact a small minority of BTL investors. I don't have the numbers but suspect that most BTLers fall into two groups

- basic rate taxpayers: if you or your husband/wife is a basic rate taxpayer (and the higher rate threshold will be £50k by the time the changes have been fully implemented) you won't be affected

- cannot sell as no money to pay CGT: profits long since MEWed away and no provision made for paying CGT ( the two BTLers I know both fall into this category and plan to keep them until the die)

I also think Osborne is trying to limit the growth of BTL rather than reduce it, as I don't think setting off a HPC would do his leadership ambitions any good at all.

Jolly good. Your posting background is fun btw - and although I've not quoted them.. it seems you know, or your mates know, quite a lot of BTL info.

In truth almost no one sees those massive returns, you invest your profits in the next house ....repeat until you die.

I am not sure there ever will be HPC at least not anywhere people actually want to live. The future I see is you rent (or spend everthing you have to buy a hovel) until your parents die then you invest their "massive return" in your own house.

Of course if your parents don't have anything to leave you, live to be a 100 or end up frittering all the money away on care home fees - that's just tough.

I should declare an interest, I gave up waiting for prices to fall and bought in Croydon last October.

Doing your own conveyancing is very straight forward, I have done it three times, in 1982,1990 and 2001 However, the saving got smaller each time as conveyancing rates have fallen massively over the last 30 years. The process itself hasn't really changed over this time.

We last moved in Jan this year and for the first time I used a solicitor, simply because I could get a competent solicitor for such a low price (£350 on an £800k purchase) it wasn't worth the hassle of doing it myself.

Many a true word said in jest.

Over the last ten years London has become a true global city, it now draws in talent from all over the world and its connection with the rest of the UK is being weaker with every passing year .

It works in London, when prices are rising strongly and you find you are in a queue of 30 people to view a property. However, these EAs are probably doing it just to show the vendors they are still trying hard for a sale, but without lots of potential buyers they won't be creating a frenzy and risk putting off any potential buyer who does turn up to view a deserted property.

I don't believe the EA getting his mates round to fake interest actually happens, we all agree the average EA is lazy and doing this seems like just too much work for probably no return.

[...]The reason I know this is that I was recently part of a team reviewing a proposal that we create a asset class based on currenty available BTL loans.

Edited July 31, 2015 by Venger

[Bland Unsight]

By reading his less and less coherent rants.

How did you impute rants? Speaking from experience dealing with BTL trolls on here, sometimes the only thing you can do is repeatedly state your case. If it is joyous to do it with a little schadenfreude and perhaps some open disdain, then do that too. What harm can come?

Seeing as he is essentially single-handedly taking on the oppo's "Move on, nothing to see here", I think that the odd behaviour that requires explanation is not Miles, but your decision that the time is right to post sneering comments about him on here.

Edited July 31, 2015 by bland unsight

[Bland Unsight]

Isn't' Susan pretty obviously Ros from Property118?

[ntmr]

Jolly good. Your posting background is fun btw - and although I've not quoted them.. it seems you know, or your mates know, quite a lot of BTL info.

Congratulations, Confusion of VIS has just gained a level!

New stats:

Charisma: 10 -> 4

Credibility: 1 -> -3

Vested interest: 5 -> 15

Eating babies: 1 -> 2

Intelligence 10 -> 10

Double agent 8 -> 12

BTL portfolio LTV: 75% -> 90%

HMRC alert factor 5 -> 8

Confusion of VIs has aquired the skill: "Pal of Fergus"

Confusion of VIs is now known as: (confused*) VI

The (confused*) status will be removed when he finds his way to the appropriate landlord forum. Considering his current int stats he may escape Property118 and end up in LandlordZone.

[Guest_growlers_*]

******me that shitside bloke is shit hot.

Venger, the Steven Seagal reference was spot on.

m.youtube.com/watch?v=Q6qwO53n3Uw

[Bland Unsight]

Confusion of VIs has aquired the skill: "Pal of Fergus"

[Neverwhere]

However being able to prevent one given the disconnect between the asset price and what people can actually pay with their earnings would be convincing evidence that his birth had in point of fact been the Second Coming...

Turning and turning in the widening gyre

The falcon cannot hear the falconer;

Things fall apart; the centre cannot hold;

Mere anarchy is loosed upon the world,

The blood-dimmed tide is loosed, and everywhere

The ceremony of innocence is drowned;

The best lack all conviction, while the worst

Are full of passionate intensity.

Surely some revelation is at hand;

Surely the Second Coming is at hand.

The Second Coming! Hardly are those words out

When a vast image out of Spiritus Mundi

Troubles my sight: a waste of desert sand;

A shape with lion body and the head of a man,

A gaze blank and pitiless as the sun,

Is moving its slow thighs, while all about it

Wind shadows of the indignant desert birds.

The darkness drops again but now I know

That twenty centuries of stony sleep

Were vexed to nightmare by a rocking cradle,

And what rough beast, its hour come round at last,

Slouches towards Bethlehem to be born?

- W. B. Yeats, The Second Coming

[Bland Unsight]

Things fall apart; the centre cannot hold;

Mere anarchy is loosed upon the world,

The blood-dimmed tide is loosed, and everywhere

The ceremony of innocence is drowned;

The best lack all conviction, while the worst

Are full of passionate intensity.

You're arguing that Yeats was knowingly foreshadowing the grim fate of the the community of highly geared property investors at Property118? Love that poem BTW, also Chinua Achebe novel which takes its title from the poem. So you might be arguing that the coming of a Conservative majority government, in full fury, falling upon the BTL scum like vengeful angels is, to the Property118 chumps, like the arrival of the missionaries in the Ibo village. Doesn't it end badly for the main guy? (Cheer up. Mark - you can survive what's coming, your portfolio might not and you may go bankrupt, but they were only ever paper gains. What matters is your connection to the people you love; the rest of it can fall by the wayside. Hold on tightly, let go lightly. The gig is up.)

Financially speaking:

Edited July 31, 2015 by bland unsight

[davidg]

How did you impute rants? Speaking from experience dealing with BTL trolls on here, sometimes the only thing you can do is repeatedly state your case. If it is joyous to do it with a little schadenfreude and perhaps some open disdain, then do that too. What harm can come?

Seeing as he is essentially single-handedly taking on the oppo's "Move on, nothing to see here", I think that the odd behaviour that requires explanation is not Miles, but your decision that the time is right to post sneering comments about him on here.

Sorry you lost me on your second para. I was just reading the comments. He started off well calling Pierre out when he suggested he would raise rents but then another poster says the BTL brigade are overblowing things he goes off on a rant about squealing pigs. He didn't get better. Yes state his case but he comes across (to me) as a bit of a loon with the language he uses.

Edited July 31, 2015 by davidg

[bearishonhouses]

Congratulations, Confusion of VIS has just gained a level!

New stats:

Charisma: 10 -> 4

Credibility: 1 -> -3

Vested interest: 5 -> 15

Eating babies: 1 -> 2

Intelligence 10 -> 10

Double agent 8 -> 12

BTL portfolio LTV: 75% -> 90%

HMRC alert factor 5 -> 8

Confusion of VIs has aquired the skill: "Pal of Fergus"

Confusion of VIs is now known as: (confused*) VI

The (confused*) status will be removed when he finds his way to the appropriate landlord forum. Considering his current int stats he may escape Property118 and end up in LandlordZone.

You know, just because someone (Confusion of VIs) posts something other than 'HPC is happening next week' does not make them a troll or BTL'er. The attitude of overly-aggressively jumping on other commenters is what has already changed what were once valuable internet forums to desolate waste grounds. (e.g. many on Redditt - especially re SERIAL, Yahoo in general).

I find much discussion on this site civili and informed, but the comments which appear to be driven by resentment, jealousy, anger offer very little to the community.

[Bland Unsight]

Sorry you lost me on your second para

That is regrettable. I shall try harder in future. Thanks for the heads up.

He started off well calling Pierre out when he suggested he would raise rents but then another poster says the BTL brigade are overblowing things he goes off on a rant about squealing pigs. He didn't get better.

Have you actually read any of the landlord forums, or any of our threads about them? The idea that pointing out that they are acting like squealing pigs is conduct that speaks to room for improvement is going to be a tough sell this end. Do you believe that he is mistaken, or exaggerating? I'd be interested in your thoughts.

Yes state his case but he comes across (to me) as a bit of a loon with the language he uses.

As do you to me, but why bang on about it? Why point it out at all?

The to and fro in the comments section may not be dialogue, but surely the buy-to-let investors supposedly reasonable position is in fact the loony position. They express it temperately because they are so thick and ignorant that it is possible for them to believe that it is reasonable, when it is, of course, insane.

Did anyone really think that a tiny minority of households would be able to cheat everyone else out of the option of owning a home forever by making some dumb as shit Mutually Assured Destruction Ponzi financial suicide pact with a bunch of shit zombie banks?

Maybe there is a reason that he comes of as a loon to you, and maybe it has something to do with what you believe?

[Bland Unsight]

I find much discussion on this site civili and informed, but the comments which appear to be driven by resentment, jealousy, anger offer very little to the community.

You go straight to the top of my troll list, (it is in alphabetical order).

Please do not feed the trolls.