silver surfer Posted September 15, 2015 Share Posted September 15, 2015 I see the Wilsons are back in the headlines, http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/11865435/Do-buy-to-let-investors-REALLY-have-a-tax-advantage-over-ordinary-homebuyers.html I struggle to get past their photograph. Fat, ugly, and Brillo Pads for hair. Quote Link to comment Share on other sites More sharing options...
200p Posted September 15, 2015 Share Posted September 15, 2015 In the picture, I can't tell which are the FTB - are they in their 60s and 70s now? Quote Link to comment Share on other sites More sharing options...
Si1 Posted September 15, 2015 Share Posted September 15, 2015 Richard Dyson assumed 4% above inflation price growth for housing and then bangs on about cgt for BTLrs. Scum. Quote Link to comment Share on other sites More sharing options...
pl1 Posted September 15, 2015 Share Posted September 15, 2015 (edited) Richard Dyson's pro BTL article is the last crying death throe of an industry that is about to be taxed more fairly and doesn't like it. P*ss of Richard, nobody's listening to you anymore. Edited September 15, 2015 by pl1 Quote Link to comment Share on other sites More sharing options...
The Knimbies who say No Posted September 15, 2015 Share Posted September 15, 2015 What a load of specious garbage. The worked example spells out the issue, maybe inadvertently- the BTLer can pay 300 quid less a month than the owner occupiers for the same property. That is the nub of the issue. Quote Link to comment Share on other sites More sharing options...
mmt Posted September 15, 2015 Share Posted September 15, 2015 They buy the same property for the same price. But they don't, that is the whole point. It is the BTLers that are setting the price by assuming the role of marginal buyer. IO and tax relief allows them to pay more for the same house. Sure, a few FTBs do buy, but they buy at an elevated price level (often needing parental help or inheritance) because they have to outbid those with access to IO and tax relief. Quote Link to comment Share on other sites More sharing options...
Fully Detached Posted September 15, 2015 Share Posted September 15, 2015 And still they don't get it. It's not about fairness, and it never was. It's about weeding out the dangerously over-leveraged and giving them a couple of years to get out. They ought to be grateful that they've got a grace period, unlike those affected by the dividend tax, who get hit from next April. Quote Link to comment Share on other sites More sharing options...
Saving For a Space Ship Posted September 15, 2015 Share Posted September 15, 2015 (edited) I see the Wilsons are back in the headlines, http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/11865435/Do-buy-to-let-investors-REALLY-have-a-tax-advantage-over-ordinary-homebuyers.html I struggle to get past their photograph. Fat, ugly, and Brillo Pads for hair. (assuming annual price growth of 6pc compounded) The FTBs vs The Wilsons' BTL on fiat debt based house hoarding, is like the Idiocracy film trailer case study on over population Edited September 15, 2015 by Saving For a Space Ship Quote Link to comment Share on other sites More sharing options...
mattyboy1973 Posted September 15, 2015 Share Posted September 15, 2015 Lot's of good comments on the article already, but here are some bullet points: 1. Rent is assumed to be constant for the duration. This on its own, if corrected, would swing the balance in favour of the BTL. By the end of this thought experiment, the BTL is still letting out his £1.3M house for £1050 a month. 2. BTL has IO mortgage and FTB has repayment, so of course interest drops over time for the FTB. But there is a net income (surplus) for the BTL that could be used to pay down the capital in the same way, or simply reinvested. This isn't factored in. These are the basic mathematical errors. Other stuff such as the fact that the BTL is doing all of this as an investment whilst using someone else to pay (the renter) etc etc. Desperate stuff and so badly done as to hurt the cause, IMO. Quote Link to comment Share on other sites More sharing options...
Kiwi Toast Posted September 15, 2015 Share Posted September 15, 2015 Absolutely ought to write letters to the paper explaining how misleading these calculations are. To The Telegraph and other publications Quote Link to comment Share on other sites More sharing options...
This time Posted September 15, 2015 Share Posted September 15, 2015 And, again, the article is littered with typos. Quote Link to comment Share on other sites More sharing options...
winkie Posted September 15, 2015 Share Posted September 15, 2015 No doubt about it.....BTL investors, especially those who are already high earners do have a tax advantage over a basic rate hard working owner occupier buying via tax paid income....been going on for years.....certain people doing certain businesses seem to be more privileged than others, particularly the entitled that use money that is not their own to profit from, so out bidding the rest........and they call it a fair society. Quote Link to comment Share on other sites More sharing options...
pipllman Posted September 15, 2015 Share Posted September 15, 2015 no mention of the tax free MEWed deposit that the BTL is likely to be using compared to the saved from taxed income deposit that the FTBer is likely to be using as others have already said, it isn't BTL that is the main issue that the budget proposals seek to deal with, but the unique way in which leverage has been used in BTL versus other investments Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted September 15, 2015 Share Posted September 15, 2015 That Larry (comments) is a laugh a minute. Quote Link to comment Share on other sites More sharing options...
TheCountOfNowhere Posted September 15, 2015 Share Posted September 15, 2015 ****S Quote Link to comment Share on other sites More sharing options...
mattyboy1973 Posted September 15, 2015 Share Posted September 15, 2015 Before they remove it - and surely they must, as it is the worst thought out but of "maths" I have ever seen (did someone at P118 send it to him?) - here it is for posterity: Borrows £225,000 and buys an investment property for £300,000Monthly interest-only payments of £750 (£9,000 per year) Annual rental income of £12,600 Annual net income before tax (£12,600 - £9,000) = £3,600 Annual net income after tax at 40pc = £2,160 After 25 years the property is worth £1,339,491 (assuming annual price growth of 6pc compounded) Add total net income over 25 years (£2,160 x 25 = £54,000) = £1,393,491 Deduct total mortgage interest (£9,000 x 25 = £225,000) = £1,168,491 and deduct the original deposit (£75,000) plus the repayment of the capital loan (£225,000) = £868,491 Now deduct capital gains tax of 28pc on the capital gain (£1,039,491 x 0.28) = £291,057.48 and your total gain, on selling the property, is £577,434 See how many holes you can pick in that. I missed an obvious one earlier, but someone picked it up on the Telegraph. Interest for the BTL is deducted twice.. Static nominal rent (over 25 years) and non-reinvestment/capital pay down using the net income already mentioned above. Quote Link to comment Share on other sites More sharing options...
Acid In The Punch Bowl Posted September 15, 2015 Share Posted September 15, 2015 http://www.pcc.org.uk Quote Link to comment Share on other sites More sharing options...
65243 Posted September 15, 2015 Share Posted September 15, 2015 And still they don't get it. It's not about fairness, and it never was. It's about weeding out the dangerously over-leveraged and giving them a couple of years to get out. Totally agree with this. The existing tax system is skewed substantially in favour of buying somewhere as an owner occupier. Apart from huge CGT bonus, being an owner occupier is much more efficient in terms of income, because of the imputed rent which goes untaxed. Incidentally, it is the slippery notion of imputed rent (the non-cash income which owning property produces) that a Land-Value Tax would capture. Anyone who thinks the tax system is unfair on first-time buyers either doesn't understand tax, or does but is making an argument from fairness to make themselves feel better. The reform is not fair, but it's not intended to be fair. Quote Link to comment Share on other sites More sharing options...
pipllman Posted September 15, 2015 Share Posted September 15, 2015 not sure what he is on about in his latest missive, http://www.propertytribes.com/irrefutable-reasons-why-property-still-viable-investment-landlord-t-127621548-27.html MPs WHO ARE LANDLORDS. If they do have mortgages then they will be hit by the new tax regime. It will be interesting to know the number of Let Properties each individual MP owns and whether they have mortgages.I think all landlords should write to their MP to ask Do you, or your spouse, own any Let Properties and if so how many.In 2015 in England 55% of houses are owner occupied, 23% of houses are owned by PSL, and 22% by Social Landlords.In 2007 it was 67% Owner Occupier, 11% PSL and 22% Social Landlords.Hence the rise of the PSL as a Strong Economic Force which HMG has to listen to.Great Britain PLC cannot function without the PSL.If 55% of the population house another 23% it means the average House Owner owes 42% of a Private Sector Rented house.Is there anything wrong with any of the 660 MPs owning a Rented House. Of course not. From the figures provided 20% of the MPs own a rented house whereas nationally 42% of house owners own a rented house. There is nothing wrong with a MP owning a rented house. However, it would disqualify them from participating in any debate about housing.Order, Order ... The Prime MinisterI must declare an Interest as I own Rent Houses. I will pass to my Rt Honourable friend the Chancellor of the Exchequer.Order, Order George Osborne.Sorry Mr Speaker. I must also Declare an Interest as must all Conservative MPs.Order Order HM Leader of the Opposition Jeremy Corbyn.Can the Prime Minister tell the House how many Tory MPs own how many rented houses?Order Order The Prime MinisterI must declare an interest!Order Order Mr Jeremy Corbyn.Is that an interest in the Interest?Order Order. The Prime Minister.Are you referring to Mortgage Interest?Yes replies Mr Corbyn.Order Order The Prime MinisterAs I have already indicated I cannot speak as I have declared an Interest?Order Order Jeremy Corbyn.Pie and Mash twice.Order Order Mr Corbyn PleaseAnd a Cup of tea!Does this mean we cannot have a debate on Mortgage Interest because all Tory MPs must declare an Interest on Mortgage Interest?Order Order Mr Prime MinisterI've got an idea. Let's blame the previous Labour Government. That is the normal way out!Order Order Jeremy CorbynWhat about reinstating Mortgage Relief on BLT properties?Order Order Mr Prime MinisterYou got it in one Mr Corbyn. You should be sitting in my seat!Fergus Wilson 15th September 2015 Quote Link to comment Share on other sites More sharing options...
Venger Posted September 15, 2015 Share Posted September 15, 2015 What a joke. BTLelegraph. It could be they're still in negative equity. Forever HPI chronic, vs older CGT trapped landlord multiple double-downer whiners. First-time buyerBorrows £225,000 and buys a home for £300,000Monthly repayments of £1,076.77 for 25 years at a rate of 3pcTotal mortgage payments: £323,031After 25 years the property is worth £1,339,491 (assuming annual price growth of 6pc compounded)Deduct your mortgage cost plus deposit (£323,031 + £75,000) = £398,031and your total gain, on selling the property, is £941,460 Quote Link to comment Share on other sites More sharing options...
Fully Detached Posted September 15, 2015 Share Posted September 15, 2015 (edited) not sure what he is on about in his latest missive, I think he has flipped. Either that, or in a few weeks time he will announce that his latest fantasy land career plan is to become a political satirist, having already received interest from a number of publications who are, as he speaks, fighting with each other and falling over themselves to negotiate with his agent. Edit - that will be a different agent to the one he tw4tted, obviously. Edited September 15, 2015 by Fully Detached Quote Link to comment Share on other sites More sharing options...
Si1 Posted September 15, 2015 Share Posted September 15, 2015 Totally agree with this. The existing tax system is skewed substantially in favour of buying somewhere as an owner occupier. Apart from huge CGT bonus, being an owner occupier is much more efficient in terms of income, because of the imputed rent which goes untaxed. Incidentally, it is the slippery notion of imputed rent (the non-cash income which owning property produces) that a Land-Value Tax would capture. Anyone who thinks the tax system is unfair on first-time buyers either doesn't understand tax, or does but is making an argument from fairness to make themselves feel better. The reform is not fair, but it's not intended to be fair. No Btl mortgage cover is further guaranteed by housing benefits, whereas OO is not Quote Link to comment Share on other sites More sharing options...
Confusion of VIs Posted September 15, 2015 Share Posted September 15, 2015 I think he has flipped. You only think!! he has flipped. Quote Link to comment Share on other sites More sharing options...
CunningPlan Posted September 15, 2015 Share Posted September 15, 2015 I have been wondering for a while how average houses can now be 10 times average wages, but I think I get it now. This is very simplistic and ignores deposits but seems to make sense. Figures come from the first google calculator I came across and the figures are rounded. If I have a 50K income, the bank will lend me about £225k to buy a house. This will cost me £1,000 per month If a landlord borrows £225k it will cost him £500 per month. Therefore if I give my £1000 to the LL, he can afford to pay £450k against my £225k. House price can therefore be 9 times my earnings. However, my 50k gross is £3k per month net. The bank will kindly let me spend 1/3 of that on a home. The LL knows that I can live much more frugally than that and will allow me to keep 50% (if I am lucky) so he will charge me £1500 per month. With that £1500, he can afford to pay the loan on a £675k house - 13 times my salary! The only thing stopping him is that he needs 125% mortgage cover with the rent. Therefore of my £1,500 he can only use £1,125 of it - allowing him to service a loan of £506k. 10 times my salary. IMHO 10x is about as far as prices can go. The fix is to change the LL% cover required. Make it 200% and the LL and I will then compete, albeit both of us with my money, on a level basis. Quote Link to comment Share on other sites More sharing options...
Venger Posted September 15, 2015 Share Posted September 15, 2015 Dyson, tell it to Ed Monk, with his Telegraph piece. Although he too has his eyes on HPI, and being 'better off' with HPI, in his joint-mortgage with his mate. First-time buyer: Borrows £225,000 and buys a home for £300,000. [...] After 25 years the property is worth £1,339,491 (assuming annual price growth of 6pc compounded). Irrecoverable costs such as stamp duty and fees to solicitors amounted to around £10,000. Our mortgage deal meant that we’d repay about this much of the debt over two years, while our monthly repayments were close to what we were paying in rent. So, assuming no movement in prices, we’d have recovered the cost of buying from savings in rent in two years. If prices went up we’d be better off, if they went down we’d be worse off. Ed Monk. Telegraph 01 Sep 2015 http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/11825267/Were-not-gay-just-priced-out-The-minefield-of-buying-a-flat-with-a-friend.html All this 'unfairness' vs future FTBs (at these painfully high valuations), from and for BTLers sat on 10, 20, 30 years of HPI CGT capital gains, and facing a big liability now if they need to sell, with situation where they face paying more balanced general rolling taxation. :angry: Quote Link to comment Share on other sites More sharing options...
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