1/3 of Landlords with 1 BTL considering selling up - but bigger Landlords want to buy more

[Mancunian284]

https://dailym.ai/2HfM4R6

[TJHooker]

Shows that section 24 needs bringing in right away for basic rate taxpayers, but as they're more likely to be Tory voters its unlikely.

These are the kind of people the Tory party see as entrepreneurs.

[Mancunian284]

22 minutes ago, TonyJ said:

Why are larger LLs are not really affected by s24? They are even more likely to be higher rate taxpayers than small LLs.

 

Are larger LLs more likely to hold properties in a Ltd Co structure?  

 

 

[hurlerontheditch]

24 minutes ago, TonyJ said:

Why are larger LLs are not really affected by s24? They are even more likely to be higher rate taxpayers than small LLs.

However, Simple Landlords Insurance is hardly an impartial observer, because its survival will lie in discouraging shrinkage of the rented property market. This raises suspicions about the agenda behind their 'survey', and even its integrity. 

I would guess it is intended to encourage LLs with more than one property to buy the properties of those LLs who are selling, and to try to stop them being 'lost' to owner occupation. But if the survey's integrity is is in doubt, it may even be a complete fabrication, intended to encourage smaller, less experienced LLs to follow the (fabricated) lead of larger, more experienced LLs, and not sell up.

Larger ones probably have limited company structure which I believe S24 doesn’t apply ?

[Parkwell]

Section 24 is too slow and too lenient. The BTL market has been allowed to grow out of control for so long that those who got in early and managed their finances more sensibly are still in a comfortable position. Renters have spent the last 15 years paying off their mortgages. A huge number of houses have been hoovered up and held for ransom by this new generation of useless rentiers.
 

[Habeas Domus]

Im guessing a lot of this is complacency, a lot of big landlords just pass everything to their accountant and open another nice bottle of red, the penny won't drop until the big tax bills start arriving.

[spyguy]

22 minutes ago, Parkwell said:

Section 24 is too slow and too lenient. The BTL market has been allowed to grow out of control for so long that those who got in early and managed their finances more sensibly are still in a comfortable position. Renters have spent the last 15 years paying off their mortgages. A huge number of houses have been hoovered up and held for ransom by this new generation of useless rentiers.
 

Its not slow or lenient. S24 is brutal as it ramps up.

Basically, the 1/3 will be newish entrants whove put 30% and found btl is less than lucrative.

 The btlers looking to grow their portfolio will mainly be the io btl 90% ltv. These people have not got a inkling of the coming sh1tstorm.

Edited April 21, 2018 by spyguy

[spyguy]

3 minutes ago, Habeas Domus said:

Im guessing a lot of this is complacency, a lot of big landlords just pass everything to their accountant and open another nice bottle of red, the penny won't drop until the big tax bills start arriving.

Yes.

These are not big LLs. Just horrendously leveraged individuals.

[Mancunian284]

9 minutes ago, Habeas Domus said:

Im guessing a lot of this is complacency, a lot of big landlords just pass everything to their accountant and open another nice bottle of red, the penny won't drop until the big tax bills start arriving.

Which should be some time this year, depends when their accountant does the 17/18 tax return.

[hurlerontheditch]

33 minutes ago, TonyJ said:

It still amazes me that BTL people may still not be aware of what's coming their way later this year. Their accountants have obviously not pre-warned them, and they don't read the financial news, or subscribe to a LL internet forum. Saying that, my accountant also tells me nothing unless I specifically ask him.

A lot won’t have accountants. And a lot of those won’t file a return 

[juvenal]

6 minutes ago, hurlerontheditch said:

A lot won’t have accountants. And a lot of those won’t file a return 

The majority, I suggest.

[spyguy]

44 minutes ago, TonyJ said:

It still amazes me that BTL people may still not be aware of what's coming their way later this year. Their accountants have obviously not pre-warned them, and they don't read the financial news, or subscribe to a LL internet forum. Saying that, my accountant also tells me nothing unless I specifically ask him.

Accountants are tallyman.

You are confusing them with tax advisors, who are a more expensive.

[spyguy]

11 minutes ago, hurlerontheditch said:

A lot won’t have accountants. And a lot of those won’t file a return 

Yet.

[Mancunian284]

10 minutes ago, hurlerontheditch said:

A lot won’t have accountants. And a lot of those won’t file a return 

HMRC are tightening the noose though.

letting agents are now obliged to submit landlord figures to HMRC (only for 17/18 at this stage)

lenders will not provide a btl mortgage without a tax return 

connect will be able to reconcile land registry data with electoral roll/lcouncil tax data

It sounds like HMRC haven’t bothered before as pre section 24 the amount of tax owing wasn’t worth the effort to collect.  Section 24 changes that.

[spyguy]

11 minutes ago, TonyJ said:

Maybe a lot want to sell before they think they are going to be forced to file a return, and before their previous failures catch up with them (probably too late now). 

Theyve missed it.

If youre going to be hammered by s21 you need to have sold before it kicks in.

[spyguy]

13 minutes ago, Mancunian284 said:

HMRC are tightening the noose though.

letting agents are now obliged to submit landlord figures to HMRC (only for 17/18 at this stage)

lenders will not provide a btl mortgage without a tax return 

connect will be able to reconcile land registry data with electoral roll/lcouncil tax data

It sounds like HMRC haven’t bothered before as pre section 24 the amount of tax owing wasn’t worth the effort to collect.  Section 24 changes that.

Oh, thats not needed, just a whack round chops for the EA.

Hmrc know who owns what house and how much mortgage tgey have. What they mught not be 100% on is how much rent.

[Houdini]

1 minute ago, spyguy said:

Theyve missed it.

If youre going to be hammered by s21 you need to have sold before it kicks in.

Osbourne gave everyone a mini-boom in 2015-16 as people bought before the 3% additional stamp duty kicked in. 

[Houdini]

1 minute ago, spyguy said:

Oh, thats not needed, just a whack round chops for the EA.

Hmrc know who owns what house and how much mortgage tgey have. What they mught not be 100% on is how much rent.

Agency reporting regulations mean that letting Agents should be providing HMRC with that information as they are legally obliged to do so. 

[Neverwhere]

It seems that this is the report that the article is based on.

Simple Landlord Insurance surveyed 500 people who are either residential landlords or who own holiday lets, but - AFAICS - don't differentiate between them, or note how many of them are buy-to-let landlords, (i.e. funding their rental properties with buy-to-let loans).

They also appear to have made no effort to check whether the small number of landlords they did question understood the changes under discussion before asking how they had affected their plans, so there is no way of gauging how realistic those plans are.

There's also a glaring error between the HMO chart and text which suggests, unsurprisingly, that the report was quickly thrown together as a marketing exercise, and that it may contain less immediately obvious errors elsewhere.

Surveying intentions is also quite different to surveying actions.

Someone may intend to expand their rental portfolio, only to find that they no longer meet the banks' lending requirements and that they simply can't borrow the money that they need to do so.

Equally someone may intend to sell a rental property but find that the market won't actually support the price that they imagine that it's worth in their head, or that they need to clear the debt secured against it, and fail to sell it in any reasonable time frame.

Intentions are all pie-in-the-sky. Great if you want to convince people that the future is going to be a certain way, without actually having to provide evidence that it is, but not really anything more than a record of worries and wishful thinking.

[Mancunian284]

13 minutes ago, TonyJ said:

Do you think we will see a lot of bankruptcy fire sales? Once HMRC is on their backs, presumably the LLs won't have the luxury of time - pretending not to be desperate, playing hardball and bluffing potential buyers. Maybe a lot of properties will come up at auction, with low reserves so they sell first time for whatever the LL can get.

We don’t know the figures - how many LLs aren’t currently paying tax but are going to be caught out by HMRC in the next year or two?  I think it’s going to be a slow burn - those that are filing tax returns will get a shock this year and it may take a while for HMRC to identify and notify those they can catch with agency reporting regulations.

[Mancunian284]

2 minutes ago, TonyJ said:

Maybe it wont be so slow. Given the info it probably now has from its sources, if they haven't filed a tax return by 31st Jan 2019, maybe CONNECT will identify them instantaneously and be programmed to send out letters automatically asking why they haven't filed a return?

HMRC is a huge and bureaucratic organisation for one thing.  It seems like the (political) will is finally there and they are targeting LLs, which is progress.  Automated letters are one thing but the LLs will have the right to appeal and tax investigations can take years.

[nothernsoul]

What was the intended purpose of S24? This wasnt legislation introduced by a bolahevik government, but by a tory government full of landlords. As legislation goes, it was basically the bare minimum new labour should have introduced a decade earlier to  balance out the unfair advantages of BTL. 

In my opinion, they wanted to ease small BTL landlords out( or rather  overleveraged amateurs like fergus wilson, despite his many properties). The sole reason for this was fear of these landlords crashing the market, as they could easily have done in 2008.

The private rental market would then be donminated by huge corporate entities, in it for long term rental income, or private individuals who owned outright, not just buy it and flip it chancers. 

[Mancunian284]

23 minutes ago, nothernsoul said:

What was the intended purpose of S24? This wasnt legislation introduced by a bolahevik government, but by a tory government full of landlords. As legislation goes, it was basically the bare minimum new labour should have introduced a decade earlier to  balance out the unfair advantages of BTL. 

In my opinion, they wanted to ease small BTL landlords out( or rather  overleveraged amateurs like fergus wilson, despite his many properties). The sole reason for this was fear of these landlords crashing the market, as they could easily have done in 2008.

The private rental market would then be donminated by huge corporate entities, in it for long term rental income, or private individuals who owned outright, not just buy it and flip it chancers. 

Nail on the head in my opinion.

 

Also concerns that typical Tory voters are being priced out and may vote for another party?  By that I mean the younger generation of middle class professionals.  I’ve said before that I think it looks like the government are trying to engineer a period of house price stagnation to give the up and coming generation of Tory voters the chance to buy a home.

Edited April 21, 2018 by Mancunian284

[spyguy]

30 minutes ago, Mancunian284 said:

We don’t know the figures - how many LLs aren’t currently paying tax but are going to be caught out by HMRC in the next year or two?  I think it’s going to be a slow burn - those that are filing tax returns will get a shock this year and it may take a while for HMRC to identify and notify those they can catch with agency reporting regulations.

Most of them.

S24 changes from being able to offset rent agaunst mortgage, to paying income tax on rental income.

Massive cgange. And quick, for the leveraged.

Hmrc kniw who the LL are now.

[Mancunian284]

41 minutes ago, Neverwhere said:

It seems that this is the report that the article is based on.

Simple Landlord Insurance surveyed 500 people who are either residential landlords or who own holiday lets, but - AFAICS - don't differentiate between them, or note how many of them are buy-to-let landlords, (i.e. funding their rental properties with buy-to-let loans).

They also appear to have made no effort to check whether the small number of landlords they did question understood the changes under discussion before asking how they had affected their plans, so there is no way of gauging how realistic those plans are.

There's also a glaring error between the HMO chart and text which suggests, unsurprisingly, that the report was quickly thrown together as a marketing exercise, and that it may contain less immediately obvious errors elsewhere.

Surveying intentions is also quite different to surveying actions.

Someone may intend to expand their rental portfolio, only to find that they no longer meet the banks' lending requirements and that they simply can't borrow the money that they need to do so.

Equally someone may intend to sell a rental property but find that the market won't actually support the price that they imagine that it's worth in their head, or that they need to clear the debt secured against it, and fail to sell it in any reasonable time frame.

Intentions are all pie-in-the-sky. Great if you want to convince people that the future is going to be a certain way, without actually having to provide evidence that it is, but not really anything more than a record of worries and wishful thinking.

Thanks for the clarification. Simple Landlord Insurance are clearly a VI but I hadn’t looked any further into the legitimacy of the figures behind the report.

Edited April 21, 2018 by Mancunian284