Landlords regret investing in buy-to-let

[highcontrast]

https://www.propertywire.com/news/landlords-regret-investing-in-buy-to-let/

Hahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahaha ?

Now where's my tiny violin?

Also - https://www.propertywire.com/news/landlords-warn-they-could-exit-the-market/

Oh my sides! Stop it!

[Si1]

"Over half (53%) of landlords would not have purchased their properties in the first place had they known how regulated the Private Rented Sector would become, research from property development firm Accumulate Capital has found."

How long ago was s24 or whatever announced?

If only there was some way that information like this could be disseminated, maybe in words and letters, so people could do research and inform themselves. You could call it "the news" or "current affairs" or something.

[Si1]

Oh yeah

 

HahahahaHahahahaHahahahaHahahahaHahahahaHahahahaHahahahaHahahahaHahahaha

Etc

 

[nome]

I was half listening to piece on Radio 4 last week, some landlord claiming that he's sold up and ''made 5 families homeless''... but according to him it wasn't because he was forced to do it, oh no he was doing it purely to make a point about the new regulations and tax changes.

 

[Si1]

1 hour ago, nome said:

I was half listening to piece on Radio 4 last week, some landlord claiming that he's sold up and ''made 5 families homeless''... but according to him it wasn't because he was forced to do it, oh no he was doing it purely to make a point about the new regulations and tax changes.

 

I knew a family who were evicted because the landlord sold up. They weren't made homeless. They rented another house. Has he seen them huddled up on the street begging?

[spyguy]

The tax system has barely caught up with idiot IO BTLers.

The regulation is slowly getting there.

What needs to happen is the removal of the last bit of interest relief.

And banks being forced to raise capital for all their IO loans.

On a slightly connect issue, Im still seeing people pile into holiday lets. Im guess9ng this the property cant lose mindset plus a lot pensions being cashed in.

Just in time for the taxation of FHL: to get clarified.

 

 

 

 

 

[jimmy2x3]

33 minutes ago, spyguy said:

The tax system has barely caught up with idiot IO BTLers.

The regulation is slowly getting there.

What needs to happen is the removal of the last bit of interest relief.

And banks being forced to raise capital for all their IO loans.

On a slightly connect issue, Im still seeing people pile into holiday lets. Im guess9ng this the property cant lose mindset plus a lot pensions being cashed in.

Just in time for the taxation of FHL: to get clarified.

 

 

 

 

 

i get hotels regular, and the airbnb concept is in for a massive crash.  the market is completely saturated and rooms very cheap. there is hardly a city in the uk that you cant get a 30 quid room infact none if you look hard enough. and as airbnb is mostly homes with 2 or 3 rooms whats happening is many are getting fed up. lucky to achieve 50% occupancy rates and very little in the winter. the changing of sheets and tidying up and organising of it all is creating a situation many are making very little. add in the fees airbnb take and mortgage interest and very soon half are begging for a full time tenant again. 

hotels have got smarter and better and takling airbnb head on and i can get room after room with a breakfast throwing in for 30 quid something no airbnb can do. i know people doing bnb that have started to refuse 1 or 2 night lets and are only looking for week long lets due to the work involved switching over to new people each night. hotels can do this due to economy of scale with 20 or 30 or 50 rooms full a night. 

hence when i rent rooms now i never do airbnb for these reasons. 

1. airbnb is often more expensive

2. airbnb is full of amatuer landlords that make you feel uncomfortable to relax in their precious homes

3. the neighbours of tese homes are often hostile and fed up of people coming and going

4. you get a breakfast at a hotel

5. airbnb owners will be far more active in complaining or witholding any monies due to any damages due to the same reasons amatuer landlords do the same ie granmas precious house where they really despise anyone staying but need the cash.

5. i want informal, heres your keys and have a nice evening. airbnb is often full of owners far too interested in your comings and goings and what your up to than a hotel is. 

6. mostly no owner on the premises what if the loony in the next room starts running around the place with an axe

7. big chance of getting to the property but then having to wait around for the owner to arrive to gain entry.

8. as above but with far more restrictive times to get keys etc than a hotel unless there in all day and live next door. 

9. more chance of a perv sticking a spy camera in the shower room

10. far more penny pinching going on with heating etc especially when they only got one room let and only got 35 quid for it, they dont want you burning the heating all night whereas a hotel with have 30 or 40 guests and a bigger more economical heating system. (this is actually a huge moan of people that use airbnb, )

[Si1]

1 hour ago, spyguy said:

The tax system has barely caught up with idiot IO BTLers.

The regulation is slowly getting there.

What needs to happen is the removal of the last bit of interest relief.

And banks being forced to raise capital for all their IO loans.

On a slightly connect issue, Im still seeing people pile into holiday lets. Im guess9ng this the property cant lose mindset plus a lot pensions being cashed in.

Just in time for the taxation of FHL: to get clarified.

 

 

 

 

 

There was a columnist in the ft, very recently, extolling the tax efficiency of owning a holiday let, in his case in Edinburgh.

[Pop321]

33 minutes ago, jimmy2x3 said:

i get hotels regular, and the airbnb concept is in for a massive crash.  the market is completely saturated and rooms very cheap. there is hardly a city in the uk that you cant get a 30 quid room infact none if you look hard enough. and as airbnb is mostly homes with 2 or 3 rooms whats happening is many are getting fed up. lucky to achieve 50% occupancy rates and very little in the winter. the changing of sheets and tidying up and organising of it all is creating a situation many are making very little. add in the fees airbnb take and mortgage interest and very soon half are begging for a full time tenant again. 

hotels have got smarter and better and takling airbnb head on and i can get room after room with a breakfast throwing in for 30 quid something no airbnb can do. i know people doing bnb that have started to refuse 1 or 2 night lets and are only looking for week long lets due to the work involved switching over to new people each night. hotels can do this due to economy of scale with 20 or 30 or 50 rooms full a night. 

hence when i rent rooms now i never do airbnb for these reasons. 

1. airbnb is often more expensive

2. airbnb is full of amatuer landlords that make you feel uncomfortable to relax in their precious homes

3. the neighbours of tese homes are often hostile and fed up of people coming and going

4. you get a breakfast at a hotel

5. airbnb owners will be far more active in complaining or witholding any monies due to any damages due to the same reasons amatuer landlords do the same ie granmas precious house where they really despise anyone staying but need the cash.

5. i want informal, heres your keys and have a nice evening. airbnb is often full of owners far too interested in your comings and goings and what your up to than a hotel is. 

6. mostly no owner on the premises what if the loony in the next room starts running around the place with an axe

7. big chance of getting to the property but then having to wait around for the owner to arrive to gain entry.

8. as above but with far more restrictive times to get keys etc than a hotel unless there in all day and live next door. 

9. more chance of a perv sticking a spy camera in the shower room

10. far more penny pinching going on with heating etc especially when they only got one room let and only got 35 quid for it, they dont want you burning the heating all night whereas a hotel with have 30 or 40 guests and a bigger more economical heating system. (this is actually a huge moan of people that use airbnb, )

I live in a town with huge tourist activity and it’s a real gem for hotels and Air BnB. The demand for rooms is massive and without elaborating more you couldn’t buy in a better town. B&Bs have done really well for 50/60 years  

And Even in this town I agree completely with your initial comments re supply and whilst a very good Boutique hotels may attract high rates but average ones are struggling. 

A little bit shabby (maybe even positioned cleverly as shabby chic) but still very good hotel may average £75 but shopping around £40/45 is not unheard of. 

Again the boutique Air BnB do okay but you either need to be very cheap (ie a room for £15) or very good quality.

Buying a holiday let us not property investment it’s a business and I know someone who has done it for years....financially he is fine but he says competition is fierce.

The old B&Bs seem to be the first to be going....but anything overly shabby has gone already. 

Only used Air BnB (albeit technically via booking.com) once in Italy. It was okay but certainly some of the points you raised there rang a bell too.

We like to travel and prefer to stay in hotels. Safe and cheap. As an aside (different world I know) the last time we stated in New York we stayed in a dated room at the Waldorf. Cheaper than ANY B&B, (if staying over 6 nights) complimentary fresh coffee, safe, no brekky though...unfortunately a refurb will have stopped that now but illustrates how tough it is in the hotel business  

[Saving For a Space Ship]

?

What's the meaning of the phrase

'A plague on both your houses'?

Quote

Almost From ....Shakespeare's Romeo and Juliet, 1592: MERCUTIO:

I am hurt. A plague o' BTL on your houses! I am sped.

Is he gone, and hath nothing?

https://www.phrases.org.uk/meanings/14450.html

 

Edited January 24, 2020 by Saving For a Space Ship

[spyguy]

1 hour ago, Si1 said:

There was a columnist in the ft, very recently, extolling the tax efficiency of owning a holiday let, in his case in Edinburgh.

Yeah.

I read it.

Opinion Buy-to-let

Why I changed my mind about buy-to-let

Financial advisers don’t usually like the idea of property as an investment —  but there are some exceptions 

https://www.ft.com/content/48fde753-f8ff-4dba-9a11-a7ecef77de68

I was scratching my head at  the article as the few facts he gave were confusing.

And there were few numbers

c

As an investment adviser, I am struck by the number of clients who ask: “Should I invest in a buy-to-let property?” Given my job, you would probably expect me to be biased against property investments. Certainly, my stock answer for high-earning clients used to be not to go out and buy an investment property.

This is because pensions have been a much more tax efficient way to save — higher-rate tax relief on the way in, tax-free investment growth, and the promise of taking a quarter of your pot tax free on the way out. Lovely.  But if they had a partner who was a lower or basic rate taxpayer, my answer would be maybe to buy one property. But only one, so the tax did not push them into a higher tax bracket.

Also, multiple properties are a hassle to look after (an investment manager doesn’t phone you up when their dishwasher is broken). The income stream from a property should give a tax efficient income now and in retirement. You can also “gear up” and borrow against your asset, and the tenants will pay down your mortgage over the years. This sounds like the perfect investment, almost too good to be true. Well, previous chancellors thought so too, and the resulting tinkering with the system has created a property tax nightmare. When investing in property these days then, you should ideally be doing so for two reasons: for the yield and for tax efficiency.

Without either of these, you are simply hoping that the house increases in value. I have a lot of clients who have fallen into the property tax trap because they forgot these two principles.

Let’s say they bought a buy-to-let years ago. It’s worth a lot of money now, but the rental yield is terrible and is taxed at their highest marginal rate. If they sell now, most of the sale value will be subject to 28 per cent capital gains tax (property CGT is 8 per cent higher than CGT on investments). They will also be worried about inheritance tax. So the nightmare is they sell the house and lose about 30 per cent of the value once estate agent fees are taken into consideration.

But if they were unlucky enough to die the day after completion, this could trigger a 40 per cent inheritance tax liability on the remaining 70 per cent of the sale cash. Property can also be a pain to gift. You can’t give your children 300 bricks or half a bathroom. But you can give small gifts to your beneficiaries with cash or an investment portfolio. Investment property is becoming a more expensive investment to hold. From April, landlords will only be able to offset basic rate tax relief on their mortgage cost.

The current direction of travel would indicate that this tax relief may go altogether — a scary thought ahead of the new chancellor’s first Budget on March 11.  Furthermore, buyers now have to pay 3 per cent additional stamp duty on a second property. Landlords will additionally pay higher deposits, fees and interest rates on a buy-to-let mortgage as this type of lending is considered higher risk. So in today’s market, you will need price growth of about 10 per cent just to get back to square one. The rental yield means you are perhaps, but often not, covering the mortgage costs (by my reckoning, you will be doing well to get a yield of 2 per cent on a London property). And remember — you are not making a yield on your deposit. 

Basically, a landlord entering the market today will probably be paying for someone to live in their house as they dream of a capital gain. Yet if this ever comes, they would not be able to crystallise it without paying 28 per cent tax — and that’s assuming they won’t be hit by other tax increases in future. Nonetheless, I bought a second property anyway. I thought that as I am now getting to be an old man, I would diversify. I have a share in the firm I work for, and I work in the investment industry, so I have that risk on top of an average investor’s normal equity risk. Merryn Somerset Webb has very strong views on my purchase, as I bought a basement flat in Edinburgh, her stamping ground. Most of my family live there and my firm has an office there. So I use it for fun, for work and I rent it out on a short-term let on various apps and websites. This means I benefit from international tourism. In fact, last summer I had one guest all the way from Los Angeles who complained the flat was too hot! Luckily, my homeland didn’t let me down: it started to rain as I was buying him a fan.

Good old dreich Scottish weather. I am making money (the yield on this property, net of fees is about 4.2 per cent). But although my family love staying there, not all of my friends approve of my investment.  One had a two-hour rant at me for depriving the people of Edinburgh a place to live. But if I didn’t buy the flat, then it’s likely another landlord would have. And having a short-term furnished holiday let (rather than a buy-to-let) suits our family circumstances.  There are very important tax differences between the two. In the UK, to qualify as the former, your property must be available as furnished holiday accommodation letting for at least 210 days in the year. No, you staying in it “on holiday” does not count.

You cannot rent it to the same person for more than 31 days. Excitingly, profits count as earnings for pension purposes — so you can claw back some of the tax bill with a pension contribution Michael Martin You are, however, able to offset the mortgage costs against the taxable gain each year, as well as offset all costs such as furniture. Additionally, when you sell, it qualifies for entrepreneurs’ relief, rollover relief and holdover relief (please tweet me if you want these explained, I will run out of words otherwise).

But, excitingly, profits count as earnings for pension purposes — so you can claw back some of the tax bill with a pension contribution. My first year of ownership threw up one first world problem — the huge success of the Edinburgh Festival means I cannot afford to stay in my own flat in August. 

Overall, the yield is better, there are more tax advantages and we get to stay there. No investment is without risk, and I have gone into this fully aware that politicians could try to restrict short-term holiday lets through the planning process in future. But by explaining honestly how I’ve weighed it all up, I hope you can see for yourselves how much is at stake if you’re deciding whether to invest in a second property. 

Ill cutnpaste whole lot as its a 3rd party opinion piece and out of date/old.

If the article is typical of his advice then Id recommend his customers go elsewhere. Its shit.

One, BTL is not a furnished holiday let. Different tax laws, different mortgages, different regulation.

You cannot use a BTL mortgage for FHL/AirBNB - the TnCs inist on a tenacy being in place.

Highly leveraged IO BTL makes no sense any me. Its a hiding to nowhere. For a HRT is suicide.

Two, FHL holiday is grossly under regulated and, due to Gidiot, has fallen between paying council tax and paying business rates.

AirBNB hell in places like Edinburgh is going to result in FHL requiring planning permission.

Changing residential house to a holiday let should be subject to the same regulation as turning a house into a shop or bar. Is should require planning.

The return on FHL are dire - basically they get school holidays. Thats below the number of days that a place needs to be let to get existing FHL reliefs.

Putting aside Airbnb hellholes. all the figures Ive seen for FHL point to yields that are too low to take on any finance. 

 

 

 

[regprentice]

5 hours ago, nome said:

I was half listening to piece on Radio 4 last week, some landlord claiming that he's sold up and ''made 5 families homeless''... but according to him it wasn't because he was forced to do it, oh no he was doing it purely to make a point about the new regulations and tax changes.

 

Heard that as well. In Protest to landlord registration scheme fees in Liverpool Iirc. 

He claimed the fees were 3x the amount the interviewer did in his intro, and made the claim about making people homeless, all without being challenged by the interviewer. 

[Houdini]

5 hours ago, Pop321 said:

I live in a town with huge tourist activity and it’s a real gem for hotels and Air BnB. The demand for rooms is massive and without elaborating more you couldn’t buy in a better town. B&Bs have done really well for 50/60 years  

And Even in this town I agree completely with your initial comments re supply and whilst a very good Boutique hotels may attract high rates but average ones are struggling. 

A little bit shabby (maybe even positioned cleverly as shabby chic) but still very good hotel may average £75 but shopping around £40/45 is not unheard of. 

Again the boutique Air BnB do okay but you either need to be very cheap (ie a room for £15) or very good quality.

Buying a holiday let us not property investment it’s a business and I know someone who has done it for years....financially he is fine but he says competition is fierce.

The old B&Bs seem to be the first to be going....but anything overly shabby has gone already. 

Only used Air BnB (albeit technically via booking.com) once in Italy. It was okay but certainly some of the points you raised there rang a bell too.

We like to travel and prefer to stay in hotels. Safe and cheap. As an aside (different world I know) the last time we stated in New York we stayed in a dated room at the Waldorf. Cheaper than ANY B&B, (if staying over 6 nights) complimentary fresh coffee, safe, no brekky though...unfortunately a refurb will have stopped that now but illustrates how tough it is in the hotel business  

In the case of the Waldorf - it's a full rebuild bar the external walls.

The hotel was bought by a Chinese insurance firm (whose chairman has since been sentenced to 18 years for fraud - including purchasing these hotels) for doing things beyond his remit.

[nome]

6 hours ago, regprentice said:

Heard that as well. In Protest to landlord registration scheme fees in Liverpool Iirc. 

He claimed the fees were 3x the amount the interviewer did in his intro, and made the claim about making people homeless, all without being challenged by the interviewer. 

Exactly. The BBC (along with just about everybody else) considers us here on HPC to be the wicked, despicable, heartless b'stards for daring to want house prices to fall... whilst scumbags like this are given an easy ride in, fact often actually lauded. 

[Uncle_Kenny]

From the article:

Quote

“Indeed, a considerable number of investors are now looking to alternative real estate investment options instead, such as development finance – these provide ways to access bricks and mortar investment opportunities without the complications or costs of actually purchasing the asset.”

Why don't they just buy shares in British Land, Landsec or Segro? all FTSE 100 companies. Perhaps they feel the need to do something clever to brag about at dinner parties.

[Confusion of VIs]

9 hours ago, spyguy said:

Yeah.

I read it.

Opinion Buy-to-let

Why I changed my mind about buy-to-let

Financial advisers don’t usually like the idea of property as an investment —  but there are some exceptions 

https://www.ft.com/content/48fde753-f8ff-4dba-9a11-a7ecef77de68

I was scratching my head at  the article as the few facts he gave were confusing.

And there were few numbers

c

As an investment adviser, I am struck by the number of clients who ask: “Should I invest in a buy-to-let property?” Given my job, you would probably expect me to be biased against property investments. Certainly, my stock answer for high-earning clients used to be not to go out and buy an investment property.

This is because pensions have been a much more tax efficient way to save — higher-rate tax relief on the way in, tax-free investment growth, and the promise of taking a quarter of your pot tax free on the way out. Lovely.  But if they had a partner who was a lower or basic rate taxpayer, my answer would be maybe to buy one property. But only one, so the tax did not push them into a higher tax bracket.

Also, multiple properties are a hassle to look after (an investment manager doesn’t phone you up when their dishwasher is broken). The income stream from a property should give a tax efficient income now and in retirement. You can also “gear up” and borrow against your asset, and the tenants will pay down your mortgage over the years. This sounds like the perfect investment, almost too good to be true. Well, previous chancellors thought so too, and the resulting tinkering with the system has created a property tax nightmare. When investing in property these days then, you should ideally be doing so for two reasons: for the yield and for tax efficiency.

Without either of these, you are simply hoping that the house increases in value. I have a lot of clients who have fallen into the property tax trap because they forgot these two principles.

Let’s say they bought a buy-to-let years ago. It’s worth a lot of money now, but the rental yield is terrible and is taxed at their highest marginal rate. If they sell now, most of the sale value will be subject to 28 per cent capital gains tax (property CGT is 8 per cent higher than CGT on investments). They will also be worried about inheritance tax. So the nightmare is they sell the house and lose about 30 per cent of the value once estate agent fees are taken into consideration.

But if they were unlucky enough to die the day after completion, this could trigger a 40 per cent inheritance tax liability on the remaining 70 per cent of the sale cash. Property can also be a pain to gift. You can’t give your children 300 bricks or half a bathroom. But you can give small gifts to your beneficiaries with cash or an investment portfolio. Investment property is becoming a more expensive investment to hold. From April, landlords will only be able to offset basic rate tax relief on their mortgage cost.

The current direction of travel would indicate that this tax relief may go altogether — a scary thought ahead of the new chancellor’s first Budget on March 11.  Furthermore, buyers now have to pay 3 per cent additional stamp duty on a second property. Landlords will additionally pay higher deposits, fees and interest rates on a buy-to-let mortgage as this type of lending is considered higher risk. So in today’s market, you will need price growth of about 10 per cent just to get back to square one. The rental yield means you are perhaps, but often not, covering the mortgage costs (by my reckoning, you will be doing well to get a yield of 2 per cent on a London property). And remember — you are not making a yield on your deposit. 

Basically, a landlord entering the market today will probably be paying for someone to live in their house as they dream of a capital gain. Yet if this ever comes, they would not be able to crystallise it without paying 28 per cent tax — and that’s assuming they won’t be hit by other tax increases in future. Nonetheless, I bought a second property anyway. I thought that as I am now getting to be an old man, I would diversify. I have a share in the firm I work for, and I work in the investment industry, so I have that risk on top of an average investor’s normal equity risk. Merryn Somerset Webb has very strong views on my purchase, as I bought a basement flat in Edinburgh, her stamping ground. Most of my family live there and my firm has an office there. So I use it for fun, for work and I rent it out on a short-term let on various apps and websites. This means I benefit from international tourism. In fact, last summer I had one guest all the way from Los Angeles who complained the flat was too hot! Luckily, my homeland didn’t let me down: it started to rain as I was buying him a fan.

Good old dreich Scottish weather. I am making money (the yield on this property, net of fees is about 4.2 per cent). But although my family love staying there, not all of my friends approve of my investment.  One had a two-hour rant at me for depriving the people of Edinburgh a place to live. But if I didn’t buy the flat, then it’s likely another landlord would have. And having a short-term furnished holiday let (rather than a buy-to-let) suits our family circumstances.  There are very important tax differences between the two. In the UK, to qualify as the former, your property must be available as furnished holiday accommodation letting for at least 210 days in the year. No, you staying in it “on holiday” does not count.

You cannot rent it to the same person for more than 31 days. Excitingly, profits count as earnings for pension purposes — so you can claw back some of the tax bill with a pension contribution Michael Martin You are, however, able to offset the mortgage costs against the taxable gain each year, as well as offset all costs such as furniture. Additionally, when you sell, it qualifies for entrepreneurs’ relief, rollover relief and holdover relief (please tweet me if you want these explained, I will run out of words otherwise).

But, excitingly, profits count as earnings for pension purposes — so you can claw back some of the tax bill with a pension contribution. My first year of ownership threw up one first world problem — the huge success of the Edinburgh Festival means I cannot afford to stay in my own flat in August. 

Overall, the yield is better, there are more tax advantages and we get to stay there. No investment is without risk, and I have gone into this fully aware that politicians could try to restrict short-term holiday lets through the planning process in future. But by explaining honestly how I’ve weighed it all up, I hope you can see for yourselves how much is at stake if you’re deciding whether to invest in a second property. 

Ill cutnpaste whole lot as its a 3rd party opinion piece and out of date/old.

If the article is typical of his advice then Id recommend his customers go elsewhere. Its shit.

One, BTL is not a furnished holiday let. Different tax laws, different mortgages, different regulation.

You cannot use a BTL mortgage for FHL/AirBNB - the TnCs inist on a tenacy being in place.

Highly leveraged IO BTL makes no sense any me. Its a hiding to nowhere. For a HRT is suicide.

Two, FHL holiday is grossly under regulated and, due to Gidiot, has fallen between paying council tax and paying business rates.

AirBNB hell in places like Edinburgh is going to result in FHL requiring planning permission.

Changing residential house to a holiday let should be subject to the same regulation as turning a house into a shop or bar. Is should require planning.

The return on FHL are dire - basically they get school holidays. Thats below the number of days that a place needs to be let to get existing FHL reliefs.

Putting aside Airbnb hellholes. all the figures Ive seen for FHL point to yields that are too low to take on any finance. 

A non article, he bought a pad for his own/family use and lets it out when he is not there.

We have done the same with a villa abroad, use it for our plus friends/family holidays about 8 weeks a year and let it out during July August (too hot to want to visit). Just about covers our management maintenance costs and little capital gain over the 12 years we have owned it but we bought it a holiday getaway not an investment so happy with that. 

  

[Frugal Git]

As long as you have salary sacrifice, Maxing pension contributions is still imho the first thing to do - even if you're lower rate (and in certain situations this means qualifying for bennies as well thanks to a reduced P60 figure).

68p instantly turns into £1. Maybe even £1.138 if you have an employer who passes on their NI saving. That is not shabby. 

And if your reduced salary means you qualify for tax credits or universal credit - very likely if you have kids or rent and earn anywhere between 10-40k (and maybe more in some cases) then it's more like give up 25-27p net to get each additional £1 (or £1.138) in the pension. Which is as close to a flipping no brainer as you can get. 

Whoever wrote that article hasn't properly investigated how the tax system works. No surprises there given the typical standard of journalism and indeed 'professional financial advice'.

Edited January 25, 2020 by Frugal Git

[spyguy]

3 hours ago, Frugal Git said:

As long as you have salary sacrifice, Maxing pension contributions is still imho the first thing to do - even if you're lower rate (and in certain situations this means qualifying for bennies as well thanks to a reduced P60 figure).

68p instantly turns into £1. Maybe even £1.138 if you have an employer who passes on their NI saving. That is not shabby. 

And if your reduced salary means you qualify for tax credits or universal credit - very likely if you have kids or rent and earn anywhere between 10-40k (and maybe more in some cases) then it's more like give up 25-27p net to get each additional £1 (or £1.138) in the pension. Which is as close to a flipping no brainer as you can get. 

Whoever wrote that article hasn't properly investigated how the tax system works. No surprises there given the typical standard of journalism and indeed 'professional financial advice'.

I also dont grasp how the non OOO property land scape is going to change.

The biggy thats missing is - How much borrowed money/leverage is at play?

The second bit is how isthe house classed? Its not a BT&L as needs a tenant, so th whole start of the article and title are just wrong.

It smells like a 2nd home with a bit of AirBNB on the side, to pay for running costs and give his 3% yield. If so, then he wont qualify for the FHL, so hell need to be paying ctax on the place.

But the path for AirBNB is clear - they are going to be out lawed/heavily regulated. Its only going to take the first lot of flats being burnt down with a load of kids in. Or a Denis Neisen like 'host'

Even puttign those aside, AirBNB is ffinf hell for any residents. Edinburgh have it really bad

https://www.dailymail.co.uk/news/article-6307855/Airbnb-accused-taking-Edinburgh-flat-pictured-11-key-safes.html

Id like to see him re-run his figures when AirBNB places are subjected to business rates and small business rates relief is removed from housing.

SBRR is ther as most businesses provide some employment useful activity.

Holiday lets n AirBNB do not 0- they are a curse.

 

[spyguy]

10 hours ago, Confusion of VIs said:

A non article, he bought a pad for his own/family use and lets it out when he is not there.

We have done the same with a villa abroad, use it for our plus friends/family holidays about 8 weeks a year and let it out during July August (too hot to want to visit). Just about covers our management maintenance costs and little capital gain over the 12 years we have owned it but we bought it a holiday getaway not an investment so happy with that. 

  

In the UK, if theres one FHL< theres 100s.

The FHL only affects a small number of areas - Cornwall, Devon, Norfolk, Y Dales, Lakes and ~20 miles around Whitby, which is where Im from.

FHL manage to be a total curse to the locals left living i nthe area. and a hiding to nowhere for the owner.

As it currently stands, due to Gdiot, FHL fall between resi taxation -they dont pay ctax as they are classed as a business, and business taxation - they get full small business rate relief as the rateable value is smaller.

Thats nuts.

Scabby BC is missing out out on several millions of lost ctax revenue (business rates go to HMRC).

Looking at the sales, Id guess ~50% of sales within Whitby have been to people buying FHL. Theres no planning requirement, say, if you wanted to turn a resi house into a butchers, bar shop or whatever. They just roll up, gut a place, call it 'Captains rest' or something similar wnk, and put it on a holiday site.

It wasnt so bad when they were buying the old crappy small houses. ow they are buting resi stuff i nthe estates.

The effect is doubly felt as public services are based on FT resi figures, so not only is the area getting ~30% in funding. But then get cursed with having to provide services as the population goes up ~30% in summer.

Most of the cost of the extra services fall on the FT residents.

Then theres parking hell.

Heres how it goes.

You bu a 2 or 3br house, that would do for a family of 3 or 5.

You put bunk beds in two rooms, advertise as sleeps 8.

You get two lots of family turning, in 2 cars - Oh just park the car round the corner, Im sure itll be OK....

One of couples invites some friends over for the night - Dont worry, you can sleep i nthe living room ...

Another car turns up, parked 'round the corner'

A family house, meant for 3-5, ends up with 10+ + 3 cars.

Lets have a BBQ! At midnight, we can sit outside and get pissed and argue til 3am - we are on holiday! (even ifthe neighbours have to be up at 7am(

A mate lives between 2 FHLS. Its hell from Jul->Sep - cars park in his drive, people puke in his garden, constant noise.

 

[Pop321]

5 hours ago, Frugal Git said:

As long as you have salary sacrifice, Maxing pension contributions is still imho the first thing to do - even if you're lower rate (and in certain situations this means qualifying for bennies as well thanks to a reduced P60 figure).

68p instantly turns into £1. Maybe even £1.138 if you have an employer who passes on their NI saving. That is not shabby. 

And if your reduced salary means you qualify for tax credits or universal credit - very likely if you have kids or rent and earn anywhere between 10-40k (and maybe more in some cases) then it's more like give up 25-27p net to get each additional £1 (or £1.138) in the pension. Which is as close to a flipping no brainer as you can get. 

Whoever wrote that article hasn't properly investigated how the tax system works. No surprises there given the typical standard of journalism and indeed 'professional financial advice'.

Agree completely and total no brainer for high rate tax paying employees. 

I was in a situation where due to ‘benefits in kind’ ie car, concessionary mortgage, BuPA etc I was salaried at £50k (plus £10k bonus) but my tax bill was based on an income of £90k. I never thought that was unfair but it made me look at my tax bill each year. 

My employer offered salary sacrifice for holiday, pension and a share scheme. It was only the last 10 years that I realised it meant I could work and pull wages from my employer almost like a director might who is running their own company. 

The trigger was a £10k bonus I received and and I only saw £4K of it due to emergency tax coding etc. Then at the year end no ‘tax rebate’ was due....so next year I ticked the box where bonus was added to pension. From then I started to use basic pay as well for the benefits most employees ignored.  

So although salaried at £50k (with maybe a £10k bonus on top)  I was probably paying £30k into pension and £2k into a share scheme.  All this on top of the basic company pension scheme with a careful headroom check to ensure I wasn’t overfunding.  

Employees were very open about their pension payments and many on similar salaries may wonder how I could afford to save so much money into the added pension and share schemes....I wondered how they could afford to pay so much tax. I was lucky I had savings I could use to live on  

I was still paying a big tax bill and always tipped into higher rate tax so my liberal leftie ideology was ‘broadly’ intact  

All this despite my huge distrust of pensions. Specifically the ever moving goalposts from governments ie retirement access dates, how much you can take each year, taxation changes etc.  However even I couldn’t resist the ‘free money’ salary sacrifice offered. 

The issue is I now will pay 20% tax when I draw the pension (after the personal allowance). But that’s fair enough....everyone has to. 

Property is a totally different proposition. In the main it has relied on debt, happily it is no longer tax efficient and the recent legislation indicates the direction of travel. There will always be landlords but I think ‘amateur landlords’ (and there are many many of them...some with 10 houses) will hopefully fade away.

The Air BnB phenomenon is a worry. It offers an opportunity to spend money on lamp shades, use farrow and ball, and up-cycle furniture to furnish ‘our little place in Whitby’ and although it may not make money it’s almost perceived as a ‘middle class thing’. A blocked toilet, broken tap, an unwarranted bad review (real bad reviews are different) will convince many to sell but I can see a steady supply of new people wanting to experience it themselves rather than listen to others who have done it. 

Edited January 25, 2020 by Pop321

[dugsbody]

5 hours ago, Frugal Git said:

As long as you have salary sacrifice, Maxing pension contributions is still imho the first thing to do - even if you're lower rate (and in certain situations this means qualifying for bennies as well thanks to a reduced P60 figure).

68p instantly turns into £1. Maybe even £1.138 if you have an employer who passes on their NI saving. That is not shabby. 

And if your reduced salary means you qualify for tax credits or universal credit - very likely if you have kids or rent and earn anywhere between 10-40k (and maybe more in some cases) then it's more like give up 25-27p net to get each additional £1 (or £1.138) in the pension. Which is as close to a flipping no brainer as you can get. 

Absolutely agree. The salary sacrifice is such a benefit that I'd be surprised if it can continue. And your post above highlights something very rotten about our tax system, which is stealth taxes. Go a penny over a threshold and suddenly you lost child benefits or other such benefits, which effectively means the money has to come directly out your pocket, which amounts to the same thing as paying more tax. 

I hate that system. Everyone without qualified special needs (disabled and other cases) should receive equal benefits. If they want people to pay more, add it onto the tax rate instead of means testing which is just a way of hiding what is happening from a gullible public. 

[dugsbody]

39 minutes ago, Pop321 said:

The issue is I now will pay 20% tax when I draw the pension (after the personal allowance). But that’s fair enough....everyone has to. 

Actually, if you don't take the 25% tax free lump sum then this gets bundled into your withdrawals. I presume you won't go for an annuity because they're awful these days. So if you withdraw periodically, you get 25% tax free and the £12500 tax free allowance. If your needs are £30k pa, I think it amounts to something trivial like £2k tax.

Edit: Yes, checked, if you have no other income. See here: 

https://www.which.co.uk/money/pensions-and-retirement/pensions-retirement-calculators/pension-tax-calculator-af1sc5u1y9mc

Edited January 25, 2020 by dugsbody

[JB1973]

I know a few landlords, but I don't know any landlords that regret buying their buy to lets.  If that is true then it is odd that they are buying more.  Most the ones I am aware of are doing ok and some I know with pretty ordinary incomes, are quietly sitting on gains in the millions of pounds.  I keep reading the posts on this site but a lot seem to smack of a sort of jealousy.  Especially with loads of "ha ha's".

[Wayward]

On 24/01/2020 at 06:09, Si1 said:

I knew a family who were evicted because the landlord sold up. They weren't made homeless. They rented another house. Has he seen them huddled up on the street begging?

Many landlords seem to have messiah syndrome. 

[Frugal Git]

1 hour ago, dugsbody said:

Absolutely agree. The salary sacrifice is such a benefit that I'd be surprised if it can continue. And your post above highlights something very rotten about our tax system, which is stealth taxes. Go a penny over a threshold and suddenly you lost child benefits or other such benefits, which effectively means the money has to come directly out your pocket, which amounts to the same thing as paying more tax. 

I hate that system. Everyone without qualified special needs (disabled and other cases) should receive equal benefits. If they want people to pay more, add it onto the tax rate instead of means testing which is just a way of hiding what is happening from a gullible public. 

The stealth tax thing is very much mainstream at the moment with the greggs bonuses 'scandal' - where finally the penny has dropped that a £300 bonus for the workers who are on UC means they see £75 in their pocket.

Reading elsewhere (Mumsnet etc) public opinion is split. Some say that's how it should work - you're still 'better off' and it proves that UC always does 'make work pay'...

Well, a reasonable example to me that flies in the face of that is two families - both have 2 kids. One on 18k, one earning, 50k, both renting.

Gross annual difference in salary 32k, net difference 8k. What's the point?

THat to me it means it's rational to minimize your income, whether by reducing your hours or using every trick in the book, unless you're on really, really big money.

Maxed pension and Cycle to work scheme doesn't have a limit? Treat yourself to a 10k Pinarello Dogma then at an effective 75% discount. Might as well.

Edited January 25, 2020 by Frugal Git