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Landlords regret investing in buy-to-let


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HOLA441
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HOLA442
23 minutes ago, Saving For a Space Ship said:

 

 

Landlords in London feel the burden of buying

https://londonnewstime.com/landlords-in-london-feel-the-burden-of-buying/83175/

Is this article supposed to be written in English?

 

 

ok the version from the ft - available at: https://www.businessfast.co.uk/london-landlords-feel-the-burden-of-buy-to-lets/  makes more sense  

Edited by bearishonhouses
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HOLA444
1 hour ago, Glenn said:

I'm not sure, although i note it says "buying by tourets is less attractive" which is something I've always thought as well.

House buying tourettes could well be an afliction of many portfolio landlords.

When asked if they're buying this particular one - 'f#ck yeah' every time

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HOLA447
10 hours ago, Si1 said:

So it looks like property118 won, to some degree?

Wooh there.
 

“TCGA92/S162 applies where a person other than a company transfers a business as a going concern with the whole of its assets (or the whole of its assets other than cash) to a company wholly or partly in exchange for shares. Provided that various conditions are satisfied, see CG65710, the charge to CGT on the whole or part of the gains will be postponed until such time as the person transferring the business disposes of the shares.

This seems to be a expensive way of delay the eventual  tax hit.

ITll also fall foul of a change being to avoid tax.

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HOLA448
12 hours ago, highcontrast said:

https://www.property118.com/hmrc-investigation-into-9-million-property118-incorporation-relief-claim/

Well well well...

HMRC Investigation into £9million Property118 ‘Incorporation Relief’ Claim

(Probably deserves its own thread!)

I don't fully understand this.  Does this mean that BTLers can transfer their properties in to limited companies to avoid section 24 and defer the Capital Gains Tax bill that they would otherwise have to pay immediately?  If so then that's bad news.

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HOLA449
19 minutes ago, Will! said:

I don't fully understand this.  Does this mean that BTLers can transfer their properties in to limited companies to avoid section 24 and defer the Capital Gains Tax bill that they would otherwise have to pay immediately?  If so then that's bad news.

Details missing.

IIRC Bustamove was had a fair few IO mortgages fixed for 5-10 years.

Then S24 came out and he was caught with trying to cash out the fixes (the penalties would have been punitive) andor move property to a LtdCo.

Moving a property from personal -> LtdCo  incur CGT

It would also fall foul of HMRC rule s on pointless changes just to avoid tax.

Youd also need the mortgage co to be happy with this - most are not happy with LtdCo.

Even *if* a mortgage could be transferred to a LtdCo to avoid CGT, then theres still the avoiding S24 tax, which HMRC wont drop.

 

 

 

 

 

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HOLA4412
7 minutes ago, spyguy said:

Look at those ICRs!

Even for a Ltd Co with all the boxes ticked, 125%.

Their calculator still appears to be based on Interest Only mortgages though.

Edited by Will!
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HOLA4413
9 hours ago, spyguy said:

Details missing.

IIRC Bustamove was had a fair few IO mortgages fixed for 5-10 years.

Then S24 came out and he was caught with trying to cash out the fixes (the penalties would have been punitive) andor move property to a LtdCo.

Moving a property from personal -> LtdCo  incur CGT

It would also fall foul of HMRC rule s on pointless changes just to avoid tax.

Youd also need the mortgage co to be happy with this - most are not happy with LtdCo.

Even *if* a mortgage could be transferred to a LtdCo to avoid CGT, then theres still the avoiding S24 tax, which HMRC wont drop.

 

 

 

 

 

The correct way is to value it pay the CGT and put in the Ltd co as you say 

You would probably get away with it and then they run that big data thing they have 

Just settled an EBT situation which involved a last payment in 2001. HMRC love something that is patently on the line that they can call in at any point 

I think the bigger issue will be the mortgage though as you say 

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HOLA4414
11 hours ago, spyguy said:

Details missing.

IIRC Bustamove was had a fair few IO mortgages fixed for 5-10 years.

Then S24 came out and he was caught with trying to cash out the fixes (the penalties would have been punitive) andor move property to a LtdCo.

Moving a property from personal -> LtdCo  incur CGT

It would also fall foul of HMRC rule s on pointless changes just to avoid tax.

Youd also need the mortgage co to be happy with this - most are not happy with LtdCo.

Even *if* a mortgage could be transferred to a LtdCo to avoid CGT, then theres still the avoiding S24 tax, which HMRC wont drop

 

 

How come? S24 is surely circumvented by going into a ltd company.

As regards mortgages. This particular businessman would appear to have covered all his properties in a single humungous secured business loan, be I'm guessing, in his ltd company. 

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HOLA4415
9 hours ago, Si1 said:

How come? S24 is surely circumvented by going into a ltd company.

As regards mortgages. This particular businessman would appear to have covered all his properties in a single humungous secured business loan, be I'm guessing, in his ltd company. 

Busta ad Bustas LtdCo are two different legal entities.

You cannot swap assets between willy nilly.

Assets transferred between two need to priced at market value and sold, with CGT and fees paid.

If I suddenly find a desperate need to transfer 10 x mortgages held by me, personally, into SpyLtdCo then I face a number of hurdles.

One, I have to sell those houses at market value. And Im liable for any CGT.

Two. the current mortgage, held by me, dies. The LtdCO then has to raise a new mortgage

Three, Id have to convince HMRC that this was not an act to avoid tax.

AFAICT the big of legal tightropery is based around 1.

All areas of law are pretty murky. If theyve managed to get HMRC to accept one argument, there will be another one waiting.

And the effort is all about delaying CGT rather than avoiding it.

But the mortgage hurdle still remains - most of the idiot banks involved with personal IO BTL dont offer the same terms to LtdCo.

The bank bustas ot his cheap IO BTL mortgages from probably wont offer LtdCo BTL motgages. AFAICT most are these are unregulated finance cos.

Heres barclays:

https://www.barclays.co.uk/business-banking/borrow/limited-company-buy-to-let/

Bustrer wold fail as his none rental income isnt going to be that high.

The page also lacks stuff like APR and fees, which normally mean they are going to be painful.

 

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HOLA4416

https://www.property118.com/governments-so-called-protection-is-damaging-decent-tenants-prospects/

Regarding students: that has dried out almost completely, at least now. There is a huge number of student houses on the market - all not rented. The final year students will study from home. International students are not coming. Brexit - so favoured here - got rid of any new EU students, they do not want a hassle and prices. Others are waiting. In 15 years being Landlords for students we have never seen anything like that. Perhaps it is the time to sell?

That makes me smile/laugh so hard :)

Karma baby.

laugh.gif.7ccf794593503aae8aee5222acfc6384.gif

Edited by highcontrast
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HOLA4417
12 minutes ago, highcontrast said:

https://www.property118.com/governments-so-called-protection-is-damaging-decent-tenants-prospects/

Regarding students: that has dried out almost completely, at least now. There is a huge number of student houses on the market - all not rented. The final year students will study from home. International students are not coming. Brexit - so favoured here - got rid of any new EU students, they do not want a hassle and prices. Others are waiting. In 15 years being Landlords for students we have never seen anything like that. Perhaps it is the time to sell?

That makes me smile/laugh so hard :)

Karma baby.

laugh.gif.7ccf794593503aae8aee5222acfc6384.gif

The whining and moaning on the comments thread is pure gold. 

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HOLA4419

The trouble with landlords, is they think that their businesses should be a special case with zero tax, costs and work. I have debated these whiners before and explained that if they can't run their landlord business competently, they should sell up.

Too many think their properties should be like money printing machines and they should have to do zero work and take zero risk. They don't seem to understand that when a tenant pays rent, they are not just paying for the property, they are also paying the landlord for a service.

These services include things like keeping the property maintained, dealing with issues with a property and keeping appliances in good order. All these things require both time and money.

Just like any other business landlords have to pay tax, write off cost from bad customers and deal with damage caused by bad customers. Alas landlords think they are a special case and the reality of doing business shouldn't apply to them.

It is about time that changed, so incompetent amateurs are driven out of the market. This isn't just about bringing more properties onto the market for first time buyers, though we desperately need that; it is about getting rid of the incompetent landlords that blight this country, by pricing them out the market.

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HOLA4420
On 1/23/2020 at 10:28 PM, highcontrast said:

Hahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahaha ?

I am guessing there are many who do not regret it

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HOLA4422
On 2/22/2021 at 6:59 AM, spyguy said:

Busta ad Bustas LtdCo are two different legal entities.

You cannot swap assets between willy nilly.

Assets transferred between two need to priced at market value and sold, with CGT and fees paid.

If I suddenly find a desperate need to transfer 10 x mortgages held by me, personally, into SpyLtdCo then I face a number of hurdles.

One, I have to sell those houses at market value. And Im liable for any CGT.

Two. the current mortgage, held by me, dies. The LtdCO then has to raise a new mortgage

Three, Id have to convince HMRC that this was not an act to avoid tax.

AFAICT the big of legal tightropery is based around 1.

All areas of law are pretty murky. If theyve managed to get HMRC to accept one argument, there will be another one waiting.

And the effort is all about delaying CGT rather than avoiding it.

But the mortgage hurdle still remains - most of the idiot banks involved with personal IO BTL dont offer the same terms to LtdCo.

The bank bustas ot his cheap IO BTL mortgages from probably wont offer LtdCo BTL motgages. AFAICT most are these are unregulated finance cos.

Heres barclays:

https://www.barclays.co.uk/business-banking/borrow/limited-company-buy-to-let/

Bustrer wold fail as his none rental income isnt going to be that high.

The page also lacks stuff like APR and fees, which normally mean they are going to be painful.

 

For reference if busta operates as a sole trader then incorporates his buisness no CGT is due or any other taxes as he is elegible for incorporation relief. 

That's the argument being put foward and won with portfolio landlords. I.e it's a buisness not an investment. Argument doesn't work with your old flat but does work with a £9m portfolio as evidenced. 

Yes the CGT still exists and is deffered till the buisness is sold. 

As a Ltd all interest is deductable and as a portfolio landlord you borrow as a fixed and floating charge against all the the assets at a decent rate. Risk and rate  is low for the lender as they have choice of security. 

 

People don't do this with £9m of assets as they are stupid or it's a Wednesday nomatter what you might like to believe. 

Edited by captainb
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HOLA4423
5 minutes ago, captainb said:

For reference if busta operates as a sole trader then incorporates his buisness no CGT is due or any other taxes as he is elegible for incorporation relief. 

That's the argument being put foward and won with portfolio landlords. I.e it's a buisness not an investment. Argument doesn't work with your old flat but does work with a £9m portfolio as evidenced. 

Yes the CGT still exists and is deffered till the buisness is sold. 

As a Ltd all interest is deductable and as a portfolio landlord you borrow as a fixed and floating charge against all the the assets at a decent rate. Risk and rate  is low for the lender as they have choice of security. 

 

People don't do this with £9m of assets as they are stupid or it's a Wednesday nomatter what you might like to believe. 

IIRC he had fixed a large number of mortgages and risked the repayment penalties as it dawned on him that S24 doomed his plan.

IIRC he was borrowing as an individual, not as a LdCo or self-employed. The IO BTL setup was a pure leverage speculation.

as far as as 'people dont do this with 9m ...' Sadly they and the banks *DID*.

Ove the years, Ive come to know of several people whove borrowed well over 2m on IO BTL loans to speculate on housing.

No advice sort, of investigation into the plan.

 

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HOLA4424
12 minutes ago, crescent said:

This is why Lloyds and others will jump in to fill a void as they see it - they will not care if they lose money over 5-10 years they will just buy and sit on places for our lifetime

Banks care very much if they lose money.

 

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HOLA4425
23 minutes ago, crescent said:

This is why Lloyds and others will jump in to fill a void as they see it - they will not care if they lose money over 5-10 years they will just buy and sit on places for our lifetime

The shareholders might have something to say about that approach.

Sunak is unlikely to want to give the banks, except for GS, another bailout, so will want them to keep a capital buffer.

 

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