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Guest wrongmove

From A Rich Man’s Game To Retirement Scheme For The Masses

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Guest wrongmove

From a rich man’s game to retirement scheme for the masses

"Investing in property has become such a mainstream occupation that it is easy to forget that buy-to-let is a relatively recent phenomenon.

Rising property prices, the proliferation of newly built flats and the unreliability of pensions has helped to make property the cornerstone of many people’s retirement plans.

But until just over ten years ago, when the law was changed to encourage small landlords and ordinary homeowners to invest in rental homes, letting was the preserve of a few wealthy and sometimes ruthless individuals.

The most notorious was Peter Rachman, who exploited tenants in Notting Hill, in West London, in the 1950s and 1960s. So brutal were his tactics that the term Rachmanism is now used to describe slum landlords’ ill treatment of tenants.

Law-abiding landlords were often saddled with sitting tenants and had to put up with limited returns. The poor image of landlords and the total security of tenure for tenants made lettings unpopular until 1988, when the Housing Act deregulated the rental market and rebalanced the rights between landlords and tenants.

The real revolution, however, came in 1997 when amendments to the Housing Act were brought into force. The change made it easier for landlords to regain possession of their properties, reducing the risk of being left with a sitting tenant. The move persuaded mainstream lenders to offer cheaper loans to potential landlords and buy-to-let was born.

It was an initiative, devised by the Association of Residential Letting Agents (ARLA), that completely changed the market, turning thousands of homeowners into landlords.

Previously, obtaining a mortgage for a rental home was difficult and expensive. Property investors were often forced to buy at less attractive commercial rates. Key factors such as rental income were not taken into consideration. Today nearly a million households live in buy-to-let properties. They are worth well over £120 billion, contributing £30 billion to the economy each year, according to ARLA.

In the mid 1990s less than half of the private rented sector was owned by individuals. Now they own two thirds of it. ........"

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It also reads:

"The changes have benefited tenants, too. Competition between landlords has pushed up standards and pulled down rents. Buy-to-let has helped to revive parts of the housing market and boost inner-city regeneration.

The demise of buy-to-let has been forecast at least once in the past ten years. But predictions that landlords will sell in droves when the market slows have so far failed to materialise. Instead, buy-to-let is expected to grow further as demands for rental homes increase. The rise in single-person households, immigration and the demise of the first-time buyer, as more young people are priced out of the property market, is good news for landlords."

I wonder whether we could get a similar effect with big institutional investors rather than individuals?

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these guys must have a degree in ENRONOMICS.

courses are available at all good universities and available through mass-media.

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Instead, buy-to-let is expected to grow further as demands for rental homes increase. The rise in single-person households, immigration and the demise of the first-time buyer, as more young people are priced out of the property market, is good news for landlords."

Wait a minute doesn't that suggest that yields will continue to fall as prices continue to rise making the investment less attractive rather than more.

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Guest Shedfish
the demise of the first-time buyer, as more young people are priced out of the property market, is good news for landlords
Wait a minute doesn't that suggest that yields will continue to fall as prices continue to rise making the investment less attractive rather than more.

damn right!

some of the arguments used are risible

see also the 'better buy before they become unaffordable' / 'capital growth is my pension' fuzzy nonsense

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Guest wrongmove
What and amazing bit spin and what a pluff piece on private rentals.

I wonder who wrote it! :lol:

Also from The Times - this one's quite bearsish, therefore totally spin free B)

‘Once you’ve gone wrong, it’s hard to say, Oops’

"Rob Windsor is confident that his tax affairs are in order. He was in the Army when he let his first property to students in the Chester area in 2000. However, he found the level of administration involved in owning multiple properties was overwhelming and retired from the Army in 2003 to become a full-time landlord.

He now has a portfolio of 23 properties, a mix of flats and houses. His wife, Laura, undertakes the basic bookkeeping before the records are sent to an accountant who prepares their income tax returns.

The couple take out interest-only mortgages through a specialist buy-to-let broker to ensure that they can offset repayments against the tax paid on their rental income. Mrs Windsor attends courses run by Revenue & Customs to keep on top of legal changes.

“When it’s your full-time job you read a lot about it,” Mr Windsor says. “It’s difficult as every place is different, and there is a lot of administration. I think some people fall into it and aren’t aware of the self-assessment tax system, which is very dangerous. Once you have gone down the wrong line for a few years, it would be quite hard for some to go to the Revenue and say, ‘Oops’.”

Shiran Jayasinghe represents a different side of the buy-to-let market. A part-time landlord, he is a full-time employee with the NHS. He began buying properties five years ago as an investment for his future, and now has three flats in London. However, he finds the tax system too complex, and is considering selling up.

“Because of interest rates and the tax, when you think about it, the investment doesn’t make much of a return.” "

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