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Property Being Withdrawn From Market?

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I'm trying to identify whether landlords are going to postpone cashing in their investment properties for a few months for reduced tax.

Has anyone seen signs of property being withdrawn from the market? I guess it might be interesting to compare local property pages over the next few weeks. If "vacant possession" and "no forward chain" properties mysteriously disappear then this might be happening.

Why do I want to know this? Well, if landlords are stalling their sales to avoid tax, we may well see a glut of properties hit the market in April. Crash postponed until then.

Anyone got some annecdotes?

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My attitude is that recent btl'ers who have decided they arent in it for the long term really are the only ones to benefit from the change. As recent buyers they will have already overpaid for the property so any sale attempt will involve them trying stubbornly to get top bubble dollar to cover their costs and walk away like a real man. They will hold for the CGT giveaway but these properties would not sell anyway and will not be missed.

On the flip side you will have long term peeps with lots of equity having bought in the middle ages who now see an 8% saving as a good reason to sell before next april. They have seen a lot of upside, may now regard the market as at a peak and will be happy to make a quick sale at a "reasonable" price.

Overall l say prices will go down because of it. This will be most clearly indicated by asking prices dropping rapidly in the first instance. Overall market supply is going to go down for OTHER reasons, people expecting market to rebound like a demented labrador and HIPS. I doubt you would ever be able to make a clear link, but as a stand alone factor l suspect for every BTL holding off for a brucie CGT bonus, there's another old timer flogging so <> no change.

To summarise overall impact from CGT change in isolation:

Asking prices drop

Supply unchanged

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Guest Popalot
My attitude is that recent btl'ers who have decided they arent in it for the long term really are the only ones to benefit from the change. As recent buyers they will have already overpaid for the property so any sale attempt will involve them trying stubbornly to get top bubble dollar to cover their costs and walk away like a real man. They will hold for the CGT giveaway but these properties would not sell anyway and will not be missed.

On the flip side you will have long term peeps with lots of equity having bought in the middle ages who now see an 8% saving as a good reason to sell before next april. They have seen a lot of upside, may now regard the market as at a peak and will be happy to make a quick sale at a "reasonable" price.

Overall l say prices will go down because of it. This will be most clearly indicated by asking prices dropping rapidly in the first instance. Overall market supply is going to go down for OTHER reasons, people expecting market to rebound like a demented labrador and HIPS. I doubt you would ever be able to make a clear link, but as a stand alone factor l suspect for every BTL holding off for a brucie CGT bonus, there's another old timer flogging so <> no change.

To summarise overall impact from CGT change in isolation:

Asking prices drop

Supply unchanged

Great post DH. Also, it made me think that the old handers will be more likely to take a drop in sale price (apart from the fact that they have made so much anyway) of up to 8%..... if they are trying to sel before April, as they will be avoiding the hike from 10-18% Warped logic maybe...but people think oddly when it comes to panicing over money.

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Great post DH. Also, it made me think that the old handers will be more likely to take a drop in sale price (apart from the fact that they have made so much anyway) of up to 8%..... if they are trying to sel before April, as they will be avoiding the hike from 10-18% Warped logic maybe...but people think oddly when it comes to panicing over money.

The old timers probably know what it was like in 89 and will fancy the idea of a war chest to dive back into the market a bit lower down.

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My attitude is that recent btl'ers who have decided they arent in it for the long term really are the only ones to benefit from the change. As recent buyers they will have already overpaid for the property so any sale attempt will involve them trying stubbornly to get top bubble dollar to cover their costs and walk away like a real man. They will hold for the CGT giveaway but these properties would not sell anyway and will not be missed.

On the flip side you will have long term peeps with lots of equity having bought in the middle ages who now see an 8% saving as a good reason to sell before next april. They have seen a lot of upside, may now regard the market as at a peak and will be happy to make a quick sale at a "reasonable" price.

Overall l say prices will go down because of it. This will be most clearly indicated by asking prices dropping rapidly in the first instance. Overall market supply is going to go down for OTHER reasons, people expecting market to rebound like a demented labrador and HIPS. I doubt you would ever be able to make a clear link, but as a stand alone factor l suspect for every BTL holding off for a brucie CGT bonus, there's another old timer flogging so <> no change.

To summarise overall impact from CGT change in isolation:

Asking prices drop

Supply unchanged

Firstly the emboldened text part is just plain wrong (getting it mixed up with business assets I think). Secondly, there is NO incentive for any BTLer to sell now before April (someone mentioned pensioners in an earlier thread but I still cannot see that). What the market needed was for the BTlers to jump ship NOW when the market is sensitive, not in April when (very much more often than not) people are more upbeat about the market. True, there will be a flood of property onto the market in April, that would have affected prices very much now, however in April it will be another matter.

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So all BTLers subject to capital gains will be better off waiting regardless how long they have held the property?

I might need to see the figures if you are asserting that, thanks.

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My opinion is that the CGT changes will slightly reduce the extent of the crash, unfortunately. This is, in my opinion, because although yes long-term BTLetters will want to sell before April to take advantage of their taper relief, many of them will then go on to buy new properties to start to take advantage of the new lower rate going forward. So a "bed and breakfast scenario is likely, where they sell one day and buy back the next"

In addition to that, recent BTLetters will be motivated to wait until April before selling if they see prices start to decline. However in my opinion most RECENT BTLetters are stupid in any case, have probably never heard of CGT, and will be panicked into selling beforehand by the recent declines in prices and change of sentiment.

Lets just hope that they don't consult their financial advisers before taking that selling decision!

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Firstly the emboldened text part is just plain wrong (getting it mixed up with business assets I think). Secondly, there is NO incentive for any BTLer to sell now before April (someone mentioned pensioners in an earlier thread but I still cannot see that). What the market needed was for the BTlers to jump ship NOW when the market is sensitive, not in April when (very much more often than not) people are more upbeat about the market. True, there will be a flood of property onto the market in April, that would have affected prices very much now, however in April it will be another matter.

Large, long term landlords registered as businesses have taper relief applied to their original purchases and thus do potenitally have CGT gains to be made by selling now rather than later. Johnny come lately BTL's get the benefit of CGT reductio post April 5th. The long termers have the opportunity to beat the deadline and get out before the Johnnys flood the market in April, we'll see how many take the extra tax break and the opportunity.

There's a lot of BTL already underwater - in particular in new build, the mortgage rates are rising and proeprty sitting (which most of them are doing becuase there are no tenants to fill swathes of BTL fodder developments) is making bigger monthly losses as a result. Many of these will have to sell the whole CGT is not applicable.

This is just the beginning, there's a lot more dirty washing to be aired and a lot more mortage backed security losses to be booked.

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So all BTLers subject to capital gains will be better off waiting regardless how long they have held the property?

I might need to see the figures if you are asserting that, thanks.

"All" is an over-statement.

Indexation and Taper Relief (at 40% CGT) could be better than a flat 18% CGT rate.

If the gain (tapered or non tapered) is only subject to 10% or 20% CGT rate(s).

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I think it depends on the individual BTLer and his current financial situation and attitude to the housing market. If they have the frighteners up them either through their current financial situation and/or having a bearish outlook to the immediate future they may just cut and run when they have the chance. Not everywhere in the UK has had such high house prices / hpi as London and for many BTLers the difference in CGT between now and April may not be greatly significant.

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Some real nonsense being posted on here as usual.

Most landlords hold their properties as non-business assets.

Anyone who bought pre April 98 can now get 9 years taper relief plus a bonus year making the maximum available of 10 years.

They will pay tax at 24% (ie 40% tax x 60% relief) on any chargeable gain.

Until the change just announced, they would gain no further relief by delaying a sale any longer.

Now they will benefit by delaying the sale until next April and paying only 18% tax.

On the flip side, if they sell before April 2008, they will gain from indexation relief which can be substantial. After April 2008, this relief is no longer available.

On balance, I would say that cases should be looked at on an individual basis and the decision will be marginal.

For those that bought since April 1998, they will currently hold between 0 and 9 years relief and will pay between 40% and 27% tax on a chargeable gain if they sell now. As they are not eligible for indexation relief anyway, a delayed sale (based on tax alone) makes sense.

Overall, based on the non-business tax situation, sales will be delayed.

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Sean

Most landlords hold their properties as non-business assets.

True, and the ones that don't tend to have portfolios verging on the very large indeed. For them a few percent extra CGT over their portfolio is probably worth a fortune.

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Some real nonsense being posted on here as usual.

Most landlords hold their properties as non-business assets.

Anyone who bought pre April 98 can now get 9 years taper relief plus a bonus year making the maximum available of 10 years.

They will pay tax at 24% (ie 40% tax x 60% relief) on any chargeable gain.

Until the change just announced, they would gain no further relief by delaying a sale any longer.

Now they will benefit by delaying the sale until next April and paying only 18% tax.

On the flip side, if they sell before April 2008, they will gain from indexation relief which can be substantial. After April 2008, this relief is no longer available.

On balance, I would say that cases should be looked at on an individual basis and the decision will be marginal.

For those that bought since April 1998, they will currently hold between 0 and 9 years relief and will pay between 40% and 27% tax on a chargeable gain if they sell now. As they are not eligible for indexation relief anyway, a delayed sale (based on tax alone) makes sense.

Overall, based on the non-business tax situation, sales will be delayed.

Sean, you may be an accountant as you have captured this just about spot on as I know the rules (yes, I had not taken into account indexation relief before 1998 so that is probably a mitigating factor for landlords of more than 9 years standing. If it were possible to condense your answer though might it be "bought before 1998 possibly benefit from selling, bought after this date almost certainly benefit from holding on (provided no scams such as moving in to property employed)".

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Some real nonsense being posted on here as usual.

Most landlords hold their properties as non-business assets.

Anyone who bought pre April 98 can now get 9 years taper relief plus a bonus year making the maximum available of 10 years.

They will pay tax at 24% (ie 40% tax x 60% relief) on any chargeable gain.

Until the change just announced, they would gain no further relief by delaying a sale any longer.

Now they will benefit by delaying the sale until next April and paying only 18% tax.

On the flip side, if they sell before April 2008, they will gain from indexation relief which can be substantial. After April 2008, this relief is no longer available.

On balance, I would say that cases should be looked at on an individual basis and the decision will be marginal.

For those that bought since April 1998, they will currently hold between 0 and 9 years relief and will pay between 40% and 27% tax on a chargeable gain if they sell now. As they are not eligible for indexation relief anyway, a delayed sale (based on tax alone) makes sense.

Overall, based on the non-business tax situation, sales will be delayed.

Thanks for making the effort to post.

Nonsense postings are important to provoke an accurate if exasperated post by passing experts that might otherwise not bother :)

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Pimperne1, I am merely someone that has slowly acquired property over 20 years and wanting to understand the tax situation for each one. I sold one recently and did the calulations for my tax return so was quite up-to-date. I have posted mainly on the overseas section and one of the issues I believe strongly in is that you must understand your exit strategy before buying and on an ongoing basis. Obviously, this includes understanding the tax situation. Overseas investors tend to ignore this and get into a lot of trouble - not so much in relation to the tax but in overlooking who on earth would buy their off-plan property 3 years down the track when they've got a low yield and people don't want to live there. Yes I am an accountant but have never worked as one and, yes, I agree with your summary sentence. In my case, I paid no tax on a nominal (pre-expenses) £83k gain this year when selling an old property. That would not be the case next year and, using the back of an envelope, it would cost me about £14k tax next year. I can't be sure because there are other reliefs such as that for having previous private residence. Does anyone know if the Government has covered it all yet or will it follow in consequential changes and updates, driven by their internal think tank (The Tories) and the media?

Dabhand, I get the message. My post was equally designed to provoke a response! :)

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