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Dr House

Cgt And Btl - The Coming Surge Of Supply

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Money Morning today highlights the potential impending deluge of sales from BTLers with established portfolios. Basically, if CGT rules saty as planned, the HPC will gather incredible pace after April as all the BTL properties come on the market to take advantage of the 18% tax - before the obvious coming crash.

They think it is possible Darling will see this and try to delay it in relation to BTL - but my bet is on their total incompetence and I think it may be one public u-turn too many for the Eyebrowed Muppet (given he is going to water down non Doms).

Keeping the buy-to-letters waiting

A more attractive option (for the Chancellor at least) would be to delay the capital gains tax changes, perhaps for “further consultations”. At the moment, if the CGT change goes through, property investors (on whom the market boom has been built) will see the tax on their profits fall from 40% to 18%. Many buy-to-let investors must be itching to cash in, and just waiting for the change before putting their portfolio on the market. I know this is true, because property pundits such as Stuart Law at Assetz are screaming for the CGT changes to be delayed, clearly worried about the impact on prices.

If the Chancellor does indeed put this change off, without scrapping it entirely, he could dangle the carrot of an 18% rate in front of property investors for another year. That might encourage them to hold on to their properties for longer than they’d otherwise deem wise, and prevent a massive fire sale this spring. The move would also garner plaudits from pressure groups such as private equity investors and wealthy entrepreneurs who have condemned the changes.

So if there’s one measure I can see coming out of this Budget, it’s that buy-to-let investors will find that come April 6th, they’ll still have to pay 40% on any profits they make from selling their properties.

By the way, I would suggest selling them anyway. After all, you can only get charged CGT if you’ve actually made a profit.

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So, the BTL industry is "screaming" for high taxes to be maintained ?! (and stamp duty ? "er no, please cut that one")

This highlights how perilous the market must be, despite those "strong fundamentals" we keep hearing about

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So, the BTL industry is "screaming" for high taxes to be maintained ?! (and stamp duty ? "er no, please cut that one")

This highlights how perilous the market must be, despite those "strong fundamentals" we keep hearing about

I believe its the taper relief they are more concerned about?

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The new rules mean people may want to wait until April before selling.

Surely in a market where average time to sale is rocketing, we would expect anyone who wants a sale in April to have their house on the market already?

I don't see why we would therefore see a surge in April.

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The new rules mean people may want to wait until April before selling.

Surely in a market where average time to sale is rocketing, we would expect anyone who wants a sale in April to have their house on the market already?

I don't see why we would therefore see a surge in April.

Because anyone with an IQ over 50 will want to see the new rules enshrined in LAW before they make a move. Governments change their mind midstream? Never!

For the longer-invested BTLers the difference is only from 24% after taper relief to 18% (assuming th sale pushes them into the higher tax bracket, as it probably will) which is not enough to overcome the commercial considerations. The people who might want to get out quickly are those who invested c 5 years ago, who currently have a largish paper gain, but not much entitlement to taper relief.

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You know, I wonder if we give the recent wave of amateur BTL landlords too much credit for commonsense?

To be consciously holding off putting your property up for sale needs a recognition that there is an urgency to sell it and realise the capital gains. If you realise that there is a need to sell it quickly, you have surely come to the conclusion that property prices are going to decline considerably in the near future. If you have concluded that there will be a considerable decline, saving the difference between 18% and 40% will not be as much of a motivator as the difference between a capital gain or a capital loss.

I think that most of the newcomers to the BTL party have simply not "got it" yet. I work with several and they are still banging the "in it for the long term" mantra and have given no indication that they have even considered selling up. I'd be surprised if one or two of them have even heard about the proposed changes to CGT!

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  • 293 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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