Wednesday, May 9, 2007

Another cut in BTL profit margins

'Green' tax to hit buy-to-let property owners

This places another obstacle in the way of BTL-ers - I like it. I wonder how the erosion of profit margins will effect the BTL market which seems extremely robust at the moment.

Posted by talking rot @ 07:55 AM (478 views)
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4 thoughts on “Another cut in BTL profit margins

  • tyrellcorporation says:

    Three of my mates have recently bought BTL properties and two of them openly admitted they were going to be losing money on the rent side of things. They were 100% sure though that the capital growth alone will mean they’re onto a winner!

    This is what we are up against.

    A £200 certificate required possibly every 3 years won’t put anyone off.

    On a depressing note; in Exeter a house near me sold for £235k about 18 months ago, it’s just gone on for £315k. I need to be earning over £80k a year just to keep up with HPI in Devon!

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  • Matt_the_hat says:

    Are we all naive enough to believe the Home Information Packs are there to speed up sales? Everything in these packs have been diluted except the real reason; energy efficiency certificates. Don’t worry the government has a good reason for this – saving the planet – and it will be at everyone’s (home owners and tenants) expense!!

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  • This is no big deal as far as the BTL set are concerned – more hassle than anything else.

    What is a big deal is that for the typical BTL mortgage holder, the increased cost of quarter point rate rise translates into a 5% rent rise if they are to break even.

    When rents rise, some tenants feel the pinch and start sharing – it doesn’t take much to cut demand…

    So rents can’t rise fast enough, making the BTLers even more dependant on capital growth. This further reduces the percentage returns from letting, requiring even more house price inflation for the BTLers to keep buying, which continues in a vicious circle until at some point HPI can’t keep up and the BTL brigade stop buying…

    Then the market implodes..

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  • Seenitallbefore says:

    It’s obvious the real reason the government are obsessed with pushing these packs through into the housing game is that they will attract a lovely slice of VAT at 17.5% on each and every one of them. Nothing to do with speeding up the market and everything to do with speeding up Gordons ever increasing slice of a dwindling cake.

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