Saturday, Jul 11, 2015

MSW digs out some interesting snippets from budget

FT: Budget may have big effect on house prices in the long term

Changes in taxation and allowances make BTL a much worse proposition.

Posted by letthemfall @ 10:55 AM (8869 views)
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31 Comments

1. bidin'matime said...

Great article, letthemfall, and thanks for posting it - but unless you're a subscriber, the link doesn't get you the full article - took me a while to track it down. When anyone posts an FT article, it would be useful to include a section of the text in the commentary, which readers can Google, to avoid having to sift through numerous links to FT index pages, which then produce the same problem when you link from them (probably set up by the FT to make it harder to 'land' on the actual article).

Non-subscribers can find it by Googling this bit:

"new investors might think twice before getting in. It will be harder for them to get mortgages and now that buy-to-let is identified as a tax raising target, who’s to say that the 20 per cent relief won’t go too? "

Saturday, July 11, 2015 12:35PM Report Comment
 

2. nubbers said...

Interesting workaround bidin'matime. I was able to read the article simply by Googling your text. Thanks.

I have noticed something in the last couple of days. People that I have talked to, who are likely to be affected by the latest budget, seem to be totally unaware of just how much they are going to be affected. One, a contractor who now has a buy to let, is going to get 2 big tax hits and possibly some other minor hits. I am pretty sure that it is now in his best interest to sell up, but it could be a while before he realises.

Saturday, July 11, 2015 03:15PM Report Comment
 

3. letthemfall said...

Searching title (with FT added when necessary) links to article okay.

The changes are coming in gradually, so may take a while to have an affect. Apparently there is a get out - btl within a company. But that means double CGT, a put off even to the naivest blter, who in any case won't want to mess about with all that.

Saturday, July 11, 2015 03:30PM Report Comment
 

4. bidin'matime said...

@3 - yes, moving property into a company will trigger CGT, but buying within the company in the first place has CGT advantages, being relief for inflation ('indexation relief'), which means that your sale price is compared to the inflation adjusted purchase price - something that was withdrawn for all but limited companies years ago.

However, the new dividend tax then scuppers the withdrawal of the net gain from the company - so it would only really work if it was a 'forever' investment (eg pension planning). But yes, the admin is a lot more.

As an accountant I should declare an interest - some new tax planning to get my teeth into! (And some CGT work if people do sell). Well, we've all got to make a living...

Saturday, July 11, 2015 07:05PM Report Comment
 

5. clockslinger said...

Please excuse me slinging my clock this thread, but sadly some (I assume Tory) milquetoast unhandle a political opinion robustly stated reported me to the moderator fascists and I can no longer post on the normal forum.
I saw the forum article about Ian Duncan Smiths blue sky thinking on welfare. Read it and watch this...

http://www.hangthebankers.com/how-greece-was-robbed-by-the-bankers/

We apparently don't need the help of the IMF terrorists here in UK as we grow our own and hot house them in our very own political parties!
One Nation....Alienation!

Sunday, July 12, 2015 02:59PM Report Comment
 

6. killer bunny said...

Thx bidin' re FT workaround.

Companies can't do any of this as they can;t borrow easily for BTL. Tax or not tax, it's a non-starter for probably 95% of BTLers. See 50 pages of thread in forum

Sunday, July 12, 2015 03:18PM Report Comment
 

7. Pink said...

Don't link to the FT pay site, nobody has or wants an account with them.

Sunday, July 12, 2015 03:46PM Report Comment
 

8. libertas said...

Won't matter a jot, because this boom market is driven by global capital flows that UK Govt has no control over.

A bad ending to Greece followed by a cascade to other Countries will cause capital to flood into the UK and USA, precipitating lower interest rates. We are already seeing a flood of Greek buyers in London. I have said, look out for Greek and Turkish areas, like, from Wood Green to Edmonton Green for an influx, with of course wealthy Greeks buying up prime London.

But it will not only be Greeks. Many others will move to London for it being a safe haven from what looks like a protracted period of woe within the Eurozone. Simply, this crisis cannot be solved other than by disintegration, because the EU Bureaucracy is non-democratic, there is no political union, and most importantly, no debt or fiscal union. The EU will attempt to use this crisis to bring about these things, but I fear it is having the opposite effect of putting nitrite under the Eurosceptic movement.

In particular, if this keeps going, Cameron may not be able to provide any change that would appease the public and lead to a Yes vote.

Sunday, July 12, 2015 08:22PM Report Comment
 

9. mister ed said...

@7

You tell 'em, Libby.

All your predictions come true.

Especially that stuff about 3% wage rises leading to 10.5% annual house price growth.

Sunday, July 12, 2015 09:34PM Report Comment
 

10. reticent said...

@7 With, say, 3 bank accounts and a €60 withdrawal limit, those Greeks will have a £80k deposit for a 2-bed in zone 2 towards the tail-end of next year, provided they don't need to spend money on anything else in the meantime.

Monday, July 13, 2015 07:26AM Report Comment
 

11. britishblue said...

Libby@7 you are a few years behind. The pinnacle of the European hot money was when Cyprus went bust. The hot money is waiting for a individual bad end to Eurozone countries and then ready to flow back. If Greece does goes bust and defaults it will be debt free and with a highly depreciated currency will be a great opportunity for the hot money to flow back once it has stabalised and they trust a new government not to over tax them. You could probably pick up a beach side hotel for less than a 2 bed flat in a tower beside the river in London. and if you are Greek you will want to take advantage of this.

Re the changed to buy to let. I have noticed whenever a government find a place for more tax or more revenue they just keep going. Look at the students. .It would have been incomprehensible 10 years ago that the would have to pay 9k a year for their university fees and they are all voting age. The givernement are not likely to lose many voters on this as they will be aware that now the change has been made if Labour get in, in the future they will probably accelerator it.

Monday, July 13, 2015 09:01AM Report Comment
 

12. reticent said...

@10 He said it himself. He couldn't remove the deduction entirely because people will have recently made investment decisions based on it.

It's only a matter of time...

Monday, July 13, 2015 09:48AM Report Comment
 

13. icarus said...

@7 - UK government no control over global money flows into UK/London property? It controls the level of taxation, the degree of tolerance for money laundering and tightness/laxity of rules for disclosing property ownership as well as the City's relationship with 'British' territories like BVI acting as boltholes for iffy money.

Monday, July 13, 2015 10:51AM Report Comment
 

14. Cheesypeas said...

@libertas what boom? And are you aware of the capital flight from London over the last 12 months?

And with respect to the market, it is driven by sentiment at the margins... Sentiment is on the downside with changes in stamp duty, nom-dom status, CGT for foreign investors, cuts in housing benefit. And the what has happened to the market? London prices have been flat from Q3 2014. They remain propped low interest rates, and limited supply of houses for sale. Conclusion - no crash, no boom in the short-term i.e. the next 12 months. There are too many variables in the medium term, of course we can speculate on the upside or downside.

Monday, July 13, 2015 12:44PM Report Comment
 

15. cheesypeas said...

@libertas what boom? And are you aware of the capital flight from London over the last 12 months?

And with respect to the market, it is driven by sentiment at the margins... Sentiment is on the downside with changes in stamp duty, nom-dom status, CGT for foreign investors, cuts in housing benefit. And the what has happened to the market? London prices have been flat from Q3 2014. They remain propped low interest rates, and limited supply of houses for sale. Conclusion - no crash, no boom in the short-term i.e. the next 12 months. There are too many variables in the medium term, of course we can speculate on the upside or downside.

Monday, July 13, 2015 12:44PM Report Comment
 

16. mark said...

speaking to a couple of friends with BTL, they have spoken to accountants and have been advised to get out now before it is too late, their accounts both told them the same things it is only a matter of time before you have zero tax allowances for BTL

On another note Debra Meeden on dragons den last night said property was a bad investment idea and people are likely to get burned

what is she worth ? 50 mill ? 100 mill ? clearly she is someone to listen to

Monday, July 13, 2015 01:01PM Report Comment
 

17. i remember the 90`s said...

@14 I am trying to talk my 32 year old son out of BTL .He sees it as only way to get a nest egg for retirement I see it as potential disaster even more after reading from someone else what I been thinking going to have to try harder .!!!!!!

Monday, July 13, 2015 04:28PM Report Comment
 

18. icarus said...

@14 - Wayne Rooney is worth £70+ million, including money from business deals. Would you listen to him on any subject outside football?

Monday, July 13, 2015 05:40PM Report Comment
 

19. letthemfall said...

I must say I'm amazed how many people want to go in for the hassle of btl. It's a trend as much as anything. Retirement nest eggs are best built with diversified investments in shares (inside a SIPP), which at its simplest is a cheap global tracker fund. Much easier, and now probably better returns.

Monday, July 13, 2015 05:48PM Report Comment
 

20. mister ed said...

@17

Yup. Shares are far more liquid and much less hassle than dealing with a property.

Or as someone once said: "I've never had any of my shares call me on Sunday morning to tell me the toilet is blocked or the boiler has conked out." :-)

Monday, July 13, 2015 08:27PM Report Comment
 

21. mark said...

16 icarus - fair point but I'm not sure Debra meeden is famed for kicking a ball around like a hairy ape, whilst she is not the best looking dragon she earned her money using her brains :)

Tuesday, July 14, 2015 09:59AM Report Comment
 

22. icarus said...

mark, I did mention Rooney's business deals in addition to his footballing (yes, he was advised, but wasn't she?). Why do we have all this discussion of house prices if a pronouncement from her is all that's needed to settle the issue? I've known a few people who've made millions and usually they're not worth hearing on any subject outside the area where they made their money. Would you listen to Alan Sugar on 'The History of Capitalism'???

Tuesday, July 14, 2015 10:43AM Report Comment
 

23. mark said...

didnt rooney lose a wad in dubai ?

an uneducated ape taking advice from highly qualified accountants cant go wrong can they lol

I would rather listen to a self made multi millionaire than a hairy footballer who makes prestbury look tacky- I personally think she is right the property market in the UK is too damaged to make money from especially BTL - ok if you are a gangster and want to hide money property is the ideal place, so long as property stays empty and is maintained

shares are the ideal way for smaller investors to make money from, although hard work and doing jobs only immigrants will take will also give you a good income.

a house is not an investment it is a place to live in

Tuesday, July 14, 2015 11:09AM Report Comment
 

24. icarus said...

If he lost a wad in Dubai he must have made a lot of money elsewhere if he's worth over £70m.

Tuesday, July 14, 2015 11:25AM Report Comment
 

25. mark said...

yeh he is paid too much for kicking a ball

Tuesday, July 14, 2015 11:36AM Report Comment
 

26. icarus said...

The best-known footballers are worth a lot more than the sum of their football wages.

As for shares, I'd ask why the two main Chinese stock markets have dropped by 33% over the past month and what knock-on effects this could have - and why the Chinese government has taken so many desperate measures to suspend the problem at the probable cost of its longer-term exacerbation.

Let's ask the dragon.

Tuesday, July 14, 2015 11:59AM Report Comment
 

27. mark said...

china wont affect uk markets nor usa markets

Tuesday, July 14, 2015 12:53PM Report Comment
 

28. quiet guy said...

@Mark

http://www.theguardian.com/money/2015/jul/13/canary-wharf-flats-maine-tower-overseas-buyers

Hundreds of flats in Canary Wharf development sell in less than five hours

"The scramble for Maine Tower flats came just days after the launch of another Canary Wharf development also attracted queues for properties costing from £395,000.

Maine Tower’s developer, Galliard, said the off-plan sales were made at two events – one in London and one in Hong Kong – and half the properties sold went to overseas buyers keen for a stake in the UK market. Of 230 properties offered for sale, 208 were bought in the first four hours.

Chinese buyers are turning to overseas property as a safe haven for their money following a slump in the country’s stock market, and 50 properties were snapped up in Hong Kong. In London, 158 were taken by a broad range of purchasers. There were a number of Greek buyers, as well as other European investors and buyers from India and east Asia.

David Galman, sales director at Galliard Homes, said: "The volume and speed of sales at the Maine Tower launch was incredible and shows the confidence that buyers from both the UK and overseas currently have in the London market."

Tuesday, July 14, 2015 05:40PM Report Comment
 

29. mark said...

like I said china won't affect UK markets as in UK stock markets

Wednesday, July 15, 2015 02:48PM Report Comment
 

30. clockslinger said...

Mark, You are right as far as it goes. And as far as it goes is good news is good news and China, low growth Greece, well, that's all bad news that is good news as it triggers lots of government intervention to support the market, even if that means "measures" as subtle arresting folk who are willing to bet the Emperor really isn't wearing anything after all. What could possibly go wrong, eh?

Wednesday, July 15, 2015 07:24PM Report Comment
 

31. mark said...

nothing I'm quite happy making money from stocks :)

lots of bargains

Thursday, July 16, 2015 08:59AM Report Comment
 

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