Property crash, just maybe it really is different this time

[Hancock]

If you are a basic rate taxpayer you can still offset mortgage interest payments.

You are a fucken bore the way you constantly claim there is nothing in the works to put house prices up.

You have used MMR since 2012, and the other banking regulation you hung your hat on for years (i forget its name)

Yet here we are.

[Wight Flight]

46 minutes ago, Fully Detached said:

Having had a day to think it over, I think this is the aim rather than to promote an increase in prices, although it could undershoot or overshoot significantly. If these lockdowns ever do end, there's going to be an absolute fuck load of divorces, and an absolute fuck load of broken households who now need two houses rather than one. Massive increase in sales combined with economic uncertainty and job insecurity equals price discovery and does not bode well for house prices, so I reckon that's the driver for this.

Add in a SDLT holiday extension, and you've got pretty much anybody being able to raise a 5% deposit for a tax payer backed mortgage. But since I mentioned overshooting...

And since you don't have to be a first time buyer, a couple with 30k can buy 2 x300k houses. Scary...

Not to mention, if the figures are to be believed, an awful lot of inheritances that haven't been eaten up by care home fees.

[Green Devil]

1 hour ago, Wight Flight said:

Not to mention, if the figures are to be believed, an awful lot of inheritances that haven't been eaten up by care home fees.

Generally theres enough left over to pay at least deposit on a second home at least. Cheap loans with gold plated pensions coming later, you dont have to be rich to afford a second home at all. Its very easily within reach of the late 40s with a big morgage already if they are the twin working household. 

[Noallegiance]

2 hours ago, Fully Detached said:

If these lockdowns ever do end, there's going to be an absolute fuck load of divorces, and an absolute fuck load of broken households who now need two houses rather than one.

I'm one little person and I know four marriages that have broken in the last 9 months.

[Fully Detached]

9 hours ago, Noallegiance said:

I'm one little person and I know four marriages that have broken in the last 9 months.

Yep. Lots of demand, and if that demand came at the same time as tax threshold freezes, mass redundancies and a rising cost of living, then house prices would have plummeted.

Substitute the word house for "loaf of bread" in the above sentence and people would rejoice at it.

[spygirl]

13 hours ago, Hancock said:

If you are a basic rate taxpayer you can still offset mortgage interest payments.

You are a fucken bore the way you constantly claim there is nothing in the works to put house prices up.

You have used MMR since 2012, and the other banking regulation you hung your hat on for years (i forget its name)

Yet here we are.

No.

You get a 20% tax credit. thats all. Youve got to earn that money outside of rentals.

If you are a basic rate tax payer then youll struggle to remortgage  an IO BTL.

Banks are refusing to to extend BTL loans to people earning ls than 50K.

And anyone earning more than 50k wont touch high leveraged rentals. which is the only way you could get a yield with IO BTL.

You also risk having the rent + income you into a tax band or kill off tax credits entitlement.

This is a serious issue for a lot IO BTLers.

Here Barclays BTL site:

https://resources.barclays.co.uk/mortgage-calculators/buy-to-let-affordability-customer

 

[Wight Flight]

1 hour ago, spygirl said:

No.

You get a 20% tax credit. thats all. Youve got to earn that money outside of rentals.

If you are a basic rate tax payer then youll struggle to remortgage  an IO BTL.

Banks are refusing to to extend BTL loans to people earning ls than 50K.

And anyone earning more than 50k wont touch high leveraged rentals. which is the only way you could get a yield with IO BTL.

You also risk having the rent + income you into a tax band or kill off tax credits entitlement.

This is a serious issue for a lot IO BTLers.

Here Barclays BTL site:

https://resources.barclays.co.uk/mortgage-calculators/buy-to-let-affordability-customer

 

This is really bloody stupid.

I just put in some numbers - £400k property, my income £50k. BTL mortgage of £300k over 25 years and I got approved!

No way I would get that if I actually wanted to buy a place to live in myself.

[sancho panza]

12 hours ago, Noallegiance said:

I'm one little person and I know four marriages that have broken in the last 9 months.

Sad isn't it?

 

 

Anecdotally,firend has jsut rented a nice pad in Devon but at £1500pcm.Says the market there is hot.I suspect with people leaving London.

Banking system will struggle taking CRE lossess that are coming let alone a deflationary event in the Londinium hosuing market.

Think we're going to go like the US for a while,former hot markets empty out while former dour markets hot up.

 

[spygirl]

1 hour ago, Wight Flight said:

This is really bloody stupid.

I just put in some numbers - £400k property, my income £50k. BTL mortgage of £300k over 25 years and I got approved!

No way I would get that if I actually wanted to buy a place to live in myself.

I tried, using what a typical 50yo  - 50k income, ~500/maintenance, 5k CC, 800m rent.

Rejected.

These sites are guidance, just to filter out the Dont aste our times.

They'll think of a lot more reasons not to lend when you formally apply

[spygirl]

8 hours ago, spygirl said:

No.

You get a 20% tax credit. thats all. Youve got to earn that money outside of rentals.

If you are a basic rate tax payer then youll struggle to remortgage  an IO BTL.

Banks are refusing to to extend BTL loans to people earning ls than 50K.

And anyone earning more than 50k wont touch high leveraged rentals. which is the only way you could get a yield with IO BTL.

You also risk having the rent + income you into a tax band or kill off tax credits entitlement.

This is a serious issue for a lot IO BTLers.

Here Barclays BTL site:

https://resources.barclays.co.uk/mortgage-calculators/buy-to-let-affordability-customer

 

Ok, I'll try another way.

https://www.which.co.uk/money/tax/income-tax/tax-on-property-and-rental-income/buy-to-let-mortgage-tax-relief-changes-explained-atnsv0j6j782

This is good as the rent n mortgage are pretty much a close match to an udiot btler I know.

It's even worse when a LL crosses into high rate tax band.

 

 

[RJT1979]

On 28/02/2021 at 22:50, Noallegiance said:

I'm one little person and I know four marriages that have broken in the last 9 months.

They won't be able to afford to buy again. But their house will need to be sold.

[sleepwello'nights]

On 19/02/2021 at 16:17, Hancock said:

Im not from there so wasn't aware of the status, just seems like rural Southampton.  Soton is a absolute hole mind, i'd be unlikely to find a reason to ever visit there.

to get on a ship to leave? 

[sancho panza]

5 hours ago, spygirl said:

Ok, I'll try another way.

https://www.which.co.uk/money/tax/income-tax/tax-on-property-and-rental-income/buy-to-let-mortgage-tax-relief-changes-explained-atnsv0j6j782

This is good as the rent n mortgage are pretty much a close match to an udiot btler I know.

It's even worse when a LL crosses into high rate tax band.

 

 

thats a really good expalanation thar spy.

so on a situationw here there;s £700pcm in income and £600 per month in repayments,that's brutal non?

[sleepwello'nights]

11 hours ago, Wight Flight said:

This is really bloody stupid.

I just put in some numbers - £400k property, my income £50k. BTL mortgage of £300k over 25 years and I got approved!

No way I would get that if I actually wanted to buy a place to live in myself.

Isn't that your answer, buy a house to rent to yourself. Unless you become an enemy of the state a lender isn't going to ask you to prove that you are renting the house to a third party. 

[Wight Flight]

11 minutes ago, sleepwello'nights said:

Isn't that your answer, buy a house to rent to yourself. Unless you become an enemy of the state a lender isn't going to ask you to prove that you are renting the house to a third party. 

Mortgage fraud is a bit of a bugger.

I think some Tommy bloke discovered this.

[wherebee]

12 minutes ago, Wight Flight said:

Mortgage fraud is a bit of a bugger.

I think some Tommy bloke discovered this.

then rent it to a mate who rents you a room as a lodger.

[Wight Flight]

1 minute ago, wherebee said:

then rent it to a mate who rents you a room as a lodger.

Bigger issue is that you can't get a BTL mortgage unless you already own a home.

 

[sleepwello'nights]

Just now, Wight Flight said:

Bigger issue is that you can't get a BTL mortgage unless you already own a home.

 

Perhaps Rishi will be your saviour with a government guaranteed mortgage. 

[Wight Flight]

9 minutes ago, sleepwello'nights said:

Perhaps Rishi will be your saviour with a government guaranteed mortgage. 

I'm actually hoping he doesn't. If he relaxes MMR rules prices will rocket.

[King Penda]

On 27/02/2021 at 15:59, satch said:

Satch’s Exclusive Special Budget Report – An Estate Agent Rights

 

Property prices last year rose by a stunted 8.5 percent instead of the usual 10 or 15 percent. This is understandable due to the massive pan-global plague coronavirus pandemic and the millions of infections caused by the Covid virus.

But Nik Nak has come along from obscurity to save Britain and soon his policies will be adopted by every country throughout the globe. We, in this great country, lead the way in running an economy in times of trouble as we do in developing vaccines to save humanity from extinction. Our brave chancellor has identified the two major economic problems in this crisis that are holding us all back and will address both of them with a dramatic and forceful budget.

If you ask most people what problems exist with the economy going forward they would list; unemployment, people on furlough, business rates, lack of money velocity, more jobs losses on the horizon for millions. This is what most people think and as usual, most people are wrong. Nik Nak is wise and has consulted with estate agents who are proper financial experts and identified the two real issues that are holding back the recovery. Firstly banks and lenders are demanding 10 or even 20 percent deposits to buy a house and secondly they are also reluctant to lend hundreds of thousands of pounds to people who may lose their jobs and livelihood.  Nik Nak has slashed the percentage needed for a house deposit to just five percent and has guaranteed mortgages up to £600,000 with government cash so the banks can lend freely without any fear of losing money. Once the property market is back up and running the rest of the economy will follow.

In 2021 property prices have never been higher and will rise even more under the leadership of this great chancellor who will be, I am sure the next Prime Minister. Expect property prices to rise by at least 15 percent in 2021 and another 20 percent in 2022 due to these two fantastic initiatives from Nik Nak. So buy now, buy one or even two. Don’t miss out. Buy Now. Prices are set to soar.

 

 

Has insane has it sounds if I could I’d buy a bigger house and take a mortgage on at 55 I’m confident I’m my ability to pay it back because I can adapt and im

used to low paid jobs and that’s on one wage but I am talking Stoke and I could in theory put 90k down has a deposit 

[King Penda]

On 28/02/2021 at 22:13, Green Devil said:

Generally theres enough left over to pay at least deposit on a second home at least. Cheap loans with gold plated pensions coming later, you dont have to be rich to afford a second home at all. Its very easily within reach of the late 40s with a big morgage already if they are the twin working household. 

Totally correct if the x had not gone to bark at the moon I could have put down say 30k on a 50/60k terrace got a lodger than pay that 30k max mortgage off at 1k a month and that’s on just above minimum wage I would have to cash a small pension to do  it . But look at the maths rent 400/425 add a lodger in my paid for house 275/300  with little debt I would have slaughtered buying another terrace in 2 years 3 if I was fucking about 

Edited March 2, 2021 by stokiescum

[wherebee]

I just had an estate agent knock on the door looking to see if we wanted to sell.  Never had that before in my life, especially round here. 

Surely that's an indication of the wall of money out there looking for a home?

[King Penda]

58 minutes ago, Wight Flight said:

Bigger issue is that you can't get a BTL mortgage unless you already own a home.

 

Own or have a mortgage on different things imo

[spygirl]

7 hours ago, sancho panza said:

thats a really good expalanation thar spy.

so on a situationw here there;s £700pcm in income and £600 per month in repayments,that's brutal non?

Thats just the basic - tax /income /rental thing, which is bad enough.

When you mix in the reality, which includes tax credits/benefits, tax on rental and incomes and banks lending criteria, then its something like this:

- If you are a basic rate tax payer then you dont earn enough for the bank to give you a BTL mortgage 

If you already have one then you are stuck on BTL SVR until the mortgage ends or the house is repo'd - any mortgage payment miss is going to see the bank repo ASAP.

Then youve the problem with e rental  income affecting tax credits and child benefit.

Despite what people claim, IO BTL of the leveraged type was only appealed to people without a pot. As a well off bloke said when we listened to some IO BTL idiot spouting their BS on IO BTL - why in fuck would I take o that  level of leverage backed against my assets?

Again, as the example above shows, most IO BTL are only skimming a 100, 200 'profit' I know of few who are actually topping up the IO BTL mortgage.

From 2013 (this may sound a long time time ago but London profits have been falling since ~2015. The last 12 months has seen London rental income plummet and voids rise):

https://www.mumsnet.com/Talk/property/1931758-BTL-and-Tax-Credit

OP:

My parents offered me to give me a lump sum to help with getting a buy to let mortgage as an investment. (Can't get a residential mortgage as earning too little).
I am receiving Child and Working Tax Credit at the moment, not much though. I was wondering if anybody knows whether it will effect my tax credit having a buy to let mortgage and receiving rental income which will go 100% towards the mortgage. Any advice would be appreciated!

REPLY:

If it's a business that isn't making any money (the rent will only cover expenses such as the mortgage, agency fees, gas safety checks, repairs etc) then I suppose it doesn't affect your income. But until you have done your first self-assessment tax return (which I believe you will have to do, if you are receiving non-PAYE income), you won't be able to show that so you may well end up having your support docked.

I'm not sure that's entirely the point though: why would you rent out somewhere if you're very unlikely to make any money from it? What will happen when interest rates go up?

OP:

Good point. I am thinking long term that the tenants will pay off the mortgage for me. It is London based where house prices still rise too.

REPLY:

If you're paying off the mortgage then please bear in mind that only the interest part of the mortgage is tax deductible. So if the rent is, say, £1000 per month and the mortgage interest is £500 per month, that remaining £500 is viewed as income (obviously there may be other expenses that can be deducted too but the mortgage is likely to be the biggest allowable expense). Furthermore, at the end of the year, you may find that not only has this affected your tax credits but you will have to pay tax on any "profit" which may only be a paper one if you are pouring all the rent into paying off the mortgage.

REPLY2:

Just run away from this

You mentioned that you are on a low income, I wonder how you will be able to deal with tenants who build up arrears or voids in rental periods if money is a bit tight.

 

At this point a BTLer will start saying how these people dont understand BTL and property.

If the BTLer a blokey geezery type then  - only a nerd would respond like that i.e. try and do any maths and work out any tax due before investing - I was called that as some moron from the pub was on about investing in something that offered a 50£/month 'profit'.

If its woman then theyll  usually start crying and going up about people putting her down. Or start ranting.

 

- If you are a higher rate tax payer - and anyone on an average income plus 2 or 3 IO BTL will find themselves on the higher rate then the outcome is even worse.

https://www.mumsnet.com/Talk/legal_money_matters/3494396-Rental-Income-and-Tax

I'm looking for some advice - DH and I have become accidental landlords and we are trying to wade our way through all our obligations.

I understand we need to complete a tax return now but I'd appreciate some clarification. Firstly the details (not exact figures and trying to remain vague for privacy reasons)

- We still have 10 years + outstanding mortgage - our repayments are around £300 per month.

- We will get just over £4000 a year in rent.

- We are paying the factoring costs of approx £300pa

- My DH pays 40% tax, I pay 20% (we are in scotland)

When we add up the mortgage repayment and the factoring costs we are actually going to be left with no profit at all from the rent each month. It was never our intention to make money from it, we are just struggling to pay both the rent on our new property and a mortgage at the same time.

So my question is; how much tax are we likely to have to pay on the rent? How out of pocket are we still going to be??

TIA

The slow dawning realisation that they are not goign to get rch. The opposite in fact.

 

 

 

 

[spygirl]

6 hours ago, wherebee said:

I just had an estate agent knock on the door looking to see if we wanted to sell.  Never had that before in my life, especially round here. 

Surely that's an indication of the wall of money out there looking for a home?

He'll be saying hes a ex offender from boro and would you like to buy some household cleaning products.

(Im guessing you are in Oz so its a bit long for transit full of smoggies to travel).

Ive not had the postcard with  'Mrs A was trying to buy a house in your road but he sale fell thru.

Or

We've recently sold xx house. Would you like to sell yours?

The former does not work as I know which houses are sold or not.

The latter normally fails as the sale drops thru after the postcard.

The lack of postcards shows that EAs have no free cash at all.