How does Buy to Let END!

[Wight Flight]

34 minutes ago, InLikeFlynn said:

No doubt true, but I'm surprised at how few (0.57%) BTL mortgages are in arrears.

Not really. I would guess the underwater landlords are down about £250 a minth on average, and most for 12 months or fewer.

No LL is going to fuck his credit rating over £3k - no credit rating = no business.

Edited November 10, 2023 by Wight Flight

[InLikeFlynn]

5 hours ago, Wight Flight said:

Not really. I would guess the underwater landlords are down about £250 a minth on average, and most for 12 months or fewer.

No LL is going to fuck his credit rating over £3k - no credit rating = no business.

That makes sense... Lots of landlords subsidising their BTLs in the short term.

Presumably many of the mortgages will have been taken out some time ago and will be at low LTVs, whereas some of the more recent entrants will have much higher LTVs and a much higher risk of default. We shall see.

[spygirl]

Browsing and saw this.

https://www.onthemarket.com/details/13599524/?utm_source=home_co_uk&utm_medium=cpc&utm_campaign=home_feed

165k

New to the market is this 3 bedroom mid terrace on Gordon Street sold as an investment opportunity as a tenanted property. Situated in the Manor Road area, the property has been well maintained and has a rental income in the region of £6600 per annum. Call us now on[use Contact Agent Button] for further details.

Depending how you do your valuing but price = 100x monthly rent.

I make that 50k. Prob less as its tenanted.

,back to 2000 prices.

[Wight Flight]

9 minutes ago, spygirl said:

Browsing and saw this.

https://www.onthemarket.com/details/13599524/?utm_source=home_co_uk&utm_medium=cpc&utm_campaign=home_feed

165k

New to the market is this 3 bedroom mid terrace on Gordon Street sold as an investment opportunity as a tenanted property. Situated in the Manor Road area, the property has been well maintained and has a rental income in the region of £6600 per annum. Call us now on[use Contact Agent Button] for further details.

Depending how you do your valuing but price = 100x monthly rent.

I make that 50k. Prob less as its tenanted.

,back to 2000 prices.

Tenant clearly wouldn't allow interior photographs, and LL hasn't bothered to keep any.

Avoid.

[MightyTharg]

On 06/11/2023 at 15:09, spygirl said:

 

Since April 2020 buy-to-let landlords have had to pay tax on all their rental income, receiving a tax credit worth 20% of their mortgage interest repayments instead.

 

What does this mean? It’s a bit of a contradiction.

For example, if they are in the 40% income tax bracket and rent = mortgage, does that mean they pay 40% - 20% = 20% tax?

That would be a phenomenally good deal. Less than half of what a working person would pay.

[spygirl]

32 minutes ago, MightyTharg said:

What does this mean? It’s a bit of a contradiction.

For example, if they are in the 40% income tax bracket and rent = mortgage, does that mean they pay 40% - 20% = 20% tax?

That would be a phenomenally good deal. Less than half of what a working person would pay.

It's means that hmrc treat a typical btl as an investmentincome.

You'll get taxed on your entire income - earned income plus rental income minus the 20% tax credit.

That tax has to be earned I.e not rental.

1 hour ago, Wight Flight said:

Tenant clearly wouldn't allow interior photographs, and LL hasn't bothered to keep any.

Avoid.

I still think Scabby is one of the lessor known btl hot spots.

[Wight Flight]

2 hours ago, MightyTharg said:

What does this mean? It’s a bit of a contradiction.

For example, if they are in the 40% income tax bracket and rent = mortgage, does that mean they pay 40% - 20% = 20% tax?

That would be a phenomenally good deal. Less than half of what a working person would pay.

No. As they keep bleating, they pay tax on their turnover, not their profit.

They are almost right in that.

[Bobthebuilder]

4 minutes ago, Wight Flight said:

they pay tax on their turnover, not their profit.

Not a great business idea.

[Wight Flight]

12 minutes ago, Bobthebuilder said:

Not a great business idea.

It's even better than that.

Receive £60k in rent, and pay £60k in mortgage interest and not only will you have a great big tax bill but you will also lose all child benefit AND now pay tax at 40% on your kitchen porter wages.

It really should have sent a very strong message that the treasury didn't like highly leveraged landlords but for some reason most chose to ignore it.

[MightyTharg]

10 hours ago, Wight Flight said:

No. As they keep bleating, they pay tax on their turnover, not their profit.

They are almost right in that.

Not their turnover since they can claim all sorts of expenses (just not the mortgage).

but what I was asking is do they pay less than half the tax of someone earning the money? If they get 20% of the mortgage costs back that’s really nice. And their tax relief will have gone up massively as interest rates have risen, so maybe they are doing even better than before.

[sleepwello'nights]

2 hours ago, MightyTharg said:

If they get 20% of the mortgage costs back that’s really nice. And their tax relief will have gone up massively as interest rates have risen, so maybe they are doing even better than before.

The increased mortgage costs will be substantially higher than the increase in the 20% allowance.

[MightyTharg]

9 hours ago, sleepwello'nights said:

The increased mortgage costs will be substantially higher than the increase in the 20% allowance.

Yes, but the increased mortgage costs are matched by the decrease in the value of the money owed. So the increased 20% allowance is just more gravy on top of the rising rents.

If you think of two house owners with identical houses. One rents his out and receives the rental income, of which he pays 20% tax. The other lives in his house and works for a salary that is coincidentally the same as rent the other guy charges. The worker pays 50% tax and NI (or 60% if you include VAT).

They both receive the same income before tax, but the guy who works ends up with much less money than the guy who doesn’t. 

The landlord might be getting double the money, but he’s the one the press keep saying is suffering from excess tax. I guess this is because landlords have double the money so they can afford twice the PR spend.

[Wight Flight]

1 hour ago, MightyTharg said:

Yes, but the increased mortgage costs are matched by the decrease in the value of the money owed. So the increased 20% allowance is just more gravy on top of the rising rents.

If you think of two house owners with identical houses. One rents his out and receives the rental income, of which he pays 20% tax. The other lives in his house and works for a salary that is coincidentally the same as rent the other guy charges. The worker pays 50% tax and NI (or 60% if you include VAT).

They both receive the same income before tax, but the guy who works ends up with much less money than the guy who doesn’t. 

The landlord might be getting double the money, but he’s the one the press keep saying is suffering from excess tax. I guess this is because landlords have double the money so they can afford twice the PR spend.

Where does the guy who rents his house out live?

[Wight Flight]

1 hour ago, MightyTharg said:

Yes, but the increased mortgage costs are matched by the decrease in the value of the money owed. So the increased 20% allowance is just more gravy on top of the rising rents.

If you think of two house owners with identical houses. One rents his out and receives the rental income, of which he pays 20% tax. The other lives in his house and works for a salary that is coincidentally the same as rent the other guy charges. The worker pays 50% tax and NI (or 60% if you include VAT).

They both receive the same income before tax, but the guy who works ends up with much less money than the guy who doesn’t. 

The landlord might be getting double the money, but he’s the one the press keep saying is suffering from excess tax. I guess this is because landlords have double the money so they can afford twice the PR spend.

Landlords don't compare themselves to workers as they are businessmen.

I can deduct interest on any loan i take out to invest in my business. They can't. That is why they think it is unfair.

[MightyTharg]

4 hours ago, Wight Flight said:

Landlords don't compare themselves to workers as they are businessmen.

I can deduct interest on any loan i take out to invest in my business. They can't. That is why they think it is unfair.

That’s great. I presume that means they will be campaigning to pay VAT like a business.

Busy doing what exactly? 

[MightyTharg]

4 hours ago, Wight Flight said:

Where does the guy who rents his house out live?

In his girlfriend’s house, but it’s not really relevant to the example.

[With a crooked smile]

20 hours ago, MightyTharg said:

Not their turnover since they can claim all sorts of expenses (just not the mortgage).

but what I was asking is do they pay less than half the tax of someone earning the money? If they get 20% of the mortgage costs back that’s really nice. And their tax relief will have gone up massively as interest rates have risen, so maybe they are doing even better than before.

People just stick it through an LTD and claim back the interest like any other company. 

People on here don't like it a bleat a lot about higher mortgage rates for LTDs etc but it's really marginal. 

You get a very bitter one-sided view here.

Look up most landlords you know on Companies House. Most will have an Ltd that started around the time of the tax changes.

Same old boring crap and whinging posted time and time again in this part of the forum.

Edited November 14, 2023 by With a crooked smile

[spygirl]

9 hours ago, Wight Flight said:

Landlords don't compare themselves to workers as they are businessmen.

I can deduct interest on any loan i take out to invest in my business. They can't. That is why they think it is unfair.

Ive neer heard a LL call their BTL portolfio - My business.

My investment. My pension. Yep.

Just from frist page of googling -

My Bulletproof BTL Property Investment Strategy

https://www.propertyinvestmentproject.co.uk/blog/my-property-investment-strategy/

 

https://www.thp.co.uk/accountants-for-landlords/should-i-transfer-my-btl-properties-into-a-limited-company/

Generally, if you own under say ten Buy To Let properties as investments and are not running a genuine lettings business it is likely that the costs involved in transferring properties into a limited company will exceed the benefits. There are just too many tax traps.

Landlords are selling up: How can the next generation of buy-to-let investors prosper despite more taxes, regulation and higher mortgage rates?

https://www.thisismoney.co.uk/money/buytolet/article-11968909/How-generation-buy-let-investors-prosper.html

Etc.

Neither allow you to    deduct costs/interest.

Same way Joe PAYE Punter cant deduct mortgage interest, or car ost, or suit, etc  from his tax.

 

If they had a BTL/LL business then that would be different.

In which case HMRC would expect to see some business-like' activity- LtdCo, you spending 20h+/w on the 'business', a lot of risk bearing stuff. etc etc.

Leveraging up and skimming 100/m isnt enough.

The only property area where HMRC allow some scope for a mug punter to play at propertee is FHLs. And there are quite rigid rules for them. And v limited finance.

 

[sleepwello'nights]

1 hour ago, spygirl said:

 

Landlords are selling up: How can the next generation of buy-to-let investors prosper despite more taxes, regulation and higher mortgage rates?

 

 

On the development I manage recent sales of flats have been to Indian or Pakistani buyers. They are renting the properties through AirBnB and are getting high occupancy levels. Their target market is visiting business people due to a shortage of hotel accommodation in the area. 

I have no idea of their financing arrangements but even with a conventional business mortgage at current rates they will be profitable. Once the disruption caused by the return to the norm for interest rates has subsided then I feel that residential property will continue to be a safe and secure investment sector. 

[ashestoashes]

44 minutes ago, sleepwello'nights said:

On the development I manage recent sales of flats have been to Indian or Pakistani buyers. They are renting the properties through AirBnB and are getting high occupancy levels. Their target market is visiting business people due to a shortage of hotel accommodation in the area. 

I have no idea of their financing arrangements but even with a conventional business mortgage at current rates they will be profitable. Once the disruption caused by the return to the norm for interest rates has subsided then I feel that residential property will continue to be a safe and secure investment sector. 

thought airBnB was on the way out due to tax changes and competition from hotels building competing serviced room accomodation

[sleepwello'nights]

7 minutes ago, ashestoashes said:

thought airBnB was on the way out due to tax changes and competition from hotels building competing serviced room accomodation

So I thought. One flat is advertised at £150 a night. From what I'm told its been let for three months solidly so far. So £150 x 90 = £13500. More than the annual rental for an identical flat in the same development.

At the moment there are no licensing restrictions in the area. I know because a nearby resident has complained and asked what can be done to stop it. 

[spygirl]

39 minutes ago, ashestoashes said:

thought airBnB was on the way out due to tax changes and competition from hotels building competing serviced room accomodation

 

27 minutes ago, sleepwello'nights said:

So I thought. One flat is advertised at £150 a night. From what I'm told its been let for three months solidly so far. So £150 x 90 = £13500. More than the annual rental for an identical flat in the same development.

At the moment there are no licensing restrictions in the area. I know because a nearby resident has complained and asked what can be done to stop it. 

I woudl hzrd they are setting themslevs up for all manner of tax (AirBNB bookign go to HMRC) and migration charges - LL are meant to check for legal mgriation.

As soons as sub-ctonintal student visas scam is shitcanned in Jan then it all demand goes.

 

[sleepwello'nights]

29 minutes ago, spygirl said:

 

I woudl hzrd they are setting themslevs up for all manner of tax (AirBNB bookign go to HMRC) and migration charges - LL are meant to check for legal mgriation.

As soons as sub-ctonintal student visas scam is shitcanned in Jan then it all demand goes.

 

Until then the money rolls in. 

Lots of grumbles on other threads on high immigration, student visas for overseas students (and thier families), reduction in minimum income requirements for work visas, etc. Don't see it stopping any time soon. 

[Wight Flight]

2 hours ago, sleepwello'nights said:

Until then the money rolls in. 

Lots of grumbles on other threads on high immigration, student visas for overseas students (and thier families), reduction in minimum income requirements for work visas, etc. Don't see it stopping any time soon. 

I think it changes in January.

https://www.gulbenkian.co.uk/uk-student-visa-news/#:~:text=Some major changes to the,visa to the work visa.

[One percent]

6 minutes ago, Wight Flight said:

I think it changes in January.

https://www.gulbenkian.co.uk/uk-student-visa-news/#:~:text=Some major changes to the,visa to the work visa.

You have to ask yourself why it’s being introduced from January when the academic year starts in September.  It’s also been announced a long way ahead of its implementation. I smell a rat.