How does Buy to Let END!

[Wight Flight]

10 minutes ago, roundhouse said:

Are these realistic amounts for two "skint" people with only £7.5K in the bank? Five bed house is big so maybe more on heating, but only 2.5 people living there. So how utilities at £500/mo. Mobile £62, really? I pay £8/mo. Rarely eat out other than occasional pasty, but am sure I don't touch £500 or even £200/mo on groceries. Or £100, but will check tomorrow.

Renting/lodging I'm really out of touch with utility bills so would appreciate any guidance from dosbodders. 

Looks like utilities include council tax so in fact quite frugal.

£60 for eating out might just be a couple of drinks in a pub every fortnight.

It depends what groceries includes, but when my son is home we can easily do that a month.

[Ash4781b]

12 hours ago, spygirl said:

OK, I know this is prob alightly made up fir advertorial purposes but ..... its not far off some people I hear about.

The money diaries: ‘Buy-to-let didn’t work out – I need to find Plan B

https://www.thetimes.co.uk/money-mentor/investing/buy-to-let-isa-investing-guide-expert-lloyds-bank

Occupation IT consultant
Age 54
Lives in St Albans
Salary £61,000
Take-home £3,700 pcm
Housing status Five-bedroom house; £300,000 left to pay on the mortgage
Lives with My wife and daughter, 17. My two older children have left home
Housing costs £1,000 pcm plus £700 which we pay for our daughter’s rent – she’s at university
Savings Cash savings of £3,500; cash ISA with £4,000
Pension Currently stopped paying into my workplace pension – outgoings are so high we can’t afford to. There’s probably £30,000 in there
Utilities £500 pcm
Other monthly outgoings
• Car lease £260
• TV subscriptions £19.97
• Internet £60
• Mobile £62
• Eating out £60
• Groceries £500

 

12 hours ago, spygirl said:

54, 13 years to clear 300k of mortgage debt.

1k/m repayment on 300k of debt has to be low IO mortgage.

30k in a pension - I've seen loads of those.

Sub 10k cash ffs, for a self employed 

Eating 60!!! I wish,. Wheres he go ?MaccyD?

 

“How much do you think you can afford to invest?
So much of our capital is tied up in property right now, but if we can sell then once we’ve bought another place, we’ll have around £50,000 to invest.”

That article is paid for by Lloyds. Could be real people. Anyway assuming it’s real I’m struggling to follow their situation. It reads like they have 4 properties with 300k mortgage outstanding on the main residence. The other 3 properties are I think mortgaged (must be) so let’s say they have additional £1-1.5mn in interest only BTL loans probably in personal names. Crazy. They higher rate tax payers so the BTL probably goes through at higher rate. By their comments the BTL’s probably just cover costs or something.

It reads like they are selling all property and downsizing to generate 50k ? 

 

“We lived through a period where the government was encouraging people to buy lots of property and do buy-to-lets, and we have four properties including our main residence. This has been less successful than we’d hoped over the years and it’s a lot of hard work too, so we’ve now decided to sell the properties and invest.”

[spygirl]

42 minutes ago, Ash4781b said:

 

“How much do you think you can afford to invest?
So much of our capital is tied up in property right now, but if we can sell then once we’ve bought another place, we’ll have around £50,000 to invest.”

That article is paid for by Lloyds. Could be real people. Anyway assuming it’s real I’m struggling to follow their situation. It reads like they have 4 properties with 300k mortgage outstanding on the main residence. The other 3 properties are I think mortgaged (must be) so let’s say they have additional £1-1.5mn in interest only BTL loans probably in personal names. Crazy. They higher rate tax payers so the BTL probably goes through at higher rate. By their comments the BTL’s probably just cover costs or something.

It reads like they are selling all property and downsizing to generate 50k ? 

 

“We lived through a period where the government was encouraging people to buy lots of property and do buy-to-lets, and we have four properties including our main residence. This has been less successful than we’d hoped over the years and it’s a lot of hard work too, so we’ve now decided to sell the properties and invest.”

Bits of it read like an advertorial.

Bits of it read like he waawaa stories on p118.

Its might be a person. Or it might be person based onthe various people.

“We lived through a period where the government was encouraging people to buy lots of property and do buy-to-lets, "

That rigns true when Ive spoke to idiot IO BTLers.

For all UKGOVs many many faults it has *NEVER* encouraged that.

IO BTL was riven purely by agents, media and other BTLers crowign inthe media.

IO BTL is chronic in the self employed esp IR35 and trades.

Where are the costs and money in money out of 'and we have four properties including our main residence.'

You cant post a statement of affair when theres 3 IO BTL in their name FFS.

Again, as Ive stated many times.

When you go to BTL  hot spots, and Scabby is one. I keep bumping to into pretty average people -taxi drivers, all the trades, who have pretty medium earnings but are carrying several 100k if not over 1m of IO BTL.

[AlfredTheLittle]

14 hours ago, spygirl said:

OK, I know this is prob alightly made up fir advertorial purposes but ..... its not far off some people I hear about.

The money diaries: ‘Buy-to-let didn’t work out – I need to find Plan B

https://www.thetimes.co.uk/money-mentor/investing/buy-to-let-isa-investing-guide-expert-lloyds-bank

Occupation IT consultant
Age 54
Lives in St Albans
Salary £61,000
Take-home £3,700 pcm
Housing status Five-bedroom house; £300,000 left to pay on the mortgage
Lives with My wife and daughter, 17. My two older children have left home
Housing costs £1,000 pcm plus £700 which we pay for our daughter’s rent – she’s at university
Savings Cash savings of £3,500; cash ISA with £4,000
Pension Currently stopped paying into my workplace pension – outgoings are so high we can’t afford to. There’s probably £30,000 in there
Utilities £500 pcm
Other monthly outgoings
• Car lease £260
• TV subscriptions £19.97
• Internet £60
• Mobile £62
• Eating out £60
• Groceries £500

He seems ok. Take home £3,700, expenses listed are just over £3k including his daughter's rent.

[spygirl]

1 minute ago, AlfredTheLittle said:

He seems ok. Take home £3,700, expenses listed are just over £3k including his daughter's rent.

Hes 54,self employed, 300k to pay on mortgage, 30k in a pension, 3 BTL of unknown debt,and hes looking to retire ....

 

 

[Boon]

That chap is only pretending to be poor, as even a shit 5-bed in St Albans is gonna be a lot of money.
Doesn't say what type of 5-bed it is, ie terraced/detached but quite easily could be over £1m.

Wait for kids to fuck off then downside.

[spygirl]

27 minutes ago, Boon said:

That chap is only pretending to be poor, as even a shit 5-bed in St Albans is gonna be a lot of money.
Doesn't say what type of 5-bed it is, ie terraced/detached but quite easily could be over £1m.

Wait for kids to fuck off then downside.

Might have Bern 30y ago.

Not now the finsec has gone.

There arn't the high paying jobs in the South to cycle the property.

[spygirl]

Buy-to-let landlords are using limited companies to cut tax... but it could actually be costing them MORE

https://www.thisismoney.co.uk/money/buytolet/article-13236029/amp/Buy-let-landlords-using-limited-companies-cut-tax-actually-costing-MORE.html

You'll also have to convince n demonstrate that you are spending 20+h/w running your company.

Otherwise hmrc will just class the btls as an investment.

[BoSon]

3 hours ago, spygirl said:

Buy-to-let landlords are using limited companies to cut tax... but it could actually be costing them MORE

https://www.thisismoney.co.uk/money/buytolet/article-13236029/amp/Buy-let-landlords-using-limited-companies-cut-tax-actually-costing-MORE.html

You'll also have to convince n demonstrate that you are spending 20+h/w running your company.

Otherwise hmrc will just class the btls as an investment.

It's always risky using current rule loopholes for future investment as it's so easy for the government to close the loophole or apply targetted rules and taxation to penalise all those that flooded into the loophole. So a good chance it's by design and they're just baiting the trap.

Especially when large numbers are using the tactic. 50k Ltds formed in the last year just for that purpose, easy pickings when the equivalent of IR35 that targetted personal service companies is implemented to target personal property companies.

Edited April 1 by BoSon

[Wight Flight]

Have we had this?

Comments are enlightening towards the end...

https://www.property118.com/a-must-read-for-all-landlords-a-frustrated-landlord-speaks-out/#comments

[Kendo]

41 minutes ago, Wight Flight said:

Have we had this?

Comments are enlightening towards the end...

https://www.property118.com/a-must-read-for-all-landlords-a-frustrated-landlord-speaks-out/#comments

I love Paul’s comment at the end of that article: “ Letting someone live in a home you have borrowed money against is extremely stressful - there is no recognition of this.”

Ah diddums! It’s called risk mate, and the only reason the bank lets you borrow that money is on the basis of you raising money from letting it to pay off your mortgage. What a total cretin!

[spygirl]

GlanACC

12:25 PM, 26th March 2024, About A week ago

You can't blame the banks, they have to track the BOE interest rate. The issue is investing in the right properties for tenants who can pay, forget anyone on UC. Having said that a good tenant can turn into a bad one at the drop of a hat. My first property was an accidental one , but I went on to have 18.6 left now and my granddaughter will get them as the kids aren't interested.

 

 

???????

[spygirl]

GlanACC

12:41 PM, 27th March 2024, About 6 days ago

Reply to the comment left by Paul Smith at 26/03/2024 - 19:54
Nothing to do with their costs increasing. If the BOE increases rates then they are duty bound to follow. You cannot have a bank whose interest rate is uncompetitive (for the SAVERS) otherwise they would go elsewhere (yes, I know the savers rates are still poor).Increasing the rates also restricts the amount of mortgages available (this is a good thing) otherwise they would not have enough funds to satisfy the mortgage demand if the rates did not follow the BOE

 

?????

Keith Wellburn

13:05 PM, 27th March 2024, About 6 days ago

Reply to the comment left by GlanACC at 27/03/2024 - 12:41
Gilt rates are a key driver of mortgage rates, and they themselves are based on the market expectations of the direction of BoE base rate.

Hence the huge jump in mortgage rates following the Liz Truss episode and the fact that mortgage rates are in constant flux despite BoEBR being unchanged since last August.

It was all so simple back in the day, take deposits and lend it out, at variable rates on a margin to cover costs and give a profit. And nobody needed a mortgage broker!

 

?????

[spygirl]

Jesus.

Paul Smith

7:36 AM, 28th March 2024, About 5 days ago

Reply to the comment left by GlanACC at 27/03/2024 - 12:41
Interesting, maybe we don't need to defend the banks, their profits are their fortress. The BoE affordability rules in place for BTL products, stress tested borrowing landlords against a £2 increase in mortgage costs for every £100 borrowed. The same organisation then put the rates up £5.24 for every £100 borrowed and scrapped some rules. It's a bit like telling you a bag of carrots will cost £2 then charging you £5.24. The fact they gave some of this money to savers makes Andrew Bailey look like a reverse Robin Hood, taking from the poorer borrowers and giving to those with savings? We were told interest rate rises were absolutely necessary to slay the dragon that was inflation and financial pain was the tool to curb spending. When we apply that to Landlords we see very different effects on different groups of landlords and sadly this ripples down to tenants and appears to destabilise the rental markets? Roughly 1/3 of landlords were lucky enough to own their properties outright. They face no increase in costs and receive extra money on their savings, these fortunate folk are not asked to contribute towards inflation and in have additional unexpected disposable income to spend as they see fit? The second group of landlords again currently about 1/3 are again fortunate and much to Andrew Bailey's annoyance are still sheltered in the calm waters of fixed rate deals so again have not helped reduce inflation by paying more money to the banks. The third group of landlords again around 1/3 have faced the full wrath of Andrew Bailey and his regulatory interest rate policy. They are fighting the front line, paying all the landlords costs to reduce inflation and the government and banks appear to have been extremely unsympathetic. They know the costs are up to three times higher than many of these landlords were stressed tested at, by the BoE affordability rules but there are few meaningful concessions. In fact some banks ensure they charged as soon as legally possible.Tge concession is the banks allow these landlords to accrue the money they can't afford to pay so their debt rises and the banks add more interest. This is a punitive measure that effectively fines landlords who borrowed within the BoE rules. Meanwhile some of the extra windfall the banks receive from this punished group of landlords is given to savers and some is kept for profit. Perhaps this policy forces some landlords to put up rents, while others don't need to but may as well follow suit. This policy appears bad for tenants and borrowing landlords. It was the BoE that changed the game by putting interest rates up higher than other countries and higher than it's own stress test rules. So far it is a minority of landlords and tenants who are being made to pay for the chaos this policy is causing in the rental markets. Arguably the banks could and should have done more to honour stress testing rules for a minority of borrowers who had borrowed in good faith rather than scrap the rules and charge the maximum amount possible as quickly as possible.

[spygirl]

GlanACC

8:32 AM, 28th March 2024, About 5 days ago

Reply to the comment left by Paul Smith at 28/03/2024 - 07:36
Paul, very well explained. However I think landlords should also shoulder a good chunk of the blame. Many landlords were so highly geared that any ripple would cause them financial pain. When I borrowed £1.8m I bloody well had a plan B so that if rates went up (and they did) I would still be able to subsidise the loan repayments by borrowing from my other non property company. By all means have an interest only mortgage but don't sail close to the wind and factor in rate rises. It was bloody obvious that rates would rise at some point, trouble was many people thought it would only be a percent or less.

[spygirl]

https://www.landlordzone.co.uk/news/landlords-warned-over-limited-company-rules-as-hmrc-letters-go-out

The NRLA has warned landlords who have set up limited companies to run their property portfolios that they will have prove they spend 20 hours a week managing their businesses to get the tax reliefs many hoped they would.

Thousands of landlords have switched their properties from being owned personally to a limited company to benefit from more generous tax reliefs including for mortgage interest payments. Limited companies also pay lower capital gains tax when disposing of property than personal tax payers, although in both cases not in all circumstances.

Chris Norris (main picture) head of policy at the NRLA, says that there is a lot of confusion around exactly how a landlord demonstrates their company qualifies for incorporation relief.

“If you are a landlord and want to qualify for the relief you have to demonstrate that you spend at least 20 hours a week managing the business,” he says.

“There are landlords who may have overestimated the time they spend or are not able to demonstrate that time.”

[Wight Flight]

51 minutes ago, spygirl said:

https://www.landlordzone.co.uk/news/landlords-warned-over-limited-company-rules-as-hmrc-letters-go-out

The NRLA has warned landlords who have set up limited companies to run their property portfolios that they will have prove they spend 20 hours a week managing their businesses to get the tax reliefs many hoped they would.

Thousands of landlords have switched their properties from being owned personally to a limited company to benefit from more generous tax reliefs including for mortgage interest payments. Limited companies also pay lower capital gains tax when disposing of property than personal tax payers, although in both cases not in all circumstances.

Chris Norris (main picture) head of policy at the NRLA, says that there is a lot of confusion around exactly how a landlord demonstrates their company qualifies for incorporation relief.

“If you are a landlord and want to qualify for the relief you have to demonstrate that you spend at least 20 hours a week managing the business,” he says.

“There are landlords who may have overestimated the time they spend or are not able to demonstrate that time.”

20 hours a week is going to be almost impossible to justify.

Shame.