Recession
Sep 17th 2007, 7:13 am
#16
Banned
Joined: Jul 2007
Location: Kuwait - Sringboard to Djibouti
Posts: 305
Re: Recession
What is a recession? Are you encouraging us all to move back to the UK because houses will be cheap? Are you saying that the Easternised world will be unaffected by this phenomenon?
Sep 17th 2007, 7:49 am
#17
Homebody
Joined: Jan 2005
Location: HOME
Posts: 23,182
Re: Recession
I have to agree with your point about Buy to Let investors, many of whom are not UK nationals and have no connection with the UK other than buying property to let out at a profit. When I lived in the Far East the Singapore "Straits Times" and Hong Kong's "South China Morning Post" were constantly having adverts for UK properties (mainly flats in London) for investors to buy and rent out at a profit, often purchased 'off-plan'........
In any event, there is very little money to be made from renting out property in the UK these days. And a lot of BTL investors will get their fingers burned given the current events.
Sep 17th 2007, 8:01 am
#18
BE Forum Addict
Joined: Oct 2003
Location: Depends
Posts: 4,041
Re: Recession
Depends on what you call little money. I have a property that earns 40k a year in the UK.
In what way is this different from all the Brits buying rental properties in Florida, Spain, Cyprus, Kosovo etc?
In any event, there is very little money to be made from renting out property in the UK these days. And a lot of BTL investors will get their fingers burned given the current events.
In any event, there is very little money to be made from renting out property in the UK these days. And a lot of BTL investors will get their fingers burned given the current events.
Sep 17th 2007, 8:19 am
#19
Ping-ponger
Joined: Jul 2002
Location: Dreich Alba
Posts: 12,025
Re: Recession
40k a year? Does the address end in "Palace"?
Sep 17th 2007, 8:30 am
#20
Democracy advocate
Joined: Mar 2006
Posts: 12,553
Re: Recession
If you have a mortgage then a sizeable chunk of the 40K is spent on the mortgage interest (most in fact) with the rest being taken up with insurance and letting agents and wear & tear.
If you do not have a mortgage then you could be getting around 6% interest from a bank by leaving the money on deposit.
Either way there is little revenue money to be made from BTL at the moment - just the dream of ever increasing property prices to give you a capital appreciation.
Sep 17th 2007, 8:41 am
#21
Democracy advocate
Joined: Mar 2006
Posts: 12,553
Re: Recession
The sad thing is, eiher way, someone is unhappy.
If prices keep going up, short-term and long-term owners are happy because they get "richer" (although it's a fasle rich unless you own more thyan one house). Of course, potential buyers would be even more upset than they are currently.
If prices stay the same, long-term owners are happy ("rich"), short-term owners are neutral/unhappy (because they broke the bank to buy, but at least aren't losing house value), and prospective buyers are unhappy (because they have to crucify themselves to buy).
If there's a drop in values, buyers are happy, but owners (especially recent buyers like me) are completely p*ssed off because they lose wealth.
I won't say I hope prices keep going up (because I know there are returners who are really struggling to find an affordable house), but once they go up, it just doesn't seem right to wish they'll go down.
I just pray for wage inflation to redress the balance somewhat, and that the government introduces legislation to slow down the number of BTL investors - especially the fat cats who use their wealth to steal houses from under the noses of honest hard-working people. Maybe a graduated tax system on BTL properties is the answer (i.e., the more you own, the higher the tax rate on rental income).
If prices keep going up, short-term and long-term owners are happy because they get "richer" (although it's a fasle rich unless you own more thyan one house). Of course, potential buyers would be even more upset than they are currently.
If prices stay the same, long-term owners are happy ("rich"), short-term owners are neutral/unhappy (because they broke the bank to buy, but at least aren't losing house value), and prospective buyers are unhappy (because they have to crucify themselves to buy).
If there's a drop in values, buyers are happy, but owners (especially recent buyers like me) are completely p*ssed off because they lose wealth.
I won't say I hope prices keep going up (because I know there are returners who are really struggling to find an affordable house), but once they go up, it just doesn't seem right to wish they'll go down.
I just pray for wage inflation to redress the balance somewhat, and that the government introduces legislation to slow down the number of BTL investors - especially the fat cats who use their wealth to steal houses from under the noses of honest hard-working people. Maybe a graduated tax system on BTL properties is the answer (i.e., the more you own, the higher the tax rate on rental income).
All of them work and so any profit from letting is taxed at their marginal rate - 40% for all of them. Plus they pay VAT on their letting agents fees etc etc.
I do belive that the UK needs to build more property to improve the supply side of the equation, I also believe that there should be a higher rate tax band on all income over a certain amount (say 45% on over 100K), but directly penalising productive, entrepenurial people who are taking steps to assure their retirement is not the right message to send. One of my friends earns around 40K, but has two BTLs generating around 10K profit per year - why should he be taxed at a higher rate than someone earning 1M pa?
Sep 17th 2007, 8:46 am
#22
Account Closed
Joined: Jul 2005
Posts: 15,019
Re: Recession
Sorry dunroving but I just can't agree with that statement. I have plenty of friends who have rental properties, most came from middle class backgrounds, some from working class - they saw an opportunity, took the risk and went for it (with some eye watering mortgages). They continue to have to work to manage the properties or give away most of the profit to agents to do it for them. Most saw it as a way of generating a pension fund rather than generating extra income. They were lucky with their timing.
got it in one!
Sep 17th 2007, 8:53 am
#23
Ping-ponger
Joined: Jul 2002
Location: Dreich Alba
Posts: 12,025
Re: Recession
Sorry dunroving but I just can't agree with that statement. I have plenty of friends who have rental properties, most came from middle class backgrounds, some from working class - they saw an opportunity, took the risk and went for it (with some eye watering mortgages). They continue to have to work to manage the properties or give away most of the profit to agents to do it for them. Most saw it as a way of generating a pension fund rather than generating extra income. They were lucky with their timing.
All of them work and so any profit from letting is taxed at their marginal rate - 40% for all of them. Plus they pay VAT on their letting agents fees etc etc.
I do belive that the UK needs to build more property to improve the supply side of the equation, I also believe that there should be a higher rate tax band on all income over a certain amount (say 45% on over 100K), but directly penalising productive, entrepenurial people who are taking steps to assure their retirement is not the right message to send. One of my friends earns around 40K, but has two BTLs generating around 10K profit per year - why should he be taxed at a higher rate than someone earning 1M pa?
All of them work and so any profit from letting is taxed at their marginal rate - 40% for all of them. Plus they pay VAT on their letting agents fees etc etc.
I do belive that the UK needs to build more property to improve the supply side of the equation, I also believe that there should be a higher rate tax band on all income over a certain amount (say 45% on over 100K), but directly penalising productive, entrepenurial people who are taking steps to assure their retirement is not the right message to send. One of my friends earns around 40K, but has two BTLs generating around 10K profit per year - why should he be taxed at a higher rate than someone earning 1M pa?
I hear what you are saying, and it would be drastic to levy burdensome taxes on your friends in one fell swoop. But the graduated introduction of appropriate tax laws woulkd give them time to sell their properties if they can no longer make money from them. As you said, they had lucky timing, so if they sold up now they certainly wouldn't lose out. I guess it's a question of what is fairer - for your friends to continue to make money from their good timing, or for working class people to be able to own a house.
Agree with you also that building more affordable housing is part of the solution.
Sep 17th 2007, 9:07 am
#24
BE Forum Addict
Joined: Oct 2003
Location: Depends
Posts: 4,041
Re: Recession
No but it is in prime location.
Last edited by Mercedes; Sep 17th 2007 at 9:12 am.
Sep 18th 2007, 5:21 am
#25
BE Forum Addict
Joined: Oct 2003
Location: Depends
Posts: 4,041
Re: Recession
No Mortgage and brought the property at a depreciated price, having the tenants apparently made it much cheaper. In fact I got it for half price. No letting agents, so none of their fees. But it it is in a good location where demand is high and supply is low and in a good area. It is also a good site for development and since the area is being developed, I could later sell it to a developer or develop it myself as there is room for a few houses.
When I'm in the UK, part of it will be my primary residence, so if I did sell it, I wouldn't pay capital gains on it. So I'm on a win win with it. But I brought it for my pension fund and as I work for my own company any money will be re-invested anyway, and it will be higher than what I would have got if I had put the original sum in the bank in a deposit account.
When I'm in the UK, part of it will be my primary residence, so if I did sell it, I wouldn't pay capital gains on it. So I'm on a win win with it. But I brought it for my pension fund and as I work for my own company any money will be re-invested anyway, and it will be higher than what I would have got if I had put the original sum in the bank in a deposit account.
Typical BTL rental yield is around 6-7% in the UK at the moment - this means your property is worth around 625K.
If you have a mortgage then a sizeable chunk of the 40K is spent on the mortgage interest (most in fact) with the rest being taken up with insurance and letting agents and wear & tear.
If you do not have a mortgage then you could be getting around 6% interest from a bank by leaving the money on deposit.
Either way there is little revenue money to be made from BTL at the moment - just the dream of ever increasing property prices to give you a capital appreciation.
If you have a mortgage then a sizeable chunk of the 40K is spent on the mortgage interest (most in fact) with the rest being taken up with insurance and letting agents and wear & tear.
If you do not have a mortgage then you could be getting around 6% interest from a bank by leaving the money on deposit.
Either way there is little revenue money to be made from BTL at the moment - just the dream of ever increasing property prices to give you a capital appreciation.
Last edited by Mercedes; Sep 18th 2007 at 5:39 am.
Sep 18th 2007, 6:56 am
#27
Just Joined
Thread Starter
Joined: Sep 2007
Posts: 14
Re: Recession
Hello again. As you may have heard the Fed has cut rates by 50 basis points. This is absolutely disastrous for value of the dollar. Any Americans on this board should expect rampant inflation. If you do not believe me, do a little research. This is terrible news for US economy.
Sep 18th 2007, 8:09 am
#28
Ping-ponger
Joined: Jul 2002
Location: Dreich Alba
Posts: 12,025
Re: Recession
Hello again. As you may have heard the Fed has cut rates by 50 basis points. This is absolutely disastrous for value of the dollar. Any Americans on this board should expect rampant inflation. If you do not believe me, do a little research. This is terrible news for US economy.
Sep 18th 2007, 8:12 am
#29
I don't give a damn
Joined: Mar 2007
Location: In the arms of my family. Heaven...
Posts: 4,980
Re: Recession
Hello again. As you may have heard the Fed has cut rates by 50 basis points. This is absolutely disastrous for value of the dollar. Any Americans on this board should expect rampant inflation. If you do not believe me, do a little research. This is terrible news for US economy.
Sep 18th 2007, 8:22 am
#30
Life is more than a dream
Joined: Oct 2006
Location: Kings Moss, UK - it's a bit like Emmerdale
Posts: 1,389
