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Do I deserve to be punished
Speaking as a homeowner myself, we've no right to demand protection from the vagaries of the market. If prices drop then so be it. It happened before to other people. If you didn't bail them out then why expect protection for yourself now? Whether it's a punishment we somehow deserve doesn't come into it.
because voter demographics are changing
Not yet. The young are the least likely to vote (43% vs 78% turnout for 18-24 vs 65+). Also getting worse 18-24 men down by 8% since 2010, women up by 5%.
We have a housing bubble, particularly in the South East
And so once again we have a national policy to sort a South East issue. Remind me again why SNP did so well at the elections?
as a voting bloc the young eternal renters/living with parents folks (this now extends to people in their 30s) are becoming increasingly important.
Again, this is a looming 'bombshell'. Those who have benefited from all the housing price rises and culture since 1970's are viewed with jealousy by a younger group of voters, who want to find a way of wrestling the properties that the baby boomers occupy into their hands, at reasonable cost. As that older generation die off, what will happen to the gap between expectations of what a house is worth vs what can be afforded by the next generation? Will there be enough wealthy first time or Gen X/Y'ers to keep the prices up?
Whenever this buy-to-let tax comes up it staggers me the number of people (including financial journalists and representatives of big accountancy firms) who seem to have forgotten their first ever lesson of supply/demand economics.
Prices are not based on costs so Landlords simply can't put up prices because their costs have gone up. The idea that they're not already charging (in most cases, there will always be edge case exceptions) as much as the market will bear is ridiculous.
This^. I've made a lot of sacrifices to buy my place (which I live in), bikes not bought, holidays not gone on etc. Do I deserve to be punished for that because I have the temerity to earn over 40k?
Why are you being penalised for earning over 40k?
If you are buying a home to live in at a price you can afford then you are pretty shielded from the market changing. That said this new legislation will have zero impact on house prices.
I've made a lot of sacrifices to buy my place (which I live in), bikes not bought, holidays not gone on etc. Do I deserve to be punished for that because I have the temerity to earn over 40k?
Just run us through how you're being punished exactly?
Why is it that some people presume that the government has some kind of moral obligation to set economic policy so that homeowners have an asset that must endlessly appreciate in value way, way beyond rates of inflation, pay rises etc?
It seems to be regarded as some god-given right nowadays. It isn't. Its a deliberate perversion of The Market, in that governments have consistently artificially propped up prices for political reasons (home owners borrowing money they don't have, against their ever-appreciating 'asset' to buy shiny things they don't need).
It needs sorting out, before it once again becomes another major contributory factor to another potentially catastrophic, but predictably familiar boom and bust cycle
"If you are buying a home to live in at a price you can afford then you are pretty shielded from the market changing"
Kinda- unless you need to move and paid top dollar and then lost all your equity
Exactly^. I'm not in favoir of prices rises, jsut against price falls, stagnent prices seem to be the least worse option, stopping the moving goal post problem.
I don't understand the problem with negative equity as applied to people moving house.
If you buy a house for £200k, but then need to sell at £150k in order to buy elsewhere, it's probable that the house you want to move to has also lost the same proportion of its value, eg it's also priced at £150k but was previously £200.
So what is the difficulty, unless you're moving to a region where prices have risen or remained stable?
That works both ways and plenty of people benefit, I.e. Move from a SE conurbation to a grim coastal/faded industrial area where prices have stagnated for years and homes are difficult to sell.
you bought a house with 20k deposit of 200k.
the market drops and your house now only worth 150k.
you have paid in say 20k over 3-4 years .....
you still owe the bank 10k + have no equity to get a deposit on your new 150k house......
And in that scenario the couple saving hard for 3-4 years for their £200k home have a decent deposit and cand get an affordable mortgage as the property they want to buy is now 50k cheaper.
This frees up a bit more money and they start a mini buy to let empire. 🙄
Whats to stop people setting up / moving their property into a Ltd company to take profit as dividend (and offset expenses against tax etc)?
yes mr smith - edit - i read it wrong i thought you were having a go ;). Got what you meant now !
the bit i find funny is all the accidental land lords who say they couldnt sell their flats - no one wanted it - but apparently demand out strips supply for first time buyers (usually flats)- clearly it doesnt OR they have overvalued their house in their own mind.
Whats to stop people setting up / moving their property into a Ltd company to take profit as dividend (and offset expenses against tax etc)?
Cost of setting up and managing a company - in my case it would not save anything over the extra tax bill.
Taking a house into a company incurs Transaction Tax (Stamp Duty) costs.
Selling a house from a company means you incur capital gains at a much larger rate, and without an allowance.
You would pay yourself dividend, rather than PAYE, and I cannot see that lasting much longer... 🙄
This means only those with a number of highly profitable properties will benefit from a company for property.
matt_outandabout - Member@Moses - trail_rat has it. Negative equity means you cant move.
No it doesn't. It just means you can't move, and expect to buy another house (or perhaps, not of the same standard). But that doesn't stop you, it just puts you in the same position as all the other people who can't buy a house.
the bit i find funny is all the accidental land lords who say they couldnt sell their flats - no one wanted it - but apparently demand out strips supply for first time buyers (usually flats)- clearly it doesnt OR they have overvalued their house in their own mind.
I bought my place when we had a 'tied' house to my work. The flat was a 'if the job goes wrong, we have somewhere to live' approach to life.
We paid £104k in 2008. It needed £4k on roof and we did small renovation of £2k. Cost £110k + puchase cost.
We tried to sell in 2012/13 for £110k ono - not one offer (even below), and barely any interest in it. Remember this was mid house prices falling stage. I make a net profit on my regular costs, overheads and (current) tax of less than £800 a year. The washing machine died a few months ago, so this year I am now down to £600 profit this year. One void month, and I am in negative.
We needed our own home, not where the flat is, so last year re-mortgaged to withdraw deposit for our own home (three beds with five of us in it). I wish I could get rid of the flat, it is a stress and time consuming - but the market is not there yet, and with these changes is unlikely to be.
I am not asking for sympathy - it is the choice we made, and I should have left my money in the banks(!). However, to be in a situation where you think things are stable and sustainable, only for the government to pull the rug, is deeply frustrating.
I will sell before 2020, but I suspect I shall loose every penny of capital that I had. I expect there will be many thousands in the same position as me. Anyone want a cheap flat in a Highland town?
so you then go to rent northwind..... and find that the goverments ****ed that industry over and now demand outstrips demand and you cant find a house to rent..... and you cant afford to buy.
rock and hard place.
what are similar properties selling for.
just because you spent 6k on it doesnt mean its worth that extra 6k remember.
Im under no illusion that rewiring my house / replumbing and putting a new boiler on my house has raised its value by even a penny.
HOW EVER id hope its raised its desirability at its valuation.
MEanwhile i get to live in a house where i know the wiring and plumbing are done right.
doing work on a house doesnt always value
trail_rat - Memberso you then go to rent northwind..... and find that the goverments **** that industry over and now demand outstrips demand and you cant find a house to rent..... and you cant afford to buy.
rock and hard place.
The point I'm trying to make is, this isn't a negative equity problem, it's a countrywide problem and most people who're affected by it, have never had a chance to own one home never mind a second or third. So no it doesn't stop you moving but also frankly it's not the biggest issue we have.
i agree we have big issues - i just dont think stripping back the rental market to the big guns only is a viable answer -
have you ever rented off one of the big corporate rental agencies -
ill never do it again. absolute horror fest of lying cheating bastards.
what are similar properties selling for.
When we bought, it was at a price where the roof and renovations were 'accounted for' - most other properties the same at the time were on £120k+.
Currently, three properties of similar type have sold in the last year, three more the year before that.
There are a number of properties for sale locally of similar size and value, that have been on the market for 2+ years. There are some of similar size, brand new developer renovations, that have been on the market for 4 years without sale.
Being able to rent the place is not an issue - when we advertise I will have 5-10 people look round, and the last couple of times have had to refuse 3-5 of them as someone had got there first.
Maybe I should push the rent up? But then I am greedy landlord apparently, and would get hit for even more tax. 😉
matt - im all in favour of renting from someone with a face - which is why im oppose to the "tax the small fish out the game"
i just dont believe "we couldnt sell it" - its a " we dont want to sell it for that"
And its the same situation - for any of us who will end up in negative equity - i probably wouldn't do anything different to you if i was at risk of not getting enough to fund my next house(not that i see my self needing another any time soon) but was in a strong rental area where people need mobility - which i "currrently" am but increasingly less so.....with the depressed oil price.
Just run us through how you're being punished exactly?Why is it that some people presume that the government has some kind of moral obligation to set economic policy so that homeowners have an asset that must endlessly appreciate in value way, way beyond rates of inflation, pay rises etc?
It seems to be regarded as some god-given right nowadays. It isn't. Its a deliberate perversion of The Market, in that governments have consistently artificially propped up prices for political reasons (home owners borrowing money they don't have, against their ever-appreciating 'asset' to buy shiny things they don't need).
It needs sorting out, before it once again becomes another major contributory factor to another potentially catastrophic, but predictably familiar boom and bust cycle
you bought a house with 20k deposit of 200k.the market drops and your house now only worth 150k.
you have paid in say 20k over 3-4 years .....
you still owe the bank 10k + have no equity to get a deposit on your new 150k house......
Exactly^. I'm not in favoir of prices rises, jsut against price falls, stagnent prices seem to be the least worse option, stopping the moving goal post problem.
The brick took the words out of my mouth. Cash terms stagnation would seem to be the least worst option. Given time and rising wages (try not to laugh) this makes housing more affordable, both for new entrants and mortgage holders, without hitting those of us who bought after the boom with negative equity.
Binners, re-read my post. I'm not asking for an endlessly appreciating asset, I live in my house and I borrowed what I could afford, still (just!) the case after getting divorced. I just don't want to be trapped in it by negative equity. I was lucky enough to be able to afford to buy out here in the Shires. I've worked hard and made sacrifices to pay the mortgage down. There are a lot of us! A tad unfair, don't you think, if Government policy wipes out the tens of thousands of pounds we've paid in to our mortgages? Granted, worse things happen at sea, but still not a great situation.
[i]I don't understand the problem with negative equity as applied to people moving house.
If you buy a house for £200k, but then need to sell at £150k in order to buy elsewhere, it's probable that the house you want to move to has also lost the same proportion of its value, eg it's also priced at £150k but was previously £200k.
[/i]
I'm guessing you've never been in this position... Basically you can't sell, unless you've enough cash (or equity) spare to pay off the mortgage. Therefore if you need to move then you'll need a bridging loan or rent the new house.
FWIW the house we bought in 1989 only came out of negative equity in 1997, luckily we didn't need to move.
i just dont believe "we couldnt sell it" - its a " we dont want to sell it for that"
This you are correct with.
We are now locked into a mortgage until next year. When this ends, I will sell, and likely for well below what we paid.
I still find it funny that everybody replying believes home ownership is their right, prior to the Thatcher years (I guess) it was a privilege not a right. Just saying.
ti_pin_man
The 'problem' we had was:
To buy - £750 a month mortgage, and we cannot be moved on.
To rent - £1k a month, and we could be kicked out.
WWYD?
"I still find it funny that everybody replying believes home ownership is their right"
Not at all - how ever i feel those that have done the hardwork to own there own house should not be policied out of that position.
Anyway . thatchers regime knew what they were doing..... get a noose round their neck (mortgage) stops them striking so quickly and so often 😉
Oh and what matt said - where i live it was 1200 a month for a 3 bed semi on a rental and put up with other peoples choices re kitchen/decor/bathroom etc.
or 700 quid a month to buy a more suited to me place that i can make a home of and not live in fear of being kicked out with a couple months notice.
Did I, as a landlord, just complain about the high rents? 😆
Don't believe it's a right, I bought something I could afford. I just don't want to have flushed tens of thousands down the proverbial!
the world has changed a lot over the last 100 years, we take it for granted and I see no reason that it might not turnaround back to 1918.
[img] 
[/img]
So who is going to own these properties then, if we do revert to 1918?
faceless conglomerate tax dodging regimes based outwith the uk perhaps.....
1918 - largely estate/Crown/council owned.
2020 - Who ?
the same type of person who owned them back then, the landed rich.
the worlds changed.
i know that even in the 1960s - if you were a farmer/worked on the estate/were a fisherman/woodsman a.nother production industry in scotland you quite often got a house tied in with the job and it formed part of your wage.
I cant see you living in a dorm next to your office. can you?
You missed the bit on your own infographic about 31% Social Landlords (Council Houses) by 1981...
If you buy a house for £200k, but then need to sell at £150k in order to buy elsewhere, it's probable that the house you want to move to has also lost the same proportion of its value, eg it's also priced at £150k but was previously £200k.I'm guessing you've never been in this position... Basically you can't sell, unless you've enough cash (or equity) spare to pay off the mortgage. Therefore if you need to move then you'll need a bridging loan or rent the new house.
Yep. We can't move anywhere, no matter how cheap the house.
Actually that's not quite true since prices have recovered a bit in the last 6 months or so. And we have a repayment mortgage too.
most house given with a job / role were duly lost once they died or lost their jobs. Thats not ownership.
Should have linked, graphic came from gov website for national statistics. I'll ping them an email and ask them to correct. 😉
i never called it ownership.
however its a much more useful form of renting than being at the mercy of mega corp rental conglomerates....
...so you can be at the mercy of your MegaCorp employer and lose ÿour house and job simultaneously? you're barking up the wrong tree
So in other words housing is becoming less of a sacred cow; Osbourne's move against buy-to-let is part of a wider campaign against homeowners which is only going to escalate.
except the people being taxed more aren't "homeowners", they're people running businesses
where did i say that ......
myfirst statement was the worlds changed .......
its not 1918 anymore - just because it workedthen doesnt mean it will work now....partly for the reason you have suggested but also a host of other reasons.
Why is it that some people presume that the government has some kind of moral obligation to set economic policy so that homeowners have an asset that must endlessly appreciate in value way, way beyond rates of inflation, pay rises etc?
Wait, you mean my house isn't a brick box that shits money?!
the example was to show people how our attitudes to home ownership have changed, its much more prevalent for people to think they are in some way entitled to own their house. Its a more modern idea than people imagine. I'm not saying the old way is better just highlighting how lucky we actually are to 'mostly' own our houses. Even if the banks really own most of them 🙂 We are lucky compared to many of our ancestors.
It's also a British thing. Much higher rental rates in France and Germany, I seem to remember.
the example was to show people how our attitudes to home ownership have changed
That graph really shows the huge change in wealth distribution over that period. Inequality was very high in 1918.
I'm a bit late to this party but here are my thoughts.......
We moved into our current gaff 10 years ago and at the time I thought it was overpriced, along with everything else on the market but as we had made cash on our old place had some protection from any crash as well as affordable mortgage payments
As I type this prices in my town are just stupid, it's nothing special but there is no way a newly qualified teacher or policeman would be able to afford it, and it's hardly Chelsea so even those with the money wouldn't want to
Over the last 10 years the two biggest drivers on price have been landlords buying up private properties and student houses going hand in hand with the expansion of the local college
The mentality of many has been you can't lose with property
Until July 8th they may have had a point, I have occasionally been jealous of their bottle in taking on hugely leveraged mortgages for multiple properties even if I never agreed that they had any skill as investors
The thing is that even I saw this in the budget 6 weeks or so ago and it raised a wry smile
So why has it taken this long for the so called experts to read about it in the Telegraph?
My main conflict of interest is that with 2 teenage kids they may now have a chance to buy somewhere in the future if they want to, although I rented till my mid 30s for flexibility so they may too
And as for anybody with 20 buy to lets on mahoosive interest only mortgages?
We'll I'd imagine the shrewder ones would have banked some profit but those you hear crowing in pubs and dinner parties about how you can't go wrong may now be about to learn a harsh life lesson
If I knew how to spell my favourite German word I now would 🙂
be at the mercy of your MegaCorp
I do not work for The Man, for that reason. 😉
So why has it taken this long for the so called experts to read about it in the Telegraph?
I knew about it at the budget, even before as I refused to vote for tories or labour at the election, this being one of the issues.
I live abroad but own property in the UK, it does seem a particularly british thing this obsession with house prices. The sales prices in London are ridiculous - a 1 bed flat is now going for c 350k outer SW London v 250k 18 months ago.
My first purchase - I have the original sales price in the lease - sold for 96k in 1997. They are c 400k now, so pretty much quadrupling in 18 years. The same flat was c 200k in 2006 so that looks like it doubles every 10 years.
These capital prices are academic of course once you have bought the place, assuming no debt. You don't actually feel any wealthier if the bricks & mortar you own are worth 100k, or 200k as the tax structure (CGT) means you can't chop & change.
The problem lies in the market created by the govt - anyone can buy property & not be penalised for owning more than they need. I follow the Lakes mkt & it's being mooted that second home owners up there will pay a premium to owner occupiers on council tax. We had a holiday home there & 10 years ago we paid 10% council tax, then 50% & now 100%. If that went to say 125% it would deter outsiders.
I have no intention of selling anything, prices may rise or may fall, its not a cash flow. They've never been empty & if they did, it would let in a few days.
i bought my first house this year
the previous owner had bought it in 2000 and sold it to me 15 years later for a 384% profit 😐
If that went to say 125% it would deter outsiders
You're kidding right?
Someone who can spend £500k on a 2nd home isn't going to be put off by an extra £250/year in Council Tax!
[i]the previous owner had bought it in 2000 and sold it to me 15 years later for a 384% profit[/i]
Hmm, not if they'd bought it with a mortgage and had been paying it for the last 15 years. As an example; a £100k repayment mortgage at an average of 5% over 15 years works out at £142k.
They also maintained it for the last 15 years, and then take off the inflation costs (about 50%).
At the moment I rent from a mega corp (but not in the UK).
"Luckily" for me they have a set of preferred vendors for things like electricity, internet and renters insurance... With all of these companies I get special rates.. It hard to say how special they are as no other company will give me a quote due to the postcode...
Putting all the power with a corporation will never work out well for the people at the low end and with loans being hard to come by it may be that your home is not your castle you just get to live there until you retire and the state pension is cut leaving you in the street...
faceless conglomerate tax dodging regimes based outwith the uk perhaps.....1918 - largely estate/Crown/council owned.
Wrong.
At the time of the Glasgow rent strike, (1915)90% of households (of all classes) lived in private rented housing.
I believe the situation was similar elsewhere in the UK. Widespread council housing arrived later.
PRS is making quite a comeback in the UK new housing market. I've recently been involved in something where there was a mix of private owned, affordable and private rental sector properties. There are quite a number of them coming onto the market in the SE.
Estate/crown housing - is private rental it was just administered differently basically it was renting off your employer back then
Read the poor had no lawyers by andy wightman if it remotley interests you how scotland came to be as it is . Warning it reads like a university review text but is very interesting and fully referenced
I see this has descended into something of a STW splitting hairs/personal differences/political leanings/conjecture debate..
Anyways.. [b]can someone advise me?[/b]
I own a house (or rather the rights to pay the mortgage!) on a property recently valued at £149k near coastal mid-Wales. I've since moved away and am now renting, but also have been renting out my old house as a landlord. I put down something like £23k deposit on the property when I bought it 3 1/2 years ago. It's value has risen (apparently) by a £k or a few since then.
So... I'm now in a situation where being a landlord doesn't suit - the last tenants ran up 3 months rent arrears, caused damage and did a runner - and I am strongly considering selling as the better option. Selling the property means biting the bullet for 6-9 months 'till it sells (?) - and continuing to pay a mortgage on the property, while continuing to pay the rent where I live now. I will also probably have to fork out another £3k getting the place renovated, so that it sells promptly.
I gather I may own more equity on the house - now that I've paid 3 1/2 years payments on a 35 year mortgage, so I will (possibly) recoup more of the selling price, but then fees and all that vampire crap will eat into this. I'd feel I'd like to be able to get my deposit money back, but I'm not sure that will even be possible.
So... according to STW [b]should I stick or twist? (continue to be a landlord, or sell up now?)[/b]
First time buyer by the way - so I literally have no idea what I'm doing.. 😯
Insurance job
I gather I may own more equity on the house - now that I've paid 3 1/2 years payments on a 35 year mortgage
You'll be looking at pennies. Your repayments in this period will be largely paying the interest, not the capital.
You'll probably get some of your deposit back but I doubt you'd walk away with £25k imo.
If your valuation is right then I'd suspect you won't recover all of your deposit after fees. That doesn't mean selling is a bad as it'll cost you money to keep it. Depends how well it rents. I don't imagine coastal mid Wales is a rental hotspot or likely to see much in the way of property price rises. I think I'd sell, live with losses and do something else with the money but it depends on your situation.
I was/sort of am in the same position NID. Only difference is I now live in home provided by my employer so the numbers make a bit more sense.
To be honest I'm not sure I would continue in your position and would cut your losses if you are able to look to buy where you are now. If you get a good tenant you are still liable for tax on your income from the house (and the repayment part of the mortgage payment does not count as an outgoing so making a profit to be taxed on is easier than you might think) and you will pay capital gains tax for the years you are renting it out if the house goes up in value irrespective of if it costs money just to keep the house at the same standard it was when you bought it. I would say it only makes sense to carry on if you couldn't possibly afford to buy where you live now as it still keeps you in the housing market.
TheBrick - Member
Insurance job
^ That - I wouldn't rent out a property without malicious damage cover, heard a few horror stories running into £10k+ including unpaid rent & damages (mate actually turned up in a van with a few of his mates in the dead of night to perform an "eviction" only to be confronted by the tennant with a video camera in one hand & a phone ringing 999 in the other... knew his rights apparently)
Okay... cheers guys. That's STW decided it then, I'll sell the house.
This whole thing makes me feel a bit sick, wish I'd never got into it now.. 😐
mcj78. Lame eviction attempt then. If someones not paying and wrecking the place get a phone jammer and heave ho. Id bet they won't have the cash to get a lawyer and after the event the police won't be that arsed. If anyones crying about their rights offer them a bed