 You don't need to be an 'investor' to invest in Singletrack: 6 days left: 95% of target - Find out more
The changes to BTL interest relief have been covered here already. One of the arguments against the proposed changes is that BTL is a buisness, and a business should be able to claim finance as a pre tax cost, therefore paying less tax.
Should the chancellor follow his own example and either remove or reduce the relief of finance costs against corporation tax?
That would bankrupt many business. Well actually it wouldn't as they would with absolutely certainty move abroad / offshore, only a certified numpty of a CEO/CFO would keep a business located in the UK if that where the case. Where it would really hit is in banking, banks would be unable to lend anything like the amounts they do currently
The change in BTL tax laws just means those who can afford to pay cash for property are at a massive advantage,
The change in BTL tax laws just means those who can afford to pay cash for property are at a massive advantage,
+1
And those who only pay lower rate tax see no change.
You know that the Government has a live consultation on this right?
BTL isn't a business like a cafe or design agency or airplane manufacturer in that it takes inputs, does something with those inputs and sells the finished output for a profit.
It's 100% dependent on debt and an assumption house prices will go up forever. It's a speculative punt.
Economists call this kind of economic activity 'rent seeking' in that it just exploits existing assets rather than creating new wealth, hence the desire to discourage it but not discourage normal business activity.
Build to let would be different in that it would be creating new assets and then taking an income on those new assets...
It's 100% dependent on debt and an assumption house prices will go up forever. It's a speculative punt.
Ahahahahahahaha etc.
No, good BTL is based on monthly profit, hence the core requirement for 125%+ rental yield to cost.
So what happens if we put people off BTL but renters cant afford to buy?
Where will the rental properties come from? and if there are less rental properties available, what happens to rental prices?
I am not sure what the long term answer is, I suspect some balanced situation where there are still private landlords but not so many that first time buyers are priced out the market.
[i]Where will the rental properties come from? and if there are less rental properties available, what happens to rental prices?[/i]
There's no incentive to buy a BTL with debt so cash buyers will be buying the btl properties. So basically the little guy is getting cut out the act.
If supply is restricted and demand stays the same obviously price will go up in the short term. Long term people who had to rent may be able to buy so demand will fall, price will level out, etc, etc.
So what happens if we put people off BTL but renters cant afford to buy?
House prices fall and cheaper BTL takes up the slack. There will always be millions of people who don't want to or can't buy.
While it is technically a business, to qualify as a business the BTL should sit within a business - and AFAIK the Chancellors changes won't impact those landlords running a business, but will impact folk having two (or more) houses and letting one (or more) out.