Why is it brilliant? I purchased my first flat in Bexley at 19, lived in it for 8 years, during which time I saved enough of a deposit for my next home. As I had managed to save the deposit, which I worked hard for, I decided to keep my flat in Bexley and rent it out.
Originally I never intended to do this, as my plan was to sell the flat and pay the deposit from that.
I pay the right amount of tax of my rental property, and will pay capital gains when selling. If someone has worked hard and can afford to buy more flats/houses to rent out, as long as tax is paid, not sure I see why they should pay extra stamp duty.
Because to put it simply, you only need one house.
This is why I have zero interest in politics, because too many people don't understand this.
How many cars and children are we allowed ?
There's not a shortage of cars or children and buying more than one car or having more than one child doesn't unreasonably inflate the price preventing others from merely having one car or one child.
But we live in a supply and demand based economy and not some utopian situation borne of jealousy.
Some people make money out of renting property out - good.
Some people make money out of building houses - good.
Yes, but the buy to let market had tax advantages, so therefore it wasn't "pure" supply and demand.
The market was skewed in favour of btl and now it won't be as much.
Thanks, only thing that stands out is tax relief on mortgage, which has already been reduced. I don't think I would see a problem if it was removed altogether.
Can't believe some people are knocking others who have worked hard and saved hard to afford a second property to provide income for their families and hopefully bit of a nest egg for the future.
Looks like Cameron / Osborne have clicked-on to the old Blair/Brown trick of "stealth taxes" - make the punters pay again for stuff they have already paid for.
Landlords will just pass this charge onto tenants, thus putting the screws even further on the lower paid.
As the Modfather said many years ago:
The Lords and Ladies pass a ruling, The sons and girls go hand in land, From good stock and the best breeding, Paid for by the servile class.
Can't believe some people are knocking others who have worked hard and saved hard to afford a second property to provide income for their families and hopefully bit of a nest egg for the future.
No one in this thread has knocked any buy to letters, (as far as I can see). In fact I've said good luck to them.
I've simply said, that I'm glad, that the property market, will no longer favour investors, at the expense of everyone else, who cannot afford one home, let alone more than one.
So how does one prove its a second home and not the new primary address?
Presumably, to do with where you are registered for voting and or council tax.
Stamp duty has to be paid within 30 days of when you can take possession of a new house. It may be the case that you're still selling your old house or about to put it on the market within that timeframe.
If you're planning to move to a new home and rent out your old home (as is the case for the last 3 flats I've rented, including the current place), then the place being let is not subject to stamp duty, and you will be registered for council tax and voting at your new place.
If you're a Homes Under The Hammer fan looking to buy a place, do it up and sell it, is that a 2nd home or buy to let at all?
Of course there are ways of telling and collecting the tax and investigating tax avoidance/fraud, but these seem expensive to me. Lots of administration to it, and these costs would have to be taken from the potential revenue.
In the meantime, it freezes new entrants out of the rental supply market, which would lead to higher rents for tenants, and therefore make it more difficult for them to fund a deposit.
If the aim is to flood the market with supply of properties for sale, I think this might be done more efficiently through higher rates of inheritance tax for heirs who don't live in the property.
Still, it comes into effect in April, so there's four months for wanabe buy-to-letters to enter the market. Might push up prices a bit further and boost government revenues from stamp duty & CGT in the short term.
Ordinary folk who manage to buy a second property, perhaps as an alternative pension pot, get clobbered whilst big Rackman style corporations get off Scott Free. Quelle surprise!
Can't believe some people are knocking others who have worked hard and saved hard to afford a second property to provide income for their families and hopefully bit of a nest egg for the future.
Really, can't you? It's par for the course sometimes. Just jealousy and spite. Take the bloke that said no one should have a second home. Why? Does that include static and mobile caravans? If not why not? Many second homes are holiday homes in areas that otherwise have little interest to anyone to actually live and work there. Many are little more than shacks and are not really habitable in winter months, like on the North Yorkshire coast for example. Some places rely upon second home owners to provide the local economy with its main income stream. But let's not worry about that as long as we keep the class war going. Some will take the opportunity of shifting the secondary home purchase to Spain or France or the USA and the monetary benefit to the local economy with go too.
As for home affordability - I can't imagine how some would have coped back in the day when there were realistic mortgage rates rather than the virtually free money on offer now!
Perhaps we could stop selling all new-build properties to foreign investors - that's the biggest problem.
I have a 2nd property. I couldn't sell it 3 years ago so rented it out when I relocated for my job. I don't cover the mortgage each month. I've had it on the market for 2 months and had 1 viewing. Property in North Essex isn't shifting like it does down here. My tenants move out in 3 weeks and I'll be left with 2 mortgages to pay for a few months. Once I finally do sell it I'll be stung for capital gains tax too. It's great this property game!
Thanks to today's additional kick in the bollocks I think I'll take my money and invest in something else - if and when I sell my old house.
Can't believe some people are knocking others who have worked hard and saved hard to afford a second property to provide income for their families and hopefully bit of a nest egg for the future.
I have no issue with those people. The people I take issue with are landlords who own a whole portfolio of properties, never visit or invest in them and increase their rent at every available opportunity while giving crooked estate agents free reign to try and claw back every penny of a deposit off spurious damage claims. Meanwhile young people can never get onto the property ladder because most of the properties are already bought up, and the ones that aren't are near-impossible to save up for due to the sky-high rent prices. Not all landlords are like this I know, but I've come across the bad ones far more regularly than I have the good ones.
- £400k purchase price - £100k deposit - £300k interest only mortgage at 3% pa - 2.5% stamp duty (amortised over five years) - 4% gross rental yield (after costs, voids etc.)
The above investment generates a 5% return on the £100k investment in the first five years (£16k less £2k stamp duty pa less £9k interest pa).
However if stamp duty increases to 5.5% then the return falls by almost half to 2.6% (£16k less £4.4k stamp duty less £9k interest pa), less than you can generate (unlevered) from low risk investment grade bonds with daily liquidity.
Thanks to today's additional kick in the bollocks I think I'll take my money and invest in something else - if and when I sell my old house.
Precisely. The idea is to get people to invest in something else, so others will have the opportunity to buy their own place before the age of 40 if ever.
Somewhat paradoxically, the best way to reduce house prices would be to scrap stamp duty altogether - as pure 'dead money tax' it represents the single biggest impediment to a fluid market.
Why would an owner of a £1m house in London move to a bigger house in the 'burbs (with nearly £50k stamp duty) when it would cost the same to extend or convert the loft?
When people talk about lack of housing supply driving up prices, they forget that supply comprises existing stock for sale as well as new builds.
If there was a genuine housing crisis then rents (an equally important component of demand) would be rising as fast as house prices, yet rental yields have been falling consistently.
Can't believe some people are knocking others who have worked hard and saved hard to afford a second property to provide income for their families and hopefully bit of a nest egg for the future.
I have no issue with those people. The people I take issue with are landlords who own a whole portfolio of properties, never visit or invest in them and increase their rent at every available opportunity while giving crooked estate agents free reign to try and claw back every penny of a deposit off spurious damage claims. Meanwhile young people can never get onto the property ladder because most of the properties are already bought up, and the ones that aren't are near-impossible to save up for due to the sky-high rent prices. Not all landlords are like this I know, but I've come across the bad ones far more regularly than I have the good ones.
Its mostly the eastern Europeans that are parasites and do a runner, knockin me £2-3k at a time. Not all of em are like this I know, but I've come across the bad ones far more regularly than I have good ones.
Including the 2 occasions that I gave em a squeeze and only took little and no deposit and still got kicked in the bollocks both times
I do feel that this will lose the Tories a lot of votes. How many "small" buy to let investors are there? How many of them are going to be really pissed off with these changes and how many of them vote Tory? I guess they did the sums so whatever the numbers are, it's not enough to bother Dave and George. Of course, it doesn't affect their mates who have loads of houses.
I have to declare an interest here - influenced by Houses Under the Hammer I got into the buy-to-let thing earlier this year but I'm small time - just someone who worked hard all his life and had a little spare cash. It was part of my grand plan for retirement - it turns out the pension plan I paid shed-loads into is not really going to cut it. Now looking for a plan B.
Why is it brilliant? I purchased my first flat in Bexley at 19, lived in it for 8 years, during which time I saved enough of a deposit for my next home. As I had managed to save the deposit, which I worked hard for, I decided to keep my flat in Bexley and rent it out.
Originally I never intended to do this, as my plan was to sell the flat and pay the deposit from that.
I pay the right amount of tax of my rental property, and will pay capital gains when selling. If someone has worked hard and can afford to buy more flats/houses to rent out, as long as tax is paid, not sure I see why they should pay extra stamp duty.
Totally agree mate. I did something similar, worked hard and paid every extra penny I had into over payments. My brother bought a 30k Bmw at the age of 20 on finance, lost 10 k and has never been able to save for a deposit. That is his fault nit mine so why should I suffer
There's a Tory MP with 26 properties. I'm sure there are some Labour MPs with a few as well.
This doesn't really sound like a good policy all round to me when you look at the example given above by @swisdom
I'm not anywhere near owning, and can't see it happening for a long time. Wouldn't be surprised if somewhere in my lease there is a autumn budget response clause where my rent gets put up because that wally Osbourne tries to play the man of the people with his token gestures
I do feel that this will lose the Tories a lot of votes. How many "small" buy to let investors are there? How many of them are going to be really pissed off with these changes and how many of them vote Tory? I guess they did the sums so whatever the numbers are, it's not enough to bother Dave and George. Of course, it doesn't affect their mates who have loads of houses.
I have to declare an interest here - influenced by Houses Under the Hammer I got into the buy-to-let thing earlier this year but I'm small time - just someone who worked hard all his life and had a little spare cash. It was part of my grand plan for retirement - it turns out the pension plan I paid shed-loads into is not really going to cut it. Now looking for a plan B.
If you've already bought, then you don't have to pay the stamp duty. This hits future buy-to-let investors, not the existing landlords. In fact, for existing landlords, the potential drop in property prices might deter them from selling. The extra stamp duty means a barrier to entry for the competition. Barrier to entry protects incumbents, who may actually be able to increase rents. So everyone wins.
Tough argument. Where does the line between home and investment opportunity fall?
Personally, I've always viewed property as a home and feel eternally blessed that at the point of my life when you / you and your partner buy your first home, we were able to buy something (small 2 bed terrace) that meant we made sacrifices, but didn't financially destroy us. That property is now 3.5 to 4 times in value, yet our aggregated income is probably not 20-30% higher. Yes out situations have changed, but it really wasn't a lifetime ago.
What chance have youngsters got of following the same path without ridiculous sacrifices and a financial noose round their neck for 30 years?
Something has to change. It's not fair on those that simply weren't lucky of being in the right place at the right time, or left an inheritance.
Osborne should have hit purchases through trusts and offshore vehicles even harder; and he should have reduced the capital gains tax for people like me who have owned a second property for years and would have to pay a huge amount of tax if I sold, which in turn means that property is unlikely to be coming in the market in my lifetime...if there was a real incentive to sell these properties then prices wouldn't rise so fast and might even start coming down...and it will free up a lot of cash that will start to flow back into the economy
I do feel that this will lose the Tories a lot of votes. How many "small" buy to let investors are there? How many of them are going to be really pissed off with these changes and how many of them vote Tory? I guess they did the sums so whatever the numbers are, it's not enough to bother Dave and George. Of course, it doesn't affect their mates who have loads of houses.
I have to declare an interest here - influenced by Houses Under the Hammer I got into the buy-to-let thing earlier this year but I'm small time - just someone who worked hard all his life and had a little spare cash. It was part of my grand plan for retirement - it turns out the pension plan I paid shed-loads into is not really going to cut it. Now looking for a plan B.
If you've already bought, then you don't have to pay the stamp duty. This hits future buy-to-let investors, not the existing landlords. In fact, for existing landlords, the potential drop in property prices might deter them from selling. The extra stamp duty means a barrier to entry for the competition. Barrier to entry protects incumbents, who may actually be able to increase rents. So everyone wins.
Except maybe the tenants.
Ah, yes I have avoided the stamp duty rise but not the tax changes which mean, from 2017 I can't offset the mortgage costs against tax.
Also the stamp duty thing is actually a loan in effect because when you sell it is taken off the capital gains (assuming you make a capital gain).
Finally managed to get on the ladder 2 days after my 30th in April last year. The plan was to invest in the flat, and after about 5 years try and move out of London but keep the place as our retirement fund.
They changed the stamp duty about 5 months after we bought. Would have saved us about 3.5k.
Now this. Awesome! Time to change the whole fecking plan.
Comments
Landlords will just pass this charge onto tenants, thus putting the screws even further on the lower paid.
As the Modfather said many years ago:
The Lords and Ladies pass a ruling,
The sons and girls go hand in land,
From good stock and the best breeding,
Paid for by the servile class.
I've simply said, that I'm glad, that the property market, will no longer favour investors, at the expense of everyone else, who cannot afford one home, let alone more than one.
If you're planning to move to a new home and rent out your old home (as is the case for the last 3 flats I've rented, including the current place), then the place being let is not subject to stamp duty, and you will be registered for council tax and voting at your new place.
If you're a Homes Under The Hammer fan looking to buy a place, do it up and sell it, is that a 2nd home or buy to let at all?
Of course there are ways of telling and collecting the tax and investigating tax avoidance/fraud, but these seem expensive to me. Lots of administration to it, and these costs would have to be taken from the potential revenue.
In the meantime, it freezes new entrants out of the rental supply market, which would lead to higher rents for tenants, and therefore make it more difficult for them to fund a deposit.
If the aim is to flood the market with supply of properties for sale, I think this might be done more efficiently through higher rates of inheritance tax for heirs who don't live in the property.
Still, it comes into effect in April, so there's four months for wanabe buy-to-letters to enter the market. Might push up prices a bit further and boost government revenues from stamp duty & CGT in the short term.
Just jealousy and spite.
Take the bloke that said no one should have a second home. Why? Does that include static and mobile caravans? If not why not? Many second homes are holiday homes in areas that otherwise have little interest to anyone to actually live and work there. Many are little more than shacks and are not really habitable in winter months, like on the North Yorkshire coast for example. Some places rely upon second home owners to provide the local economy with its main income stream. But let's not worry about that as long as we keep the class war going.
Some will take the opportunity of shifting the secondary home purchase to Spain or France or the USA and the monetary benefit to the local economy with go too.
As for home affordability - I can't imagine how some would have coped back in the day when there were realistic mortgage rates rather than the virtually free money on offer now!
I have a 2nd property. I couldn't sell it 3 years ago so rented it out when I relocated for my job. I don't cover the mortgage each month. I've had it on the market for 2 months and had 1 viewing. Property in North Essex isn't shifting like it does down here. My tenants move out in 3 weeks and I'll be left with 2 mortgages to pay for a few months. Once I finally do sell it I'll be stung for capital gains tax too. It's great this property game!
Thanks to today's additional kick in the bollocks I think I'll take my money and invest in something else - if and when I sell my old house.
Imagine the following scenario:
- £400k purchase price
- £100k deposit
- £300k interest only mortgage at 3% pa
- 2.5% stamp duty (amortised over five years)
- 4% gross rental yield (after costs, voids etc.)
The above investment generates a 5% return on the £100k investment in the first five years (£16k less £2k stamp duty pa less £9k interest pa).
However if stamp duty increases to 5.5% then
the return falls by almost half to 2.6% (£16k less £4.4k stamp duty less £9k interest pa), less than you can generate (unlevered) from low risk investment grade bonds with daily liquidity.
Why would an owner of a £1m house in London move to a bigger house in the 'burbs (with nearly £50k stamp duty) when it would cost the same to extend or convert the loft?
When people talk about lack of housing supply driving up prices, they forget that supply comprises existing stock for sale as well as new builds.
If there was a genuine housing crisis then rents (an equally important component of demand) would be rising as fast as house prices, yet rental yields have been falling consistently.
Including the 2 occasions that I gave em a squeeze and only took little and no deposit and still got kicked in the bollocks both times
I have to declare an interest here - influenced by Houses Under the Hammer I got into the buy-to-let thing earlier this year but I'm small time - just someone who worked hard all his life and had a little spare cash. It was part of my grand plan for retirement - it turns out the pension plan I paid shed-loads into is not really going to cut it. Now looking for a plan B.
This doesn't really sound like a good policy all round to me when you look at the example given above by @swisdom
I'm not anywhere near owning, and can't see it happening for a long time. Wouldn't be surprised if somewhere in my lease there is a autumn budget response clause where my rent gets put up because that wally Osbourne tries to play the man of the people with his token gestures
Except maybe the tenants.
Personally, I've always viewed property as a home and feel eternally blessed that at the point of my life when you / you and your partner buy your first home, we were able to buy something (small 2 bed terrace) that meant we made sacrifices, but didn't financially destroy us. That property is now 3.5 to 4 times in value, yet our aggregated income is probably not 20-30% higher. Yes out situations have changed, but it really wasn't a lifetime ago.
What chance have youngsters got of following the same path without ridiculous sacrifices and a financial noose round their neck for 30 years?
Something has to change. It's not fair on those that simply weren't lucky of being in the right place at the right time, or left an inheritance.
Also the stamp duty thing is actually a loan in effect because when you sell it is taken off the capital gains (assuming you make a capital gain).
They changed the stamp duty about 5 months after we bought. Would have saved us about 3.5k.
Now this. Awesome! Time to change the whole fecking plan.