The Brexit referendum thread: potential consequences for GB, EU and the Brits in CH

	Quote:	fatmanfilms
	UK hose prices will fall substantially

Due to Climate Change, summers will probably be hotter in the UK. I would expect an outright hosepipe ban, so no doubt you are right, hose prices will fall.

[amogles]

	Quote:
	Due to Climate Change, summers will probably be hotter in the UK. I would expect an outright hosepipe ban, so no doubt you are right, hose prices will fall.

The real reason hose prices are falling is this ....

[Urs Max]

	Quote:	fatmanfilms
	UK hose prices will fall substantially as Prime central London as already done. The big losers will be people who bought with a 40% interest free help to buy loan & the government who underwrote that loan.

The owners are unlikely to actually lose as they saved the interest that would otherwise have been due. That doesn't spare them from financial problems of course, especially those who didn't amortise the debt with the saved interest.

Since the government may be forced to forfeit on those debts (in part or full) once a significant number of owners are underwater, not amortising may actually be the most profitable thing to do.

[fatmanfilms]

	Quote:	curley
	What's that? Mortage interest no longer deductable in England? Where does the 65% play into this? And what do you mean by 3 UK tax years? Is that a rule limited to 3 years?

Landlord will be taxed on gross rental income not the profit after mortgage interest. Currently mortgage interest is a fully deductible expense. The change is being phased in over 4 years starting April 2017, so for the 2021 tax year only a 20% tax deduction is allowed.
Many basic rate tax payers who rent out a property will become higher rate taxpayers as a result this change of rule.
65% is roughly the point where the cash flow will turn negative due to a higher tax bill.
I expect plenty of landlords with 10 plus properties may well go bankrupt as a result if their empire is based on high borrowings.

Due to change of financing rules Banks can NOW only lend 120 months rent so max value capped at 160 months rent. Plenty of London sells for over 400 months rent at the moment, about the same as Swiss property.

	Quote:	Urs Max
	The owners are unlikely to actually lose as they saved the interest that would otherwise have been due. That doesn't spare them from financial problems of course, especially those who didn't amortise the debt with the saved interest. Since the government may be forced to forfeit on those debts (in part or full) once a significant number of owners are underwater, not amortising may actually be the most profitable thing to do.

Price in London rose 40% due to 40% HTB, after 5 years that interest loan becomes interest bearing & the rate is not attractive. If London prices fell 50% they would still not be a bargain based on income multiples. Oh & any profits get split with the government so it's not a one way bet
High End Prime central London prices have already fallen over 30% & still there is no buyers.....

[Blueangel]

	Quote:	fatmanfilms
	I expect plenty of landlords with 10 plus properties may well go bankrupt as a result if their empire is based on high borrowings.

That's just buy to let creating a dependent tax pool. Typical government tactic of giving with one hand and taking with the other.

Question for you... How many people do you actually know who fall into that category? I don't know any as the 5 friends & family who are landlords, and are guiding me, have always kept their investment properties mortgage free.

[fatmanfilms]

	Quote:	Blueangel
	That's just buy to let creating a dependent tax pool. Typical government tactic of giving with one hand and taking with the other. Question for you... How many people do you actually know who fall into that category? I don't know any as the 5 friends & family who are landlords, and are guiding me, have always kept their investment properties mortgage free.

I don't know anyone who has an investment property that is paid for with cash, all mortgaged & all increased the mortgages as prices increased to buy more property & get cash 'tax free'.

The reason why heavily geared landlords they will go bust is there is a huge CGT bill to pay after clearing the mortgage........ They never thought they would have to sell so the tax was irrelevant as it's not paid at death.

[amogles]

	Quote:	Blueangel
	Question for you... How many people do you actually know who fall into that category? I don't know any as the 5 friends & family who are landlords, and are guiding me, have always kept their investment properties mortgage free.

Do you mean genuinely mortgage free, or mortgages kept within the envelope of equity?

I would think that these days where you can have a mortgage for under 1%, but still make 6 to 10% with stocks and funds, that I would be very tempted to mortgage anything that isn't already mortgaged and use that money to get ahead. But of course always within the bounds of being able to repay the full sum at any time.

[Blueangel]

	Quote:	fatmanfilms
	I don't know anyone who has an investment property that is paid for with cash, all mortgaged & all increased the mortgages as prices increased to buy more property & get cash 'tax free'.

There's a part of me that wants to say "they were sold a pup", but I'm old school when it comes to finances.

“Be fearful when others are greedy and greedy when others are fearful.” Warren Buffett.

[Blueangel]

	Quote:	amogles
	Do you mean genuinely mortgage free, or mortgages kept within the envelope of equity?

I mean genuinely mortgage free, and were outright cash purchases. Should add that all 5 have been landlords for over 15yrs. I know for a fact that two of them only ever release equity by taking a mortgage against their own home, yet the properties in their portfolio are always kept mortgage free.

I'm fully aware that seems to be counterintuitive, but when one is a builder and the other is an accountant, I'm more inclined to take heed from them. The only market force hitting their investments at the moment is that there's a glut of 2 bed apartments on the market, so they're switching a proportion of their assets into 3 bed semis. The builder currently only has one apartment left, and has switched all his investments into houses.

[fatmanfilms]

	Quote:	Blueangel
	“Be fearful when others are greedy and greedy when others are fearful.” Warren Buffett.

If prices fall 75% it will indeed be a good time to buy, however today 90% of people are bullish on property, so yes I am fearful.

	Quote:	Blueangel
	I mean genuinely mortgage free, and were outright cash purchases. Should add that all 5 have been landlords for over 15yrs. I know for a fact that two of them only ever release equity by taking a mortgage against their own home, yet the properties in their portfolio are always kept mortgage free. .

Thats bonkers as then none of the mortgage interest would be tax deductible. Most investors get the deposit from their own home & fully mortgage the rest, thus highly geared.

[Urs Max]

	Quote:	fatmanfilms
	High End Prime central London prices have already fallen over 30% & still there is no buyers.....

I think we've had that before, didn't we? A few burrooughs saw prices fall but neighbouring burroughs saw them rise by a similar amount for a net zero-ish change. And overall London prices are still flat-to-up.

[fatmanfilms]

	Quote:	Urs Max
	I think we've had that before, didn't we? A few burrooughs saw prices fall but neighbouring burroughs saw them rise by a similar amount for a net zero-ish change. And overall London prices are still flat-to-up.

I am talking about HIGH END PRIME properties the came on the market at 14,000,000, dropped to 10,000,000 & still not sold. Of course the higher stamp duty is to blame.
Fulham had dropped roughly 15% since peak, Westminster & Chelsea somewhat more. Just look at how much asking prices have dropped on Rightmove using property bee.

The housing crisis has come about because every government for the past 50 odd years hasn't built the number of houses they said they would. It could easily be solved, if only people would open their minds a little.

• Less use of bricks and mortar, more use of pre-fabricated concrete and even pre-fabricated houses like you often see here and in Germany. Cheaper and quicker to build
• Stop all housing subsidies, all they do is inflate prices and make landlords rich
• The Green Belt is an outdated dinosaur, do away with it, free up the land and build on it
• Get immigration under control
• State planning regulations is a killer. Much less regulation is required. The Government shouldn`t be building houses, they should stop preventing people from building houses

[Blueangel]

	Quote:	fatmanfilms
	Thats bonkers as then none of the mortgage interest would be tax deductible. Most investors get the deposit from their own home & fully mortgage the rest, thus highly geared.

Like I said, it appears to be counterintuitive, particularly with regards to the current investment norms, but they've all survived and have very healthy investments. It's not bonkers, it's just a different approach.

The accountant refuses to have property investments that are too exposed to changes in government property or taxation policies. He resolutely keeps that element of 'risk' in his financial investments, not his property ones.

The builder still owns 5 of the last 7 houses he's lived in. His kids own the other 2, plus he has several others and a few apartments. He's more of a property hoarder than a deliberate landlord, but it's worked out very well for him...and his kids. With both of them, he rented houses to them at full whack rent, then after 5yrs, he reimbursed 70-80% of their payments so that they had a decent deposit to buy their houses.

There are many routes into building a property portfolio, but anything that is government backed, or government policy, such as the buy to let scheme, sends me running for the hills. I saw too many people get stung in the 80's with endowment mortgages and the likes. But like I said, I'm old school. Strictly repayment mortgages and savings, and never HP. Never even had a car loan. They've always been cash purchases.

[fatmanfilms]

	Quote:	Blueangel
	The builder still owns 5 of the last 7 houses he's lived in. His kids own the other 2, plus he has several others and a few apartments. He's more of a property hoarder than a deliberate landlord, but it's worked out very well for him...and his kids. With both of them, he rented houses to them at full whack rent, then after 5yrs, he reimbursed 70-80% of their payments so that they had a decent deposit to buy their houses.

Even more bonkers as the rent was subject to taxation. More than likely he evaded the tax, but I am sure you don't know the full story.

[Uncle Max]

	Quote:	Loz1983
	The housing crisis has come about because every government for the past 50 odd years hasn't built the number of houses they said they would. It could easily be solved, if only people would open their minds a little...

The Statistic of the Year - it's a thing - is 0.1% of British land is built upon.

"...it is hard to have an informed and rational debate about housing policy, airport expansion or, for that matter, intensive agricultural methods when the country is so mistaken about the basics."

I fact checked StirB's assessment of when the Government / Voters will open their minds: he is correct. More precisely, it'll be ten past never next Martober.

	Quote:	Uncle Max
	The Statistic of the Year - it's a thing - is 0.1% of British land is built upon. "...it is hard to have an informed and rational debate about housing policy, airport expansion or, for that matter, intensive agricultural methods when the country is so mistaken about the basics." I fact checked StirB's assessment of when the Government / Voters will open their minds: he is correct. More precisely, it'll be ten past never next Martober.

I love the way the image in the article shows "built-on" as being 5.9% and then not explaining the difference between the two numbers.

[st2lemans]

	Quote:	Uncle Max
	The Statistic of the Year - it's a thing - is 0.1% of British land is built upon.

Fake news.

0.1% is DENSELY built on, 5.9% is built on (from the same article).

Tom

[Uncle Max]

	Quote:
	I love the way the image in the article shows "built-on" as being 5.9% and then not explaining the difference between the two numbers.

Yup, it could confuse. The 0.1% refers to "densely built upon". Still, props to the comment from the author "everybody's stupid and that's for sure".

	Quote:	Uncle Max
	Yup, it could confuse. The 0.1% refers to "densely built upon". Still, props to the comment from the author "everybody's stupid and that's for sure".

Good news, there's more land for the government to sell off than we thought. Hooray!