he seems to think buy to let investments are fine, but doesn't like pensioners having them...
Property and pensions
- Thread starter lunar
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he seems to think buy to let investments are fine, but doesn't like pensioners having them...
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Isn't that what pension companies do anyway?
Seems a bit of a non issue to stir up some btl hate for the afternoon. Tomorrow's fish and chip paper.
Soldato
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For a long time governments encouraged BTL in order to 'replace' council housing, encouraged by a banking sector which was better at maths and not influenced by short term political needs.
There were and still are tax advantages not available to folk looking to buy a home rather than an income stream. This has distorted the housing market (and the housing benefits bill) and pushed up prices, especially at the lower end, to the benefit of nobody except those lending money. Because even successful private landlords don't benefit from a messed up society.
So he's right, even if his argument wasn't particularly well articulated.
It would be nice if we looked to Germany -- where rental property tends to be managed by pension funds rather than individual pensioners of varying competence and self interest -- rather than the USA for the best way to manage long term housing needs. But that's not going to happen. We are too culturally greedy to put the health of the nation above the wealth of the individual.
</leftydrivel>
There were and still are tax advantages not available to folk looking to buy a home rather than an income stream. This has distorted the housing market (and the housing benefits bill) and pushed up prices, especially at the lower end, to the benefit of nobody except those lending money. Because even successful private landlords don't benefit from a messed up society.
So he's right, even if his argument wasn't particularly well articulated.
It would be nice if we looked to Germany -- where rental property tends to be managed by pension funds rather than individual pensioners of varying competence and self interest -- rather than the USA for the best way to manage long term housing needs. But that's not going to happen. We are too culturally greedy to put the health of the nation above the wealth of the individual.
</leftydrivel>
That's exactly what I was trying to suggest.
The landlord will retire comfortably, while the tenant would have helped him get there.
do you not see the contradiction though with claiming you're also OK with buy to let investments
are they OK if you're rich enough to not need to live off the rental income or something?
Soldato
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Agreed. I've no issue with it what so ever.
Presumably if people kept their opinions to themselves on various subjects there wouldn't be much scope for a call in radio talk show. The show was about property prices and renting, the caller fits the two criteria of having bought a property and being involved in the renting sector... Why they're doing it, is surely just a reason.
They require as much money as you want to get out of them. They perform as well as the investments you choose to make.
By the way, it is perfectly possible to borrow within a personal pension. Up to be 50% of the net fund value, although it is possible to buy certain investments that are structured to be more highly geared.
For clarification, a personal pension CAN hold residential property in certain circumstances. These are normally through certain syndicated investments with specific limits between a group of different investors, or via a SIPP that has applied for conversion from commercial to residential or applied for residential planning. On the latter point it is possible for the pension to act on the planning permission and start development up to a certain point - normally well before the point that it can become habitable - but HMRC have not clarified the specific cut off point when it would incur tax charges.
But your OK with a tenant paying someone extra money while they are working? Why is it only once they retire that you have an issue with it?
that is interesting, so does the commercial property then get removed from the SIPP once it becomes habitable or do you just have a potential tax bill?
I mean having a stake in a fund that invests in residential properties isn't really the same as being able to hold individual buy to let properties in a pension
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It doesn't get removed - your SIPP has to physically sell it. If you don't then you'll be taxed as it will be deemed as taxable property - unauthorised payment and scheme sanction charges.
My fiancee and I have actually just bought our first home, a 2 bedroom flat with the intention of travelling for a few years after our wedding in 2017. During this time we will be renting this out with 'Permission to Let' on our mortgage, not under a BTL mortgage. On our return from travelling we will have somewhere to live (tenants will obviously be given appropriate notice) while we re-establish ourselves in jobs and begin planning for a larger house.
We will look to remortgage the property as a BTL, and rent it out, so we can obtain an appropriate mortgage on our larger property without the rental property impacting our ability to borrow.
If the BTL rules tighten so much in the meantime that we are unable to obtain a BTL mortgage (very unlikely) we will simply bring the LTV of the flat down to such a level that the payments have little impact on our affordability on our main mortgage (though this will have an impact on our main deposit so may require some extra saving before moving on)
This is a long term investment for us, and we have zero intention of selling the property - up here in Scotland a 93k 2 Bedroom flat in a good area with a good finish will fetch 550 - 600 easily at the moment.
Despite the above, I do think there is a bit of a problem in some areas with people tying themselves to 5 or 6 properties under high LTV / High Interest BTL Mortgages who would go under (and potentially leave people in very tough positions) should they reach a low level of occupancy/encounter major problems.
We will look to remortgage the property as a BTL, and rent it out, so we can obtain an appropriate mortgage on our larger property without the rental property impacting our ability to borrow.
If the BTL rules tighten so much in the meantime that we are unable to obtain a BTL mortgage (very unlikely) we will simply bring the LTV of the flat down to such a level that the payments have little impact on our affordability on our main mortgage (though this will have an impact on our main deposit so may require some extra saving before moving on)
This is a long term investment for us, and we have zero intention of selling the property - up here in Scotland a 93k 2 Bedroom flat in a good area with a good finish will fetch 550 - 600 easily at the moment.
Despite the above, I do think there is a bit of a problem in some areas with people tying themselves to 5 or 6 properties under high LTV / High Interest BTL Mortgages who would go under (and potentially leave people in very tough positions) should they reach a low level of occupancy/encounter major problems.
+1
What a ridiculous statement.
Annualized return from property since 1985 is 5.7%, FTSE 9.9%
Personally I would never own a BTL for the simple reason that they are for most person a massive allocation of assets (many eggs in one basket), not to mention the most illiquid of assets. Holding shares in a REIT is much simpler.
http://www.thisismoney.co.uk/money/investing/article-2958803/Cash-stocks-property-best-returns-past-30-years.html
Shares are likely to be more volatile than property, especially now that the precedence has been set that the government won't let banking facilities fail should the arse fall out the market.
But your right, intelligent money is probably not in property, which again supports my point that the rental market is built on a foundation of people looking for quick wins on the cusp of affordability because "omg look at house prices rising lol!". Average Joe knows about house prices, Average Joe does not know much about shares.
Doesn't stop me wanting a BTL though, but I've not even got one house yet let alone two, as the rental market has screwed me for 3 years!
But your right, intelligent money is probably not in property, which again supports my point that the rental market is built on a foundation of people looking for quick wins on the cusp of affordability because "omg look at house prices rising lol!". Average Joe knows about house prices, Average Joe does not know much about shares.
Doesn't stop me wanting a BTL though, but I've not even got one house yet let alone two, as the rental market has screwed me for 3 years!
eh?
Even the most basic FTSE tracker over 20 years has done around 440% (excluding any dividends/reinvestments etc etc)
FTSE 100 DEcember 1995 - 1413
FTSE 100 DEcember 2015 - 6277
Lookin at eu wide statistics it is wuite clear that the higher the amount of owner occupants and the less mortgags owners have, the poorer the country. Or maybe the causality is reverse. Who knows, but correlation is clear, see fig 2:
http://ec.europa.eu/eurostat/statistics-explained/index.php/housing_statistics
Personally i think owner occupancy is getting less and less good for the tenant / people and society. Modern work life has changed and life long careers in one office/ factory are rare. If you own your home, it can easily hold you back and prevent you from advancing on your career. Not to mention the sadness of people in villages where employment was based on one major employer who desides to shut down the factory. Not only people lose their jobs, but their housing values plummet and they are stuck to walls in the sticks, often with mortgage.
Yes, it is cheaper to live if nothing unexpected happens, but we are no longer peasants stuck to a single farm for a lifetime.
http://ec.europa.eu/eurostat/statistics-explained/index.php/housing_statistics
Personally i think owner occupancy is getting less and less good for the tenant / people and society. Modern work life has changed and life long careers in one office/ factory are rare. If you own your home, it can easily hold you back and prevent you from advancing on your career. Not to mention the sadness of people in villages where employment was based on one major employer who desides to shut down the factory. Not only people lose their jobs, but their housing values plummet and they are stuck to walls in the sticks, often with mortgage.
Yes, it is cheaper to live if nothing unexpected happens, but we are no longer peasants stuck to a single farm for a lifetime.
1985-1994, absolutely fine. Good, solid, consistent growth.
1994-2003, rollercoaster. Big gains followed by big wipeout.
2003-2009, same.
2009-2015, up.
2015-today, down.
Buy to let became most popular in the mid 1990s - steady growth as opposed to the rollercoaster above. If you started investing in 1985 with a long term outlook - no problem, but for those who started saving for their future in 1994 housing is *clearly* the better investment by miles in terms of growth and stability.