Buy To Let Property Investors Set to Struggle

[Earlybird]

Have just finished reading a news article about how, due to turmoil in the financial markets, buy-to-let mortgage lenders are preparing to raise their rates in spite of the fact that the Bank Of England recently chose not to raise interest rates. It is anticipated that many investors will struggle with repayments as a result.

The article said that over 1/3 of all buy-to-let properties are owned by investors who own 100 properties or more. For some reason that number seems astonishing.

www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/09/11/nloans111.xml&DCMP=EMC-new_11092007

I know there has been some discussion here about if/how property investors have driven up the cost of property for 'normal' people. But, I am stunned to think that so many investors own so much property.....will be interesting to see what the rate rises will do to the buy-to-let market.

Thoughts/comments?

Bugger

It's not fair - I only have one property which I intend to live in when I return to the UK (I lived there for 3 yrs before I moved overseas). It was not purchased as a business venture, just as somewhere to live. It is very frustrating that I still have to have a buy-to-let mortgage

We are house-hunting at the moment (though since the news about the credit crunch we are slightly sitting back now to watch what happens!) and have seen a surprising number of previously BTL houses up for sale. They all just seem to be sitting there and gradually dropping in price. Lots of places been hanging around since the spring (this is in SE London/NW Kent borders). I wonder if some of the more short-term speculators are realising that rents are nowhere near what they were hoping, and getting out.

I'm sorry but buy to lets should be taxed as the business' they are which would eliminate the amature landlords and stop driving up house prices for the poor souls just wanting somewhere secure to bring up their children.

Good about bl&&%y time.
I totally fail to see why someone can tax deduct the mortgage on their BTL whilst I can't tax deduct my childcare or any of my other legitimate work expenses, or the mortgage I need to put a roof over my dcs heads.
If it does fall it will go a long way

Rent should be taxed like income ie 40% over whatever it is not the lower rate some businesses pay (is it 'dividends')

Rent is taxed as income.

mamama lots of landlords run their properties like businesses and pay themselves in dividends which are taxed at a much lower rate then income if that makes sense(I have 19% and 10% in my head and intended to go of and google and find out last night but got sidetracked - a job for tomorrow I think now). My point was I have costs that I pay to go to work (not bus fares, shoes but quite specific things I can't do my job without - I have to pay these myself with my post tax salary, rental income is taxed after mortgage has been deducted. IR says it is technically possible to do my job without some of these things therefore not tax deductible, it is very posssible to be a landlord without paying a mortgage so why tax deductible)
Califrau there can't be many places left in the UK where you can rent a house for 310 pounds a month.
Both of you I think the comments on this thread were more aimed at the BTL landlords (like to ones with 100 properties in the OP) than at people who rent out their one and only home because they happen to be somewhere else for whatever reason.
As a additional thought I wouldn't remotely suggest someone should STR I think to buy now would require a lot of thought, but so would to sell. Presumably since you're both overseas you miss the never ending drip of radio/newspaper articles discussing the state of the market here!! (both up and down)

There must be a few of us in the same position, Califrau - people who bought a house to live in but had to move away temporarily and are too worried to sell as we know we won't be able to afford to buy anything else later on.

I agree, 1dilemma that there is a difference between the likes of me & Califrau and those 'amateur' landlords, out to make a profit. If it is genuinely a business, bought for the sole purpose of letting and making a siginifcant income then yes, it should be taxed properly. I think a lot of people who buy-to-let don't realise how hard it is to actually make a profit. Once you've covered the mortgage, insurance, repairs, agents fees, credit checks, gas safety checks & other costs, it really doesn't leave much to put away.

Like some of you here, I've moved from the UK to another country. I've held onto the flat in case we want to go back to London, and also because it's a fantastic investment. I've got tenants in, and am hoping to have a good experience as a landlord - with the main idea being of course, to cover my mortgage/associated expenses via their rent cheques.

Am I right in thinking that a property purchased as an investment will have a buy-to-let mortgage, which is different to those of us who have straightforward mortgages as we previously lived in our homes and now don't (but rent them out)?

And the main point of my OP was to be stunned at what is happening in the property market in general with accelerated appreciation and housing shortages. I had no idea that 1/3 of the buy-to-let properties are owned by investors who have 100 or more properties in their portfolio. The cumulative increase in outlay required as a result of any rate increase could be frightening when it is multiplied by 100 properties. It made me wonder if suddenly a large number of properties would be put up for sale and flood back into the market. It could allay the housing shortage, but also cause property prices to decrease significantly - which would be good for some, but catastrophic for others.

Agree Earlybird, and glad you ladies havn't taken offence really none was intended, as I'm sure you can see I am quite able to wholehartedly wish for a sharp decline in property prices whilst at the same time not wanting people to be harmed by that!! I also think you are right a lot of multiple BTL landlords have continuously re-mortgaged/MEWd to keep buying more and are quite heavily geared therefore very exposed to changes in the market, the vast majority of owner occupiers/(or for you lot owners of single properties) would be very protected from that unless you have bought right at the peak or in some cases have to move right away.
Earlybird I'm surprised your lender is letting you keep your mortgage and hasn't made you switch to BTL, would presumably give them more income!! be sure not to check with them the only other thing I would say is that I read somewhere that high property prices are bad since they transfer wealth from the poor to the rich and the young to the old which is kind of true if you think about it and also kind of sad!Off to look at the property price bore thread now only I fear it may not be for me....

Hmmmmm, the majority of our clients who buy to let and own 50 + properties, are normally cash buyers so unfortunately the interest rise in buy to let wont affect those people

the buy to let investors on mortgages that buy off us tend to only own 1 or 2 properties to rent out.

I truly feel sorry for 1st time buyers as they are being pushed out the market by investors