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Debate House Prices
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BTL ..... who should pay?
Comments
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I wonder if the answers have any simple costs involved. Like...
100k house. 5% year = £5,000 out
Likely rent - 500/m = £5,000 in (allow ten months only for voids)
Profit = zero.
That's before costs.
What's the next question?
Why didn't you factor in 6 months voids, a new roof and only £100/month in rent to make a REALLY impressive point?
Silly boy.0 -
I note that no bulls can actually post a reason financially why buying a BTL now would make any money. My figures are close to real.
You choose to argue with nonsense, because you have no argument. If you did, you would be falling over yourself to prove me wrong.0 -
I note that no bulls can actually post a reason financially why buying a BTL now would make any money. My figures are close to real.
You choose to argue with nonsense, because you have no argument. If you did, you would be falling over yourself to prove me wrong.
Like they want to "prove" it to you by posting some figures equally as fictitious as yours?0 -
I wonder if the answers have any simple costs involved. Like...
100k house. 5% year = £5,000 out
Likely rent - 500/m = £5,000 in (allow ten months only for voids)
Profit = zero.
That's before costs.
What's the next question?
Am I missing something, profit = 0 until the mortgage term is up and you have 100's of thousands of £'s worth of asset for doing nothing.This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com0 -
kennyboy66 wrote: »The attraction (as ever) is the potential for capital growth. In your example £20k deposit, sit on house for 5 years and hope you can sell it for £130k.
Profit = 150%
and you pay less tax than if you were working for a living.
It's not for me, but you can see the logic is seductive for those whose experience of property since 1970 is an inflationary march upwards with really only in this crash that nominal values fall to a significant amount.
You don't even need capital appreciation
20k deposit
Tenants pay the costs i.e. mortgage maintenance, etc (keeping it simple)
After 25 years you own a property worth £100k
versus
20k in bank earning 0.1% (ok, well make it an average of 5%)
Compounded after 25 years = £67,700
47.7% better off without capital appreciation:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
Yes. You are missing something. I am guesstimating an interest only loan on 100k at 5%. No capital repayment element. I am not exaggerating figures, just looking at property prices and comparing to rental values.Am I missing something, profit = 0 until the mortgage term is up and you have 100's of thousands of £'s worth of asset for doing nothing.
It's very simple stuff and I wondered if anyone from the bull camp could make a simple financial case for buying a BTL right now, today.
Because I can't and think they need to drop much further. If you can destroy my argument then fine, please go ahead.0 -
Because I can't and think they need to drop much further. If you can destroy my argument then fine, please go ahead.
Try doing a bit of reading and research.
We are not saying all property is prime for BTL, but there are ones out there.:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
exactly where they raised them before and probably more likely to invest in property now especially with lowish savings rates, most people aren;t comfortable or understand investing in the stock market. - have a look at the Housing and Renting board to see the increasing number of questions about people wanting to invest in BTL.
Lloyds is not and does not monopolise the BTL market.
Why did you not choose Mortgage Works as your example of a BTL lender :rolleyes:
Why should you lose your tax efficiency and pay more income tax
paying capital back makes no sense whatsoever unless you are wanting to sell the property. that's the point of BTL - it's a tax efficencies are extremely important.
if it's being let - the debt is being repaid by the income received from the rental income. how are you putting your family at risk?
The trouble is Mr C is that the world constantly changes. What worked yesterday may not work tmorrow. In business you constantly have to adapt to changing market conditions. Created by all sorts of events.
A huge number of people have no understanding of how the property bubble was created. They all cite historical data to support their view that upward trends will generate huge returns in the medium term. A positive return above inflation in itself is not enough for them.
No Lloyds doesn't monoplise I agree. But the Mortgage Works lends now on the basis of 60% LTV. So not sure where 40% deposits plus buying and setting up costs are going to found by future BTL investors.
With regards to tax efficiency. To grow a business you need to generate cash (after tax), in order to reinvest. Or how will you acquire the next property to grow your portfolio? As pointed out above 40% deposits are required, so are of the reach of most people. In order to generate cash you need to repay capital in order to reduce interest payable.
On secondary note. If its so obviously tax efficent. Wouldn't that make it a target for changes in taxation rules? I would say 100% yes. Particularly as tax revenues have to be increased.
Ok your BTL empire is a pack of cards. As one property fails for whatever reason you are forced to sell it. Possibly selling another to clear the negative debt. And so on. At the end you are left with your family home which was remortgaged to provide the initial deposit. This too is sold to clear the debt.0 -
Yes. You are missing something. I am guesstimating an interest only loan on 100k at 5%. No capital repayment element. I am not exaggerating figures, just looking at property prices and comparing to rental values.
It's very simple stuff and I wondered if anyone from the bull camp could make a simple financial case for buying a BTL right now, today.
Because I can't and think they need to drop much further. If you can destroy my argument then fine, please go ahead.
OK.
Heres a house in Stoke (not an area I know well, picked due to watching a prog the other day on TV). 3 bed semi. 60k.
http://www.rightmove.co.uk/property-for-sale/property-23272141.html?maxPrice=60000&displayPropertyType=houses&oldDisplayPropertyType=houses&pageNumber=1&fromSummary=true&backToListURL=%2Fproperty-for-sale%2Ffind.html%3FsearchType%3DSALE%26locationIdentifier%3DREGION%255E1271%26radius%3D0.0%26displayPropertyType%3Dhouses%26minBedrooms%3D%26maxBedrooms%3D%26minPrice%3D%26maxPrice%3D60000%26maxDaysSinceAdded%3D%26retirement%3D%26partBuyPartRent%3D%26_includeSSTC%3Don%26sortByPriceDescending%3D%26primaryDisplayPropertyType%3D%26secondaryDisplayPropertyType%3D%26oldDisplayPropertyType%3D%26oldPrimaryDisplayPropertyType%3D%26oldSecondaryDisplayPropertyType%3D%26newHome%3D%26auction%3Dfalse%26x%3D85%26y%3D16
Heres another for rent. 3 bed semi. Same postcode.
http://www.rightmove.co.uk/property-to-rent/property-19191352.html?maxPrice=400&minBedrooms=3&maxBedrooms=3&pageNumber=1&fromSummary=true&backToListURL=%2Fproperty-to-rent%2Ffind.html%3FsearchType%3DRENT%26locationIdentifier%3DREGION%255E1271%26radius%3D0.0%26displayPropertyType%3D%26minBedrooms%3D3%26maxBedrooms%3D3%26minPrice%3D%26maxPrice%3D400%26maxDaysSinceAdded%3D%26retirement%3D%26sortByPriceDescending%3D%26_includeLetAgreed%3Don%26primaryDisplayPropertyType%3D%26secondaryDisplayPropertyType%3D%26oldDisplayPropertyType%3D%26oldPrimaryDisplayPropertyType%3D%26oldSecondaryDisplayPropertyType%3D%26letType%3D%26letFurnishType%3D%26houseFlatShare%3Dfalse%26x%3D81%26y%3D13
£375/month. Lets assume rents for £350. x10 months. = £3500 (10 months is overly cautious but I'll play your silly game)
60k @ 5% = £3k
As we're doing realistic lets assume 15k deposit and 45k @ 5% = £2250
This took me 3 minutes and was the first property I saw on Rightmove for Stoke and under 60k. The rental one was not the first they were renting at £395 but though I'd play it cautious.
Not even researched and something which isn't a disaster in 3 minutes.
Next.0
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