The Buy-to-let boom is back

COOLTRIKERCHICK

up until a few years ago, we were totally on our butts finanically,

we have managed to get ourselves out of debt ( apart from our mortgage) and save some money.

We have allways wanted a smallholding, but in reality dont think we will be in a position to buy one... we have not pensions either, so we are using the money we have saved to buy a B.T.L property.

what is wrong with us trying to look to the future...we have no pensions, and prob by the time we retire ( we are in our middle to late 40's) there might not be any pensions etc...

My parents havent got any pensions etc and boy are they struggling big time, they have got to sell their home to buy a smaller/cheaper house just to get some cash to live on...

Before maggie thatcher ( i think it was her) alot of people lived in rented housing etc... whether they were privately own by the employers or the local authority....

maybe over the last few decades there has been too much pressure on people to buy their own homes... and then find they cant sell them, or they are in negative equity.....

some people prefer to rent, as its easier for them to move if they want to, and havnet got the worry of the major repairs etc to the property.....

it work both ways

Cleaver

COOLTRIKERCHICK wrote: »

what is wrong with us trying to look to the future...we have no pensions, and prob by the time we retire ( we are in our middle to late 40's) there might not be any pensions etc...

Just out of interest, how come you've got to your late forties without sorting out a pension?

COOLTRIKERCHICK

Cleaver wrote: »

Just out of interest, how come you've got to your late forties without sorting out a pension?

we had more outgoings than income, so could not afford to put money aside/into a pension....

we had a business for 5 years that was losing money every week, and we could not get out of the lease, unless we went bankrupt, and we didnt want to do that, our mess it was up to us to sort it out

Brallaqueen

CTL's are what bother me -they never intended to be a BTL, Landlord not always aware that they are now running a business etc. They should be abolished and BTL mortgages only given out to those who can provide a sound business plan and prove sufficient knowledge of the legal aspects.

Cleaver

Brallaqueen wrote: »

CTL's are what bother me -they never intended to be a BTL, Landlord not always aware that they are now running a business etc. They should be abolished and BTL mortgages only given out to those who can provide a sound business plan and prove sufficient knowledge of the legal aspects.

Why would you want to abolish CTL? In essence there is already a fairly tight structure in place to ensure that people who rent out a home do it properly. If you get consent to let from your lender then they have judged whether you are in a financial position to rent out your house. The law then sets out what you need to do to rent out a house. But does this really mean that you treat tenants in a decent way? This is something you surely can't put legislation in place to deal with.

We got consent to let to rent out our old house when we moved to a new city and apologies for sounding arrogant, but we were great landlords. I had a bit of knowledge about the law, but had never rented a house out before so used a good letting agent who did everything by the book. Our tenants had a great experience because we genuinely cared about them.

Abolishing certain products or taxing people higher amounts doesn't get rid of bad landlords. Nothing gets rid of bad landlords, it's the same as any other business really. Plot a graph of landlords and you'll have a bell curve - 10% will be awful, 80% will be fair to middling and 10% will be amazing. This will be the same for shops, tradesmen or any other industry or business you pick. You could apply for a BTL mortgage, set out an amazing financial business plan, follow all the laws and still be an awful landlord who provides a bad service to tenants.

the_flying_pig

I must admit that I briefly considered buying just one BTL last week given all the bad news about pensions etc. Figured I'd look close to home so that I'd be able to carry out any maintenance etc myself. Calculated gross yields for my street (SW London). A shade over 3%. Nearer 2% after maintenance, voids, and letting agent fees. looked at BTL mortgage best buy tables. Realised that, even with a big deposit and on interest only I'd be paying an awful lot into it every month. The whole thing would only stack up given a prolonged period of (1) high inflation; and (2) central bank inactivity, keeping rates below inflation. Decided I didn't particularly want to gamble on that. BTL for cash (or mostly cash, or a short hefty repayment driven mortgage) rather than leveraged, might be better but like most people I could not afford that (without skimping or overborrowing massively on my primary residence, which would be much the same thing). There was a good opportunity there 10 years ago, a great one at the end of the 90s. But not now.

HAMISH_MCTAVISH

Gross yields of 10% are now achievable in a fair few places. 3% seems like a total waste of time.

ash28

We had an estate agent in during the week - we're wanting to sell and move to another area - he said what quite a number of people are doing if they can't sell their house, and if they have a large amount of equity in their current house, is releasing some of the equity for a large deposit on a new house, taking out a mortgage for the new house and renting out the old house.

In our situation - looking to move northwards from the south east - if it was route we wanted to take (it isn't), we could release £100k from this house which would mean a mortgage of £130k (repayment £760) use the £100k as a deposit on a nice house further north and have a mortgage of £70k (repayment £413 per month) - rent on this property £1500 per month - theoretically the rent would cover both mortgages - with a bit left over every month.

On the other other hand we could just pay off what's left of the mortgage on this house - put down a £100k (from savings) on a new house and get a mortgage for the £70k - our joint income is over £37k in pensions, both index linked to RPI (55 and early retired) in 11 years time income will increase by 2 full state pensions. Most lenders will let us have a mortgage ranging from 15 to 30 years - our income is guaranteed - we won't lose our jobs

The rent from our current house would more than cover our new mortgage with enough to cover voids and repairs with a good sum left over each month.

I can understand why people would be tempted to do it - especially if the mortgages weren't too onerous. We might be tempted - especially by the 2nd option - if we can't sell this house.

chucknorris

the_flying_pig wrote: »

I must admit that I briefly considered buying just one BTL last week given all the bad news about pensions etc. Figured I'd look close to home so that I'd be able to carry out any maintenance etc myself. Calculated gross yields for my street (SW London). A shade over 3%. Nearer 2% after maintenance, voids, and letting agent fees. looked at BTL mortgage best buy tables. Realised that, even with a big deposit and on interest only I'd be paying an awful lot into it every month. The whole thing would only stack up given a prolonged period of (1) high inflation; and (2) central bank inactivity, keeping rates below inflation. Decided I didn't particularly want to gamble on that. BTL for cash, rather than leveraged, might be better but like most people I could not afford that (without skimping or overborrowing massively on my primary residence, which would be much the same thing). There was a good opportunity there 10 years ago, a great one at the end of the 90s. But not now.

I'm not sure which part of SW London you are in. I have 4 flats in Battersea and I have never had an unwanted void since buying them, I bought the first one over 20 years ago. The only voids I have experienced are when I have chosen to refurbish a flat between tenancies.

the_flying_pig

HAMISH_MCTAVISH wrote: »

Gross yields of 10% are now achievable in a fair few places...

Is that really true, though? 10% gross sounds great, net it'd be enough to cover a 20 year repayment mortgage fixed for 5 years... But 10% is emphatically not available in almost all cases... Simple maths tells you this, £160k is the Haliwide notional average property, but without thinking we can all instantly see that £16k pa (£1.3-£1.4k PCM) is higher than the average rent... Similarly, simple micro economics tells you that if a reasonably riskless 10% existed in anything other than very small quantities there'd be a gold rush of people desperate to take advantage of it, every landlord website and Sunday 'money' supplement would be trumpeting about it, etc, quickly pushing prices up and yields down. I'm not saying that examples of it don't exist anywhere but it's clearly not common enough to be worthy of discussion.

More generally though, H, same as everyone else I like free money and no-brainer moneymaking opportunities. If you can find me a 10% gross yield flat or house for sale within 10 miles of where I live now in SW12 I will (a) buy it; and (b) pay you a bounty of a grand or so.