Should I buy to let - any advice appreciated

tubster

Thanks folks, this is really helping me thing this through. I know what you mean Teddyco, I lived through a property crash before and it isn't pretty. I am absolutely bombarded by property shows on television and friends are buying to let like they are opening a savings account. It is absolutely mental. I'm not sure that buying abroad is for me though, another whole area of unknown risk.
A houseboat is a bit different, but is tied a bit to the property market - they are attractive for people who can't get on the housing ladder. And I am a bit worried about the eggs in one basket thing, although it seems to me that anyone with a mortgage has pretty much done that. I'm finding it really hard to get my head around the amount of debt people are running up on their mortgage; you have to pay back nearly double in the end and every penny has to be paid by you. Who was it that said 'man is supposed to be free, yet everywhere I look I see him in chains?!'

plane_boy2000

Just my personal feeling, but I would go for it and make sure you buy something big enough to live in with your family. Over five years you will have hopefully have weathered any price correction, and you may have made something. Then move in and stay there to reduce any CGT issues.

On teh subject of CGT you also get indexation relief I think so that your liability is reduced the longer you own the asset so after about 5 years I think you are only liable for about 80& of the gain, but someone else will know the details.

RedTomato

Yant1 wrote: »

House prices go up by about 8% each year and there arnt many svings accounts that can match that.

Past performance is no guarantee of future returns they say!

If you can find a house that you are sure that you will want to move in to in five years and you can get enough rent (don't forget to inlcude voids and repairs etc.) to cover the mortgage, it could be a good hedge. However, there is definitely risk involved as, if prices drop and for some reason you can't move into that house and have to sell, you could be left with negative equity. I don't know why people think that 5 years is a good lenght of time to have ridden out a possible fall. For instance, prices may dip in a few years from now, none of us know.

tubster

Thanks again for the comments. The rent around here would just about cover a buy to let interest only mortgage, so it would be likely to cost us over the period. The point about the isa allowance is something I hadn't considered; it is all cash isas...
Voters seem to be split between going for it and sitting it out for a while. The kind of house we could afford now wouldn't be anything to get excited about; I'm thinking it would be good to hold on for a little while and hope saving might get us something that we could get enthusiastic about. The problem is that even a rise of a few percent on a 200K house a year turns into 8-10K in price rise, which wipes out the saving I can make meantime...