why do some people own more than one property?

want2bmortgage3

Just something I've been thinking about, everyone needs a roof over their head and I would have thought most people would prefer to own than rent.

So, for someone that owns a property with a lot of equity or savings, why do they decide to buy another one, instead of just paying off their existing mortgage then putting any excess in savings?

The only reason I can think of is people don't trust pensions and want an alternative investment, to one day live off the rent of the 2nd property? Is there any other reason apart from greed/status?

somethingcorporate

No, that just about covers it.

Long term capital growth and rent income is pretty attractive and it is certainly a status thing nowadays.

I went on a yachting holiday recently (we were the odd couple out being mid-20s at the time) but the chatter between all the older couples was how many B2Ls they owned. Not that it meant anything, most are probably heavy in negative equity now.

tsg20

A lot of people like to have a country/holiday home in a place that's different to where they live most of the time. Obviously it would depend on the specifics, but it might end up being cheaper then renting if they go back to the same place regularly.

Fire_Fox

People don't think how nice their lifestyle would be if they were mortgage free and rent free.

sophlowe45

some landlords have several properties as the return on rent can be high.

sometimes couples move in together but one rents out their property rather than selling as many relationships do end.

you should always diversify your investments.

it could be a way of reducing your tax, buy a property through an off shore company, there are different ways of doing it, with some methods you don't event know who owns the property, think of one Hyde park corner where the council does not know who owns most of the apartments and hence they do not pay council tax. I am sure there are other tax advantages too.

yes greed and status too in my opinion. If you have a huge amount of money you need to do something with it.

there are more empty properties in the UK than homeless people or so I have read, perhaps it is incorrect.

I am sure there are more reasons I have not thought of.

fluffymuffy

Isn't there some sort of tax thing whereby when you rent something out the rent goes to pay the mortgage and you only have to pay tax on the profit?

Werdnal

I can only comment on my own situation.

Hubby and I were both made redundant from the same company in 2000. He used his redundancy money to pay off the remainder of our mortgage, and I used mine and some savings to buy a small BTL property outright. I have had 12 years rental income, plus always have the capital to fall back on if I sell - although planning to keep it long term as a "pension" and possibly a first step on the property ladder for our son.

I resent the suggesting that is it greed or status. I worked hard for my redundancy money and savings, and want it to work for me, rather than sit in the bank earning very little interest! If there was greed or status involved, I would be shouting about my property ownership, but in fact very few people (family and close friends) actually know I have a 2nd property - perhaps I am afraid they will jump to conclusions and judge me like you seem to have!

Werdnal

fluffymuffy wrote: »

Isn't there some sort of tax thing whereby when you rent something out the rent goes to pay the mortgage and you only have to pay tax on the profit?

You declare your rental income to HMRC, and you can deduct the INTEREST only portion of your mortgage from the profit you make, and therefore reduce any tax you may be liable to pay.

The repayment portion of the mortgage is not an allowable expense.

However, I don't think that alone has much bearing on whether people own/buy more than one property!

theartfullodger

You could always ask Lizzie Windsor why she does....

FTBFun

want2bmortgage3 wrote: »

why do some people own more than one property?

Because this isn't the Soviet Union, so if someone wants to purchase property without recourse to state funds that's their business (and of course the mortgage company's etc).

Brighty

I relocated renting the old house house out in case we came back and renting one up north, then bought up north keeping the other as an investement. Then parents passed away leaving us with 2 more properties. So now have 3 rental properties between myself and my brother, with only 60k mortgage on the lot, plus my residence which has 95k mortgage. Rental income is a nice whak every month and long term property goes up more than savings. We have so much equity in them than even if prices drop, we are still safe

Brighty