Buy to let no longer worth it?

deaston

_CC_ wrote: »

This is a bit of a misconception.

If you were investing in individual companies or sectors, maybe. If you were to invest in broad indexes like the S&P, FTSE 250, pacific funds etc then I wouldn't consider these high risk at all, over the long term.

I think this is what drives a lot of people into BTL. They deem property as safe and shares as risky or a form of gambling.

Ok, thanks for the advice. I'll have a better look into it. I certainly imagine that the government will make earning from property harder and harder as the population increases, so maybe I should spread my investments over more vehicles.

Pixie5740

deaston wrote: »

How odd to question my choice of investment but then not actually be able to come up with anything better.

I can come up with lots of different and better ways for me to invest my money. If you're a lazy investor and just want to invest in property because that's what your friends and family do rather than doing any kind of research then knock yourself out.

mrginge

The fundamental point being missed is that BTL is a business, not an investment.

deaston

mrginge wrote: »

The fundamental point being missed is that BTL is a business, not an investment.

For me, it'd be purely an investment. I've no interest in starting a buy-to-let business.

Innys1

I've been a BTL investor for the best part of thirty years.

If I were given the option to start from scratch now, I'd certainly think twice. The main reason for that is the recently announced changes in the amount of mortgage interest relief available.

Not so long ago, many mortgage advisors were trumpting BTL as being a tax efficient investment and for applicants to borrow as much as they could. A case of the tax relief tail wagging the dog. I wasn't convinced - I'm sure many others were.

New BTL investors really need to have minimal mortgages to make the business economically viable.

Guest101

Pixie5740 wrote: »

I can come up with lots of different and better ways for me to invest my money. If you're a lazy investor and just want to invest in property because that's what your friends and family do rather than doing any kind of research then knock yourself out.

Can you imagine what kind of LL you'd get?!

Guest101

deaston wrote: »

For me, it'd be purely an investment. I've no interest in starting a buy-to-let business.

It cant be just an investment.


You'd be legally responsible for dozens of things.

AlexMac

Momentarily returning to the original Q-

deaston wrote: »

Any current landlords see this as an issue?[/url]

I'm happy to hang on in there as a BTL LL with two small (ex LA) flats and as Deaston seems to be relatively savvy I'd back his judgement that property in the right bits of the SE will continue to rise, so in addition to rental income there may well be long-term capital gain. So while a majority seem to be counselling you against BTL, I'd say, go for it; I've enjoyed capital gains similar to those you describe on both the one I've had for 4+ years (bought in the trough well after the 2007-08 peak and crash), but, more stonking gains on the one I bought almost 20 years ago.

And with one long-term tenant on a softish rent (so I haven't had a void or had to pay agent fees to set up a new tenancy for years) and the second on a long term licence to a social housing provider I can't/won't drive rents up.

I have no problem with paying a bit more tax on earnings - (Osbourne doesn't seem to want to chase big businesses, so some of us have got to pay for public services!). And CGT is only an issue of you're lucky enough to enjoy a gain (so, another silver lining?).

I haven't got my head round the full implications of the change in tax regime whereby you'll be taxed on turnover rather than profits, in that I'm not sure what reliefs will continue to apply. I think I get the bit about only having a 20% (ie basic rate equivalent) allowance for the mortgage interest rather than knocking the lot off so you can potentially enjoy 40% or 45% relief; but as that only applies if you earn over the 20%/40% tax threshold its not an issue for us. I think we may be a grand or so worse off, especially as my wife (who jointly owns the two gaffs) is well under the threshold and I'm barely nudging it.

Obviously it will hit you if you have a big portfolio, gross earnings including rents and salry/pension well over the 20% (£42,385)
income tax threshold or are highly leveraged with a mortgage...

And as regards the cautions about trash tenants... maybe I've just been lucky... or maybe picky, as I've always done being a LL by the book?

mrginge

deaston wrote: »

For me, it'd be purely an investment. I've no interest in starting a buy-to-let business.

Then you have demonstrated pefectly that you don't really understand what is involved in BTL.

p00hsticks

deaston wrote: »

It doesn't make property a bad investment, just makes stocks and shares a potentially better one, but at much, much higher risk.

I'm not an expert in risk analysis so I might be wrong , but, as I said in my original post, I see buying a single BTL property (as opposed to a number of properties over which you can spread the risk) as much riskier than investing in a balanced portfolio of stocks and shares.

Plus a BTL is far more hassle, and cannot be partially liquidated if needed.