Why do people resent buy-to-letters so much?

cells

Needs posting separately

Roughly speaking over the decade.
A: 30% of BTL investment have made a big nominal capital loss
B: 20% have made a loss in real terms
C: 20% have made a good nominal return
30% have made a very good real return

A: NE NW Y&H
B: WM EM
C: SW & E-Eng
Lon & SE

BananaRepublic

Not according to these people:

http://www.nationwide.co.uk/~/media/MainSite/documents/about/house-price-index/Q4_2014.pdf

cells

BananaRepublic wrote: »

Not according to these people:

http://www.nationwide.co.uk/~/media/MainSite/documents/about/house-price-index/Q4_2014.pdf

That is a year out of date

But yes if we chose and pick a specific year then we can make things look more or less positive. If we look at now vs 8 years ago then BTL investment looks even worse in a lot of the regions. If we look at now vs 12 years ago BTL investments looks a lot better. Picking a flat 10 years shows us that in approx 50% of the country BTL was a real loss and in 50% a real gain.

It certainly hasn't been a one way rocket for all as you have been suggesting

chucknorris

BananaRepublic wrote: »

Not according to these people:

http://www.nationwide.co.uk/~/media/MainSite/documents/about/house-price-index/Q4_2014.pdf

According to your own link if you bought the average property in Northumberland in 2004 and sold it in 2014, the property value was the same at £166k in both years. So in the 10 years of ownership that would be a capital loss of approx £12k:

£500 Mortgage valuation
£500 Mortgage arrangement fee
£3,000 Furniture/white goods
£1,660 Stamp duty
£1,800 Solicitor’s fees (buying/selling)
£1,220 Allowance for minor work to bring up to standard (there’s always something)
£3,320 Estate agent’s fees

£12,000 Total loss

If it was bought with a 20% deposit (additional £33,200 invested) that would equate to a 26.5% loss on ROCE (return on capital employed).

EDIT: That's a 26.5% loss on an average property, there will be people who lost more.

Another EDIT: When allowing for rental profit the loss over the 10 years is reduced to £4k

cells

chucknorris wrote: »

According to your own link if you bought the average property in Northumberland in 2004 and sold it in 2014, the property value was the same at £166k in both years. So in the 10 years of ownership that would be a capital loss of approx £9k:

£500 Mortgage valuation
£500 Mortgage arrangement fee
£3,000 Furniture/white goods
£1,660 Stamp duty
£1,800 Solicitor’s fees (buying/selling)
£1,220 Allowance for minor work to bring up to standard (there’s always something)
£3,320 Estate agent’s fees

£12,000 Total loss

If it was bought with a 20% deposit (£33,200) that would equate to a 36.1% loss on ROCE (return on capital employed).

His link is out of date. If he is good enough to post the next one q4-2015 when Nationwide release it it's going to show ten year losses for thee regions which is going to mean property over the last 10 years has been a nominal loss in those regions and the loss will be amplified if a mortgage was used.

For whatever reason he doesn't want to accept that property has not been a one way bet that paid off handsomely. It depends on when bought when sold and which locations. Much like some shares have done fantastic and some poorly. Looking at just apple or google shares and saying the stock market has been fantastic for all is just as silly as his insistence that all property in England has been fantastic

chucknorris

cells wrote: »

His link is out of date. If he is good enough to post the next one q4-2015 when Nationwide release it it's going to show ten year losses for thee regions which is going to mean property over the last 10 years has been a nominal loss in those regions and the loss will be amplified if a mortgage was used.

For whatever reason he doesn't want to accept that property has not been a one way bet that paid off handsomely. It depends on when bought when sold and which locations. Much like some shares have done fantastic and some poorly. Looking at just apple or google shares and saying the stock market has been fantastic for all is just as silly as his insistence that all property in England has been fantastic

I thought the best way to demonstrate that property isn't necessarily a one way bet was to throw his own link's data back at him, unadjusted.

Anyway, I've been watching scrooged which is just finishing, and now it is time to cook the Xmas dinner, so I'm off now. Merry Xmas to you cells (and to too Banana R).

cells

chucknorris wrote: »

I thought the best way to demonstrate that property isn't necessarily a one way bet was to throw his own link's data back at him, unadjusted.

I think even many Property investors have made the same mistake as him by thinking of property as one asset class moving in tandom.

I know a medium landlord in the west Midlands that is kicking himself for investing in his local market without thoughts for what might happen in the regions. His one London Property has made more gains than his 30 w-midlands properties.

The reality is that each region should have been seen as a distinct investment. London has been like google and apple shares while the NW and Y&H has been like BP and the NE like....northern rock

cells

BP (or any FTSE company) is a business and it's shares are an investment

BTL is a business and its 'shares' (the property) is an investment.

Both investments can go up and down depending on the particular share/property and depending on timings.

London gets too much of the attention. BTL has been a great investment in London over the last decade but so have apple shares. Trying to decide rules regulations taxes and performance of property by looking at London only is as silly as trying to compare the merits of the stock market by looking at only apple shares.


Why do people resent BTL landlords? I don't think many do. Those that do mostly do so from a misunderstanding of what it is. And of course some simply don't like that property (in London) has made so much profit. Which is probably as sane as the people who don't like that Apple has made so much profit ignoring that many companies made little to no profit just as many residential investments in England over the decade have made little to no profit

Prothet_of_Doom

p00hsticks wrote: »

Personally, I have no problem with what I would call 'professional' BTL people who treat it as a full time business, recognise what their obligations are and charge a fair market rent for the property that gives them an acceptable but not extortionate return.

The ones that I (and I suspect many others) take issue with are the many 'amateurs' who often seem to have fallen into it almost by accident (e.g. by not selling an existing home when they move).

Many of these people seem to treat BTL just as an 'investment' to be viewed on the same lines as stocks and shares or savings account- you simply stick your money in and do nothing but wait the return, ignoring the fact that you are dealing with providing homes for real human beings who you should provide with a good service and treat decently.

My wife and I are embarking on our first BTL as a professional, partnership, seeking to understand our obligations, attempting to understand the risks and the pitfalls, and we see it a good long term business idea to treat people "right" and to ensure that the property is kept in good health. Even before we have tenants, I have a list of things that need doing over the next 3 years, which will wipe out a years profit.
For me it's somewhere to park £42K of "investment" whilst taking on £91K of debt, whilst potentially getting screwed by the tenants from hell.
If the plan goes to plan, by the time we retire, it will provide 1/6th of our retirement income.

CLAPTON

Prothet_of_Doom wrote: »

My wife and I are embarking on our first BTL as a professional, partnership, seeking to understand our obligations, attempting to understand the risks and the pitfalls, and we see it a good long term business idea to treat people "right" and to ensure that the property is kept in good health. Even before we have tenants, I have a list of things that need doing over the next 3 years, which will wipe out a years profit.
For me it's somewhere to park £42K of "investment" whilst taking on £91K of debt, whilst potentially getting screwed by the tenants from hell.
If the plan goes to plan, by the time we retire, it will provide 1/6th of our retirement income.

hope you have modeled the effect of losing all interest tax relief.