Is buy to let still worth it?

Crashy_Time

chucknorris wrote: »

London is my market, that is why my response is London focused, it may well be that outside of London the story is different, but that has no impact on me. Past performance doesn't necessarily repeat itself, property has been great for us, there is no doubt about that, we would not have made the same wealth from shares. But I invested back in the early 90's, and the circumstances are very different now. If I was younger I probably would invest in one investment property, for the sake of portfolio diversity, but I definitely wouldn't do what I did back in the early 90's, and go 'all in' on property. I was very comfortable about doing that back then, but I wouldn't feel the same way about it now. What I feel is different now is that:

Generally:
- London prices are much higher now, and we are also in an extremely low interest environment, so I don't really see how London house prices can significantly out preform inflation going forward.

- The tax system has moved against property, while shares are treated much more favourably.

- The increased stamp duty and loss of the wear and tear allowance has reduced profitability.


Specifically to me (so probably of not much interest to others):

- Property is a long term investment and I am 60 next year.

- I am already going to struggle to spend the existing equity before I die, so there really isn't any point in taking on more hassle and risk for potential profit that can't be spent. Also if I want to spend my current equity I really have to start selling now (which I am).

You have been saying this for quite a while, have you actually sold yet?

chucknorris

Crashy_Time wrote: »

You have been saying this for quite a while, have you actually sold yet?

Is your memory really that bad, you know (or you should do) that we have two properties on the market right now. Surely you must know that property is illiquid, you just don't sell properties instantly like shares, it takes time.

caronoel

For your own sanity Chuck, please do not feed the troll.


According to crashy, he is a financial whizz kid who has been waiting for the big crash for over 10 years now, during which time his rent has not gone up a single penny.

chucknorris

caronoel wrote: »

For your own sanity Chuck, please do not feed the troll.


According to crashy, he is a financial whizz kid who has been waiting for the big crash for over 10 years now, during which time his rent has not gone up a single penny.

I know, he often tests me, I don't like to rub people's noses in their own failures, generally I don't see the need to do that, but he does seem to bring it on himself. After all those years of utter failure he still hasn't learned his lesson.

Crashy_Time

chucknorris wrote: »

Is your memory really that bad, you know (or you should do) that we have two properties on the market right now. Surely you must know that property is illiquid, you just don't sell properties instantly like shares, it takes time.

Would have been more liquid if you had sold when I originally said you should.

Crashy_Time

chucknorris wrote: »

I know, he often tests me, I don't like to rub people's noses in their own failures, generally I don't see the need to do that, but he does seem to bring it on himself. After all those years of utter failure he still hasn't learned his lesson.

It is going to be quite funny if you can`t shift your properties after posting all this guff.....:rotfl:

cotleigh

We have had many of ours since late 1990s (London) or early 2000s (Canterbury, Kent). Many are in a Ltd co, so not subject to the personal tax rules, also our loans are small and getting smaller, so its making us quite a lot. Not sure if it would be worth it starting out now though.

padington

It's worth starting out now for sure if you can stay in the low tax band. Saying that, in 2018 there might be some bargains to be had as brexit flings shxt everywhere.

Mr.Generous

In 3 years my pension pays out a tax free lump sum of about £80k, enough to buy outright a buy to let property. An £80k house at the moment would return about £550 pcm. I am more confident in choosing a property than in buying shares.

chucknorris

Mr.Generous wrote: »

In 3 years my pension pays out a tax free lump sum of about £80k, enough to buy outright a buy to let property. An £80k house at the moment would return about £550 pcm. I am more confident in choosing a property than in buying shares.

I can't argue with the figures, that's a gross yield of 8.25%, but there will be expenses that reduce your net earnings. Holding smaller values of property when you are in the 20% tax bracket will still make a lot of sense. We are going continue to hold some property despite paying more tax, for the sake of portfolio diversity.

What you have to decide is, does the net income difference between property and shares, justify holding property and the hassle that comes with it. It might be slightly different for us, because we don't have children to leave the equity to, so we have to spend it, and if we don't start spending it soon, then we won't have enough time to do so. Is your plan to leave that house to your children? Or will you want/need to sell it with enough time left to spend the equity before death, if so, you need to factor in capital gains tax, possible crashes etc.