Is BTL still worth it?

AimHigh

Hi all,

Appreciate these threads pop up regularly but just wondering what the latest consensus on this is given further legislation changes etc.

Is BTL still a viable option for the small guy to make something of himself? It seems that profits are getting squeezed even more and that without significant funds or a huge portfolio it is no longer realistic to expect that you can make enough money from BTL to actually change your life (taking into consideration vacancies and maintenance etc also).

Is BTL now only really an option for the rich? Is being mortgage free on your own house and investing your money elsewhere a more realistic way to achieve financial independence nowadays?

Had been exploring the idea of a property portfolio as a means to create multiple streams of income but it just seems like everything is stacked against it nowadays - I guess the legislation changes are working! :T

AH

theartfullodger

Judging by my tax bill a few days ago, probably not.

Thrugelmir

AimHigh wrote: »

Is being mortgage free on your own house and investing your money elsewhere a more realistic way to achieve financial independence nowadays?

Should always be a priority. Taking risk is all very well until it goes wrong. The one certainty in life is uncertainty.

theartfullodger

Death & taxes, surely.

anselld

Not much has changed since ...
https://forums.moneysavingexpert.com/discussion/5654232

... probably for the "Debate" forum.

AimHigh

Thrugelmir wrote: »

Should always be a priority. Taking risk is all very well until it goes wrong. The one certainty in life is uncertainty.

On that note, does this only apply to a house you expect to live in for the long term? Appreciate there are multiple variables (personal preference, terms of mortgage etc) but what are the benefits of overpaying a mortgage/raising as high a deposit as poss for a house you only expect to live in for a few years?

Not a homeowner so don't fully appreciate the process but I guess it can help get you better terms when you then purchase the next house? And it obviously lowers your debt and hopefully gives you more equity. Just have friends that are putting as much money as poss into their house (expecting to live there for 3-5 years) whereas I think I'd be more inclined to pay the mortgage, assuming reasonable interest, and invest the excess, assuming higher returns than the interest on the mortgage.

Assumptions, assumptions

AimHigh

anselld wrote: »

Not much has changed since ...
https://forums.moneysavingexpert.com/discussion/5654232

... probably for the "Debate" forum.

Thanks, did read that thread before posting but wondered if enough had changed to make it worth updating. Happy for this to be moved if required.

Bluebell1000

In some circumstances it can work well, it depends on the property, the tenants and lots of other variables! With DH's flat it was bottom end of the market, the tenants often didn't pay and broke everything. So no, it was a PITA and we were very glad when we finally found a buyer for it.

With our current BTL house, it's on a low rate interest only mortgage, and is the only house of that size in the area, so it's quite desirable for tenants as a family home, and so far the rent is reliable! DH is a non taxpayer, and the income will make significant inroads into our residential mortgage. We're expecting to replace the boiler soon (i.e. 0-5 years depending on how lucky we are with it), so that will eat into the profits of course. It's not a fortune, and certainly not enough to live on. But it's a nice addition to our regular pay.

Perhaps with a property portfolio it'd be more viable as a business, but you'd need a pretty high up front investment I think, for the deposits.

Bluebell1000

AimHigh wrote: »

On that note, does this only apply to a house you expect to live in for the long term? Appreciate there are multiple variables (personal preference, terms of mortgage etc) but what are the benefits of overpaying a mortgage/raising as high a deposit as poss for a house you only expect to live in for a few years?

Not a homeowner so don't fully appreciate the process but I guess it can help get you better terms when you then purchase the next house? And it obviously lowers your debt and hopefully gives you more equity. Just have friends that are putting as much money as poss into their house (expecting to live there for 3-5 years) whereas I think I'd be more inclined to pay the mortgage, assuming reasonable interest, and invest the excess, assuming higher returns than the interest on the mortgage.

Assumptions, assumptions

Yes, the answer depends on the interest rate. Our current mortgage rate is 1.73% residential and 1.44% BTL fixed. At those rates, we can get a better return by putting potential overpayments into a fixed rate savings account / regular saver (ours is at 5% interest), and then use it to pay off a lump sum if (when) the rates on the mortgage are higher.

AnotherJoe

AimHigh wrote: »

Hi all,

Appreciate these threads pop up regularly but just wondering what the latest consensus on this is given further legislation changes etc.

Is BTL still a viable option for the small guy to make something of himself?

Not in my NSHO

It seems that profits are getting squeezed even more and that without significant funds or a huge portfolio it is no longer realistic to expect that you can make enough money from BTL to actually change your life (taking into consideration vacancies and maintenance etc also).

Why would you expect it should compared to other investments?

Is BTL now only really an option for the rich? Is being mortgage free on your own house and investing your money elsewhere a more realistic way to achieve financial independence nowadays?

I dont see why "the rich" would bother, too much hassle and risk let alone too little profit.

Had been exploring the idea of a property portfolio as a means to create multiple streams of income but it just seems like everything is stacked against it nowadays - I guess the legislation changes are working! :T

AH

In the past its arguable that many of the benefits that landlords got were at the expense of "the poor" since they benefited from tax breaks that their renters couldn't get.

No criticism is implied of anyone taking advantage of those, i did, but it wasn't a level playing field, a landlord could offset part of the mortgage against tax, the people (presumably poorer than him or her which seems to be a concern of yours?) renting from them couldn't offset their rent against tax.

Even now standard rate taxpayers still can, which means as "the little guy" you'd be looking to make a profit from "the littler guy" which doesn't fit with your comments about "the rich" you are envying.

need_an_answer

Another recent thread along the same lines for OP to read to get a view from posters this year

https://forums.moneysavingexpert.com/discussion/5771559