Is BTL still worth it?

Thrugelmir

AimHigh wrote: »

On that note, does this only apply to a house you expect to live in for the long term?

For the majority of people a mortgage is their largest single monetary outgoing. Which in turn determines the amount they need to earn. With no mortgage to service. Life becomes less stressful, less demanding, more secure. Until you leave the hamster wheel you don't realise how much it can impact you.

AimHigh

AnotherJoe wrote: »

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.

All fair points. When I quote "the rich" I merely mean someone who has access to enough start up capital (or the ability to replace it at speed) that they can build up a portfolio in a relatively short space of time as it seems to me that it's primarily about volume if the amount of investment/risk was to be worth it.

Either way, it doesn't seem like BTL is a vehicle worth considering anymore.

need_an_answer wrote: »

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

Many thanks

Thrugelmir wrote: »

For the majority of people a mortgage is their largest single monetary outgoing. Which in turn determines the amount they need to earn. With no mortgage to service. Life becomes less stressful, less demanding, more secure. Until you leave the hamster wheel you don't realise how much it can impact you.

Appreciate that - I guess it's a case of personal preference. I'm not underestimating the impact of reducing your mortgage, purely pondering the pros and cons of mortgage free sooner vs (potentially) higher returns elsewhere.

lisyloo

I guess it's a case of personal preference. I'm not underestimating the impact of reducing your mortgage, purely pondering the pros and cons of mortgage free sooner vs (potentially) higher returns elsewhere.

It also depends on what other options are available to you personally.
For example my employer generously passes on their 13.8% employees NI, if I salary sacrifice to a pension. At basic rate this gives me a total of 45.8% tax relief on pension contributions (20% tax, 12% NI, 13.8% employers NI) which is a great opportunity.

If your employers offer this kind of benefit or offers pension matching which you haven't used, then these are great offers.

Putting money into a pension is of course a long term commitment but so is paying off your mortgage (no guarantee you'll be able to get the credit at a point in the future).

Some people might be better off considering pension options rather than paying off a mortgage.

Crashy_Time

http://www.cityam.com/263702/countryslide-struggling-estate-agent-countrywides-income

buggy_boy

Crashy_Time wrote: »

http://www.cityam.com/263702/countryslide-struggling-estate-agent-countrywides-income

You have copy and pasted this sooo many times and is totally irrelevant to the question.

BTL is still a viable investment however the game has changed, with the attacks on landlords you have to consider than more attacks are coming as government blames private landlords for their failings.

If you can buy the property with no or a small mortgage BTL will still be a good investment. Unlike other investments house prices will increase over the long term and you get the rent. It does come with risks though, personally I find having multiple BTL's means the risk is reduced as if one has a big bill or issue, the others can pay for it so dont have to pay for it out of my income. Generally speaking the higher the yield the more work it is, for the little guy I would go with something like a 2 or 3 bed semi, I would avoid flats because of management fees and lease payments, also avoid student accommodation and HMO's, way too much work, make sure you buy somewhere with good schools, I buy local so manage myself, saving thousands in letting agent fees (Use them for tenant finding and setting up).

seven-day-weekend

Our BTL flat works well, we bought it when it was two years old, it has a long lease ( 120 years +)and the charges are reasonable. The tenant looks after the place well and pays his rent on time.

We bought it outright for £85k and get a gross yield of almost 8%; our charges are ground rent, service charge, agent's fee and landlords' insurance .

Crashy_Time

buggy_boy wrote: »

You have copy and pasted this sooo many times and is totally irrelevant to the question.

BTL is still a viable investment however the game has changed, with the attacks on landlords you have to consider than more attacks are coming as government blames private landlords for their failings.

If you can buy the property with no or a small mortgage BTL will still be a good investment. Unlike other investments house prices will increase over the long term and you get the rent. It does come with risks though, personally I find having multiple BTL's means the risk is reduced as if one has a big bill or issue, the others can pay for it so dont have to pay for it out of my income. Generally speaking the higher the yield the more work it is, for the little guy I would go with something like a 2 or 3 bed semi, I would avoid flats because of management fees and lease payments, also avoid student accommodation and HMO's, way too much work, make sure you buy somewhere with good schools, I buy local so manage myself, saving thousands in letting agent fees (Use them for tenant finding and setting up).

:rotfl: Classic investment advice, just what I have come to expect on here.

Crashy_Time

https://www.ft.com/content/8b5d84c2-fbb3-11e7-9b32-d7d59aace167

buggy_boy

Crashy_Time wrote: »

:rotfl: Classic investment advice, just what I have come to expect on here.

Im sorry im quoting facts, mortgages are 25yrs, house prices over that period have always increased, even if they just increase by inflation then its a win... and its investment from a millionaire instead of you who years ago was obsessed there would be a crash so you didnt buy and now you cant afford to so you come on here desperately trying to convince everyone that house prices are going to crash by a massive amount. Go back to housepricecrash.co.uk

brit1234

I would say not if you are in South East or London. The high but falling house prices would mean negative capital gains. Stagnant or falling rents. Then you have the 3% higher stamp duty charges and the partial removal of tax relief. Its now removing childrens tax credits from parents, pushing people into higher tax brackets. The PRA is another stab wound for the highly levaraged landlord trapping them with lenders like Mortgage works forcing landlords to sell off properties. Then you have EPC reforms and the tennant fee ban coming in.

However in certain partsof the country like North East landlords are making the sums work and hoping the Northern power house will take off. Also cash rich investors can make it work. However the overleveraged landlords day is gone after section 24 was designed to stop it. There is also more competion from the growing build to rent sector which is growing rapidly.

Do you sums.