Should I invest in index funds or stick to my BTL plan?

fizio

My strategy is both share and BTL to get investment diversity.

Landlords are definitely seen as 'the enemy' so its not surprising that fewer people are seeing this as a way forward versus shares etc.

My view is that a combination of house prices, gig economy and mortgage restrictions means there are an ever increasing number of people who will never be able to buy a house so they will have to rent and this needs landlords. Govt strategy seems to be to drive out the 1-2 BTL's type landlords in favour of larger portfolio companies and this does seem to be happening.

Interesting times and I am looking at switching from BTL to development as an alternative property strategy going forward

dean350

The 0.25% is something that the ETF charges you and is reflected in the quoted price of the ETF. On top of that there are platform fees to pay (Internaxx being one such platform) and I pay about 75e per year so your figure looks about right. Everytime you trade there will be a commission (10-14E depending on size of trade) and then you pay stamp duty if they are quoted on the LSE. Just be wary of synthetric ETF's which do not hold the securities they represent and look at physical ETF's only which do actually hold the stocks they represent.

Johnnyboy11

If you want exposure to the UK property market, why not buy shares in several of the housebuilders, or a fund comprising of similar? More liquid than BTL, which can be an advantage.


Worth pointing out here that if you had a pension fund open when you left the UK, a UK expat can pay in £2,880 that tax year and each of the following 5 tax years and get a free £720 top-up each year from HMRC. Free money, got to be worth having

Bimbly

The fact that you may want to move back to the UK puts a different spin on this for me.

I'd be inclined you look at buying a dwelling for this purpose alone. You will have hassles and costs and all that, but also the certainty that it gives you a basis should you come back. Take a look at political thoughts about guaranteeing tenants the right to stay for ages, as you want to sell when you return.

You could then invest profit from rental income into a fund.

Not saying you should do this, but it's something to think about.

Of course, as a previous poster said, if you want to live in Oxford, it may not help you that much to have bought a house in Newcastle.

kidmugsy

ianthy wrote: »

but we did purchase some years ago and it takes considerable work. I don't think the numbers would add up If we purchased in the last few years, which may explain why a number of newer landlords (less than 5 years) are selling up.

Hang on, you're advocating market timing. That's a capital crime in these parts.

Or maybe it's only a capital crime for equities but perfectly OK for property.

Luke86

bluefukurou wrote: »

I can see why BTL has become much less attractive for traditional BTL investors: stamp duty hikes, mortgage tax relief changes, tougher mortgage rules, etc.

But surely a house that you could let for £600 per month, still brings in £600 per month? As an asset that brings in an income stream it still does its job. When you say it ‘used to be good’, are you talking about, what I’d call traditional BTL investors, ie people that could get a cheap BTL mortgage and then let the tenants effectively pay for the house over 20 years?

My parents have around 7 or so and it's done them well overall. It's good long-term but if you're relying on that 1 property, I wouldn't do it. In 10 years they didn't have much hassle, until one decided not to pay. It took over 12 months to get them out, meanwhile they were out court fees, rent, and the house I just spend 5 months renovating as it was a wreck.

Like I said across all their houses, they've had just 1 bad tenant over the space of a year. In the grand scheme of things it's a minor expense, but if that was your only property, the story might be a little different.

You have very little rights as a landlord, which is an absolute joke.

bluefukurou

jsinc wrote: »

It's impossible to know what future Government policy will be, but they currently appear to have conflicting aims - greater homeownership + no price falls. I don't know if/how that gets resolved but, if we assume both conditions must be solved for, the only targetable housing cohort are landlords (private and social). If solving for both isn't possible then who knows, as that gets even further into social and fiscal/financial policy.

I know one thing, I’m glad I don’t have to find a place anywhere near London or surrounding areas. I’m very lucky in that I have quite a large disposable income, but when I look at the price of property in the south, I doubt I could ever afford to live there. How the young will ever have a chance of buying a place to live unless they are extremely well paid I have no idea.

bluefukurou

thickasabrick wrote: »

J L Collins has an article on international investors, although it is specifically about Vanguard funds.
Having had a quick look I don't see any Vanguard online presence for the Middle East. There might be some links in the comments if you delve deeper.
Stocks — Part XVII: What if you can’t buy VTSAX? Or even Vanguard?
http://jlcollinsnh.com/2013/05/02/stocks-part-xvii-what-if-you-cant-buy-vtsax-or-even-vanguard/
Another article on the same blog talks about housing as an investment, although it is more aimed at a persons home rather than BTL.
http://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrible-investment/

Thanks for the links. The one about houses being a bad investment is rather tongue in cheek, but interesting.

Yeah, Vanguard is not an option for me currently, but I won’t be in the Middle East forever anyway, so I’d prefer to operate somewhere based in Europe, most likely Internaxx.

bluefukurou

Johnnyboy11 wrote: »

If you want exposure to the UK property market, why not buy shares in several of the housebuilders, or a fund comprising of similar? More liquid than BTL, which can be an advantage.

Worth pointing out here that if you had a pension fund open when you left the UK, a UK expat can pay in £2,880 that tax year and each of the following 5 tax years and get a free £720 top-up each year from HMRC. Free money, got to be worth having

It’s not so much that I want exposure to the housing market, I just want a solid, longterm place for my money.

Unfortunately, I don’t have a UK pension, so I’m unable to pay in like you say, but thanks anyway.

bluefukurou

haf63 wrote: »

My strategy is both share and BTL to get investment diversity.

Landlords are definitely seen as 'the enemy' so its not surprising that fewer people are seeing this as a way forward versus shares etc.

My view is that a combination of house prices, gig economy and mortgage restrictions means there are an ever increasing number of people who will never be able to buy a house so they will have to rent and this needs landlords. Govt strategy seems to be to drive out the 1-2 BTL's type landlords in favour of larger portfolio companies and this does seem to be happening.

Interesting times and I am looking at switching from BTL to development as an alternative property strategy going forward

Do you have any links or evidence for the perceived move towards larger portfolio companies? What do you think are the reasons for the government to squeeze out the little man in favour of big fish?