Return on BTL equity

westernpromise

It might work, I am not sure, but it would have been a much smarter way to persuade landlords to sell than what has actually been done. Adding 3% stamp duty to additional property purchase has included a lot of bystanders in the damage. It is a powerful disincentive to divest if the cost of reinvesting is excessive.

chucknorris

AFF8879 wrote: »

Isn’t HPI the only / most significant component of investment return as far as BTL goes??

I invested for the income, but of course over the long term the capital gains can be significant. But that isn't what he is saying, he is saying basing the return on what he originally invested, does not help in identifying what the optimum investment decision is right now, he has to look at what he can get from the equity with alternative investments and balance that against the pro's and con's of staying invested in property. It isn't just about money either, lifestyle comes into it too.

triathlon

We still have over 3 million immigrants alone entering the UK in the next decade, most of them are young strong aspiration non complaining hard workers who will also be in their peak child rearing years. The BTL property market has plenty of legs yet, more so than I believe a lot of bullish investors can imagine.

SouthLondonUser

Well:

what exactly are you trying to do? Are you trying to compare this with another investment, i.e. with an alternative use of the ca. £511k? If so, what is your time horizon?

Are you considering reinvesting the proceeds? Are you after a regular income or after maximising returns at the end of a certain period?

Without any indication on these points it is very much one of those how-long-is-a-piece-of-string type of questions.

Generally, if I had a 7+ year horizon and didn’t need income immediately, I would exit a property investment right now, unless maybe children might need that very property in the short term (2-4 years, not 10), mostly because I am bearish on the pound and the real estate market; this doesn’t mean I expect dramatic overnight crashes, btw, my two cents is that it’s much more likely that house prices won’t keep up with inflation. Of course this is just my opinion – I fully appreciate that not everyone will agree with it and no one has a crystal ball.

How old are you? What’s your pension situation? Have you thought of selling the property and investing some of the money in a pension? The tax advantages alone can be significant; there is also a risk that these tax advantages might be reduced in the future, who knows.