Apartment with sitting tenant

isplumm

Would the OP not be better off put their money into some form of managed stocks? Using a company like Quilter. I am getting more than 5% annual growth - then move max £20k into an Stock & Shares ISA each year? Surely there are better tax efficient systems than buying property these days?

young_investor_2021

isplumm said:

Would the OP not be better off put their money into some form of managed stocks? Using a company like Quilter. I am getting more than 5% annual growth - then move max £20k into an Stock & Shares ISA each year? Surely there are better tax efficient systems than buying property these days?

When you say 5%, I assume that doesn't take into account inflation, which is already at 5% right? Buying an apartment would at least beat inflation (assuming no extra capital gains) if my thinking is right.

canaldumidi

young_investor_2021 said:

isplumm said:

Would the OP not be better off put their money into some form of managed stocks? Using a company like Quilter. I am getting more than 5% annual growth - then move max £20k into an Stock & Shares ISA each year? Surely there are better tax efficient systems than buying property these days?

When you say 5%, I assume that doesn't take into account inflation, which is already at 5% right? Buying an apartment would at least beat inflation (assuming no extra capital gains) if my thinking is right.

Inflation exists however you invest your money. 5% growth from managed stocks or 3% - 3.6% from BTL ( by your own calculation) does not alter the inflation rate.

young_investor_2021

canaldumidi said:

young_investor_2021 said:

isplumm said:

Would the OP not be better off put their money into some form of managed stocks? Using a company like Quilter. I am getting more than 5% annual growth - then move max £20k into an Stock & Shares ISA each year? Surely there are better tax efficient systems than buying property these days?

When you say 5%, I assume that doesn't take into account inflation, which is already at 5% right? Buying an apartment would at least beat inflation (assuming no extra capital gains) if my thinking is right.

Inflation exists however you invest your money. 5% growth from managed stocks or 3% - 3.6% from BTL ( by your own calculation) does not alter the inflation rate.

Managed stocks can go rock bottom, but housing prices are unlikely to do so for a long period of time, and usually beat inflation in capital gains.

Pixie5740

If I were buying a property as an investment where I was really banking on capital gains rather than rental yield to make money I’d be buying a freehold property rather than leasehold. 

canaldumidi

Pixie5740 said:

If I were buying a property as an investment where I was really banking on capital gains rather than rental yield to make money I’d be buying a freehold property rather than leasehold. 

And apparantly Edinburgh is the place to do that.......

young_investor_2021

Pixie5740 said:

If I were buying a property as an investment where I was really banking on capital gains rather than rental yield to make money I’d be buying a freehold property rather than leasehold. 

I considered it, but all freehold properties I saw in my budget range £100,000-£150,000 are ~100 years old. I am not confident it would be a good investment given it can have a lot of structural flaws, some maybe even hidden during searches. I will keep looking until I find something I am comfortable with from all points of view.

Pixie5740

young_investor_2021 said:

Pixie5740 said:

If I were buying a property as an investment where I was really banking on capital gains rather than rental yield to make money I’d be buying a freehold property rather than leasehold. 

I considered it, but all freehold properties I saw in my budget range £100,000-£150,000 are ~100 years old. I am not confident it would be a good investment given it can have a lot of structural flaws, some maybe even hidden during searches. I will keep looking until I find something I am comfortable with from all points of view.

Why do you think older properties would have a lot of structural flaws? Surely the fact they’re still standing after 100 years is a good indication that the structure is reasonably ok.

Edinburgh’s New Town is over 100 years old and if you were looking at capital appreciation would be a good bet. However, your budget would get you naff all in that area. 

canaldumidi

young_investor_2021 said:

Pixie5740 said:

If I were buying a property as an investment where I was really banking on capital gains rather than rental yield to make money I’d be buying a freehold property rather than leasehold. 

....~100 years old. I am not confident it would be a good investment given it can have a lot of structural flaws,....

As Pixie says, properties that old are likely to have maintenance issues,or may need updating with modern kitchen, re-wiring etc, but any structural issues would have resulted in their collapsing or subsiding by now. And if subsidence were an issue, it would likely be caused by tree roots, blocked drains etc which could equally affect a 20 year old house, rather than inherant structural problems.

But I'm biased - own a perfectly sound 150 year old house built on shallow foundations that would never pass current Building Regulations!

young_investor_2021

Update on the original topic: 

Upon asking the agent a number of questions in writing, I was told two things that I found suspicious:

1. When asking if all bills are paid for: Yes, as far as we are aware it’s all paid. If there is any unpaid bills from the owner side, he would be liable and solicitors would deal with it, so it wouldn’t be your responsibility. (The agent also deals with the current letting on the premises)
2. When asking if and by how much the service charge and ground rent will increase:

They can increase however the frequency and %ge is contained within the lease which is deciphered by your solicitor as part of the conveyancing.
I insisted to be told by how much and she kept saying I'll find out during conveyancing. To me it seems essential for the overall yield, and to how much I offer, and it would seem inefficient to pay a lawyer just to find out that information. Am I excessive to ask this before making an offer?

P.S: I am asking this for the next apartments I'll be looking at, as I find it quite unlikely I'll get this one.