Buy-to-let vs stocks & shares ISA

Stig66

Hi
Hopefully this is the right place to discuss this. If not please someone tell me.

I have a sum of money to invest and was thinking of 'buying-to-let' - something like a city-centre flat. I have been advised against this in favour of a stocks and shares ISA using a platform. The sum of money is enough that my wife and i will use both our ISA allowances for this year if we do it.

What do you think?
Stig

grumiofoundation

Based on your questions re LISAs on other threads are you a first time buyer?

dunstonh

I have a sum of money to invest and was thinking of 'buying-to-let' - something like a city-centre flat.

New builds and flats go down the most in a house price crash.  And new build flats are the worst.     

The current financial situation, which is going to get worse before it gets better, is ripe to create a house price crash.  So, timing may not be great.    

What experience do you have of being a landlord?  Its not as easy nowadays, and it's not as tax efficient either.     15 years ago you could buy anything and turn a decent profit.   Nowadays, you have to be pickier and understand the market more.   Buying run-down properties and doing them up or multiple occupancies are often where the value is.   Some areas have hotspots for local reasons.     

What sort of rental yields were 

I have been advised against this in favour of a stocks and shares ISA using a platform. The sum of money is enough that my wife and i will use both our ISA allowances for this year if we do it.

Pension trumps ISA in most scenarios unless you cannot leave the money until retirement.   If you only have enough to do £40k then property is unlikely to be suitable.  So, ISA is probably the statistically most likely choice unless you are in your 40s+

Millyonare

For UK buy-to-let (BTL)... Taxes are going up. Regulatory burden is going up. State bureaucracy is going up. State interference is going up. Council surveillance is going up. Obscure laws are going up. Green laws are going up. Green bureaucracy is going up. Green costs are going up. Civil laws are going up. Criminal laws are going up. Repair costs are going up. Maintenance costs are going up. Poor tradespeople service is going up. Unreliable tradespeople are going up. Competition from big rental firms with bottomless legal departments is going up. Mortgage one-time fees are going up. Mortgage rates are going up. Mortgage costs are going up. The insurance burden is going up. Insurance costs are going up. Service agent costs are going up. Cleaning costs are going up. Letting-agent costs are going up. Management fees are going up. Ground rent is going up. Conveyancing fees are going up. Renter intransigence is going up. Noisy kid problems are going up. Pet problems are going up. National hostility toward private landlords is going up. Profit margin is going down.

Other than that, BTL is great 👍

Stig66

Thanks for everyone's input. The jury only took minutes to come to their 'guilty' verdict on buy-to-let. Other avenues are calling.
Stig66 (clue to age)

El_Torro

I have a buy to let property, which I have no plans to sell, at least not for the next few years. The posts in this thread are very valid, though I think there's a place for BTL, especially if the property is in the right location. Let's not forget that rental prices are on the rise, something that landlords will benefit from. To put it another way: the harder it is to be a landlord the less competition will be and it becomes easier to charge more for your property.

Having said that I think that BTL only really makes sense if you already have good provision in other investments, especially pensions. If you don't already have healthy pensions and ISAs I don't think that BTL is worth considering. Especially in the current economic and political climate.

Albermarle

Millyonare said:

For UK buy-to-let (BTL)... Taxes are going up. Regulatory burden is going up. State bureaucracy is going up. State interference is going up. Council surveillance is going up. Obscure laws are going up. Green laws are going up. Green bureaucracy is going up. Green costs are going up. Civil laws are going up. Criminal laws are going up. Repair costs are going up. Maintenance costs are going up. Poor tradespeople service is going up. Unreliable tradespeople are going up. Competition from big rental firms with bottomless legal departments is going up. Mortgage one-time fees are going up. Mortgage rates are going up. Mortgage costs are going up. The insurance burden is going up. Insurance costs are going up. Service agent costs are going up. Cleaning costs are going up. Letting-agent costs are going up. Management fees are going up. Ground rent is going up. Conveyancing fees are going up. Renter intransigence is going up. Noisy kid problems are going up. Pet problems are going up. National hostility toward private landlords is going up. Profit margin is going down.

Other than that, BTL is great 👍

Two sides to every story though.

London rents: Why is the cost of renting spiralling out of control? | Evening Standard

Similar but less dramatic situation in other cities as well. 

adriangs

Buying a single property like this is a highly-illiquid (difficult to sell quickly) and undiversified investment. You're literally putting all your eggs in one basket.. and an increasingly-riskier one at that, for all the reasons others have given above.

If you feel you must own property in some form, you could always consider a REIT like British Land or whatever - but (whether it's that or some other kind of equity or fund or tracker) bought within the tax-free shell that is an ISA. Always always use your ISA allocation if you can - it's literally a yearly gift from the government.