Is a Buy to Let worth it in the current political/economic climate?

Sarah1Mitty2

MobileSaver said:

Sarah1Mitty2 said:

MobileSaver said:

Sarah1Mitty2 said:

silvercar said:

People go into BTL for the income and capital growth, has to be part of a balanced portfolio. 
When the government was limiting the amount people could put into pensions by punitive tax measures, it was an attractive part of an investment strategy. But it is only a part of the picture.

Problem is that for people who chose their location wisely they have now seen capital growth, so selling out means a CGT bill that not all are prepared to face.

the landlords still looking to exit will be doing so at much lower prices than they had hoped.

The landlords still looking to exit will be doing so at much higher prices than they originally paid all those years ago, in part thanks to people like you paying their mortgage for them for all those years... I don't think many will be upset at the prices they achieve!

I would suggest that those trying to exit are more recent landlords who can`t cover the mortgage debt from rent

So even in your worst case end-of-the-world housing market apocalypse (which is definitely going to be much more bigly than all the other housing market Armageddons you have wrongly predicted over the last 15 or so years) you are talking about a tiny fraction of the 2.5 million private landlords in the UK being affected...

I think you are confusing me with the poster who said millions of tenants would become homeless as landlords try to exit the BTL sector, but yes IMO not all landlords will be affected and of course just because a landlord`s property falls in price it doesn`t mean they stop being a landlord.

MobileSaver

Sarah1Mitty2 said:

MobileSaver said:

Sarah1Mitty2 said:

MobileSaver said:

Sarah1Mitty2 said:

silvercar said:

People go into BTL for the income and capital growth, has to be part of a balanced portfolio. 
When the government was limiting the amount people could put into pensions by punitive tax measures, it was an attractive part of an investment strategy. But it is only a part of the picture.

Problem is that for people who chose their location wisely they have now seen capital growth, so selling out means a CGT bill that not all are prepared to face.

the landlords still looking to exit will be doing so at much lower prices than they had hoped.

The landlords still looking to exit will be doing so at much higher prices than they originally paid all those years ago, in part thanks to people like you paying their mortgage for them for all those years... I don't think many will be upset at the prices they achieve!

I would suggest that those trying to exit are more recent landlords who can`t cover the mortgage debt from rent

So even in your worst case end-of-the-world housing market apocalypse (which is definitely going to be much more bigly than all the other housing market Armageddons you have wrongly predicted over the last 15 or so years) you are talking about a tiny fraction of the 2.5 million private landlords in the UK being affected...

yes IMO not all landlords will be affected and of course just because a landlord`s property falls in price it doesn`t mean they stop being a landlord.

For the avoidance of doubt so that no-one gets the wrong idea from this recent post of yours...

By "not all landlords" you actually mean a tiny, tiny percentage of landlords...

And by "falls in price" you actually mean they're only looking at perhaps a 48% increase over what they paid instead of say 58%...

As said previously I wouldn't shed too many tears for these poor landlords, the vast majority have done extremely well from those misguided enough to sell to rent all those years ago. In fact it does make you wonder whether the HPC site is actually owned by a cabal of landlords as they're the ones generally benefitting from propagating the HPC myth...

ThisIsWeird

melissarfield said:

I have £250k from savings/inheritance that I'm looking to invest. Is investing in a BTL property wise at this stage?

I'm a FTB and am living with family, so I wouldn't be buying it to live in. It would be purely for investment but as more rules are coming in effect for landlords, I'm wondering if a BTL property is worth it (financially and also worth the headache)? Is there something better I could be doing with that money instead?

Hi Melissa.

I'm not going to give advice, as I just don't have enough knowledge of this area. But I'd have thought that any decision would need to take into account your personal circumstances, and also that of the area where you'd purchase a property.

For example, we know you are happy living with your family, but is that situation likely to continue? Or, would you anticipate moving in the next, ooh, 5 years or so? 10 years? When?

What sort of property could you buy for up to £250k? Could it be a new-build, so at least not require any ongoing maintenance for the duration of the let? ( From what I read on here, poor insulation and/or maintenance seems to be a major cause of dispute between LLs and TS.)

What are typical rents for the type of property you could buy?

Could the place you buy even be suitable for you as your first move out of the family home? Even temporarily? Ie, if you move in for long enough, it's then your main home so presumably not subject to CGT?

Are you 'competent' and reasonably assertive?! Could you manage this rental yourself, in a fair and balanced way? Could you sort out any issues promptly and in the correct manner? And would you be equally firm when required, and not allow things you expressly forbid - pets, for example, sub-letting, that sort of stuff? Would you be happy to carry out your own inspections? Arrange gas certs? Etc etc. If not, you'd likely need to deduct around 10% from your takings to have it managed for you. Factor that in to your sums.

What are the ongoing tax implications of a rental property? 

I'd suggest consider all these factors, and do your sums. See how it compares with other investment opportunities.

Looking at how things appear to be going, it seems to me, a layman, that falling house prices coupled with strong rental charges would be an ideal opportunity for someone like you who does not need a mortgage? Isn't the current chaos being caused in the rental market down to LLs having large mortgages on their properties? That wouldn't apply to you. 

Sarah1Mitty2

MobileSaver said:

Sarah1Mitty2 said:

MobileSaver said:

Sarah1Mitty2 said:

MobileSaver said:

Sarah1Mitty2 said:

silvercar said:

People go into BTL for the income and capital growth, has to be part of a balanced portfolio. 
When the government was limiting the amount people could put into pensions by punitive tax measures, it was an attractive part of an investment strategy. But it is only a part of the picture.

Problem is that for people who chose their location wisely they have now seen capital growth, so selling out means a CGT bill that not all are prepared to face.

the landlords still looking to exit will be doing so at much lower prices than they had hoped.

The landlords still looking to exit will be doing so at much higher prices than they originally paid all those years ago, in part thanks to people like you paying their mortgage for them for all those years... I don't think many will be upset at the prices they achieve!

I would suggest that those trying to exit are more recent landlords who can`t cover the mortgage debt from rent

So even in your worst case end-of-the-world housing market apocalypse (which is definitely going to be much more bigly than all the other housing market Armageddons you have wrongly predicted over the last 15 or so years) you are talking about a tiny fraction of the 2.5 million private landlords in the UK being affected...

yes IMO not all landlords will be affected and of course just because a landlord`s property falls in price it doesn`t mean they stop being a landlord.

For the avoidance of doubt so that no-one gets the wrong idea from this recent post of yours...

By "not all landlords" you actually mean a tiny, tiny percentage of landlords...

And by "falls in price" you actually mean they're only looking at perhaps a 48% increase over what they paid instead of say 58%...

As said previously I wouldn't shed too many tears for these poor landlords, the vast majority have done extremely well from those misguided enough to sell to rent all those years ago. In fact it does make you wonder whether the HPC site is actually owned by a cabal of landlords as they're the ones generally benefitting from propagating the HPC myth...

No, I mean not all landlords will get into financial difficulty, I don`t know the % and neither do you, and neither do you know the financial situation of most landlords and how much their flats will drop in price, but I think most sensible people agree that a LOT of landlords in the last few years relied on the flat gaining value to make the deal worth it, and that the price they bought for was set by MUCH lower borrowing costs.

Sarah1Mitty2

ThisIsWeird said:

melissarfield said:

I have £250k from savings/inheritance that I'm looking to invest. Is investing in a BTL property wise at this stage?

I'm a FTB and am living with family, so I wouldn't be buying it to live in. It would be purely for investment but as more rules are coming in effect for landlords, I'm wondering if a BTL property is worth it (financially and also worth the headache)? Is there something better I could be doing with that money instead?

Hi Melissa.

I'm not going to give advice, as I just don't have enough knowledge of this area. But I'd have thought that any decision would need to take into account your personal circumstances, and also that of the area where you'd purchase a property.

For example, we know you are happy living with your family, but is that situation likely to continue? Or, would you anticipate moving in the next, ooh, 5 years or so? 10 years? When?

What sort of property could you buy for up to £250k? Could it be a new-build, so at least not require any ongoing maintenance for the duration of the let? ( From what I read on here, poor insulation and/or maintenance seems to be a major cause of dispute between LLs and TS.)

What are typical rents for the type of property you could buy?

Could the place you buy even be suitable for you as your first move out of the family home? Even temporarily? Ie, if you move in for long enough, it's then your main home so presumably not subject to CGT?

Are you 'competent' and reasonably assertive?! Could you manage this rental yourself, in a fair and balanced way? Could you sort out any issues promptly and in the correct manner? And would you be equally firm when required, and not allow things you expressly forbid - pets, for example, sub-letting, that sort of stuff? Would you be happy to carry out your own inspections? Arrange gas certs? Etc etc. If not, you'd likely need to deduct around 10% from your takings to have it managed for you. Factor that in to your sums.

What are the ongoing tax implications of a rental property? 

I'd suggest consider all these factors, and do your sums. See how it compares with other investment opportunities.

Looking at how things appear to be going, it seems to me, a layman, that falling house prices coupled with strong rental charges would be an ideal opportunity for someone like you who does not need a mortgage? Isn't the current chaos being caused in the rental market down to LLs having large mortgages on their properties? That wouldn't apply to you. 

One problem with that is that falling house prices are due to rising mortgage debt costs, and when people have to pay more on their mortgage debt they tend to cut back on spending in the "real economy", leading to job losses and weaker rental demand.

bunnygo

no crystal ball but...no, don't do it.  You can get over 4% on savings at the moment, you won't get that kind of net return on any rental unless you do slumlord/HMO.

Plus all the expenses and risks, and the latter will only get worse. Obviously below inflation so put some/a lot of it into investment funds, your pension if possible and start maxing out your ISA allowance.

MobileSaver

Sarah1Mitty2 said:

MobileSaver said:

Sarah1Mitty2 said:

MobileSaver said:

Sarah1Mitty2 said:

MobileSaver said:

Sarah1Mitty2 said:

silvercar said:

People go into BTL for the income and capital growth, has to be part of a balanced portfolio. 
When the government was limiting the amount people could put into pensions by punitive tax measures, it was an attractive part of an investment strategy. But it is only a part of the picture.

Problem is that for people who chose their location wisely they have now seen capital growth, so selling out means a CGT bill that not all are prepared to face.

the landlords still looking to exit will be doing so at much lower prices than they had hoped.

The landlords still looking to exit will be doing so at much higher prices than they originally paid all those years ago, in part thanks to people like you paying their mortgage for them for all those years... I don't think many will be upset at the prices they achieve!

I would suggest that those trying to exit are more recent landlords who can`t cover the mortgage debt from rent

So even in your worst case end-of-the-world housing market apocalypse (which is definitely going to be much more bigly than all the other housing market Armageddons you have wrongly predicted over the last 15 or so years) you are talking about a tiny fraction of the 2.5 million private landlords in the UK being affected...

yes IMO not all landlords will be affected and of course just because a landlord`s property falls in price it doesn`t mean they stop being a landlord.

For the avoidance of doubt so that no-one gets the wrong idea from this recent post of yours...

By "not all landlords" you actually mean a tiny, tiny percentage of landlords...

And by "falls in price" you actually mean they're only looking at perhaps a 48% increase over what they paid instead of say 58%...

As said previously I wouldn't shed too many tears for these poor landlords, the vast majority have done extremely well from those misguided enough to sell to rent all those years ago. In fact it does make you wonder whether the HPC site is actually owned by a cabal of landlords as they're the ones generally benefitting from propagating the HPC myth...

No, I mean not all landlords will get into financial difficulty, I don`t know the % and neither do you, and neither do you know the financial situation of most landlords and how much their flats will drop in price,

Oh the irony! Only yesterday you seemed to know the financial situation of landlords like the back of your hand! You claimed recent landlords couldn't cover their mortgage debt from rent and so were exiting the market.

Keep digging that hole!

jimbog

Sarah1Mitty2 said:

ThisIsWeird said:

melissarfield said:

I have £250k from savings/inheritance that I'm looking to invest. Is investing in a BTL property wise at this stage?

I'm a FTB and am living with family, so I wouldn't be buying it to live in. It would be purely for investment but as more rules are coming in effect for landlords, I'm wondering if a BTL property is worth it (financially and also worth the headache)? Is there something better I could be doing with that money instead?

Hi Melissa.

I'm not going to give advice, as I just don't have enough knowledge of this area. But I'd have thought that any decision would need to take into account your personal circumstances, and also that of the area where you'd purchase a property.

For example, we know you are happy living with your family, but is that situation likely to continue? Or, would you anticipate moving in the next, ooh, 5 years or so? 10 years? When?

What sort of property could you buy for up to £250k? Could it be a new-build, so at least not require any ongoing maintenance for the duration of the let? ( From what I read on here, poor insulation and/or maintenance seems to be a major cause of dispute between LLs and TS.)

What are typical rents for the type of property you could buy?

Could the place you buy even be suitable for you as your first move out of the family home? Even temporarily? Ie, if you move in for long enough, it's then your main home so presumably not subject to CGT?

Are you 'competent' and reasonably assertive?! Could you manage this rental yourself, in a fair and balanced way? Could you sort out any issues promptly and in the correct manner? And would you be equally firm when required, and not allow things you expressly forbid - pets, for example, sub-letting, that sort of stuff? Would you be happy to carry out your own inspections? Arrange gas certs? Etc etc. If not, you'd likely need to deduct around 10% from your takings to have it managed for you. Factor that in to your sums.

What are the ongoing tax implications of a rental property? 

I'd suggest consider all these factors, and do your sums. See how it compares with other investment opportunities.

Looking at how things appear to be going, it seems to me, a layman, that falling house prices coupled with strong rental charges would be an ideal opportunity for someone like you who does not need a mortgage? Isn't the current chaos being caused in the rental market down to LLs having large mortgages on their properties? That wouldn't apply to you. 

One problem with that is that falling house prices are due to rising mortgage debt costs, and when people have to pay more on their mortgage debt they tend to cut back on spending in the "real economy", leading to job losses and weaker rental demand.

Ok, I bite. Where will those who won't then be renting (or indeed buying) be living?

CSI_Yorkshire

jimbog said:

Sarah1Mitty2 said:

ThisIsWeird said:

melissarfield said:

I have £250k from savings/inheritance that I'm looking to invest. Is investing in a BTL property wise at this stage?

I'm a FTB and am living with family, so I wouldn't be buying it to live in. It would be purely for investment but as more rules are coming in effect for landlords, I'm wondering if a BTL property is worth it (financially and also worth the headache)? Is there something better I could be doing with that money instead?

Hi Melissa.

I'm not going to give advice, as I just don't have enough knowledge of this area. But I'd have thought that any decision would need to take into account your personal circumstances, and also that of the area where you'd purchase a property.

For example, we know you are happy living with your family, but is that situation likely to continue? Or, would you anticipate moving in the next, ooh, 5 years or so? 10 years? When?

What sort of property could you buy for up to £250k? Could it be a new-build, so at least not require any ongoing maintenance for the duration of the let? ( From what I read on here, poor insulation and/or maintenance seems to be a major cause of dispute between LLs and TS.)

What are typical rents for the type of property you could buy?

Could the place you buy even be suitable for you as your first move out of the family home? Even temporarily? Ie, if you move in for long enough, it's then your main home so presumably not subject to CGT?

Are you 'competent' and reasonably assertive?! Could you manage this rental yourself, in a fair and balanced way? Could you sort out any issues promptly and in the correct manner? And would you be equally firm when required, and not allow things you expressly forbid - pets, for example, sub-letting, that sort of stuff? Would you be happy to carry out your own inspections? Arrange gas certs? Etc etc. If not, you'd likely need to deduct around 10% from your takings to have it managed for you. Factor that in to your sums.

What are the ongoing tax implications of a rental property? 

I'd suggest consider all these factors, and do your sums. See how it compares with other investment opportunities.

Looking at how things appear to be going, it seems to me, a layman, that falling house prices coupled with strong rental charges would be an ideal opportunity for someone like you who does not need a mortgage? Isn't the current chaos being caused in the rental market down to LLs having large mortgages on their properties? That wouldn't apply to you. 

One problem with that is that falling house prices are due to rising mortgage debt costs, and when people have to pay more on their mortgage debt they tend to cut back on spending in the "real economy", leading to job losses and weaker rental demand.

Ok, I bite. Where will those who won't then be renting (or indeed buying) be living?

They'll all be buying the ex-rental stock for 50p each.  Apparently. Just somehow without being bothered by the "rising mortgage debt costs".  Perhaps because the houses will cost less than a packet of crisps.  Apparently.

london21

Lower cost funds and high paying savings accounts.

Property do your due diligence lots of changes.

Check the numbers add up as mortgage rates high at present.

Also will you like to be a landlord can be stressful when things don't go right e.g rent arrears, evictions etc.