Buy to Let Property

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  • steampoweredsteampowered Forumite
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    Miranda25 said:
    In terms of return generated, yes properties and stock markets are similar 7-8%.
    It is extremely unlikely that you would generate returns of 7-8% a year on buy-to-let property.

    The average yield on buy to let property in the UK is about 3.5%. Though, no doubt it is a bit higher in some areas. Remember that's before income tax, stamp duty, capital gains tax, void periods, lender fees, letting agent fees, maintenance costs, conveyancing/solicitor fees and anything else I've forgotten.

    While it is true that it is easier to leverage your investment by taking on debt with buy-to-let than it is with shares, taking on debt also increases your level of risk. Your BTL mortgage will have to be paid regardless of whether the tenant is paying rent or not. Likewise your mortgage lender won't share in any of the costs and taxes you will have to pay. 

    Buy-to-let used to be more profitable than it is today. A chunk of the returns came from rising house prices - but we no longer live in an era of rapidly rising house prices.
  • Miranda25Miranda25 Forumite
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    Miranda25 said:
    In terms of return generated, yes properties and stock markets are similar 7-8%.
    It is extremely unlikely that you would generate returns of 7-8% a year on buy-to-let property.

    The average yield on buy to let property in the UK is about 3.5%. Though, no doubt it is a bit higher in some areas. Remember that's before income tax, stamp duty, capital gains tax, void periods, lender fees, letting agent fees, maintenance costs, conveyancing/solicitor fees and anything else I've forgotten.

    While it is true that it is easier to leverage your investment by taking on debt with buy-to-let than it is with shares, taking on debt also increases your level of risk. Your BTL mortgage will have to be paid regardless of whether the tenant is paying rent or not. Likewise your mortgage lender won't share in any of the costs and taxes you will have to pay. 

    Buy-to-let used to be more profitable than it is today. A chunk of the returns came from rising house prices - but we no longer live in an era of rapidly rising house prices.
    Steampowered, thank you for your time. It was a pleasure to communicate with you.
  • AlexMacAlexMac Forumite
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    AlexMac said
    Miranda; with this attitude, you are my kind of brave woman.  Thankfully I am already married, immensely happily to a wonderful person,  and probably 40 years too old for you, or I would be stalking you!...Bonsoir ma p'tite
    Surely you’ve been on internet forums long enough to know everything may not be as it first appears?
    Dear Mutton; at last, someone who sees through me; with your preception, you have realised that all is not as it seems; perhaps I am not a balding, overweight, 70-something, retiree wannabe, wasting their time on pointless MSE posts, but actually a successful, svelte young property tycoon like greatcrested!

    Although momentarily returning to the topic of this post, I was one of the few to actually answer the question; where can I buy an affordable starter property near London.  Even though Miranda, the OP was clearly wholly unimpressed by my suggestion of the North Kent estuary corridor.  Ah well- lockdown is easing, so I should soon be able to "Get out More" (the advice I suggest you are about to proffer?)
  • FirstTimeSoloFirstTimeSolo Forumite
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    Have you looked around Purley, Horley, Three Bridges, Redhill etc. They are all on direct line to Victoria and London Bridge and more affordable. 
  • Miranda25Miranda25 Forumite
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    AlexMac said:
    AlexMac said
    Miranda; with this attitude, you are my kind of brave woman.  Thankfully I am already married, immensely happily to a wonderful person,  and probably 40 years too old for you, or I would be stalking you!...Bonsoir ma p'tite
    Surely you’ve been on internet forums long enough to know everything may not be as it first appears?
    Dear Mutton; at last, someone who sees through me; with your preception, you have realised that all is not as it seems; perhaps I am not a balding, overweight, 70-something, retiree wannabe, wasting their time on pointless MSE posts, but actually a successful, svelte young property tycoon like greatcrested!

    Although momentarily returning to the topic of this post, I was one of the few to actually answer the question; where can I buy an affordable starter property near London.  Even though Miranda, the OP was clearly wholly unimpressed by my suggestion of the North Kent estuary corridor.  Ah well- lockdown is easing, so I should soon be able to "Get out More" (the advice I suggest you are about to proffer?)
    AlexMac,
    You are indeed one of the few who answered my initial question, thank you. But I thought about your area too and even in touch with some developers in that area. I might consider a house for myself there if I would find a house without extra work required immediately, with garden and within close proximity to the station and within £200k :smile:
    Might even come back to you for advice as you know the area (if it is fine with you).

    Not sure how easy to communicate from Gravesend/ Gillingham to London on a daily basis? Not sure how easy might be to sell the property in the future? Is it your area in demand or not? Or I would pass it to social landlord if I would struggle to sell it in the future, your lesson :-))
    I would definitely will go and look at areas recommended in this thread and all other areas which is in my mind.



  • Miranda25Miranda25 Forumite
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    Have you looked around Purley, Horley, Three Bridges, Redhill etc. They are all on direct line to Victoria and London Bridge and more affordable. 
    Will look at it too, thank you. The only thing: is it disturbing too much airplanes over your head all the time? I did not like it when I went to Richmond and Windsor Castle, even thought how Queen can live like that? :-))
  • Grumpy_chapGrumpy_chap Forumite
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    I don't think Purley, Horley, Redhill are particularly blighted by aircraft noise.

    Alternatively, consider Milton Keynes, Bedford areas.
  • Ditzy_MitzyDitzy_Mitzy Forumite
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    I let a flat, at present, in Essex.  I'm an accidental landlord, landlady actually but that term seems to have disappeared, and make precisely no money from the letting.  It costs me a bit, annually, to keep it running but the only benefit is as a long-term investment because the mortgage is covered by the rent payments.  There are more efficient ways to earn a living. 
  • FirstTimeSoloFirstTimeSolo Forumite
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    And don’t forget to factor in the service charges which can be in £000s per year. You could look at buying a conversion flat with low service charges. 
  • Miranda25Miranda25 Forumite
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    And don’t forget to factor in the service charges which can be in £000s per year. You could look at buying a conversion flat with low service charges. 
    What kind of flats are more popular in England- conversion flats or purpose-built flats? Please do not reply "houses" :-)
    What's the name for flats with private garden? Just tired to look at all advertisements and mostly communal gardens.
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