Should I invest in index funds or stick to my BTL plan?
Comments
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Landlords are now too easy a target imo. My politics depends on the subject matter, but if a Conservative government increasingly considers landlords fair game that seems to be approaching game over. What meaningful electoral alternative is there for a more favourable perspective? None.bluefukurou wrote: »Some interesting points. BTL is certainly not what it was a decade ago, and the government does seem to be making serious efforts to stop people becoming amateur landlords. Add in the possibility of a Corbyn government, plus a no deal Brexit and it’s anybody’s guess what things will be like in five years. I don’t have a crystal ball and will keep my options open. Events may well influence what I end up doing, especially if house prices are affected by Brexit.
I don’t have other property, so any property I buy to let will not be part of a huge business. I don’t feel bad about the idea of a young family paying me money to have a roof over their head. It’s just the way things are and I would have already paid for the house with own hard earned cash. I’d still sleep well knowing if anything needs doing to the house, I’ll get it done and not quibble over petty things like the rogues you read about on these forums. Life’s too short.
e.g. Floating the idea of another hike in stamp duty surcharge:
https://www.telegraph.co.uk/news/2018/08/04/hammond-urged-not-launch-tax-attack-second-home-owners-new-buy/
I'm therefore less keen on the trade off between a low yield today vs potential future capital gains. Particularly when this government has already differentiated between CGT rates on additional property (28%/18%) vs other (20%/10%), in addition to putting off new-comers.
But if not a second home and the sums still work for you then maybe fair enough and good luck. You're right that the numbers made more sense years ago for the effort, and personal situations/outlooks differ.
Alexland - thanks I didn't know about that.0 -
I work overseas and have been using Internaxx for some time. No problems to date. I think TD Waterhouse are another broker who accept non-residents.
Shares are certainly less hassle and can be sold instantly and
anytime at the press of a button. Unlike a house just part of the holding can be sold off if required. Also, as a non-resident be aware of the 3% ABSD and the CGT that becomes liable on sale of a property. UK Govt are also consulting about removing the tax free allowance for non-residents.
As an expat you may be living somewhere with no CGT on share ownership and that can give you a big advantage whilst overseas.
Shareholders must be in it for the long term though and be psychologically prepared to ride out drops along the way. The most successful investors are often those that have the stomach to buy on the dips. We had a dip from mid 2015 to mid 2016 and then another in February this year. Those that added to their holdings then will continue to do well.0 -
I agree if the numbers add up and it’s suits your circumstances, BTL is still an option. What works for one, may not be at all suitable for somebody else.BTL represents diversification in our portfolio. We have 5 properties !!!8211; 3 long term rentals and 2 short term rentals !!!8211; the last property was purchased more than 15 years ago. The running costs are not high !!!8211; agent fees 4% for 2 properties, insurance, BGas contract for boiler and gas safety cert. Plus we assign 10% a year for repairs etc., We pay an accountant to manage the books for my limited co, personal tax for me and OH and BTL!!!8217;s = £1k a year in total. BTL is just like running a biz !!!8211; cash flow, legislation especially if you have short term/holiday lets. We like the diversification it brings to the portfolio !!!8211; OH has a DB pension and I have SIPP, if the markets are down we could live on the rents. I would say the income is fine £115k before tax but we did purchase some years ago and it takes considerable work. I don!!!8217;t think the numbers would add up If we purchased in the last few years, which may explain why a number of newer landlords (less than 5 years) are selling up.0 -
It seems to me odd that with constant news of a housing shortage and many people being forced to rent indefinitely, the government is making it harder for people who simply wish to invest in a property and bring some extra income in. I’m all for giving tenants better standards and making it easier for them to rent, but to come down so hard on smalltime investors who have worked hard and saved seems unfair. Surely there’s a way to give tenants more affordable options and also make it worthwhile for small time investors to provide for the rental market.Landlords are now too easy a target imo. My politics depends on the subject matter, but if a Conservative government increasingly considers landlords fair game that seems to be approaching game over. What meaningful electoral alternative is there for a more favourable perspective? None.
e.g. Floating the idea of another hike in stamp duty surcharge:
https://www.telegraph.co.uk/news/2018/08/04/hammond-urged-not-launch-tax-attack-second-home-owners-new-buy/
I'm therefore less keen on the trade off between a low yield today vs potential future capital gains. Particularly when this government has already differentiated between CGT rates on additional property (28%/18%) vs other (20%/10%), in addition to putting off new-comers.
But if not a second home and the sums still work for you then maybe fair enough and good luck. You're right that the numbers made more sense years ago for the effort, and personal situations/outlooks differ.
Alexland - thanks I didn't know about that.0 -
Great to hear from someone who uses Internaxx. Maybe you can answer a couple of queries I have regarding charges. I’ve looked at their fees and commissions, but I’ve never used a trading platform and am not sure I understand correctly. I would like to invest in ETFs through Internaxx, but want to be sure I know how the following scenario would play out.I work overseas and have been using Internaxx for some time. No problems to date. I think TD Waterhouse are another broker who accept non-residents.
Shares are certainly less hassle and can be sold instantly and
anytime at the press of a button. Unlike a house just part of the holding can be sold off if required. Also, as a non-resident be aware of the 3% ABSD and the CGT that becomes liable on sale of a property. UK Govt are also consulting about removing the tax free allowance for non-residents.
As an expat you may be living somewhere with no CGT on share ownership and that can give you a big advantage whilst overseas.
Shareholders must be in it for the long term though and be psychologically prepared to ride out drops along the way. The most successful investors are often those that have the stomach to buy on the dips. We had a dip from mid 2015 to mid 2016 and then another in February this year. Those that added to their holdings then will continue to do well.
Supposing I opened an account and immediately bought £10k of a particular ETF (UK or US) that had an ongoing charge of 0.25%, that would count as one trade and I’d be charged €14.95 + 0.10% (€10), right? Then if I did no more trading for the rest of the year, I would only be charged €25 for the first quarter (because of the one trade), then €45 for the next three quarter because of inactivity. Is that right?
On top of those maintenance charges, I would be charged the ongoing ETF fee of 0.25%, which is 0.25% of whatever the holding is currently worth, for as many years as I hold the ETF. Is that correct?0 -
bluefukurou wrote: »It seems to me odd that with constant news of a housing shortage and many people being forced to rent indefinitely, the government is making it harder for people who simply wish to invest in a property and bring some extra income in.
How does more people investing in property help the property shortage. Increasing numbers of properties are now let by AirBnB on short rather than long term rental.0 -
I don't think there's a housing shortage, just a shortage of affordable owner-occupier houses to buy and social housing to rent. According to DCLG Table 102 3.07m new dwellings were built between 2000 and 2016. Over the same period the number of dwellings rented privately (bought by landlords) increased by 3.10m. i.e. In net stock terms landlords have bought every new property built since 2000.bluefukurou wrote: »It seems to me odd that with constant news of a housing shortage and many people being forced to rent indefinitely, the government is making it harder for people who simply wish to invest in a property and bring some extra income in. I’m all for giving tenants better standards and making it easier for them to rent, but to come down so hard on smalltime investors who have worked hard and saved seems unfair. Surely there’s a way to give tenants more affordable options and also make it worthwhile for small time investors to provide for the rental market.
I therefore no longer find Government's policy reversal odd, and expect it to continue. Investors like me haven't/aren't buying because everyone wants to rent; increasing numbers are forced to rent because investors have bought up the stock, necessarily creating their own tenant demand and (subsidised) higher price demand. I'm fine with rental provision to and profit from people who want to rent, not so much otherwise.0 -
Thrugelmir wrote: »How does more people investing in property help the property shortage. Increasing numbers of properties are now let by AirBnB on short rather than long term rental.
I wasn’t encouraging more people to invest in property because it’s so great, but perhaps it came across like that. I was just trying to make the point that because there are many people that can’t afford to get on the housing ladder for whatever reason (be it they’re unable to save for a deposit, or prices are just too high), they need somewhere to rent, but somebody like myself, who just wants to buy a place and then let it to somebody who needs to rent, is finding there are more hurdles and possibly more to come.I don't think there's a housing shortage, just a shortage of affordable owner-occupier houses to buy and social housing to rent. According to DCLG Table 102 3.07m new dwellings were built between 2000 and 2016. Over the same period the number of dwellings rented privately (bought by landlords) increased by 3.10m. i.e. In net stock terms landlords have bought every new property built since 2000.
I therefore no longer find Government's policy reversal odd, and expect it to continue. Investors like me haven't/aren't buying because everyone wants to rent; increasing numbers are forced to rent because investors have bought up the stock, necessarily creating their own tenant demand and (subsidised) higher price demand. I'm fine with rental provision to and profit from people who want to rent, not so much otherwise.0 -
You didn't come across like that and I didn't intend to come across as lecturing. I do now have issues with BTL, but was meant as more explanation on why doesn't appeal to me as an investment after having researched again.bluefukurou wrote: »I wasn’t encouraging more people to invest in property because it’s so great, but perhaps it came across like that. I was just trying to make the point that because there are many people that can’t afford to get on the housing ladder for whatever reason (be it they’re unable to save for a deposit, or prices are just too high), they need somewhere to rent, but somebody like myself, who just wants to buy a place and then let it to somebody who needs to rent, is finding there are more hurdles and possibly more to come.
It's impossible to know what future Government policy will be, but they currently appear to have conflicting aims - greater homeownership + no price falls. I don't know if/how that gets resolved but, if we assume both conditions must be solved for, the only targetable housing cohort are landlords (private and social). If solving for both isn't possible then who knows, as that gets even further into social and fiscal/financial policy.0 -
J L Collins has an article on international investors, although it is specifically about Vanguard funds.
Having had a quick look I don't see any Vanguard online presence for the Middle East. There might be some links in the comments if you delve deeper.
Stocks — Part XVII: What if you can’t buy VTSAX? Or even Vanguard?
http://jlcollinsnh.com/2013/05/02/stocks-part-xvii-what-if-you-cant-buy-vtsax-or-even-vanguard/
Another article on the same blog talks about housing as an investment, although it is more aimed at a persons home rather than BTL.
http://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrible-investment/0
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