Viewing 26 posts - 41 through 66 (of 66 total)
  • Financial advise required…purchasing a buy to let
  • gearfreak
    Free Member

    This place is turning into House Price Crash (OP, read the forums on that site before buying a BTL, it’l have you running scared!) To be honest the recent changes to tax etc make BTL a silly idea at the moment, you would be a fool to jump on now, especially if you are, or are close to paying higher rate income tax.

    dooosuk
    Free Member

    perhaps young people might actually have a chance of buying their own home at a reasonable price. Just a thought

    Maybe, but times have changed. My parents scrimped and saved for their first house deposit. Kids these days aren’t interested in that. They want the latest iWhatever, to have the Uni lifestyle despite not necessarily needing the degree, have a gap year, or multiple holidays a year, new car on PCP/HP. Then they hit mid to late 20’s, maybe 30, realise they haven’t a penny to their name and start sulking they can’t afford to buy a house.

    Yes property is some areas is far too expensive and does price people out of the market, but not in the majority of the country. Attitude towards money and savings in general has to change in the 15 to 30 yr old age range in my opinion.

    trail_rat
    Free Member

    perhaps young people might actually have a chance of buying their own home at a reasonable price. Just a thought
    Maybe, but times have changed. My parents scrimped and saved for their first house deposit. Kids these days aren’t interested in that. They want the latest iWhatever, to have the Uni lifestyle despite not necessarily needing the degree, have a gap year, or multiple holidays a year, new car on PCP/HP. Then they hit mid to late 20’s, maybe 30, realise they haven’t a penny to their name and start sulking they can’t afford to buy a house.

    This – based on my peers.

    i worked my balls off/saved hard from 23-26 and drove/drive shit cars to get my house (while renting off a BTL investor – without which i wouldnt have been able to do my job in the location i needed to live- so that i could save. – nor would my wife have been able to finish her post grad so she could get a job)……- and i dont live in cheap/uncompetitive area of the country…..

    many folk my age doing jobs like mine have the flash audi / the latest igadget / the 50 inch tv etc and then complain they have no money – or go to the bank of mum and dad to bank roll their property acquisition.

    Its all the BTL investors fault.

    Londons an exception but theres a solution to that on a personal level.

    scotroutes
    Full Member

    Just in from Scotland..

    “buyers purchasing an additional residential property – such as a second home or a buy-to-let – worth more than £40,000, will face an addition charge of 3% of the value.”

    bamboo
    Free Member

    Whilst I agree that a lot of people aged 20-30 do have the latest gadget, flash cars etc, I do wonder how much this is because they see the prospect of buying a house totally unachievable, so spend their money elsewhere. The reality is that it is possible, if you have a good income and don’t have all of the latest cars/gadgets/clothes, but for those who don’t have a decent income it really is impossible.

    FWIW I scrimped in my mid/early twenties to get a deposit together, and having bought a house I still don’t have flash cars, and we are putting up with the dodgy decor of our house until I have the time and money to do the work myself. A lot of my peers ‘wouldn’t stand’ having older cars/dodgy decor in their house, and would just throw (borrowed) cash at it.

    aazlad
    Free Member

    Mrs Aazlad and I have a very nice BTL property for sale at the moment and are willing to let it go for significantly less than the market value.

    We were forced to relocate 4 years ago and couldn’t sell in the timescale that we had so we put it up for rent. Our landlord wants to sell our current home and we want to buy it so it’s time to sell our old place.

    It has not been vacant in the 4 years and the 3 times that it was for rent it got snapped up within days. Yield of approx 7%.

    Email address in profile if you want to discuss it.

    dooosuk
    Free Member

    I do wonder how much this is because they see the prospect of buying a house totally unachievable, so spend their money elsewhere

    People have been forecasting a market correction for years…why aren’t they saving so they’re ready to go when it does? They just want a ‘have it all lifestyle’ and houses are the final item they can’t just easily get on credit.

    What is a good income? I paid off my student debt and saved a deposit on a fair but not especially brilliant graduate salarly. I bought my first property in 2006 and I lost £25k when I sold it 3 years ago…but I still had some equity in it to buy the next property because I’d chosen to live within my means and forgo the perceived must have items.

    Lifestyle choices are as much, if not more to blame than BTL landlords in my eyes. People just don’t want to admit it’s of their own doing and would rather blame people who made different choices.

    TurnerGuy
    Free Member

    I bought my first property in 2006 and I lost £25k when I sold it 3 years ago

    where in the country was that ??

    dooosuk
    Free Member

    A new build flat in Manchester 🙁

    br
    Free Member

    Whilst I agree that a lot of people aged 20-30 do have the latest gadget, flash cars etc, I do wonder how much this is because they see the prospect of buying a house totally unachievable, so spend their money elsewhere. The reality is that it is possible, if you have a good income and don’t have all of the latest cars/gadgets/clothes, but for those who don’t have a decent income it really is impossible.

    This.

    I’m 50 and bought my first house at 21 with a 100% mortgage, on 3 times my salary. At the time I could’ve easily spent less – 2-bed terraces were available for about £10k at time. Plus with the exception of cars and motorbikes there weren’t really any other toys to buy 🙂

    gwaelod
    Free Member

    Fed have just increased rates by .25 percent.

    Interesting times.

    brooess
    Free Member

    From Bloomberg – repeated increases throughout the year too… uncharted territory

    The Federal Open Market Committee unanimously voted to set the new target range for the federal funds rate at 0.25 percent to 0.5 percent, up from zero to 0.25 percent. Policy makers separately forecast an appropriate rate of 1.375 percent at the end of 2016, the same as September, implying four quarter-point increases in the target range next year, based on the median number from 17 officials.

    trail_rat
    Free Member

    Maybe i made the right choice locking in for 5 then 🙂 will probably set precident for here in the near future….

    brooess
    Free Member

    Certainly not a good time to borrow tens or hundreds of thousands of pounds on an interest-only mortgage…

    Gary_M
    Free Member

    Great year to be paying off ones mortgages

    trail_rat
    Free Member

    Certainly not a good time to borrow tens or hundreds of thousands of pounds on an interest-only mortgage

    Imo…..

    nickjb
    Free Member

    Rates are still very low.

    brooess
    Free Member

    Rates are still very low.

    True, and the impact will depend on your personal circumstances.

    If you’ve a massive interest-only mortgage and BoE follows the pattern expected of the Fed (4x 0.25% moves in a year) then your cost of borrowing is going to be a hell of a lot higher.

    Which, for the OP is a very important consideration… with wages expected to be static he may find he can’t charge higher rent to cover these higher costs

    trail_rat
    Free Member

    Currently, yes.

    1 year prediction ? 5 year prediction ? 10 year prediction ?

    Past performance data is not a good indicator of future performance – how ever it is the only data we have.

    Im only just old enough to remember the late 80s.

    I also see a 7 year boom bust cycle in local industry- i joined during the last one and looked at historical data- and i see the same repeatable data. I meet folk who have worked through a few of these boom bust cycles and most of them have arranged it so that if it goes wrong – they wont go to the wall.

    There are alot of folk my age who have not worked through one of these cycles yet and are up to eyeballs in debt and living in absolute fear of losing their job. Many are barely scraping it with the reduction in days they/we are seeing -( due to the way the payscales work)

    And while im not immune , my fixed costs are very low and my rainy day fund at a level im happy with – at the expense of the camper van( being a 1980s talbot at the level of my savings most likely) id love and the kitchen and bathroom remodel our how sorely needs….

    While your a long time dead the lack of stress that savings provide mean its worth the sacrifice to me,

    5lab
    Full Member

    your cost of borrowing is going to be a hell of a lot higher.

    is it? its going to be higher, yes. But even IF they rise by that much (which I doubt), its not such a big impact.

    On a property I let out, I owe near as dammit £200k, the rent is £1200 pcm. That gives £500 interest @ 3%, with £700 ‘profit’ (minus other costs – lets say £150 for roughly 10%) or £550 net a month. A rise of 1% would (if I were on SVR) cost me an extra £160 a month, or a drop in profit of around 25%. yes, its an impact, but its still (£5k per annum on £80k, plus any capital gains, currently running around £20k per annum) a very lucrative (albeit risky) investment.

    If the BOE could put interest rates up just for BTL they may choose to do so, but given it affects home owners as well, the powers that be simply won’t allow for the impact a massive hike would now have on the UK. Putting rates back to the long-term average of, say, 4% would (assuming mortgage rates rise by the same amount) put such a strain on household incomes that it’d destroy the economy, and anyone with a loan secured on housing (including most owner-occupiers). You’re assumption that it’d benefit non-house-owners is kind-of accurate (although a 25% drop in price with a 300% rise in interest rates is probably actually a higher cost to the FTB) – but it’d be so politically suicidal that it’ll never happen. IMO (for what its worth), any drop in effective house prices would be managed by keeping the notional values flat and inflating everything else. This would appease new entrants, as well as existing owners, a much more politically acceptable solution.

    It’ll be interesting to see what limits the BOE place, but their historical restrictions haven’t had any real impact on the market (I think the last one was that a bank can only have 25% of loans at a loan of 4.5x income or above?) because they’re scared of spooking it as much as anything. I wouldn’t be surprised to see a french-style CGT on homes owned for less than x years (which discourages dumping in poor markets, and encourages long term ownership) which would meet their needs (keep economy stable), if not those of an FTB.

    The thing with housing costs is that, in general, there’s a set number of people and a set number of properties. if you can only afford a house in the lowest quartile of value now, you’ll probably only be able to afford the same house if things change (unless you’re heavily short or long on housing). At a holistic level, making borrowing costs higher will worsen thing for FTBers, as they’ll be less able to compete with those with large amounts of capital already. a £200k loan @ 3% is £720 a year cheaper than a £150k loan @ 6k (assuming 30 year repayment mortgage). As a result, low interest rates improve social mobility, so raising them is unlikely to be on the political agenda any time soon (although BoE should be independent and thus not care)

    nickdavies
    Full Member

    5lab
    Full Member

    so the way I look at it (and others may view differently) is that, unlike a residential mortgage, there isn’t a need to pay the balance off until the property is sold. Over time (due to inflation) the income from rent should rise moderately, but lets say in 38 years time (I’m 32 now) I still have a property that for whatever reason is still work 300k with 200k of mortgage on it, I would be happy to sell it. Obviously, if you’re planning for a retirement funded fully on the income from a rental property, you need to work your maths out differently.

    If you do go down the path of paying off the mortgage, and it consumes all the left-over money after interest (I’ve not done the sums to check, but if you were paying it off, the amount paid in interest drops in future years), and it takes 30 years to do so, at the end of that time you end up with a wholely owned house, which you are able to sell (at whatever the market rate is, be it higher or lower than today). Its unlikely that a house on land in the UK will ever be worth nothing (not impossible, but its far less likely than a certain stock becoming worthless), and whatever amount you sell the house for (even if its just the initial cost, which after 30 years is unlikely) is at that point, profit (minus any CGT you might accrew for increases in value)

    edit : got beaten by a stealth edit, so this post may appear stupid 🙂

    nickdavies
    Full Member

    Sorry, I deleted to re write it as I realised a rather fundamental error in my logic and then got side tracked and missed my 15 minute window! 😳

    georgecats_0
    Free Member

    Thanks for all your input!

    nwill1
    Free Member

    Wow…I have a BTL and it’s all going well…I’m terrified now after reading this thread! Haha.

    OP – A BTL is potentially great or potentially financial suicide. It’s just about getting it right. Given the current market you need to buy below market value with a strong return/yield.

    When I did it I wasn’t looking for one but saw a property that just stacked up. The price was cheaper than others in the area but the rents was higher, right property, right location. You want to be looking at 15% yield, should hold up even with changes.

    For those on here saying about young people getting on the housing market, yes it’s tough but like others said what I’d their priority. Me and the wife budgeted hard to get on the ladder at the hight of the market before the credit crunch and crash…I know a lot of folk in my age bracket (mid 20’s/mid 30’s) who have £400+ car loads, several luxary holidays around the world a year and have far too many designer cloths and iproducts. It’s about priorities. (I appreciate that London/SE is very different to the rest of the UK).

    suburbanreuben
    Free Member

    You want to be looking at 15% yield, should hold up even with changes.

    In your dreams, maybe…

Viewing 26 posts - 41 through 66 (of 66 total)

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