Buy to let

ah so finally you get it, its not the BTL thats the issue – its the system , the goverment.

its the voted in government thats failed you brooess not the BTL investor.

its the voted in government thats failed you brooess not the BTL investor.

Sorry, absolute toss. We’re free agents in this world and we make our investment choices freely. No-one holds a gun to our heads and says ‘buy another house’. Same as the driver who holds back and then overtakes when safe rather than doing a punishment pass – it’s entirely voluntary to do the negative thing… same as a cyclist running a red light…

I’ve got a deposit saved up to buy in London/SE but it’s still not enough to make a mortgage affordable. I could use that deposit to get a BTL in Manchester or another cheaper city as has been suggested to me by many people. But I don’t because I understand the damage that BLT does to the younger generation by creating scarcity of property for sale, especially those that want to get some stability and start a family – it would be just putting my own self interest above theirs…

There’s plenty of places to invest your money if your pension’s not performing… sticking into a leveraged punt on property is entirely free choice… and a pretty stupid one given the historical instability of housing. Anyone remember how 2008 started? Anyone thought about how they’re going to access the ££ in their BLT to spend in their retirement? Selling it. What happens when a whole generation of BTLs sell over the same 5 year period to cash in their gains…?

There’s plenty of places to invest your money if your pension’s not performing… sticking into a leveraged punt on property is entirely free choice…

Broess, what you, and others, are missing is that the vast majority of rental properties aren’t owned by people looking to supplement/replace pensions, but by corporates and individuals who own hundreds and thousands of properties.
These aren’t going to be affected by the changes announced previously and in the budget- they can buy mortgage free, and as businesses won’t pay the SDLT change.

Vinney is absolutely right. And these changes will make this worse. Instead of a small investor that takes some pride in their asset it will be investment vehicles interested only in yield / IRR. This has no impact on them. Those taking a hostile line to small investor BTL landlords in this thread seem to just have a gripe against high house prices. This is not caused by the small minority of such investors that will be affected by the govts recent changes.

Also referring to property being a high risk investment – it is not – it has historically always outperformed virtually every other form of investment

Give us a clue then as to these alternative investments? Bear in mind I’ve personally experienced the Equitable Life flushing our pension, B&B/GA selling us an under-performing endowment, so I’m not a big fan of suggestions from the marketing teams of the financial services industry.

So why do people become landlords if it isn’t to make themselves richer, either now or in the future..?
Educate me.

I bought a property at the time I had a tied house with a job, just in case the job disappeared.
House prices plummeted, I have been in negative equity for 5 years.
My tenant looked at buying it recently – rent is £525pcm, if she could save deposit (she can’t/wont), if she could get mortgage (she can’t, temp contract) then the mortgage would be £560pcm.
So, she gets same flat, maintained by me, at lower cost and without saving or hassle, and can leave should her contract end.
Seems a great choice for her to stay.
So, tell me again about this money grabbing capitalist pig that I am providing an overpriced service again?

somehow i knew that would be the reply brooess.

im still wondering who would own all these rentals if it wasnt the BTL investor…..but im sure you have a plan for that.

oh – until the 80s it would have been the government . my point still stands. the goverment voted in has screwed the system. The investor has just jumped on the high yield product as any non ethical investor would.

I guess we will find out when this interest rate you have been banging on about for 4 years (you were lookign at flats vs houses arguement when i bought my first house 4 years ago- and were convinced prices were going to crash any minute back then)

So, tell me again about this money grabbing capitalist pig that I am providing an overpriced service again?

What do you mean “Again”? Where have I said it the first time? There’s nothing wrong with making oneself richer.

Give us a clue then as to these alternative investments? Bear in mind I’ve personally experienced the Equitable Life flushing our pension, B&B/GA selling us an under-performing endowment, so I’m not a big fan of suggestions from the marketing teams of the financial services industry.

Here’s a clue…

SOARING house prices may be today’s hot topic, but investors would be better sticking to shares for long-term gains, according to research for The Sunday Times.

Analysis by Halifax shows that investing £100,000 in a but-to-let property in 1989 would have produced a 201% gain, adjusted for inflation, or an annual return of 4.8%.

The same investment in the FTSE 100 would have produced a return of 653%, or 8.4% a year, based on reinvesting dividends to buy more shares, according to the stockbroker Charles Stanley.

Without the dividends, the returns from shares would have been only 203%, underlining the importance of reinvesting income.

http://www.thesundaytimes.co.uk/sto/business/money/investments/article1408963.ece

I hear you, but to make that leap for me would require me to either have the knowledge of what and when to buy and sell, which I don’t, or to trust some sort of fund manager to do it for me, like I did with the Equitable Life and the endowment mortgage, and hell will have to freeze over a lot of times before that happens.

I don’t get this argument, you say you have enough money to buy a property but just not a property in the most expensive part of the UK. You seem happy enough the be played like a puppet by these nasty people that have invested in property to make some extra money but you don’t want to do the same to eventually get a property where you want/need one.

So instead what you are wanting is for the property market to crash a bit so you can buy where you want and then for it to go on rising again so your investment in your future is sound.

If property is such a shit bet why bother to get into it in the first place. Just rent and save in the stock exchange.

Broess, what you, and others, are missing is that the vast majority of rental properties aren’t owned by people looking to supplement/replace pensions, but by corporates and individuals who own hundreds and thousands of properties.
These aren’t going to be affected by the changes announced previously and in the budget- they can buy mortgage free, and as businesses won’t pay the SDLT change.

Oh Really?

1.2 Key Findings
• Eighty-nine per cent of landlords were private individual landlords
responsible for 71% of all private rented dwellings, with a further 5% of
landlords being company landlords responsible for 15% of dwellings.
• More than three quarters (78%) of all landlords only owned a single
dwelling for rent, with only 8% of landlords stating they were full time
landlords

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/7249/2010380.pdf

The report is from 2010, but I doubt hundreds and thousands of properties have since been purchased in sufficient numbers by large landlords to reverse the figures.
A significant number of recent new landlords are those dissatisfied by their pension returns and looking for a new home for their newly liberated loot. Unfortunately, they’re kind of late to the party.
Maybe, just maybe, the new “Anti BTL” measures haven’t been introduced to “punish” landlords, but to save potential new landlords from making a big mistake? After all, they’re only following the herd, and at the first sign of any trouble there will be a massive scramble for the exit.
Woe for all!

except for brooess who has been sitting patiently waiting for the big crash so he can get his dream house at a knock down price ……

Will increase the Let to Buy market now.

Spent 10 years working in the housing benefit field.

The whole BTL “business” has grown up as a sympton of successive governments complete failure to provide adequate low cost/social housing and ensure that wages are high enough.

Both failures have been reinforced by successive governments using welfare/benefits/tax credits to prop up the whole crock of shite.

Until we vote in a government prepared to put tax system in place to fund what the nation needs, and legislate on wages that may impact on the cost of living in the short term, it won’t be fixed.

So all us turkeys need to start voting for Christmas.

Well for me buy to let investors have helped me for most of my life when I was in the UK, changed jobs, moved around, got seconded and most importantly entered the world of work after the house price acceleration in 97.

I hate to think how much stamp duty/solicitors/mortgage fee’s I would have paid if I’d owned in 2 or 3 of the 6 places I lived (some of them 2 or 3 time)

By the time my earnings were on track to not get laughed out of the bank prices had gone so far out that it was pointless trying to buy.

As said previously the country needs a healthy stock of rental properties, people need to be mobile.

It’s sad that people are happy to screw the younger generation over so thoroughly, just to try and make themselves richer
That’s a sweeping generalisation and an uneducated view of why many people become landlords.

I think this sums up a lot of people who bought in the 80s/90s and have seen their Investment (home) outpace lots of other investments. It’s the reason house prices will never be let to crash, too many people have everything in the house, if it’s worth nothing when they retire they will have a very bad time. Problem is with less people getting on the bottom the market is getting very messed up.

Whats really needed is a mindset change around renting (current economic thinking in places like Oz is that in many areas the lifetime costings are about even between buying/renting (and yes that does take into account the final value of the house – so long as it’s still standing/habitable in 50 years time), other countries have great protections and longer tenancies to make renting a stable proposition for renters and landlords. A stipulation that say 15% of new build was held as rented by the house builders for instance might lift the burden from the individual to the corporations.

A stipulation that say 15% of new build was held as rented by the house builders for instance might lift the burden from the individual to the corporations

We have that in the UK. Unfortunately the developer merely has to argue this will make the project unviable to have this quota removed or decreased.

There’s plenty of places to invest your money if your pension’s not performing… sticking into a leveraged punt on property is entirely free choice… and a pretty stupid one given the historical instability of housing

A large chunk of BTL lending is not debt financed, so very little risk – most people I know with a BTL could easily withstand interest rates going back to 80s levels.

Long term it’s a very sound investment, we’re not going to build millions of new homes any time soon, so demand is guaranteed to outstrip supply for at least a generation. Prices will rise and fall with the economy (just as stocks and shares do), but the general trend is upwards (until the demand / supply balance is significantly altered). You mention the 2008 crash, but most houses in the SE are back to their 2007 peak valuation.

What’s the difference between paying into a pension, which is likely to be a fund that a proportion is based on safe investments including property and an individual deciding not to have pension and purchasing a btl property?

One of the best funds performance wise in my company pension is UK property (commercial rather than domestic).

One of the best funds performance wise in my company pension is UK property (commercial rather than domestic).

Yer average REIT has mullered BTL as an investment over the last few years, and has the added advantage that when the music stops (as it will, for both), you can have your money out instantly. No hanging around waiting for your only asset to sell, dropping the price monthly to make it more attractive than all the other “pension” properties, with the press full of landlords wanting out, all wailing “no-one said propert could go down! sob, sniff…”

It’s a scandal, the Tories hate the fact that the general public have given up handing over their cash to the city (pensions/shares etc) for them to mismanage and waste, eating into the fat cats profits and bonuses.
Property is still the only sound long term investment I’ll be looking at.

Property is still the only sound long term investment I’ll be looking at.

Not really, property tracks the economy in a similar manner to shares, but being less liquid it is less volatile in the short term (which doesn’t really matter is you’re investing long term for a pension).

There’s absolutely no way I would invest over £100k in shares.
I didn’t hesitate to do the same in property though.

There’s absolutely no way I would invest over £100k in shares

and that is your prerogative, but doesn’t mean it’s sound a sound financial decision.

and that is your prerogative, but doesn’t mean it’s sound a sound financial decision.

Mmm possibly, I guess time will tell.

What’s the difference between paying into a pension, which is likely to be a fund that a proportion is based on safe investments including property and an individual deciding not to have pension and purchasing a btl property?

Nothing really, you pays your money and take your choice! Its really all about the situation it has/is created/creating. My daughter has held down a job for three years, works hard etc but can’t afford a studio flat. Recently a building in Dorking was being converted into flats and just before the marketing blurb was released, someone came forward and bought them all. So in a nutshell its pissing a lot of people off!

I’d think that half the people who say they can’t afford the deposit for a mortgage piss a huge amount of money up the wall.

Lots of people in this country have a crap attitude towards money management and saving.

There’s also personal choices that are made that effect affordability.
Such as deciding to rent with someone or on your own. Yes its nice to have your own place, but better to share for a while, cut your costs in half and then save some money.

Personally I’ve no issue with BTL. And will probably do it at some point down the line.

I’d think that half the people who say they can’t afford the deposit for a mortgage piss a huge amount of money up the wall.

I agree with this. There’s a growing level of entitlement in this country that I don’t like.

People come out of uni with massive debt, travel the world, buy every apple product under the sun, party hard every weekend in expensive clothes and love holidaying and then expect to be able to buy a house within 3 years without actually putting any effort into saving.

Yes there are people who are not like the above and yes, there are areas where house prices are ridiculous. But this Buy To Let assault isn’t going to cause a massive house price crash in London, Cambridge etc. and you aren’t going to be able to buy without consciously saving for a few years or more.

I’d think that half the people who say they can’t afford the deposit for a mortgage piss a huge amount of money up the wall.

Lots of people in this country have a crap attitude towards money management and saving.

I purchased my first property a few years ago so I know how hard it is to save up that all important deposit and get on the ladder, but it’s not impossible.

Many of my colleagues are really struggling but that’s because they spend vast amounts of money on luxuries or worse, their first time buyer house requirements are completely unrealistic for their budget, spending years trying to find the ‘perfect place’.

By the time I was able to consider purchasing, I had to have a 30% deposit in order to be considered when purchasing my house…. Saving was depressing and only really made possible by half a year in the Middle East.
The reason I didn’t buy earlier is that it would have trapped (or felt like it would) me in an area and denied me the flexibility to move jobs etc. Without private landlords I would have been screwed. Mind you I know people who will rent until they die as the thought of purchasing and the responsibility fills them with dread

I am temporarily in the US and the apartment block I live in is a purpose built renters block (one of hundreds in the city) and people expect to move every second year due to rent instability. This does allow people to be mobile but there is no community.
There need to be empty houses for people to move to if we want a mobile workforce and the UK is just not set up for this. If BTL disappear without a credible alternative many people will have a much harder time.

“Yer average REIT has mullered BTL as an investment over the last few years, and has the added advantage that when the music stops (as it will, for both), you can have your money out instantly. No hanging around waiting for your only asset to sell, dropping the price monthly to make it more attractive than all the other “pension” properties, with the press full of landlords wanting out, all wailing “no-one said propert could go down! sob, sniff…” “

You really believe that about REIT ….. when the music stops and folk want their money out – They can bolt the doors until they have liquidised the assets to get your money ….. Its only safer than actual property in a good market, during a crash its no better unless you pre-empt an sell early.

mitsumonkey, if you had say a million quid, where would you invest it other than shares? ok, part can go on a house, but the rest?

You really believe that about REIT ….. when the music stops and folk want their money out – They can bolt the doors until they have liquidised the assets to get your money ….. Its only safer than actual property in a good market, during a crash its no better unless you pre-empt an sell early.

Land Securities Investment Trust’s slide from the dizzy heights of 2007. The share price took 2 years to reach it’s nadir. An investor has to be pretty stupid to just sit and watch it go down for two years. A couple of months of decreasing share price should tell you something’s up and it’s time to take your profits, unless of course you’ve only just joined the fun. It’s not like the dotcom bubble, supported by fresh air and fairy dust; there are real solid assets in there. They always have a market.

Mind you, I can partly understand peoples’ reluctance to let go; a 400% increase in 6 years tends to make one greedy. Residential property in Surrey gained about 50% over the same period.

So Osbourne’s cuts to benefit costs will come by reducing the housing benefit bill.
Great. That is easy. Cap rents.
Housing benefit is a rich person’s benefit. A person who can afford to buys a second house and sits back.
A person who can’t afford to buy gets together a deposit and 2 month’s rent then applies to their local council to prove they are poor. Once their claim is approved the benefit is paid directly into the rich person’s bank account. The person who did the paperwork and went through the demeaning process never even touches the money.
Capping rents will reduce the benefit bill and reduce rents across the board making life easier for all those in the country who rent.
The only people who will lose are those who can afford more than one house.

It would be hard for the government to cap the amount that you can charge for rent. They can cap the amount of money they pay out in housing benefit but if there are more renters than houses what is there to stop the landlord charging more than this? You then end up with the people at the bottom either having to find extra rent or new accommodation.

The only way a government can control the rental cost is to own the properties.
I don’t know what the cost of building and maintaining social housing as opposed to renting it from the private sector is. Whichever appears less over a 4-5 year term will win…

saw a nice idea earlier where ALL property is owned by the state……. Seems like a very sensible idea

Will catch up on the whole thread but I suspect this extra tax and the one on second homes will be widely avoided. How will they determine its for rental purposes ? Buyers will just state it’s for living in and the extra tax will favour landlords who don’t need to borrow of which there are many.

saw a nice idea earlier where ALL property is owned by the state……. Seems like a very sensible idea

That’s seriously NUTs. It’s not even like that in Communist China or Russia. An idea is generally judged a good one where it’s been seen to work well somewhere else.

All those calling for rent controls etc need to understand how difficult that makes it to find a property to rent as landlords get very very selective about renting properties out, in France many people prefer to leave their property empty than rent it as tennet rights are so strong

All property used to be owned by the state then rights granted to lords etc who let people rent it to live on and farm for a certain cost.
I don’t really fancy going back to the feudal system it sounds pretty rubbish unless you are at the top.

some of the usa citys have rent controls in place.

ask someone in NYC how crap it is…..