Is BTL still possible?
Discussion
Groat said:
Old style Housing Benefit rents are paid all together every 4 weeks. Which means that on one calendar month each year there are 2 payments.
Today is the second HB payment day this month. (well actually Friday was but the agent processes them the next working day)
The flip side of the coin is that they don't always come in. In full anyway. The reasons usually:Today is the second HB payment day this month. (well actually Friday was but the agent processes them the next working day)
Tenant was meant to supply a piece of paper. Didn't.
Tenant was meant to supply a piece of paper. Did. Council lost it.
Tenant didn't declare change of circumstances. Payment to LL stopped until the benefit difference recovered.
As HB is paid 4-weekly in arrears, this means that you're immediately in the hole.
It’s almost as if people want BTL to be a poor investment.
On this thread, people are bringing out taxes, man maths, thinking we don’t know how to calculate yields etc to criticise the investment etc.
I think the numbers speak for themselves and are compelling. If you buy in the right area it’s a safe 7.5%-10% yield with sensible leverage before any capital gains. It’s been little hassle for me and I can get the cash out tax efficiently. Not sure if should be aiming higher, but it more than meets my aims and I don’t see how I could be consistently getting that with trackers.
I’m 50/50 stocks and property and happy with how the BTL is performing.
On this thread, people are bringing out taxes, man maths, thinking we don’t know how to calculate yields etc to criticise the investment etc.
I think the numbers speak for themselves and are compelling. If you buy in the right area it’s a safe 7.5%-10% yield with sensible leverage before any capital gains. It’s been little hassle for me and I can get the cash out tax efficiently. Not sure if should be aiming higher, but it more than meets my aims and I don’t see how I could be consistently getting that with trackers.
I’m 50/50 stocks and property and happy with how the BTL is performing.
Edited by dmahon on Monday 30th August 19:40
dmahon said:
It’s almost as if people want BTL to be a poor investment.
On the contrary, I would like it to be a good one, given how many of them we have. But I still don't think it's an investment for the rookie nowadays and it is far harder than it once was to make a lot of money at it.Zio Di Roma said:
The flip side of the coin is that they don't always come in. In full anyway. The reasons usually:
Tenant was meant to supply a piece of paper. Didn't. Once paper supplied, payment recommences.
Tenant was meant to supply a piece of paper. Did. Council lost it. As above.
Tenant didn't declare change of circumstances. Payment to LL stopped until the benefit difference recovered. Overpayment only recoverable from landlord if reasonable to assume landlord aware of the change. Super rare.
As HB is paid 4-weekly in arrears, this means that you're immediately in the hole. 'Hole' = brief delay in payment.
Tenant was meant to supply a piece of paper. Didn't. Once paper supplied, payment recommences.
Tenant was meant to supply a piece of paper. Did. Council lost it. As above.
Tenant didn't declare change of circumstances. Payment to LL stopped until the benefit difference recovered. Overpayment only recoverable from landlord if reasonable to assume landlord aware of the change. Super rare.
As HB is paid 4-weekly in arrears, this means that you're immediately in the hole. 'Hole' = brief delay in payment.
Groat said:
Zio Di Roma said:
The flip side of the coin is that they don't always come in. In full anyway. The reasons usually:
Tenant was meant to supply a piece of paper. Didn't. Once paper supplied, payment recommences.
Tenant was meant to supply a piece of paper. Did. Council lost it. As above.
Tenant didn't declare change of circumstances. Payment to LL stopped until the benefit difference recovered. Overpayment only recoverable from landlord if reasonable to assume landlord aware of the change. Super rare.
As HB is paid 4-weekly in arrears, this means that you're immediately in the hole. 'Hole' = brief delay in payment.
Tenant was meant to supply a piece of paper. Didn't. Once paper supplied, payment recommences.
Tenant was meant to supply a piece of paper. Did. Council lost it. As above.
Tenant didn't declare change of circumstances. Payment to LL stopped until the benefit difference recovered. Overpayment only recoverable from landlord if reasonable to assume landlord aware of the change. Super rare.
As HB is paid 4-weekly in arrears, this means that you're immediately in the hole. 'Hole' = brief delay in payment.
The LA knows the claimant is unreliable and would far prefer they owed the LL than them.
dmahon said:
It’s almost as if people want BTL to be a poor investment.
Apart from dafties on PH and like-minded in the real world, that's not really the case.Anything even appearing on the market at a sensible price to rent is snapped up super double quick.
Plenty of old hands expanding and newcomers buying too. I am settling a sale tomorrow which is being bought by a 'new' landlord. Auctions are inundated with foreign buyers too.
Demand and legislation is driving the industry onwards and upwards, with no reason to expect any short term slowdown., hence burgeoning build-to-rent, Llloyds plan, etc etc etc
Edited by Groat on Monday 30th August 21:05
Groat said:
Zio Di Roma said:
The LA knows the claimant is unreliable and would far prefer they owed the LL than them.
Paranoid nonsense.dmahon said:
It’s almost as if people want BTL to be a poor investment.
No, it's just become a very middle class status symbol which people to aspire to as much for the "kudos" of owning a second property as much as the return it generates. But also yes, for many people it is a poor investment. As others have pointed out, maybe the alternatives are too complicated, but if you are a higher rate taxpayer and have an BTL in your own name it is the most inefficient form of investing, period. Maybe people don't declare their income, or maybe there is a healthy dose of man maths, but you cannot sit there and make the argument for a 40% taxpayer having a second property unless they have maxed out their ISA and pension allowances.
BTLs aren’t so appealing, and property prices are high, though rents are too.
But then I feel the stock markets are a bit tippy too.
We’ve all had a good 10yrs in whatever we’ve been invested in.
The question now is BTL vs stocks and shares vs something else.
They’ll all get hammered with CGT or income tax though.
But then I feel the stock markets are a bit tippy too.
We’ve all had a good 10yrs in whatever we’ve been invested in.
The question now is BTL vs stocks and shares vs something else.
They’ll all get hammered with CGT or income tax though.
I stoped renting out the family home in Newcastle this year and started using it again last week.
We had “good” tenants; an oil company rented it for their CEO, his wife and their one child.
I fully understand the nature of the business, but still, looking at how it was treated was a lesson in the difference between how owners and tenants treat a property.
Damage was simply everywhere. They had broken the washing machine door off, smashed a shelf in the fridge-freezer, and also smashed the ice dispenser. My two sofas have disappeared, as has all of the cutlery and crockery, and the dining chairs.
The carpets have some bizarre pink stains in them, the plantation shutters have been eaten by the dog that their lease specifically forbade, and the guest bed has had the middle supports snapped off and quietly replaced by a yellow pages and a one litre tin of paint.
They didn’t report the leaking gutters caused by them not being cleaned, that have stained ceilings and wooden floors, and every single room seems to have had something glued or nailed into the walls meaning it all has to be redecorated.
The oven is filthy and broken, one of the toilets has been uprooted, and two of the doors to the garden have had their locks changed but no new key left.
The “profit” from three years of rental will cover much of the work, but not all, and I now have to spend the time and effort to get everything fixed.
For me it’s just not worth renting my places out. They will now remain empty, to be used as holiday homes when I visit.
We had “good” tenants; an oil company rented it for their CEO, his wife and their one child.
I fully understand the nature of the business, but still, looking at how it was treated was a lesson in the difference between how owners and tenants treat a property.
Damage was simply everywhere. They had broken the washing machine door off, smashed a shelf in the fridge-freezer, and also smashed the ice dispenser. My two sofas have disappeared, as has all of the cutlery and crockery, and the dining chairs.
The carpets have some bizarre pink stains in them, the plantation shutters have been eaten by the dog that their lease specifically forbade, and the guest bed has had the middle supports snapped off and quietly replaced by a yellow pages and a one litre tin of paint.
They didn’t report the leaking gutters caused by them not being cleaned, that have stained ceilings and wooden floors, and every single room seems to have had something glued or nailed into the walls meaning it all has to be redecorated.
The oven is filthy and broken, one of the toilets has been uprooted, and two of the doors to the garden have had their locks changed but no new key left.
The “profit” from three years of rental will cover much of the work, but not all, and I now have to spend the time and effort to get everything fixed.
For me it’s just not worth renting my places out. They will now remain empty, to be used as holiday homes when I visit.
Northernboy said:
I stoped renting out the family home in Newcastle this year and started using it again last week.
We had “good” tenants; an oil company rented it for their CEO, his wife and their one child.
I fully understand the nature of the business, but still, looking at how it was treated was a lesson in the difference between how owners and tenants treat a property.
Damage was simply everywhere. They had broken the washing machine door off, smashed a shelf in the fridge-freezer, and also smashed the ice dispenser. My two sofas have disappeared, as has all of the cutlery and crockery, and the dining chairs.
The carpets have some bizarre pink stains in them, the plantation shutters have been eaten by the dog that their lease specifically forbade, and the guest bed has had the middle supports snapped off and quietly replaced by a yellow pages and a one litre tin of paint.
They didn’t report the leaking gutters caused by them not being cleaned, that have stained ceilings and wooden floors, and every single room seems to have had something glued or nailed into the walls meaning it all has to be redecorated.
The oven is filthy and broken, one of the toilets has been uprooted, and two of the doors to the garden have had their locks changed but no new key left.
The “profit” from three years of rental will cover much of the work, but not all, and I now have to spend the time and effort to get everything fixed.
For me it’s just not worth renting my places out. They will now remain empty, to be used as holiday homes when I visit.
And this, ladies and gentlemen, is yet another PH textbook example of how NOT to go about renting property. We had “good” tenants; an oil company rented it for their CEO, his wife and their one child.
I fully understand the nature of the business, but still, looking at how it was treated was a lesson in the difference between how owners and tenants treat a property.
Damage was simply everywhere. They had broken the washing machine door off, smashed a shelf in the fridge-freezer, and also smashed the ice dispenser. My two sofas have disappeared, as has all of the cutlery and crockery, and the dining chairs.
The carpets have some bizarre pink stains in them, the plantation shutters have been eaten by the dog that their lease specifically forbade, and the guest bed has had the middle supports snapped off and quietly replaced by a yellow pages and a one litre tin of paint.
They didn’t report the leaking gutters caused by them not being cleaned, that have stained ceilings and wooden floors, and every single room seems to have had something glued or nailed into the walls meaning it all has to be redecorated.
The oven is filthy and broken, one of the toilets has been uprooted, and two of the doors to the garden have had their locks changed but no new key left.
The “profit” from three years of rental will cover much of the work, but not all, and I now have to spend the time and effort to get everything fixed.
For me it’s just not worth renting my places out. They will now remain empty, to be used as holiday homes when I visit.
The "Abandon It To Its Fate" technique of rental management never ever ends well.
Looks like the sequel is going to be "Why It's A Bad Idea To Own A 2nd Property That's Rarely Used".
Edited by Groat on Tuesday 31st August 01:40
Groat said:
And this, ladies and gentlemen, is yet another PH textbook example of how NOT to go about renting property.
The PH approach to BTL based on the last few pages;- Be a higher rate tax payer and buy in your name
- Don’t do any tax planning or mitigation
- Buy in London for a high price and terrible yield
- Rent out a house worthy of an oil company CEO
- Don’t properly calculate yield
- Hope for the best in terms of maintenance
- Don’t understand/deploy leverage to increase your ROI
- Use “man maths” rather than 3 minutes in front of excel or working with your accountant before making an £X00k investment
- Prioritise dinner party cred rather than treat it like a business
If you do all/any of that it’s a terrible investment.
If you don’t do any of that, it’s 7.5%+ return without breaking a sweat.
Again I must apologise for shilling for BTL, but this forum presents a comically bad picture which is different to the reality.
Edited by dmahon on Tuesday 31st August 06:48
Northernboy said:
I stoped renting out the family home in Newcastle this year and started using it again last week.
We had “good” tenants; an oil company rented it for their CEO, his wife and their one child.
I fully understand the nature of the business, but still, looking at how it was treated was a lesson in the difference between how owners and tenants treat a property.
Damage was simply everywhere. They had broken the washing machine door off, smashed a shelf in the fridge-freezer, and also smashed the ice dispenser. My two sofas have disappeared, as has all of the cutlery and crockery, and the dining chairs.
The carpets have some bizarre pink stains in them, the plantation shutters have been eaten by the dog that their lease specifically forbade, and the guest bed has had the middle supports snapped off and quietly replaced by a yellow pages and a one litre tin of paint.
They didn’t report the leaking gutters caused by them not being cleaned, that have stained ceilings and wooden floors, and every single room seems to have had something glued or nailed into the walls meaning it all has to be redecorated.
The oven is filthy and broken, one of the toilets has been uprooted, and two of the doors to the garden have had their locks changed but no new key left.
The “profit” from three years of rental will cover much of the work, but not all, and I now have to spend the time and effort to get everything fixed.
For me it’s just not worth renting my places out. They will now remain empty, to be used as holiday homes when I visit.
It's weird just how many people live like pigs. Just go house hunting for yourself and it's staggering how so many people live. Expats can be among the worst of rent a family home to as so many have developed a consumption entitlement akin to those carried by others where their bills are picked up by a grown up. We had “good” tenants; an oil company rented it for their CEO, his wife and their one child.
I fully understand the nature of the business, but still, looking at how it was treated was a lesson in the difference between how owners and tenants treat a property.
Damage was simply everywhere. They had broken the washing machine door off, smashed a shelf in the fridge-freezer, and also smashed the ice dispenser. My two sofas have disappeared, as has all of the cutlery and crockery, and the dining chairs.
The carpets have some bizarre pink stains in them, the plantation shutters have been eaten by the dog that their lease specifically forbade, and the guest bed has had the middle supports snapped off and quietly replaced by a yellow pages and a one litre tin of paint.
They didn’t report the leaking gutters caused by them not being cleaned, that have stained ceilings and wooden floors, and every single room seems to have had something glued or nailed into the walls meaning it all has to be redecorated.
The oven is filthy and broken, one of the toilets has been uprooted, and two of the doors to the garden have had their locks changed but no new key left.
The “profit” from three years of rental will cover much of the work, but not all, and I now have to spend the time and effort to get everything fixed.
For me it’s just not worth renting my places out. They will now remain empty, to be used as holiday homes when I visit.
As someone who knows that carpets, sofas and other things can easily be made to last decades, it always amazes me how there is a solid section of society for which these are all consumables.
Renting out a nice property, in a nice area, filled with nice things so supposedly nice people can be soul destroying. My sister works in the oil industry and I always though financial expats who didn't have a Japanese passport were bad but the oil industry appears to really nail financially weaponising creatures who have only recently evolved out of the trees. I wouldn't rent my faecal waste to an oil executive.
Northernboy said:
We had “good” tenants; an oil company rented it for their CEO, his wife and their one child.
<snip>
The “profit” from three years of rental will cover much of the work, but not all, and I now have to spend the time and effort to get everything fixed.
Clearly not a good situation but if the bills area going to be that sort,of size, and there was real damage in excess of reasonable wear and tear, why isn’t the oil company paying for the remedial works?<snip>
The “profit” from three years of rental will cover much of the work, but not all, and I now have to spend the time and effort to get everything fixed.
Condi said:
No, it's just become a very middle class status symbol which people to aspire to as much for the "kudos" of owning a second property as much as the return it generates.
But also yes, for many people it is a poor investment. As others have pointed out, maybe the alternatives are too complicated, but if you are a higher rate taxpayer and have an BTL in your own name it is the most inefficient form of investing, period. Maybe people don't declare their income, or maybe there is a healthy dose of man maths, but you cannot sit there and make the argument for a 40% taxpayer having a second property unless they have maxed out their ISA and pension allowances.
The real key is diversification. It's the easiest and best asset for excess income once you're allowances are being hit. The tax aspect is unbelievably bad and BTL is definitely for punters who want to pay as much tax as possible or have no choice. But also yes, for many people it is a poor investment. As others have pointed out, maybe the alternatives are too complicated, but if you are a higher rate taxpayer and have an BTL in your own name it is the most inefficient form of investing, period. Maybe people don't declare their income, or maybe there is a healthy dose of man maths, but you cannot sit there and make the argument for a 40% taxpayer having a second property unless they have maxed out their ISA and pension allowances.
You can't utilise annual CGT allowances with property, you pay big entry taxes, you can't offset key costs, comms are monumental, IHT sheltering is very expensive and third party risk from both govt and customer are huge.
But if you've hit the £1m lifetime pension allowance, the £20k ISA allowances and your GIA has reached the size where its easily utilising annual CGT allowances then all the inefficiencies and risks of property start being wiped out by the big benefits of diversity. There isn't really a better investment to run alongside others. Especially as the govt has shown it'll always bail out landlords in recessions so free market risk has almost been eliminated.
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