BTL: Sensible financial planning or selfish avarice?

BTL: Sensible financial planning or selfish avarice?

Poll: BTL: Sensible financial planning or selfish avarice?

Total Members Polled: 47

BTL is common sense in the financial climate: 53%
BTL promotes an un healthy housing market: 47%
Author
Discussion

JonChalk

Original Poster:

6,469 posts

109 months

Saturday 20th May 2017
quotequote all
So, with all of the lovely PH advice about having 4 or 6 or 93 BTLs being the only way to ensure massive financial security in the future, do you believe that:

BTL is socially and economically viable for ever, is perfectly sensible financial planning for your retirement and does no on else any harm,

or

BTL is a pernicious, selfish disease designed to promote your own financial wellbeing over the good of the country, for ever perpetuating and worsening the unaffordability of housing at the lower end of the market?

Venturist

3,472 posts

194 months

Saturday 20th May 2017
quotequote all
A little of both... personally I believe it is a sensible move for long-term financial planning, and because it seems EVERYONE is doing it, the government won't be pulling the rug out because to do so would cause a massive property crash.

However, I do think this is not a situation we should have gotten to, it perpetuates the rental cycle and drives up prices in my opinion. The government should have been on the ball with this and reigned it in with some kind of Budget tweakery before all this got so out of hand.

The potential market for any one particular house "should be" primarily people who would want to live in it, and professional landlords who own many properties and do it as a primary income.
When you have a situation where every Tom Dick and Harry has seen it's so beneficial to do a bit of landlording on the side, you end up having significant chunks of the population wanting to OWN 2 or more properties and I don't think that's sustainable. No ill feelings towards those who do it, you have to play the cards as they fall after all; but this is a scenario where government needed to step in and keep a lid on it.

rufusgti

2,528 posts

191 months

Saturday 20th May 2017
quotequote all
It's a given that it makes financial sense. it's also a fairly plausible theory that the rise in btl has brought its own issues. It's not a selfish move to own btl. I know people who claim it to be that way. The only thing these people have in common is they don't own property.
I personaly don't want to rely solely on a faceless company run by people who don't care for my particular needs in the slightest to fund my retirement. I don't think trying to protect myself from that is selfish. And as it's me taking all the risk I find it fairly annoying when people turn there nose up at me because I'm a landlord.

dogz

332 posts

255 months

Saturday 20th May 2017
quotequote all
BTL is quite restricted now as the deposit required is c25%. There are mortgages with 20% deposits but they are few and far between

People who criticise those who have BTL's are usually those who aren't yet on the property ladder or those who can't afford to do it

It certainly isn't an easy ride at times but the short term hassles are worth the long term gains

Pensions are a mugs game, although I invest in my company one but a house will allow you to pass a significant asset onto your children and if you have enough provide a very comfortable retirement

People have different attitudes to risk and what they will accept. Some like the stock market, others like antiques or art. Just depends on your attitude to risk and hassle

98elise

26,364 posts

160 months

Sunday 21st May 2017
quotequote all
I don't see how it's selfish. If someone wants or needs to rent a property, and someone else is happy to finance it, why would that be a problem?

Some people believe that BTL causes high prices, however I don't believe this. It's just one financial model for getting one family in one house. It doesn't matter if that family buys, does shared ownership or rents. It's still just one family being housed in one home.

At the time I was buying my BTL's there were plenty of similar properties on the market so BTL buyers are not hoovering up all the supply. That family could have bought for the same price I was paying.

For me personally it's been a good financial investment. Just as I started to build some decent savings interest rates started to collapse so I needed to look for a better return. I turned to property as I can turn my hand to most trades.

I worked at getting the mortgages paid off and it's at the point where I can live (just) on the profits. Thats going to fund early retirement for me.




Edited by 98elise on Sunday 21st May 08:37

Derek Chevalier

3,942 posts

172 months

Sunday 21st May 2017
quotequote all
rufusgti said:
It's a given that it makes financial sense
According to whom?

Derek Chevalier

3,942 posts

172 months

Sunday 21st May 2017
quotequote all
dogz said:
Pensions are a mugs game, although I invest in my company one but a house will allow you to pass a significant asset onto your children and if you have enough provide a very comfortable retirement
Why are pensions a mugs game, and why can't you pass the pension onto your children when you die?

sidicks

25,218 posts

220 months

Sunday 21st May 2017
quotequote all
Derek Chevalier said:
dogz said:
Pensions are a mugs game, although I invest in my company one but a house will allow you to pass a significant asset onto your children and if you have enough provide a very comfortable retirement
Why are pensions a mugs game, and why can't you pass the pension onto your children when you die?
I assume he's confusing a pension savings vehicles with a pension in payment (annuity). Plus confusing pension as an investment rather than simply as a tax efficient wrapper. The usual stuff!

BoRED S2upid

19,641 posts

239 months

Sunday 21st May 2017
quotequote all
Common sense. Money is cheap to borrow. If the government wanted to stop the property boom then either build more houses or increase interest rates.

Derek Chevalier

3,942 posts

172 months

Monday 22nd May 2017
quotequote all
BoRED S2upid said:
Common sense. Money is cheap to borrow. If the government wanted to stop the property boom then either build more houses or increase interest rates.
Why would building more houses stop the boom - it's a credit driven bubble?

Lefty

16,127 posts

201 months

Monday 22nd May 2017
quotequote all
Renting suits many people. Some dont have savings for a deposit (because lets face it, 100% mortgages aren't the best idea?)

Some are only living in an area for a short time or perhaps need the flexibility. Some just don't want the responsibility of owning a house.

Somebody has to own property for these people to rent - otherwise they'd be screwed - and a shortage of rental properties would only drive the rates upwards.

TooMany2cvs

29,008 posts

125 months

Monday 22nd May 2017
quotequote all
Derek Chevalier said:
rufusgti said:
It's a given that it makes financial sense
According to whom?
Quite.

Relatively few places are for sale at a purchase price that gives a sensible rental yield - so the drive to raise the purchase price above that sensible multiple of rent can only be from either owner-occupier buyers or BtL buyers who haven't done basic maths.

BtL buyers who have done that basic maths set a floor price - no more than that.

xjay1337

15,966 posts

117 months

Monday 22nd May 2017
quotequote all
98elise said:
I don't see how it's selfish. If someone wants or needs to rent a property, and someone else is happy to finance it, why would that be a problem?

Some people believe that BTL causes high prices, however I don't believe this. It's just one financial model for getting one family in one house. It doesn't matter if that family buys, does shared ownership or rents. It's still just one family being housed in one home.

At the time I was buying my BTL's there were plenty of similar properties on the market so BTL buyers are not hoovering up all the supply. That family could have bought for the same price I was paying.]
There's a balance though.
And the issue is where one person then buys 3, 4 , 5 or more houses to rent out... meaning that sure, they are getting some return on their investment in terms of rental income, plus the ever rising house prices, which you cannot argue with - But at the cost of

a) contributing to the general rise in property prices
b) many are avoiding paying full tax on their investments, by not declaring full rental income, or doing other ways of avoiding paying tax
c) Many BTL "buyers" are preferred to private residential buyers. This is because as a buyer you have no chain of dependencies and you can often move more quickly than normal residential buyers.

You can try and make it all philanthropic - that you (and I say you to the general BTL owners, not you specifically) are providing ease and flexibility to people or that it's one family being housed.... it's lining your own pockets. Nothing wrong with that in a sense, but don't pretend it's for good reasons.


TooMany2cvs

29,008 posts

125 months

Monday 22nd May 2017
quotequote all
xjay1337 said:
...b) many are avoiding paying full tax on their investments, by not declaring full rental income, or doing other ways of avoiding paying tax...
There should be a law against it!

Oh, wait a sec...

okgo

37,842 posts

197 months

Monday 22nd May 2017
quotequote all
xjay1337 said:
There's a balance though.
And the issue is where one person then buys 3, 4 , 5 or more houses to rent out... meaning that sure, they are getting some return on their investment in terms of rental income, plus the ever rising house prices, which you cannot argue with - But at the cost of

a) contributing to the general rise in property prices
b) many are avoiding paying full tax on their investments, by not declaring full rental income, or doing other ways of avoiding paying tax
c) Many BTL "buyers" are preferred to private residential buyers. This is because as a buyer you have no chain of dependencies and you can often move more quickly than normal residential buyers.

You can try and make it all philanthropic - that you (and I say you to the general BTL owners, not you specifically) are providing ease and flexibility to people or that it's one family being housed.... it's lining your own pockets. Nothing wrong with that in a sense, but don't pretend it's for good reasons.
Like many many many many day jobs then. Get a grip.

Sheepshanks

32,519 posts

118 months

Monday 22nd May 2017
quotequote all
98elise said:
Some people believe that BTL causes high prices, however I don't believe this. It's just one financial model for getting one family in one house. It doesn't matter if that family buys, does shared ownership or rents. It's still just one family being housed in one home.
At the bottom of the market it must have put a floor under prices - which of course is good for sellers but means private buyers are likely paying more than if the BTL market didn't exist.

One of my kids lives on an estate on the outskirts of Chester and part of the housing mix are blocks of four terraced houses. They sell instantly and there frequent "To Let" signs all over the estate, which I think impacts the area overall.

As for "family" - well it depends how wide your definition is. Opposite daughter's house are three rentals - one family, one bunch of students and a group of Eastern European guys.

xjay1337

15,966 posts

117 months

Monday 22nd May 2017
quotequote all
TooMany2cvs said:
There should be a law against it!

Oh, wait a sec...
And you know full well that many, many landlords are not investigated from a financial point of view and pay minimal tax.

okgo said:
Like many many many many day jobs then. Get a grip.
I won't be the one needing to get a grip when the housing market crashes :-)

TooMany2cvs

29,008 posts

125 months

Monday 22nd May 2017
quotequote all
xjay1337 said:
TooMany2cvs said:
There should be a law against it!

Oh, wait a sec...
And you know full well that many, many landlords are not investigated from a financial point of view and pay minimal tax.
Just like anybody else with a side source of income, then?

xjay1337

15,966 posts

117 months

Monday 22nd May 2017
quotequote all
Yes, but what does that have to do with the price of fish?

Earning £300 cash in hand each month delivering Chinese doesn't stop other people from buying Chineses, likewise it doesn't push up the price of your own Chinese smile

Certainly if people bought Chinese with the view of renting out their Chinese and then selling it for profit after 2 or 3 years then that would be different.

TooMany2cvs

29,008 posts

125 months

Monday 22nd May 2017
quotequote all
xjay1337 said:
Yes, but what does that have to do with the price of fish?
That's precisely my question, yes.

You're saying that some landlords break the tax laws - so that's a black mark against the concept of BtL.

Well, yes, some do break the laws. As do people with various other businesses. Is that a black mark against the concept of plumbing or car servicing or gardening, too?