Is BTL still possible?
Discussion
Register1 said:
In which price bracket up north is the sweet spot to buy a property?
What type of property for the first time landlord?
Depends if you're looking for just income or capital gain as well. Properties can be had for £80k but in areas where they see little capital rise.What type of property for the first time landlord?
Others will give you a better idea as I've no interest in BTL at all, despite having one (rented) and another with a relative in (made a decent wedge on capital gains). The rented one I view as a millstone but I've nothing else to do with the money it owes me
If I needed the income then naturally I'd have a different view.Armitage.Shanks said:
mrmistoffelees said:
To my mind it'll never happen given the shortage of housing but then again Labour will be in power by then so who knows.BoRED S2upid said:
This is going to snowball in a few years. More and more renters less and less homes to rent.
More and more flats being built in city centres by large institutional investors. My daughter rents in Manchester city centre and there is more buildings going up all the time.
Maybe if you want to invest in property in the future some of these companies might be trading on the stock market.
Pit Pony said:
Maybe if you want to invest in property in the future some of these companies might be trading on the stock market.
They already are - the likes of Legal and General, Aviva etc are behind a lot of the properties as they have lots of money going into pensions and long term investments which need a return. As well as that there are property Exchange Traded Funds (ETFs) which own commercial and residential properties. Armitage.Shanks said:
Register1 said:
In which price bracket up north is the sweet spot to buy a property?
What type of property for the first time landlord?
Depends if you're looking for just income or capital gain as well. Properties can be had for £80k but in areas where they see little capital rise.What type of property for the first time landlord?
Others will give you a better idea as I've no interest in BTL at all, despite having one (rented) and another with a relative in (made a decent wedge on capital gains). The rented one I view as a millstone but I've nothing else to do with the money it owes me
If I needed the income then naturally I'd have a different view.goldar said:
Armitage.Shanks said:
Register1 said:
In which price bracket up north is the sweet spot to buy a property?
What type of property for the first time landlord?
Depends if you're looking for just income or capital gain as well. Properties can be had for £80k but in areas where they see little capital rise.What type of property for the first time landlord?
Others will give you a better idea as I've no interest in BTL at all, despite having one (rented) and another with a relative in (made a decent wedge on capital gains). The rented one I view as a millstone but I've nothing else to do with the money it owes me
If I needed the income then naturally I'd have a different view.Personally I don’t think it’s a good time to be buying unless with no/very little leverage from someone very motivated to sell and with a long-term view.
Ive jut bought a BTL and Ive just had an EPC guy over to survey it before I start to renovate. He has given me a list of things I need to do for it to comply once renovated.
Interestingly I asked him about another property I was looking at and he mentioned that there is a clause to say that exceptions can be made if all reasonable attempts have been made to increase the insulation values. How true this is I don't know but surely LL won't be expected to turf out a longterm tenantin a Grade 2 listed for example.
Interestingly I asked him about another property I was looking at and he mentioned that there is a clause to say that exceptions can be made if all reasonable attempts have been made to increase the insulation values. How true this is I don't know but surely LL won't be expected to turf out a longterm tenantin a Grade 2 listed for example.
Given interest rates now on fixed rate bonds nearing 5% returns that can have more appeal than investing it into a BTL where yields are realistically not much more. If you've not much chance of capital growth in the property relying purely on rental income, then after fees, a void(s), upkeep/maintenance sticking the money into a fixed rate bonds for no hassle speaks volumes. If you're intent on building a portfolio and leveraging on interest only BTL mortgages then I could see it working.
I found myself in the BTL world having originally bought a small house for my daughter whilst she was at university to 'save' wasting money by renting given savings interest rates were low at the time. I bought it outright and after she moved out my wife decided to rent it using her non taxpayer status under HMRC rules. When the tenant gives notice I'll probably look to sell it if savings rates are where they are as it will need a bit of work.
I did think when I bought it that buying a few had legs, but being retired with a good pension did I really want all the hassle of being disturbed whilst I'm watching Netflix or away on holiday.
The other property I bought for my inlaws to live in. They wanted cash out of their house to supplement their retirement and have a good lifestyle - what a great idea spend it whilst you can! I don't 'charge' a rent but they maintain it as if their own. Actually that place has done OK and near doubled in value.
For some BTL will work especially if you can buy cheap, identify the capital potential, manage the renovations on a strict budget, revalue to leveridge the max % mortgage to buy the next one and, as they say, rinse and repeat. Afterall everyone's a winner in Homes Under the Hammer aren't they? If I put effort into it I'm sure I could get it to work but I'll admit I'm bone idle.
I found myself in the BTL world having originally bought a small house for my daughter whilst she was at university to 'save' wasting money by renting given savings interest rates were low at the time. I bought it outright and after she moved out my wife decided to rent it using her non taxpayer status under HMRC rules. When the tenant gives notice I'll probably look to sell it if savings rates are where they are as it will need a bit of work.
I did think when I bought it that buying a few had legs, but being retired with a good pension did I really want all the hassle of being disturbed whilst I'm watching Netflix or away on holiday.
The other property I bought for my inlaws to live in. They wanted cash out of their house to supplement their retirement and have a good lifestyle - what a great idea spend it whilst you can! I don't 'charge' a rent but they maintain it as if their own. Actually that place has done OK and near doubled in value.
For some BTL will work especially if you can buy cheap, identify the capital potential, manage the renovations on a strict budget, revalue to leveridge the max % mortgage to buy the next one and, as they say, rinse and repeat. Afterall everyone's a winner in Homes Under the Hammer aren't they? If I put effort into it I'm sure I could get it to work but I'll admit I'm bone idle.
Armitage.Shanks said:
Afterall everyone's a winner in Homes Under the Hammer aren't they?
IMO utopian programmes like HUTH have contributed to issues with affordable, desirable and available housing. And that is really the issue with regard to housing in the UK. All the talk of a housing shortage.
It's not that there isn't enough housing and that there's a shortage (which there is not - there are plenty to let and for sale) it's that there isn't enough *desirable* housing. I.e. housing that people want and/or can afford in specific locations/towns/cities etc.
Edited by captain.scarlet on Thursday 30th March 05:47
037 said:
Ive jut bought a BTL and Ive just had an EPC guy over to survey it before I start to renovate. He has given me a list of things I need to do for it to comply once renovated.
Interestingly I asked him about another property I was looking at and he mentioned that there is a clause to say that exceptions can be made if all reasonable attempts have been made to increase the insulation values. How true this is I don't know but surely LL won't be expected to turf out a longterm tenantin a Grade 2 listed for example.
It is true that there’s an exemption regime at present. HMG would be mad to remove it, and almost certainly won’t. Interestingly I asked him about another property I was looking at and he mentioned that there is a clause to say that exceptions can be made if all reasonable attempts have been made to increase the insulation values. How true this is I don't know but surely LL won't be expected to turf out a longterm tenantin a Grade 2 listed for example.
The turfing tenants out is an interesting one that people often don’t think through. It’s assumed that tenants will only be asked to leave if the LL decides to sell up as a result of being unable/unwilling to meet any future EPC needs. What is rarely considered is the invasive nature of works that may be needed in order to improve EPCs.
As a tenant, are you going to want to remain in situ whilst internal wall insulation is installed throughout? Is it even feasible if you have a property that is fully occupied to work around a family that wanted to? Would there be complaint about the impact of the work/mess/general habitability?
Once you get past quite simple works you’re into the type of activities that are best carried out on a vacant property, yet it is costly and impractical to provide alternative local accommodation and empty a property. If there isn’t a tenant decision to move out, and there’s a hard deadline for compliance, some LLs may move to evict tenants.
Then, having been forced to spend £x on a property, moved potentially long-standing tenants out, and significantly refreshed the place, you[d expect them to relet at higher prices in order to recoup the money spent.
Everyone would like their energy bills to be lower, but potentially being made to leave a property you’re happy with in order to carry out works that (by the time increased rent is taken into account) doesn’t result in any net cost saving doesn’t seem like a great outcome for anyone.
(All that assuming that the LL has the liquidity to do the work in the first place, which many playing the leverage game won’t)
Is this part of the reason why we are seeing the shift to new build?
When I went looking in London, long before any eco stuff became dominant, I decided that the last thing I wanted to be running for 20+ years was flats in converted houses but rather new build apartments with pretentious railings and words for the deluded in areas no civilised person would know existed until the rest of the area had been tarted up. I ended up with new builds in Wembley pre the stadium rebuild.
It just strikes me that the EPC stuff is merely increasing the gulf between compliant new build and old stock or converted stock that's best left to owner occupiers to update at a loss?
Isn't a lot of what we're seeing in the BTL market right now a general exodus of accidental landlord stock, old stuff that needs huge amounts investing to update and the stuff randomly bought by non professionals wanting to live the dream of cruising around in a Range Rover Sport giving off dirty dad vibes while new build stuff is still getting hoovered up by anyone with the money to get the yields to work?
When I went looking in London, long before any eco stuff became dominant, I decided that the last thing I wanted to be running for 20+ years was flats in converted houses but rather new build apartments with pretentious railings and words for the deluded in areas no civilised person would know existed until the rest of the area had been tarted up. I ended up with new builds in Wembley pre the stadium rebuild.
It just strikes me that the EPC stuff is merely increasing the gulf between compliant new build and old stock or converted stock that's best left to owner occupiers to update at a loss?
Isn't a lot of what we're seeing in the BTL market right now a general exodus of accidental landlord stock, old stuff that needs huge amounts investing to update and the stuff randomly bought by non professionals wanting to live the dream of cruising around in a Range Rover Sport giving off dirty dad vibes while new build stuff is still getting hoovered up by anyone with the money to get the yields to work?
goldar said:
Yes I don't mind a long term investment. I just want a good rental yield. A return of 10% pa would be ideal. Would that be achievable?
How would commercial property compare?
Almost no chance at the moment. Realistically you are looking 7% in places like wales and the north east, and 4-5% elsewhere.How would commercial property compare?
You do see the odd high yielding property, but there is always a reason. The last one I looked at the agent said the area will only attract a certain type of tenant.
Things might change though. The last auction I was bidding in saw lots properties go unsold.
Saw this comment above ....’. given interest rates now on fixed rate bonds nearing 5% returns that can have more appeal than investing it into a BTL where yields are realistically not much more. If you've not much chance of capital growth in the property relying purely on rental income, then after fees, a void(s), upkeep/maintenance sticking the money into a fixed rate bonds for no hassle speaks volumes.”
There is a lot of truth in this, but one part of the equation that always seems to be missed is that over time rents increase.
If you look at the difference in cost of a fixed rate to an index linked annuity, that gives you an idea of how powerful that can be.
There is a lot of truth in this, but one part of the equation that always seems to be missed is that over time rents increase.
If you look at the difference in cost of a fixed rate to an index linked annuity, that gives you an idea of how powerful that can be.
DonkeyApple said:
Is this part of the reason why we are seeing the shift to new build?
<snip>
Isn't a lot of what we're seeing in the BTL market right now a general exodus of accidental landlord stock, old stuff that needs huge amounts investing to update and the stuff randomly bought by non professionals wanting to live the dream of cruising around in a Range Rover Sport giving off dirty dad vibes while new build stuff is still getting hoovered up by anyone with the money to get the yields to work?
There are very few new builds in my area, certainly no flats, and few (if any) that could deliver even the most meagre of returns. <snip>
Isn't a lot of what we're seeing in the BTL market right now a general exodus of accidental landlord stock, old stuff that needs huge amounts investing to update and the stuff randomly bought by non professionals wanting to live the dream of cruising around in a Range Rover Sport giving off dirty dad vibes while new build stuff is still getting hoovered up by anyone with the money to get the yields to work?
Small scale build to let isn’t viable, and there isn’t sufficient concentration of demand/acceptable risk diversification to be had from trying a larger scheme.
All of which means that the housing stock actually available to rent is very limited in terms of inherent ability to meet higher EPCs *but* there is huge demand for rentals. We have never had a prospective tenant ask about EPC ratings.
I may however try to buy some new builds if the market slows to the extent that developers want/need to offload units that aren’t selling to owner occupiers. Some are starting to drop prices, but I don’t they’re not at the point I’d need them to be at yet.
The EPC issue is one potential problem but there is also the forthcoming Decent Homes Standard which will impose certain requirements on the accommodation before it can be lawfully let. For example the Kitchen must not be more than 20 years old.
The new Landlord Portal which has been proposed would enable Landlords to self certify that their property meets all legal requirements but apparently false or negligent statements would be a criminal offence.
The new Landlord Portal which has been proposed would enable Landlords to self certify that their property meets all legal requirements but apparently false or negligent statements would be a criminal offence.
Stevemr said:
Saw this comment above ....’. given interest rates now on fixed rate bonds nearing 5% returns that can have more appeal than investing it into a BTL where yields are realistically not much more. If you've not much chance of capital growth in the property relying purely on rental income, then after fees, a void(s), upkeep/maintenance sticking the money into a fixed rate bonds for no hassle speaks volumes.”
There is a lot of truth in this, but one part of the equation that always seems to be missed is that over time rents increase.
If you look at the difference in cost of a fixed rate to an index linked annuity, that gives you an idea of how powerful that can be.
That’s still missing key parts around whether you can negotiate an increase in the first place, let alone a worthwhile one. Rent increases aren’t a given and could easily lead to a void, or a tenant choosing not to pay, or costs evicting them and so on, all of which reduce yield. There is a lot of truth in this, but one part of the equation that always seems to be missed is that over time rents increase.
If you look at the difference in cost of a fixed rate to an index linked annuity, that gives you an idea of how powerful that can be.
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