Why are BTLs still popular?
Discussion
I`m lucky enough to have been left a semi detached bungalow in a will.
So, i am renovating it, new kitchen, bathroom, paint, carpet, etc etc. Then will be renting that out for at least 2 years to recoup my money that i put in to bring it up to a modern living standard. Nice and fresh etc.
After 2 years, who knows, may sell it and invest money else where. But, for now i am quite enjoying it as a project to see how it goes.
So, i am renovating it, new kitchen, bathroom, paint, carpet, etc etc. Then will be renting that out for at least 2 years to recoup my money that i put in to bring it up to a modern living standard. Nice and fresh etc.
After 2 years, who knows, may sell it and invest money else where. But, for now i am quite enjoying it as a project to see how it goes.
Dave3166 said:
I`m lucky enough to have been left a semi detached bungalow in a will.
So, i am renovating it, new kitchen, bathroom, paint, carpet, etc etc. Then will be renting that out for at least 2 years to recoup my money that i put in to bring it up to a modern living standard. Nice and fresh etc.
After 2 years, who knows, may sell it and invest money else where. But, for now i am quite enjoying it as a project to see how it goes.
Good for you, was in a slightly similar position myself a few years back, interested in others perspectives and ideas on how to develop what I have.So, i am renovating it, new kitchen, bathroom, paint, carpet, etc etc. Then will be renting that out for at least 2 years to recoup my money that i put in to bring it up to a modern living standard. Nice and fresh etc.
After 2 years, who knows, may sell it and invest money else where. But, for now i am quite enjoying it as a project to see how it goes.
Delusional to the point of needing psychiatric help in my opinion...
https://www.property118.com/makes-someone-pay-bill...
(And the S24 fun has barely begun yet)!
https://www.property118.com/makes-someone-pay-bill...
(And the S24 fun has barely begun yet)!
joyless lobotomised parrot said:
Saleen836 said:
Surely the additional 3% stamp duty reins in cash purchases to a degree?
Doesn't apply to everythingI’ve often looked at shops but they’ve always struck me as being higher risk due to the potential impact of empty rates and the modern day issue of not being able to use a hammer when collecting the rent.
Saleen836 said:
zubzob said:
True. The majority I bet are owned outright.
But the government doesn't appear to bothered about cash purchases. It is the over-leveraged they are concerned about, and who are the target of these measures.
Surely the additional 3% stamp duty reins in cash purchases to a degree?But the government doesn't appear to bothered about cash purchases. It is the over-leveraged they are concerned about, and who are the target of these measures.
Edited by zubzob on Tuesday 1st May 18:18
Badda said:
Why would that affect just cash purchases? I just factor it in to the purchase price and if it still makes sense, great.
This is why it’s a good tax and has formed part of what I believe to be a very sensible management of the BTL problem and risk that had been created. If you’re not highly leveraged then that 3% just forms part of your investment calculation, it also helps level the playing field a little between home buyers and property investors. But if you’re one of the turn of the century speculative punters trying to gear to the eyeballs then that 3% suddenly is a massive chunk of extra real money to be found. I've become an 'accidental landlord' in that I've moved for work and are just renting out my existing property, and as others have alluded to, it seems nothing more than a way of paying a lot of tax.
I cant help thinking that its not doing society much good in doing so - tenants are paying far more in rent than they would otherwise have to because 40% of all my income goes straight to the government. Not wanting to be greedy, the rent would be 30% lower (£300/m or £3600/yr), for example, if the government didnt take its share, which would then be in the tenants pocket to spend on goods and services employing more people, all of whom pay income tax, spend that money themselves, and the whole economy benefits.
That said, I can see the advantages of buying a flat, especially if you can do it with little/no mortgage, and as part of a mixed portfolio of assets. You're basically buying a lifetime annuity with no compound interest, even if you do pay a lot of tax to do so.
I cant help thinking that its not doing society much good in doing so - tenants are paying far more in rent than they would otherwise have to because 40% of all my income goes straight to the government. Not wanting to be greedy, the rent would be 30% lower (£300/m or £3600/yr), for example, if the government didnt take its share, which would then be in the tenants pocket to spend on goods and services employing more people, all of whom pay income tax, spend that money themselves, and the whole economy benefits.
That said, I can see the advantages of buying a flat, especially if you can do it with little/no mortgage, and as part of a mixed portfolio of assets. You're basically buying a lifetime annuity with no compound interest, even if you do pay a lot of tax to do so.
Condi said:
I've become an 'accidental landlord' in that I've moved for work and are just renting out my existing property, and as others have alluded to, it seems nothing more than a way of paying a lot of tax.
I cant help thinking that its not doing society much good in doing so - tenants are paying far more in rent than they would otherwise have to because 40% of all my income goes straight to the government. Not wanting to be greedy, the rent would be 30% lower (£300/m or £3600/yr), for example, if the government didnt take its share, which would then be in the tenants pocket to spend on goods and services employing more people, all of whom pay income tax, spend that money themselves, and the whole economy benefits.
That said, I can see the advantages of buying a flat, especially if you can do it with little/no mortgage, and as part of a mixed portfolio of assets. You're basically buying a lifetime annuity with no compound interest, even if you do pay a lot of tax to do so.
The government would have to introduce a form of rent control if they didn't take their share as greedy landlords would just keep rents high to fatten their own pockets!I cant help thinking that its not doing society much good in doing so - tenants are paying far more in rent than they would otherwise have to because 40% of all my income goes straight to the government. Not wanting to be greedy, the rent would be 30% lower (£300/m or £3600/yr), for example, if the government didnt take its share, which would then be in the tenants pocket to spend on goods and services employing more people, all of whom pay income tax, spend that money themselves, and the whole economy benefits.
That said, I can see the advantages of buying a flat, especially if you can do it with little/no mortgage, and as part of a mixed portfolio of assets. You're basically buying a lifetime annuity with no compound interest, even if you do pay a lot of tax to do so.
Condi said:
Saleen836 said:
The government would have to introduce a form of rent control if they didn't take their share as greedy landlords would just keep rents high to fatten their own pockets!
Would they? Wouldn't the market keep them at the 'right' level,same as any other enterprise? DonkeyApple said:
Badda said:
Why would that affect just cash purchases? I just factor it in to the purchase price and if it still makes sense, great.
This is why it’s a good tax and has formed part of what I believe to be a very sensible management of the BTL problem and risk that had been created. If you’re not highly leveraged then that 3% just forms part of your investment calculation, it also helps level the playing field a little between home buyers and property investors. But if you’re one of the turn of the century speculative punters trying to gear to the eyeballs then that 3% suddenly is a massive chunk of extra real money to be found. 
Something I've been toying with the idea of recently is getting my own btl property, mostly for retirement provisions but if it turns a small profit at the same time then fantastic. I've got some money sat pretty static for a deposit and even with said tax implications I cannot see around it.
I'm looking at popular city centre Glasgow/Edinburgh 2 bed flats, value around 150-170k. Idea would be to rent it for 25yrs so that in retirement I have a income or a property to sell that's really cost me very little to implement.
Was considering student let's, vetted of course, charge 400/month a room or whatever - which is cheaper than student halls. Then out of term time possibly air bnb. This was the idea as a work colleague does this (actually began 6yrs ago solely for putting his own kids through uni and has been successful renting privately since) safe and consistent enough and only grief is a bit of a repaint between tennents.
I really cannot see anything better to stick say 40k into.
Anyone feel free to talk me against this?
I'm looking at popular city centre Glasgow/Edinburgh 2 bed flats, value around 150-170k. Idea would be to rent it for 25yrs so that in retirement I have a income or a property to sell that's really cost me very little to implement.
Was considering student let's, vetted of course, charge 400/month a room or whatever - which is cheaper than student halls. Then out of term time possibly air bnb. This was the idea as a work colleague does this (actually began 6yrs ago solely for putting his own kids through uni and has been successful renting privately since) safe and consistent enough and only grief is a bit of a repaint between tennents.
I really cannot see anything better to stick say 40k into.
Anyone feel free to talk me against this?
Taxed on the way in (Stamp). Taxed on the way through (Income Tax). Taxed on the way out (CGT).
Vs Two years ISA subs:
No tax on entry. No tax on income. No tax on exit.
As for your bit about letting to students and having “no grief but a lick of paint”.... seriously....
Vs Two years ISA subs:
No tax on entry. No tax on income. No tax on exit.
As for your bit about letting to students and having “no grief but a lick of paint”.... seriously....
Edited by DoubleSix on Saturday 5th May 15:03
coljoh148 said:
I'm looking at popular city centre Glasgow/Edinburgh 2 bed flats, value around 150-170k. Idea would be to rent it for 25yrs so that in retirement I have a income or a property to sell that's really cost me very little to implement.
Mr Parrot works in these regions at considerably less values than that. I'm sure he'll come give you his thoughts!GT03ROB said:
coljoh148 said:
I'm looking at popular city centre Glasgow/Edinburgh 2 bed flats, value around 150-170k. Idea would be to rent it for 25yrs so that in retirement I have a income or a property to sell that's really cost me very little to implement.
Mr Parrot works in these regions at considerably less values than that. I'm sure he'll come give you his thoughts!rufusgti said:
Btl, purchased in 2015 for 116k.
30k deposit
Now valued at 140k.
Repayment mortgage and insurance 400 per month over 20 year mortgage.
Rent 650 per month. (100% occupancy so far)
The profit per month pays the mortgage on my own house 215 per month.
In 17 years both the mortgage on the flat and the mortgage on my house will have been payed off with the rent i recieve.
after this the rent provides the top up to my income i need to at least sustain my current situation.
Please explain that to me. If you get 650/m rent, then even on the lowest tax band of 20% (assuming you had a job to get the mortgage/deposit to start with) then you're down to £520/m, and so unless you're not paying tax on the rental income it nowhere near covers both mortgages. On a 40% tax rate then you're down to 390/m which doesn't even cover the mortgage on your rental. 30k deposit
Now valued at 140k.
Repayment mortgage and insurance 400 per month over 20 year mortgage.
Rent 650 per month. (100% occupancy so far)
The profit per month pays the mortgage on my own house 215 per month.
In 17 years both the mortgage on the flat and the mortgage on my house will have been payed off with the rent i recieve.
after this the rent provides the top up to my income i need to at least sustain my current situation.
Or are you not quite doing things properly?
joyless lobotomised parrot said:
GT03ROB said:
coljoh148 said:
I'm looking at popular city centre Glasgow/Edinburgh 2 bed flats, value around 150-170k. Idea would be to rent it for 25yrs so that in retirement I have a income or a property to sell that's really cost me very little to implement.
Mr Parrot works in these regions at considerably less values than that. I'm sure he'll come give you his thoughts!Gassing Station | Finance | Top of Page | What's New | My Stuff