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I took on a rental after seeing the price drop. Rent is 900 pcm. 

To buy would be 260k plus. So ...

40k deposit. 220k mortgage at 3pc.

monthly mortgage cost - 1050 ish

plus voids - been on marketa while

plus management fee

plus mortgage fees

plus service fee (flat)

wear n tear / decorating

Maintenance 

white goods

who the ****** would get into BTL right now?

 

 

 

 

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You gotta consider that a lot of the BTL is assisted by gifts from an elderly relative who passed on. That would leave a sizable cash sum for joe public to consider what to do with.

There is nothing in bank accounts, most don't consider the stock market, there is only really one place to put the moolah.

Into bricks n mortar. After all properdee only ever goes up.

I suspect that as you suggest a lot our older BTL leveraged goons have left the market now completely.

Edited by GreenDevil

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1 hour ago, 999house said:

I took on a rental after seeing the price drop. Rent is 900 pcm. 

To buy would be 260k plus. So ...

40k deposit. 220k mortgage at 3pc.

monthly mortgage cost - 1050 ish

plus voids - been on marketa while

plus management fee

plus mortgage fees

plus service fee (flat)

wear n tear / decorating

Maintenance 

white goods

who the ****** would get into BTL right now?

 

 

 

 

Current Interest rates 0.25%.

 

:lol: :lol: :lol: :lol: :lol: :lol: :lol: 

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1 hour ago, 999house said:

I took on a rental after seeing the price drop. Rent is 900 pcm. 

To buy would be 260k plus. So ...

40k deposit. 220k mortgage at 3pc.

monthly mortgage cost - 1050 ish

plus voids - been on marketa while

plus management fee

plus mortgage fees

plus service fee (flat)

wear n tear / decorating

Maintenance 

white goods

who the ****** would get into BTL right now?

 

 

 

 

Plus they are all buying bargains oop north....can';t loose on bricks and morta.

 

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5 hours ago, 999house said:

I took on a rental after seeing the price drop. Rent is 900 pcm. 

To buy would be 260k plus. So ...

40k deposit. 220k mortgage at 3pc.

monthly mortgage cost - 1050 ish

plus voids - been on marketa while

plus management fee

plus mortgage fees

plus service fee (flat)

wear n tear / decorating

Maintenance 

white goods

who the ****** would get into BTL right now?

 

 

 

 

Anyone who's playing the long game and doesn't need to sell if things look bad.

Short term, it looks like you're losing several hundred per month.

Long term, you're buying a house for maybe 30% of its price - with the other 70% paid by the tenants over time.

Beats the hell out of the state pension. 

PS I just bought, interest rate (fixed for 3 years) is 2.2% @ 15%, 1.7 if you don't go for fixed, 1.2 if you've got a higher deposit. Some banks are going for 0.99%. I suspect most BTL buyers would get around 1%. At 1.5, it's 760/month, so..

 

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5 hours ago, flb said:

Anyone who's playing the long game and doesn't need to sell if things look bad.

Short term, it looks like you're losing several hundred per month.

Long term, you're buying a house for maybe 30% of its price - with the other 70% paid by the tenants over time.

Beats the hell out of the state pension. 

PS I just bought, interest rate (fixed for 3 years) is 2.2% @ 15%, 1.7 if you don't go for fixed, 1.2 if you've got a higher deposit. Some banks are going for 0.99%. I suspect most BTL buyers would get around 1%. At 1.5, it's 760/month, so..

 

Which was nice.

 

 

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10 hours ago, TheCountOfNowhere said:

Plus they are all buying bargains oop north....can';t loose on bricks and morta.

 

I work with an older guy who has this as his "retirement strategy" 

 

Lots of smugness about how clever he'd been until the new tax rules came in...

 

 

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6 hours ago, flb said:

Long term, you're buying a house for maybe 30% of its price - with the other 70% paid by the tenants over time.

Beats the hell out of the state pension. 

PS I just bought, interest rate (fixed for 3 years) is 2.2% @ 15%...I suspect most BTL buyers would get around 1%. At 1.5, it's 760/month, so..

1) The vast majority of BTL 'business models' are built around interest only mortgages, not repayment.

2) LTV required on BTL is 25% minimum.

3) Rental income needs to cover 145% of the mortgage interest.

So on addition to S24, you will really struggle to find a new BTL mortgage on as favourable terms as owner occupiers.

Both taxation and banking regulations have been rejigged in our favour. And coming soon are stricter product standards too (EPC ratings) which will not apply to the average Joe. 

The boots on the other foot now.

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9 hours ago, flb said:

Anyone who's playing the long game and doesn't need to sell if things look bad.

Short term, it looks like you're losing several hundred per month.

Long term, you're buying a house for maybe 30% of its price - with the other 70% paid by the tenants over time.

Beats the hell out of the state pension. 

PS I just bought, interest rate (fixed for 3 years) is 2.2% @ 15%, 1.7 if you don't go for fixed, 1.2 if you've got a higher deposit. Some banks are going for 0.99%. I suspect most BTL buyers would get around 1%. At 1.5, it's 760/month, so..

 

Presumably imputed rent is a meaningless term to you?

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2 hours ago, maverick73 said:

Your taxed on gross revenues. Tax deductable expenses will be zero from 2020...

IMG_2582.JPG

I'm always interested in tables like this.  To me it begs the question of how far house prices would need to drop so that BTL would make the same money as it does now.  So I've run the numbers.  The first two columns in the table below, recreate the first and last table from above.  The third shows 'net profit after tax' being back to the initial £1,680.  To make the same profit, the mortgage interest (and therefore house price) need to fall.  With my calcs, prices drop 25% to £262,500 (see below)

59158f93dbad8_ScreenShot2017-05-12at11_33_24.png.991fe35b04e2ee25cb9fec6e445e7248.png

Now, this ignores the upfront costs and any changes in interest rates, which maverick73's table shows would make the situation worse for the landlord.  Hopefully, it should be obvious that these would have a further crippling effect on house prices.

The other point to make is that this has assumed constant rental income.  The numbers above show that the marginal buyer is less likely to be BTL as the profits don't make sense for them at these prices.  So if prices fall, this would encourage those in the PRS to shift to OO.  These are more likely to be richer renters (as house prices are still high), so those remaining in the PRS will be poorer, on average, than currently is the case.  Because of this shift, constant rental income appears, err, optimistic from the point of view of a BTLer.

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3 hours ago, TheCountOfNowhere said:

:lol::lol:

You know things are bad when the BTLers are posting here.

30% of the price of a house invested over 25 years would easily be worth that extra 70%, maybe many times more.

BTLs a mugs game because it's the mugs desperate for an easy return that buy into it.

The country is in 2 trillion of debt, IRs are f**k all % and the housing bubble is collapsing, housing benefit is ripe for cutting and with it the floor on rents, but sure, come on here and tell us what a great idea a BTL saving scheme is.

Have you got some old £5 notes under your mattress to ?

F*cking idiots.

Why does someone who is painfully ordinary in every other way suddenly think they're George Soros just because they got approved for a btl mortgage?

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12 hours ago, flb said:

PS I just bought, interest rate (fixed for 3 years) is 2.2% @ 15%, 1.7 if you don't go for fixed, 1.2 if you've got a higher deposit. Some banks are going for 0.99%. I suspect most BTL buyers would get around 1%. At 1.5, it's 760/month, so..

 

I thought BTL interest rates were significantly higher than owner-occupier (at least 2-3% which would mean little or no yield considering even modest costs on other things)and have much higher fees. This is before considering the risk of being stuck on SVR if unable to re-mortgage and rises due to regulations.

 

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Don't forget though that 65% approx of BTL is bought in cash (I don't have the stat to hand but posted it previously).

That is why the Tory core and the rich are not crying out more about the changes - they aren't there to affect the big land owners and the historic landlords and the 'real rich' who can buy in cash.

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As pointed out in that thread, that's the proportion of BTL purchases which are currently being conducted in cash. The number of cash BTL purchases is broadly in line with what it was pre-stamp duty and Section 24. The reason why the proportion is so high recently is because the number of people who borrow to let has greatly diminished, so the numbers only stack up for those with cash.

Even then I'm not sure - a quick Zoopla check for £100k houses gives me a 2 Bed semi-detached in Birmingham with a potential monthly rent of £600. That's £7200 gross (7.2% per annum). Letting agent fees run to ~12.5% or £864 per year. Insurance runs to about £200-300 per annum. Fixtures Fittings and Furniture - £3000 to furnish perhaps so 10% replacement cost per annum = £300. Annual maintenance for a property, a good guide is to put aside 1% of the property cost per year so that's another £1000. Oh yes and there's the tax to pay, 20% of £7200 is £1440

So net we're looking at £7200 - £864 - £200 - £300 - £1000 - £1440 = £3396. A 3.4% yield for a cash purchase - once you subtract mortgage interest from this I'm not sure what you're left with!

On second thoughts, maybe I'll just nutmeg it.

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3 hours ago, anonlymouse said:

Even then I'm not sure - a quick Zoopla check for £100k houses gives me a 2 Bed semi-detached in Birmingham with a potential monthly rent of £600. That's £7200 gross (7.2% per annum). Letting agent fees run to ~12.5% or £864 per year. Insurance runs to about £200-300 per annum. Fixtures Fittings and Furniture - £3000 to furnish perhaps so 10% replacement cost per annum = £300. Annual maintenance for a property, a good guide is to put aside 1% of the property cost per year so that's another £1000. Oh yes and there's the tax to pay, 20% of £7200 is £1440

So net we're looking at £7200 - £864 - £200 - £300 - £1000 - £1440 = £3396. A 3.4% yield for a cash purchase - once you subtract mortgage interest from this I'm not sure what you're left with!

On second thoughts, maybe I'll just nutmeg it.

I hear what you are saying mouse, and i'm not sticking up for the BTLer but I think us HPCers should see it as it really is, not what we want it to be. Eg as follows, based on my own lengthy renting experience, I think your allowances could be over the top and a typical LL will be All Right Jack:

2 Bed semi-detached in Birmingham with a potential monthly rent of £600. Depends on what the LA rent figure is, where I live (north of you) 2 bed is £500 to £550 unless it's in a great area which a £100K property will not be. 3 bedder will get £600 plus. He'll have plenty of takers. Edit: you are too low here! maybe Brum is nicer.

Letting agent fees run to ~12.5% or £864 per year. My landlord used the agent for vetting/ contract/ deposit and setting up standing order etc. and runs it himself. £0 but possible hassle factor? Long term tenant is once only fee to agent.

Insurance runs to about £200-300 per annum. £200 max I would have thought. Aren't they now pushing some contents insurance on to the tenant?

Fixtures Fittings and Furniture £3000 to furnish perhaps so 10% replacement cost per annum = £300. This is the bit that made me chuckle! - In my exp. a landlord will not furnish at all if he can get away with it. Hand me down, thrown out stuff from his other houses at best, is my experience. White goods no - he'll have to maintain them.

Annual maintenance for a property, a good guide is to put aside 1% of the property cost per year so that's another £1000. This made me laugh also, bar a disaster (covered by insurance) he most likely won't be doing anything, apart from legal obligations like the gas test. Complain about mould and you'll get a letter saying you should leave windows open and not use rads for drying clothes on.

Oh yes and there's the tax to pay, 20% of £7200 is £1440. Yes, well that's a moot point, what does he declare/ pay? and also does he have a BTL or a normal mortgage. Who checks up on this? No-one?

Edited by frankief

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On 5/12/2017 at 6:50 AM, anonlymouse said:

1) The vast majority of BTL 'business models' are built around interest only mortgages, not repayment.

2) LTV required on BTL is 25% minimum.

3) Rental income needs to cover 145% of the mortgage interest.

So on addition to S24, you will really struggle to find a new BTL mortgage on as favourable terms as owner occupiers.

Both taxation and banking regulations have been rejigged in our favour. And coming soon are stricter product standards too (EPC ratings) which will not apply to the average Joe. 

The boots on the other foot now.

Interest only is a different story and that's not really profitable nowadays unless you get an amazing price.

I'm talking about "real" btl - people who can afford to buy cash or high % deposit, not some guy who just thinks he discovered the secret to getting rich.

When I wanted to buy a house around here (370k), we made an offer for 385k, hoping to eliminate the competition. A BTL guy showed up and bought it with no mortgage (cash) for 420k. That guy is getting his money back. Now, if he had bought it interest only or with a 10% deposit and high IR obviously he'd be screwed.

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6 hours ago, flb said:

Interest only is a different story and that's not really profitable nowadays unless you get an amazing price.

I'm talking about "real" btl - people who can afford to buy cash or high % deposit, not some guy who just thinks he discovered the secret to getting rich.

When I wanted to buy a house around here (370k), we made an offer for 385k, hoping to eliminate the competition. A BTL guy showed up and bought it with no mortgage (cash) for 420k. That guy is getting his money back. Now, if he had bought it interest only or with a 10% deposit and high IR obviously he'd be screwed.

Err, with that sort of money I can think of a number of higher yielding, safer investments.

At the current yields of sub -2% he'll get his money back in 50 years.

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7 hours ago, flb said:

BTL guy showed up and bought it with no mortgage (cash) for 420k. That guy is getting his money back. Now, if he had bought it interest only or with a 10% deposit and high IR obviously he'd be screwed.

What's the rental income from that house? He's obviously jettisoned the cost of a mortgage from the equation but now he needs gross returns (after costs) of <£29,400 per annum in order to be getting greater return than stocks and shares.

Clearly banking on HPI.

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4 hours ago, anonlymouse said:

What's the rental income from that house? He's obviously jettisoned the cost of a mortgage from the equation but now he needs gross returns (after costs) of <£29,400 per annum in order to be getting greater return than stocks and shares.

Clearly banking on HPI.

I don't know. What I can tell you is that it's a fairly large house by British standards and he most likely converted it to HMO.

To be clear, the house itself was originally ~120 sqm and it had been extended since then. Whatever he's getting in rent (hmo, most likely) is just a bonus - the price for a similar property is now around 500k in that area.

 

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