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Is Buy-to-let A Sound Bet?

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Article in Todays Telegraph suggesting BTL is still a good idea :blink:

As the market crashes next Year I have no doubt that some on this board will accuse us of gloating at the misfortune of others. I for one will have no sympathy for the airheads who choose to invest in BTL following articles such as this.

Is buy-to-let a sound bet? - Telegraph 31 May

Existing landlords are expanding their property portfolios as house prices rise and demand from tenants continues to increase.

Landlords have been steadily increasing the number of properties on their books, with 130,000 buy-to-let loans advanced in the second half of 2005, an increase of 40 per cent on the previous six months. Brokers say the increased demand has been sustained so far this year.

The renewed interest in letting as an investment has been spurred by rising rents caused by an increase in the number of tenants as would-be first-time buyers are forced to rent. A survey from the Royal Institution of Chartered Surveyors last week showed rents climbing at their fastest pace since July 2001.

Moreover, the Government has predicted that the number of households in the UK will increase by more than two millions over the next 10 years, fuelled by a trend towards smaller households and a surge in workers coming to Britain from other EU countries..........

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A good sure footed article

I’m going out to look for a BTL investment now – after all someone will pay the rent and I will own the house in 25 years – I wish all investments were that simple.

Now 5 years ago it was obvious – why if we are all so clever did we not see the opportunity?

Please note there is a smidgen of sarcasm in the first part of my post

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Moreover, the Government has predicted that the number of households in the UK will increase by more than two millions

Did GB write this himself? :blink:

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The renewed interest in letting as an investment has been spurred by rising rents caused by an increase in the number of tenants as would-be first-time buyers are forced to rent.

If that is not a damming indictment of what has gone wrong with housing in this country I don't know what is, the landlords outbid the FTB forcing up prices across the chain, no FTB's = massive crash = lots of whinging stories about suckers who BTL = me say **** off to the lot of them, a fool and his money are soon parted

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The same sort of thing would have been said before. It was true then and if a potential btl'er looks hard enough it is still true now.

You can buy properties BMV but you won't find them if you spend all day on hpc.

Admittedly I do spend a lot of time on hpc. But if I can convince one bear that there are opportunities to buy BMV and live happliy ever after, it would be worth it

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Word in the City is that commercial property generally is not the thing to be in these days:

http://investing.reuters.co.uk/news/newsAr...AL-PROPERTY.xml

Even though commercial property offers more secure income; higher net yields, fully repairing and insuring terms, upward only rent reviews it has not attracted the BTL hoards. Strange no BTL bull has ever been able to explain this contradiction? <_<

The same sort of thing would have been said before. It was true then and if a potential bottler looks hard enough it is still true now.

You can buy properties BMV but you won't find them if you spend all day on hpc.

Admittedly I do spend a lot of time on hpc. But if I can convince one bear that there are opportunities to buy BMV and live happily ever after, it would be worth it

I'm a Surveyor please explain BMV? I understand the RICS Red Book definition of MV (market value).

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Even though commercial property offers more secure income; higher net yields, fully repairing and insuring terms, upward only rent reviews it has not attracted the BTL hoards. Strange no BTL bull has ever been able to explain this contradiction? <_<

I'm a Surveyor please explain BMV? I understand the RICS Red Book definition of MV (market value).

Now does that not say somthing another I thought I was the only Surveyor on here

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The renewed interest in letting as an investment has been spurred by rising rents caused by an increase in the number of tenants as would-be first-time buyers are forced to rent.

If a part of the BTL sector is based on the above phenomenon, it cannot be sustainable.

Suppose some FTB is "forced to rent" a place which they would otherwise buy if only it were affordable. They have to pay the landlord rent, and this rent has to cover the landlord's mortgage and other costs *and* some profit. Landlord costs are normally higher than owner occupiers. This is because the landlord must pay income tax on the rent, must meet a load of regulations not required for owner occupiers, cannot borrow the full value of the property, and cannot borrow at as low rates as the owner-occupier.

In the long term, how can the FTB afford to rent it if they cannot afford to buy it? Either the landlord is losing money or the tenant will buy (in which case there is no demand from this group of people for rented property). This is known as disintermediation, i.e. efficient markets will always cut out the middle man, so don't be the middle man.

This model of BTL is unsustainable over the long term.

frugalista

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Word in the City is that commercial property generally is not the thing to be in these days:

Especially so if retail is on its ar$e, that ghost-mall in Pompey comes to mind.

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Even though commercial property offers more secure income; higher net yields, fully repairing and insuring terms, upward only rent reviews it has not attracted the BTL hoards. Strange no BTL bull has ever been able to explain this contradiction? <_<

I'm a Surveyor please explain BMV? I understand the RICS Red Book definition of MV (market value).

Below market value. Ok prices are rediculously high but properties are still selling.

There are a lot of references on this site on new build apartment prices and refurbished properties being over valued. They are - that's why property developers don't buy them.

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Article in Todays Telegraph suggesting BTL is still a good idea :blink:

As the market crashes next Year I have no doubt that some on this board will accuse us of gloating at the misfortune of others. I for one will have no sympathy for the airheads who choose to invest in BTL following articles such as this.

Is buy-to-let a sound bet? - Telegraph 31 May

Another example of sloppy journalism from someone who is so idle that he simply reprints something handed to him by the VIs.

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Below market value. Ok prices are rediculously high but properties are still selling.

There are a lot of references on this site on new build apartment prices and refurbished properties being over valued. They are - that's why property developers don't buy them.

I'll say this only once. Any sale in the market is a sale at market value for the purposes of comparable evidence. If you find a vendor who is a fool, who is represented by a agent who is bent and you are a buyer who is willing to take advantage, then it's your call. But foolish vendors and bent agents exist, bubble or not.

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If a part of the BTL sector is based on the above phenomenon, it cannot be sustainable.

Suppose some FTB is "forced to rent" a place which they would otherwise buy if only it were affordable. They have to pay the landlord rent, and this rent has to cover the landlord's mortgage and other costs *and* some profit. Landlord costs are normally higher than owner occupiers. This is because the landlord must pay income tax on the rent, must meet a load of regulations not required for owner occupiers, cannot borrow the full value of the property, and cannot borrow at as low rates as the owner-occupier.

In the long term, how can the FTB afford to rent it if they cannot afford to buy it? Either the landlord is losing money or the tenant will buy (in which case there is no demand from this group of people for rented property). This is known as disintermediation, i.e. efficient markets will always cut out the middle man, so don't be the middle man.

This model of BTL is unsustainable over the long term.

frugalista

Maybe the FTB does not have the deposit. A BTL will have.

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Article in Todays Telegraph suggesting BTL is still a good idea :blink:

As the market crashes next Year I have no doubt that some on this board will accuse us of gloating at the misfortune of others. I for one will have no sympathy for the airheads who choose to invest in BTL following articles such as this.

Is buy-to-let a sound bet? - Telegraph 31 May

there's a chappie on ch4 "profiting from property" forum who has just sold his btl portfolio, cos he thinks house values are likely to fall and can't get decent rents.. he will be gutted! i would link it but i'm incapable.

ellen

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Another way to look at this is through the eyes of a would be BTL.

As a high rate taxpayer, say you have £70k to invest long term.

Do you:

1/ Stick it in the bank for 20 years on maybe 6% average IR.

2/ stick it on the FTSE for 20 years (assume 8% yoy growth which allows for the odd crash)

3/ use it to fund a BTL

Which will win in the long term?

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There are a lot of references on this site on new build apartment prices and refurbished properties being over valued. They are - that's why property developers don't buy them.

What would a developer want with a new build or refurbished property? It's like a Ford buying cars from a Vauxhall dealer's forecourt at full price and hoping to make a profit from the deal.

The only thing these "developers" are developing is a dreadful debt/equity ratio.

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Guest muttley

Another way to look at this is through the eyes of a would be BTL.

As a high rate taxpayer, say you have £70k to invest long term.

Do you:

1/ Stick it in the bank for 20 years on maybe 6% average IR.

2/ stick it on the FTSE for 20 years (assume 8% yoy growth which allows for the odd crash)

3/ use it to fund a BTL

Which will win in the long term?

Why do I have to look at it through the eyes of a would be BTL LL? Can't I look it at it through the eyes of an intelligent investor?

I would say option 3 is the worst one right now.

My previous LL paid 249k for a property that has produced exactly £0 rent in the five and a half months since we left.

If you gave him 70k he may very well fund another BTL, but I shan't be joining him.

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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