Is buy to let still worth it?

[PCTNN]

Hi, this seems like a question to ask in forums such as MSE. I've looked in there and the consensus is that it's not worth it anymore. Having said that, your average poster on MSE is basically a low/average income earner, a scared peasant that only sees buy to let as a mean to get a few bucks per year so they can buy a barbie doll for their kids for Christmas.

I'd like to hear the opinion of my peers, the top 1% earners in this country. I have an ltd set up and am a cash buyer, no mortgage needed. Do you guys still invest in buy to let?

No, I haven't asked my accountant but I have an appointment with them in 2 weeks time.

[jamesbrown]

BTL is definitely worth it if you hate your life and enjoy losing money.

[JustKeepSwimming]

You aren't our peer.

[northernladuk]

Depends what your long term plan is. Is it a quick buck or a 20 year plan to be paid off and provide income in retirement? Long term play on the housing market? Are you cash buyer or need mortgage etc? There is no quick answer to this. If you want to get something for 10 years to make a profit on and need a mortgage then definitely not. If you can buy cash and plan on returns over 15+ years and income in to your retirement then could be some good pickings towards the end of 2023.

The number of landlords selling up round here is astounding and will continue to be so as their fixed terms come to an end and the intrest hike makes it unprofitable. Prices will drop pretty significantly in coming months with the glut of houses, massively reduced number of buyers and high interest rates. If you can play the waiting game and have cash in hand you could pick of some belters at a good price and then sit on them long term. Just play the boom or bust game.

That said, whatever your plan is, executing it in the next few months is a complete waste of time. Prices won't have dropped enough and mortgages are still going up. Give it a bit of time as it's going to be a blood bath in the short term.

[GJABS]

As I understand it, the problem is that the government are bringing in new laws favouring tenents, meaning that you won't be able to evict bad tenants, or will at least have a harder job doing so.

I'd like to hear the opinion of my peers, the top 1% earners in this country.

You might be in the top 1%. I don't think many of us on here are though..

[PCTNN]

Depends what your long term plan is. Is it a quick buck or a 20 year plan to be paid off and provide income in retirement? Long term play on the housing market? Are you cash buyer or need mortgage etc? There is no quick answer to this. If you want to get something for 10 years to make a profit on and need a mortgage then definitely not. If you can buy cash and plan on returns over 15+ years and income in to your retirement then could be some good pickings towards the end of 2023.

The number of landlords selling up round here is astounding and will continue to be so as their fixed terms come to an end and the intrest hike makes it unprofitable. Prices will drop pretty significantly in coming months with the glut of houses, massively reduced number of buyers and high interest rates. If you can play the waiting game and have cash in hand you could pick of some belters at a good price and then sit on them long term. Just play the boom or bust game.

That said, whatever your plan is, executing it in the next few months is a complete waste of time. Prices won't have dropped enough and mortgages are still going up. Give it a bit of time as it's going to be a blood bath in the short term.

Thanks for the reply.

So, yes I'm planning to buy in 6-9 months, yes I'm a cash buyer and yes I'm planning to keep the property for 20 years at least (and probably add more properties if/when I can).

The idea would be to rent it until my daughter goes to uni and the she can live there (if of course she decides to go to uni there)...

[northernladuk]

Thanks for the reply.

So, yes I'm planning to buy in 6-9 months, yes I'm a cash buyer and yes I'm planning to keep the property for 20 years at least (and probably add more properties if/when I can).

The idea would be to rent it until my daughter goes to uni and the she can live there (if of course she decides to go to uni there)...

In which case I personally think you'll do fine. Probably still lose out in the short term. I don't think that's long enough for any recovery but still buying low. I'm getting my ducks in order to do the same but was going to wait a little bit longer. Need to be ready in case an absolute steal comes up at auction.

Try find out which have been rented rather than lived in and go in with a low offer for as many as you can if you aren't fussy. Landlords facing a mortgage hike will be desperate but it does mean many are sold with tenant. Also keep an eye out for the ones on auction. Friend of mine has just bought one before it went to auction and they accepted lower than the guide price. The agent just needs to get rid so he went low and then just kept offering 1k more until he reached the number on the piece of paper and the woman said yup. He was gonna spend a bit and flip it because there is about 50k in it compared to previous sale prices but they will drop before he can sell. Three nice ones ones have gone on the same road this week but he wouldn't listen so interesting to see what happens.

[Snooky]

Hi, this seems like a question to ask in forums such as MSE. I've looked in there and the consensus is that it's not worth it anymore. Having said that, your average poster on MSE is basically a low/average income earner, a scared peasant that only sees buy to let as a mean to get a few bucks per year so they can buy a barbie doll for their kids for Christmas.

I'd like to hear the opinion of my peers, the top 1% earners in this country. I have an ltd set up and am a cash buyer, no mortgage needed. Do you guys still invest in buy to let?

No, I haven't asked my accountant but I have an appointment with them in 2 weeks time.

The question you should always ask is - could I make more, or pay less, money doing it differently?

You'll pay income tax at your marginal rate on any profit from a BTL and you may be liable to CGT on any profit when you come to sell it.

You're a cash buyer so that means you probably have £150k-300k sitting around doing not much (depending on what type of property you're looking at, and where in the country). What else could you do with that money and how would the short or long term yield compare with the BTL? For example, you can get deposit accounts paying over 6% for absolutely no risk as long as you only put max £85k in each. A decent index tracker will probably do much better, even a low risk one. You'll never have to deal with dodgy tenants, repairs & refurbishment, letting agency fees, insurances, ever heavier regulations etc.

When I first got into BTL it was fairly clear the property market would still keep climbing, you could offset your mortgage interest against tax and so you were effectively leveraging your own investment to get a large, low rate, tax free loan which was easily covered by rent. The net yield, including property value appreciation, made the other costs and stresses worthwhile. Even so, I did some very careful calculations of the likely costs and profit and compared it to what I thought I could achieve with my deposit elsewhere. I suspect if I did the same calculations today, I'd put my money in another form of investment.

I suggest you do the same kind of calculations and comparison because it's not an easy money game any longer. I'm not trying to put you off and you can probably find a few bargains as house prices start to fall over the next year, but please do take all factors and other options into account.

[Paddy]

If you are a cash buyer then the best advantage would be to buy a property for development. e.g. A large older property split into two or more flats. Sell one flat and rent out the others.

BTW. I agree that the law needs to be reviewed regarding tenancies. I know quite a few younger people renting and they are terrified each time it comes to renewal time. Landlord's are using the threat of not renewing contracts to leave the property in disrepair. This applies to individual landlords and PLCs.

[BlasterBates]

You need to compare a BTL with other alternatives. In the past BTL was attractive because you could leverage your investment by taking out a mortgage. Rental yields are on average around 5% but property prices are dropping.

https://www.unbiased.co.uk/discover/...still-worth-it