oh dear: Thinking of buy-to-let? Do the sums

[Francko]

LOL dude, your pension will be robbed off ya - the whole system will collapse and it would only be fair to take part of pension from those who saved more than others, its easy since money are all locked in and you can't easily get it out.

Our pensions will be our properties you generously paid for.

[expat]

Get that mortgage down, those credit cards paid off and some money in the bank whilst the contract market is good. It won't last forever. Doomed I tell ye.....

agree with that, paying off credit cards is a stellar "investment", and paying down the mortgage is an excellent safe tax-free use of cash for most people.

It won't last forever? I commented to a colleague in 1983 that I'd had 8 good years out of it, so I didn't mind if IT, sorry DP, went down the tubes as a career soon. In fact I rather thought that it would. Or at least, something would replace COBOL within a year or two....

[AtW]

Our pensions will be our properties you generously paid for.

Already you are hit by 40% CGT on 2nd property, it is highly likely that this tax will increase - pension system is heading towards collapse and someone will have to pay for it, which of course will be those who have assets that can easily be taxed: personally I bet on gold bars buried in multiple locations, all I need now is to get a few skeletons to point the right way.

[oraclesmith]

The points are valid but not quite the whole picture. For example, if you have a 100% mortgage, if you only just cover your outgoings with the rent, and if house proces remain level for ever, then at the end of your mortgage term you do own a house that has cost you nothing. Your article gives the impression that, in that example, the net effect would be zero (no net income, and no capital gain); it ignores that fact that you do gain a property.

That the house prices will stay level is a mighty big assumption. Eg. a friend of mine bought a two bed flat in an urban area in the mid eighties. He paid £63k for it and interest rates where heading for 15% and more. He had to keep going for years with big mortage payments and it was hard work. At a low point, it was worth a mere £36k. It's now worth about £140k or more and it has a tenant, but it still doesn't make any real money. At one point it was in poor repair (lack of available funds) so all he could do was go for DSS tenants. The DSS tenant didn't pay his share of the rental at all and took a lot of legal battle, stress and expense to get out, with the subsequent damage to the property took further investment to sort out. If he'd have given up and sold up in the early nineties, he would have made a serious loss. It could happen again ?

You'd need a small portfolio of property to make a decent return. Also no-one is going to lend 100% at favourable rates on a buy to let, so you will lose out on the interest/appreciation that your deposit would have made over the period.

You could easily invest in property without the hassle of tenants and agents by buying shares in a property fund.

[Fleetwood]

I am looking at buying a flat here in Brussels, and was talking to the owner, who bought his flat,with a loan, before a property boom here, about five years ago. He is now selling, as there is no CGT if the property is sold after five years.
Over that time, he told me he has made around €150 profit a month on the rental, but the profit on the sale will work out at around €1,000 a month.
hth

[Bagpuss]

More likely is the fact that Nottingham is a crime-infested tulipehole.

Oh yes, and we're doomed.

Have you been to Nottingham or are you talking out of your

Nottingham is one of the best places I've contracted, and far safer than most of the South East

[expat]

That the house prices will stay level is a mighty big assumption.

Mighty big indeed. I'm not making that assumption. I used that as a particularly clear example, where yield and capital gain calculations would suggest no point in doing it, but the extra factor of owning a property at the end makes it worth it. I did that to point out that the yield and gain are not the whole story. I do NOT advocate BTL and I do NOt believe that house prices will stay level.

You'd need a small portfolio of property to make a decent return. Also no-one is going to lend 100% at favourable rates on a buy to let, so you will lose out on the interest/appreciation that your deposit would have made over the period.

Quite so. this too is part of the calc.

You could easily invest in property without the hassle of tenants and agents by buying shares in a property fund.

Indeed. You lose a lot of hassle for the price of paying someone else to take it. Supposing that they are professionals at that, it's exactly what professionals like us should do.

[AtW]

1000 euros a month of profit does not sound extremely attractive given potential risk.

[monkeyboy]

I am looking at buying a flat here in Brussels, and was talking to the owner, who bought his flat,with a loan, before a property boom here, about five years ago. He is now selling, as there is no CGT if the property is sold after five years.
Over that time, he told me he has made around €150 profit a month on the rental, but the profit on the sale will work out at around €1,000 a month.
hth

As I said its all in the timing.

Unfortunately I've never got this right.

[BlasterBates]

but the extra factor of owning a property at the end makes it worth it.

Provided property prices rise. The fact that you own your property has no bearing on the financial calculation because the amount you pay into the house is not subtracted from the yield calculations.