Reply to: Invest in properties now or wait?

[LondonManc]

Yes, that's a good strategy.

Also because in a lot of areas the rental market is struggling, lots of empty places at the moment. Landlords are desperate for money so they should be flexible and be okay with 3 months rolling contracts, rather than get you stuck in with 12 monther.

Planning on doing the same as soon as the lockdown eases up a little. I noticed the house market was almost dead during the first wave: no viewings allowed, nobody selling, nobody buying. Prices flew up and properties got sold in days right the second the restrictions were lifted.

They've managed even better. They've got a holiday let on a two week rolling contract.

[ChimpMaster]

Some people have lost jobs so can't go ahead with purchases.

The couple who wanted to buy our house - when we had it on the market just before Covid - ended up getting divorced during lockdown!

Generally, prices should come down a bit over the next 6 - 12 months and not least because surveyors are down-valuing in so many cases. Lenders are doing their best not to lend, using every possible excuse to say no.

For anyone thinking of selling their main home and renting for a while (i.e. gambling on price falls), this is a very risky strategy and I have known people who got caught out in the past by trying a similar thing. You just don't know when the market will turn back up and then you'll be scrambling to buy any house just to get back on the ladder.

[SueEllen]

Also I noticed quite a few properties going back on the market and needing to sell quickly. Probably buyers got their mortgage rejected (or realised they might pay less in 6 months and pulled out at the last second)

Some people have lost jobs so can't go ahead with purchases.

[PCTNN]

Also I noticed quite a few properties going back on the market and needing to sell quickly. Probably buyers got their mortgage rejected (or realised they might pay less in 6 months and pulled out at the last second)

[ladymuck]

Lots of prices falling. I get daily emails on both sales and rentals for my area and it's definitely worth hanging on for a bit.

[PCTNN]

My parents have just sold. They're moving about 200 miles away from where they are, but are renting until they see something they like and get a feel for the area. The estate agent suggested that it's a good tactic, not least because of the expectation of a drop in house prices over the winter.

Yes, that's a good strategy.

Also because in a lot of areas the rental market is struggling, lots of empty places at the moment. Landlords are desperate for money so they should be flexible and be okay with 3 months rolling contracts, rather than get you stuck in with 12 monther.

Planning on doing the same as soon as the lockdown eases up a little. I noticed the house market was almost dead during the first wave: no viewings allowed, nobody selling, nobody buying. Prices flew up and properties got sold in days right the second the restrictions were lifted.

[LondonManc]

My parents have just sold. They're moving about 200 miles away from where they are, but are renting until they see something they like and get a feel for the area. The estate agent suggested that it's a good tactic, not least because of the expectation of a drop in house prices over the winter.

[NowPermOutsideUK]

Note that housing benefit payments are paid to the would-be tenant and not directly to the landlord. Therefore, you are at the mercy of the tenant paying their rent on-time.

Yes i am aware of this - You want to find someone who is so drunk or drugs problem that the council pays direct - I have a few of these and the people are actually great dont trouble me and payments automatically

LHA rates for inner london are 1285 for a single person - That means a little 15 square metre studio will get you 1285 a month - These little flats cannot be mortgaged because of size but do qualify for the LHA rates and trade for 170K

This means a 170K asset generating 15K a year which is not bad going

[eek]

Note that housing benefit payments are paid to the would-be tenant and not directly to the landlord. Therefore, you are at the mercy of the tenant paying their rent on-time.

Also housing benefit may not be enough to meet the actual rent you are charging - and it's possible that while the tenant may think they can afford the extra the reality may be very different.

So even after the tenant has failed to pay and you successfully switch the payment to be direct to the landlord you may still be out of pocket.

[andyg]

NLUK has a good point about getting your affairs in order to decide whether to buy personally or through a SPV - Take that research seriously

It all depends on who the seller is and what the yield is - I personally wouldnt buy now but I have seen a few properties in auction where the seller is distressed and the yields are 7% and these are residential freeholds where the 7% return comes from housing benefit payments so pretty much guaranteed.

Is it a bad time to buy? Yes unless you get a very good deal on purchasing...

Also be prepared for more BTL tax and generally more rights for the tenants going forward

Note that housing benefit payments are paid to the would-be tenant and not directly to the landlord. Therefore, you are at the mercy of the tenant paying their rent on-time.

[hgllgh]

Recession in 2021 caused by continued job losses from the fallout of global 'lockdown' should mean house prices coming down. You need a recession for house price deflation and you need job losses for a recession, so that's still the key metric but there are others...

Even the property 'gurus' and pros also seem to be forming a consensus of house price deflation next year with a perfect storm caused by:-

* landlord tax changes biting harder than in 2020 and increasing beyond 2021 (if you BTL now, seems like SPV company is the way to go).... more BTL's on the market
* Rishi's SD holiday coming to an end
* Coronavirus lockdown continuing.... more airbnb's on the market
* lenders tightening their criteria (which means they see prices coming down too)
* Fear based on hard brexit

If you buy now, leave a 25% - 30% discounted offer on the table and see if you get any takers.

[NowPermOutsideUK]

And no 10% furnished allowance trick
And CGT likely to go up to income tax rate lavels
And evictions now almost impossible for a long time

Not a good time unless you really find a deal

[PCTNN]

How refreshing to see other people out there able to value investments properly ... I thought I was the only one.

To the OP, why this strange affinity for fixing broken toilets at 2am? Why not buy a tax-efficient, low-cost, liquid, balanced and globally-diversified portfolio of stocks, bonds & REITs? Oh, I see, you want to be a sitting duck for the coming wave of tax rises with an immovable, tax-inefficient asset with a P/E ratio above 30 and a pile of headaches known as "tenants". Good luck then matey!

So much truth.

I briefly considered buying a house (2nd property, so huge Additional Dwelling Supplement) and renting out my current flat in the city centre of Edinburgh.
I dodged the bullet big time. The rental market here is crap at the moment; hundreds of ex airbnb flats have flooded the rental market and it's a true race to the bottom!

Flats that would find tenants within a couple of days you see them now stay on the market for weeks and weeks and then progressively lowering the asking price.

So factor in:
- lower rental income
- 1 month without rent while you find/vet tenants
- 10% cut for the letting agency
- rental income now taxed at 40% and who knows next year
- increased mortgage because I'd have to switch from residential to buy-to-let

Investing in buy-to-let would be for me worse than just dumping money down the toilet.

[Lance]

How refreshing to see other people out there able to value investments properly ... I thought I was the only one.

You do realise that is confirmation bias don't you?

[NowPermOutsideUK]

How refreshing to see other people out there able to value investments properly ... I thought I was the only one.

To the OP, why this strange affinity for fixing broken toilets at 2am? Why not buy a tax-efficient, low-cost, liquid, balanced and globally-diversified portfolio of stocks, bonds & REITs? Oh, I see, you want to be a sitting duck for the coming wave of tax rises with an immovable, tax-inefficient asset with a P/E ratio above 30 and a pile of headaches known as "tenants". Good luck then matey!

Couldn’t have said it better then the previous two posts. There is still money to make in property but you have to be a whole lot more selective then just buying a three bed semi and letting it out. I’m talking planning changes office to residential splitting the flats etc

I wouldn’t be buying now and frankly I don’t understand who the hell is buying to keep prices up