Is property still worth investing in?

[overthinkersanonnymus]

i haven’t looked at the ins and outs of the new rules re rentals, but if you had a little money, would you consider a BTL?

I work on the periphery of property development and have seen some of the massive incomes and portfolios that some clients have (all very good landlords with beautifully maintained houses) and I was looking at maybe starting to build my own little portfolio.

Is this a good idea? What should I be aware of?

I sold two BTL properties and purchased a holiday let.
It’s far more profitable.

A lot of people are getting out of BTL, there are so many regulations and if you do get bad tenants it's practically impossible to get them out. Would you use a letting agent so you don't have to deal with the day to day dramas? I wouldn't do it too many nightmare stories, I like to sleep nights, and profits are not that good. If you are in the Industry perhaps you can avoid the pitfalls?

@BadgernTheGarden the pitfalls do seem to be bad tenants, everything else that could be an issue is fixable.

If I had a little money now, no.

If I had enough money to cover having no income from the properties for whatever reason plus to do repairs in good time, eg boilers, maybe.

But until the new legislation is tested, nope. They haven't got enough capacity in the courts.

The likelihood of significant capital appreciation is much lower (in my view) than it was between the late 90s up until around the pandemic. If the potential for price growth is small, then the landlord benefit is mainly from the rental income.

I’d rather put any available money into investment funds - more liquid than property and the potential for decent growth without the specific risks associated with being a landlord. As PPs have said, you just need one set of bad tenants or a flood or broken boiler to eat into any gains.

We’re in the process of buying our first BTL - half of the cash is from my parents estate, less than £100k but I want that money in a property to generate income, although it won’t be an amazing return, it will help to contribute to their uni fees. Also there is a property to split between 2 dc down the line & they know it’s from their grandparents which is important to me. If it was purely for ROI I’m not sure we’d do it

The main problem is the tax issue. If you have a job, you are likely to be pushed into 40% tax bracket straight away and you can only claim 20% costs. Also they stopped the ability to claim the full mortgage cost against tax relief so much higher tax liability.

Property is over the long term though isnt it

I wouldnt have thought it makes econmic sense with a mortgage now, but if you're buying cash, you're just letting it sit there and pay for itself in terms of taxes, repairs, insurance, letting fees, while it sits and appreciates. You may not see much growth over a short term, couple of years or 5 years or whatever, but if you kept it for around 15-20 years then you'll see the return

Is it likely to yeild the same return that the money would in an investment? Not sure.

We are in the process of selling all ours. Combination of lots of changes since we started (tax relief, laws, CGT etc.) which now make it much harder & far less profitable

The stress vs putting it into stocks and shares/savings accounts for the minimal extra money is just not worth it

Got into it originally using redundancy money to keep a roof over a divorced parent’s head and then bought some more for people we knew

Been doing it over 18 years and now ready to release capital to fund our retirement and security in the next few years

2 sold this year. Just had another tenant give notice so that one will go on the market soon

No based on effort - return.

I would say ‘no’ having had our own fingers burned. Very difficult to make it pay or even cover costs. We haemorrhaged money and had to sell. Look up tax, capital gains and also your duty as a landlord. It is not a passive income. Do your reasearch before you jump in. We didn’t. It was horrific.

My dh is a LL with many properties and he would say no - not for the small LL. It’s far too risky nowadays with all the rules and regs. If you get a tenant who stops paying the rent it’s absolute hell to get them out. Also a lot of the safety regs are crazy.

Which safety regs are crazy?

Which safety regs are crazy?

Which safety regs are crazy?

It depends on your goals really, I’m buying flats via a ltd company over the next 2 years, I’ve got deposits low interest only mortgages and 2 sons, so my sons will be directors (if I die they can inherit and manage the let’s) all profits are going straight into my directors pension and I have 20 years on my plan for this investment, the directors pension reduces any corporation tax.

I could just put my 100k deposits into a pension but I wanted to have some different investments and capital gains on property over 20+ years plus the pension “should” work out better plus the ability to pass the flats to my sons inheritance tax free.

Im sure in those 20 years the rules will change but for now thats the plan.

Make sure it’s wrapped up in a Ltd company with those goals.

I had a lump sum and was advised to BTL about 8 years ago, but even then I couldn’t see that it was the best option for me. The lump sum would have been a deposit not outright, and I’d been so broke for so long that there were numerous big ticket issues pending with my own house, in particular the roof, also I needed to work part time for a period so was going to have a much lower income. Anyway, I didn’t go the BTL route and have never regretted it. The person that advised me to consider it I now find has had endless legal issues with the BTL property they own and it’s currently unsaleable.

Well for a start: having to have a licence to rent to more than 2 people. Having to completely fire board any property and put in all fire doors/alarms in every room.

Council houses don’t have to follow these procedures btw.

You will soon be fined £25K if you try and sell your house and it doesn’t sell and you then re-rent it within 12 months.

I can go on but it’s probably something the OP should look into very carefully themselves.

Theres a housing/rental shortage in this country and that’s no surprise.

On average, there has been little to no house price growth in real terms for 20 years. Given that and the risks and expenses involved, I wouldn’t touch BTL with a barge pole.

Always think of the end game.

I was cynical about house price increases when Sarah Beeny started her show (Remember the crushed glass in an old fireplace?) but still they went up and up and up.

People will always want housing and whilst there is ever increasing demand then it'll continue to be an investment.

The government could kill BTL by offering a long term high interest bond which they used the cash from to build houses to rent to people.

Christ! I had no idea about this. I’m out.

They (sucessive governments) have already really put BTL on life support, with intent to finally put a pillow over its head.

I don't think the changes themselves are all bad, I used to give advice to tenants whilst being a landlord but the systems are all broken and a nice diversified global ETF is probably a lot less risk.

Since the financial crisis UK real terms house prices haven’t risen on average. A lot of what looks like growth is just inflation.

Source https://www.allagents.co.uk/house-prices-adjusted

The eco stuff as well I think is onerous and not realistic compared to home owners, there are lots of other things that I cant remember off the top of my head that are expected of rental properties which are not in place for many homeowners because its not a priority or the home owner cant afford it but for some reason it must be put in place in a rental property

Ultimately, Ive said this on so many threads, the anti landlord rhetoric will be the destruction of rentals for the average person, the PRS will be wholly owned by massive companies who wont give a shit and wont negotiate or be tolerant or patient or flexible.