Should I invest in a property to let?

[yetanotherdaytoday]

I am about to inherit* some money. It's enough for a cheap studio flat in my town, or a 1 bed if I go a little further afield.

If I don't invest it, I could easily spend it topping up my income as we're always living one paycheck to the next, and it'd be gone in a few years.

I'm thinking about buying a small property with it and letting it.

Is there any reason I shouldn't do this? It seems to make sense to me as it'd provide a modest income, and be an asset I could cash in at some point, or leave to my own DC.

Has anyone got any tips about being a landlord? Thanks.

(*Full disclosure, my mother inherited the money after my father died, and she has said she wants to give me and my siblings a large cash sum).

You're right on the tax on foreign income on UK residents. 🇬🇧

Just had a quick scoot around latest legislation and concluded the whole thing is stitched up.

There is no winning in this OP. We are just minions serving the state. Just enjoy the money the best way you can whilst you can.

Can you link to the flat you are buying for 80k? Most places where people want to live have had prices distorted by cheap borrowing so you wouldnt get much just now for 80k IMO, happy to be proved wrong though. I think you are confusing "normal" inflation and wage growth leading to house price increases with the anything but normal global monetary experiment that kicked off in 2008, that experiment has now been shut down and it isnt sensible to expect that we will just cruise along for a bit and then take off again when interest rates have gone from under 1% to pushing 6% at the fastest rate on record. Prices have to correct first and by buying now you would be looking at a big loss on what you paid IMO before things started moving upwards again.

Rents are not increasing though, and landlords cant exit the market because the FTB types who would previously have bought an ex-BTL cant get the loans, South West rents down 20% according to this.

https://propertyindustryeye.com/rents-fell-last-month-as-market-returns-to-seasonal-patterns/

Rents are not falling where there is high demand and fewer properties. If a one bed is only £80,000 by definition this isn’t a sought after area. Might attract a couple though. You also pay CGT on the gain in price. There are many reasons not to do this as a sole investment.

Err, no, because the main example I used was my parents, who bought a house in the 70s and sold 40 years later - so before long before 2008.

It went from £5k in value to well over £1m.

That's not just inflation.

Was that the "70s", which year? Or was it "1970"? Bought in 1970 and sold 40 years later would have been sold in 2010, so AFTER 2008? The increase in value doesnt sound correct to me, so unless you can link to that property with price history I dont buy this example, sorry. And your example of an 80k flat doesnt exist? How can you base your buying decisions on this sort of data?

From memory, and a 30 year house price increase example, some 2 bed ex-council houses that I know went for under 20k in the early 90`s (Thatcher "Right To Buy" era) were a few years ago selling for 100 -120k, they will probably have slipped back quite a bit now that rates are back up, but that is a realistic example, the only way you profit from a property bubble is if you are "flipping" property, or downsizing. Throwing inherited money into the property bubble at this stage, with the added horror of having to manage tenants, and all the legal compliance etc. would be a very bad move, very bad, one that you will probably regret in the future.

Why do people make everything an argument on here 😂😂😂

Crashy, you can get flats for £80k in lots of cities in northern England.

Here are some in Sheffield.

Newcastle

Manchester

All of them are one bedroom flats, but that is what OP said she was looking at. I have said I don’t think it is a great investment idea due to the running costs, but the flats themselves look fine.

I reckon the house bought in 1970 might have made 600k 40 years later, not a million, but happy to be proved wrong, my point was more about the timeline than anything else, and I don`t think a property bought now (especially now) will achieve the same price gains as previous buyers in previous decades could look forward to, we are at the end game for shovelling out cheap debt to the public.

Makes sense and fair enough!

Comment was just as it seems everything devolves to a combative tone on here

It was probably in Fulham, Notting Hill , Camden or some other used to be rough but now ultra trendy part of London.

I agree, I wouldn't bet on that ever happening again.

How funny. Why would I make it up, especially when I'm after advice?!

I can assure you my parents got around double that when they sold!

Where have you plucked £600k from?

But it's still happening. The population is growing. And London is a monster that dominates the South East. Smaller towns are full of DFLs, which drives the prices up.

Is anyone predicting the population of London us going to do anything other than grow?

I don't see how property won't rise over time.

I'm not trying to make big bucks, I'm just trying to put the money somewhere solid.

So, as far as house prices go, it's supply demand, isn't it?

And if the population keeps rising, and London continues to be a hub for well paid jobs, then the prices of properties in the South East will likely continue to rise at a higher rate than inflation. (The same may be true in other areas, I'm just not familiar with them).

Lenders messing about with schemes that create property market bubbles mean there are big highs and lows on top of that, but they are not the only influence on the market and the underlying trend is still up.

I suppose if there are huge social shifts with people moving to working at home en masses, or climate change catches up with us and investments become meaningless, then I may ee be wrong.

But if there isn't significant social change, I think it's a fairly safe bet that property will be a good investment - isn't it?

We have one and it brings in £900 a month which you would never get with savings

I pay a percentage of the rent to cover non payment and managing the flat . It's well worth it .

If you don't do that but the most amount of premium bonds . Both these investments have been the best for us .

That's good to know, floofbag

Have you considered the impact of a declining population? More people than ever are chosing not to have children. It is possible within our life time we could have a significant drop in housing demand.

I'm sure the government would compulsory purchase the worst housing stock in this situation and knock it down, but this is another factor you need to consider. Politically, we have reduced freedom of movement and the young are choosing to forfeit having children (probably because it's all just too expensive). A bit of a ticking time bomb in my opinion. However, this is your job, to spot the opportunities and avoid the pitfalls. I might be right/wrong, you might be wrong/right, anotherusername may predict the future accurately but anotherusername2 might be talking nonsense. I'm afraid we can't tell you what to do for the best, because there are wider issues at play that we have no benefit of hindsight with.

My biggest consideration when buying a property is climate change implications and possible migration. Some areas will be less impacted by CC, but you can bet those places will see demand rise. I've considered places, which are idyllic now but once you look into the CC modelling the area is at risk of drought, desertification and or worse becoming the sea! That is something that could happen within my lifetime. You need to play your cards right and not base your purchase on past performance as we have other issues at play now.

https://www.sunlife.co.uk/articles-guides/your-money/the-price-of-a-home-in-britain-then-and-now/

Honest question; are you really looking to invest money or are you just trying to cheerlead higher house prices? I am happy for there to be a crash, but I am not hiding that fact.......

I am assuming no mortgage to pay? How big is that property, 2 beds?

Are you aware of the tax implications? I rent and was an accidental landlord. Managing to buy when I moved on without selling. You will have to pay a surcharge of 3% additional stamp duty on purchase, rent will be liable to income tax (so look at your tax band, how much it would it increase it by, how much tax you'd have to pay on the rent) and when you sell any profit will be liable to capital gains tax (of which the allowance has just been massively reduced). Of course you're also tying money up where you won't be able to access it if needed so you still need to have a sizeable emergency fund. Plus insurance, agency costs etc. Work out if it's best financially or invest in a more accessible way and forget about it so it doesn't get eaten away.

My house that I rent actually came from inheritance from my Dad so I can empathise with your loss. I couldn't think of doing anything else with the money and felt guilty even buying a house with it. I lived it in when I purchased though and didn't intend to rent it's just how things panned out. Consider the financials and if it's workable or if there's a better way for you. Good luck

@CrashyTime yes no mortgage . Imo it only works if it's a cash purchase ..

Somebody inheriting 200k or 250k would make that in a savings account though, why bother with the potential hassle of tenants? I think studio flat was mentioned, the OP isn`t going to get £900 a month for a studio now, very unlikely.

OP I’ve had rental properties in the past both some distance from where I lived . One worked brilliant as I had an awesome letting agent who organised repairs etc and good long standing tenants . The other was hard work .

Look at how much interest you would earn on the money on a fixed term bond for 1 year. At the mo standard banks are about 5% .You would have to wait for the extra income for 12 months . Obviously you don’t have the same appreciation as property has over the last few years. This maybe an option while you think about what you want to do and while the world is so unsettled