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How does Buy to Let END!


macca

What happens when generation rent retire with tiny pensions and massive rent bills!  

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21 minutes ago, Green Devil said:

4% yield, say on 100k is 4k per annum in rent. If you put it in a high yield building soc account paying a whopping 0.75% you get 750pa. So that's a difference if 3,250 for running a BTL. It's probably worth it if the 100k you invest is growing 10% pa with accelerating House prices but certainly not if the market is stagnant or dropping. Pays your money takes your choice! 

Nope.

The 100k is debt. The 4% is the interest on the debt.

Theres not much issue is you drop 100k cash on a btl. But the number of people with 100k cash is tiny.

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Green Devil
4 minutes ago, spygirl said:

Nope.

The 100k is debt. The 4% is the interest on the debt.

Theres not much issue is you drop 100k cash on a btl. But the number of people with 100k cash is tiny.

Sorry I was not considering it as debt. I was considering 100k cash invested in a BTL. Obviously IOBTL is different. Since its probably unwise even as a cash investor, as I detail above with flat or declining house prices, IOBTL is even more insane. 

Edited by Green Devil
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sleepwello'nights
On ‎30‎/‎05‎/‎2019 at 20:48, spygirl said:

Nope.

The 100k is debt. The 4% is the interest on the debt.

Theres not much issue is you drop 100k cash on a btl. But the number of people with 100k cash is tiny.

I've a client who bought a house to rent in 2006. Paid £225k, with a £175k interest only mortgage. Current value £325 - 350. Current rent £15k per annum. Mortgage interest  £4k per annum. The house was new in 2006 so maintenance costs to date have been minimal. He manages it himself so no agents fees. Over the years he's owned it he's had two void periods each of only two weeks, so one month in total. 

Despite your scepticism it looks as if its been an ok investment for him. His return on the £50k he put in of say £10k net, pre tax is fine. If house prices do crash, is it likely they'll fall below the price he paid or the amount of the mortgage. 

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6 hours ago, sleepwello'nights said:

I've a client who bought a house to rent in 2006. Paid £225k, with a £175k interest only mortgage. Current value £325 - 350. Current rent £15k per annum. Mortgage interest  £4k per annum. The house was new in 2006 so maintenance costs to date have been minimal. He manages it himself so no agents fees. Over the years he's owned it he's had two void periods each of only two weeks, so one month in total. 

Despite your scepticism it looks as if its been an ok investment for him. His return on the £50k he put in of say £10k net, pre tax is fine. If house prices do crash, is it likely they'll fall below the price he paid or the amount of the mortgage. 

Oh I agree that the IO BTL were one of the main beneficiaries s ofthe ZIRP - Labour BoE need to be hung in the street,

You need to look where most of the BTL properties were bought - thats mainly the North.

The prime South was too expensive to make thebtl work, with the tiny deposits etc etc.

Its hard to get get a feel forthe propety market in a lot of plaes, mainly down to BTL having distorted the markets so much.

A quick look at the stats show a lot of places have been static for 15 years.

You mate is about to lose 30-50% of that rent with S24.

The mortgage rate for 175k - ~sub 3% looks very very low. The SVR on IO BTL is around 5%+ and rising. And remortgages typically want 50% equity put in.

 

 

 

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7 hours ago, sleepwello'nights said:

I've a client who bought a house to rent in 2006. Paid £225k, with a £175k interest only mortgage. Current value £325 - 350. Current rent £15k per annum. Mortgage interest  £4k per annum. The house was new in 2006 so maintenance costs to date have been minimal. He manages it himself so no agents fees. Over the years he's owned it he's had two void periods each of only two weeks, so one month in total. 

Despite your scepticism it looks as if its been an ok investment for him. His return on the £50k he put in of say £10k net, pre tax is fine. If house prices do crash, is it likely they'll fall below the price he paid or the amount of the mortgage. 

OK, lets have a closer look at this money printing scheme...so after 13 years he is £10k better off, or is he?

Well with stocks he would have got about 5%pa avg, £2500pa...x13=£32500, so now we are down to £17500 better off doing  BTL...for 13 years of hassle...about £1500pa or about one cappuccino per week...sounds like a sterling investment!

P.s ignored current property value as its meaningless until the money is in the bank...some of us remember the bloodbath of 89-91, and the people who said property prices couldn't drop that much.

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Hes been lucky with voids - or fibbing.

The level of voids on the To Lets I see around varius town must be averaging 4 months/year now.

Mix IO BTL with a lot of non atives and S21 and youve a recipe for mass rent strikes. Srously.

Banks should have never touch BTL with a barge poll. its going to sink the few  still solvents banks left.

 

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Wight Flight
8 hours ago, sleepwello'nights said:

I've a client who bought a house to rent in 2006. Paid £225k, with a £175k interest only mortgage. Current value £325 - 350. Current rent £15k per annum. Mortgage interest  £4k per annum. The house was new in 2006 so maintenance costs to date have been minimal. He manages it himself so no agents fees. Over the years he's owned it he's had two void periods each of only two weeks, so one month in total. 

Despite your scepticism it looks as if its been an ok investment for him. His return on the £50k he put in of say £10k net, pre tax is fine. If house prices do crash, is it likely they'll fall below the price he paid or the amount of the mortgage. 

I would assume most people rent as they cannot afford to buy.

Look at the numbers if all landlords sell up and their tenants buy their houses.

Outside of London, I believe the number is people spend a third of their income on rent. Therefore his tenants have an income of about £45k.

The most they would be able to borrow is £180k. Add in their 10% deposit and the house is worth £200k.

An investment only makes a profit when you cash it in.

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sleepwello'nights

The cold hard facts that I've presented reflect the actual performance. It seems OK to me.

Sure there are other investments that could have done better, he might have picked a share or two that performed well, equally he could have purchased others that didn't. 

As regards the tax changes he's now retired and his income, with the BTL, is unlikely to exceed the standard rate band so S24 will have no effect on the amount of tax he pays. 

Obviously the mortgage interest may increase when rates rise and he may or may not have a capital gain when the house is eventually sold. Its unlikely that it's value will fall lower than the outstanding IO mortgage and in the meantime he continues to receive the rental income profit.

BTW @MrXxx I don't understand your conclusion. £10k net profit before tax for 13 years equals £130,000 as opposed to £32,500 dividend income. Together with an unrealised gain of £100k 'ish.  What would the gain on the hypothetical share holdings be? It could just as easily be an unrealised loss.

As I've said before property investment is not illegal and I personally am not ideologically opposed to it on moral or ethical grounds. I've personally done well from it as have many others. Like many activities it grew to a level that drew attention to it and encouraged others to participate. From what I see the recent tax changes have caused many landlords to withdraw and I suspect property rental business will continue at a much lower level of activity as was normal pre 1996. Its been around for many years and will continue.

This is just a rehash of the many posts on this topic that were discussed on TOS. Many of the gripes related to the behaviour of landlords, there have always been good and bad landlords, Van Hoogstraten anyone, and there are just as many complaints about how housing associations treat their tenants

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IO BTL is weird.

Only way you'll be abel today one way or another about your mate is when he sells up and coutns the returns.

It is possible to make money - people have - but the bare facts is that IO BTLs are selling into the OO repayment market, so theyll transact at half the price.

The other issue is you mates got a new build. There's already a well know 15% discount with new builds. Factor in HTB and hes going to have a hard time to sell - if he wants.

I can guarantee you he wont have an IO mortgage in 5-10 years - they are being outlawed, moved from baks to the finance sector where the money will have to be raised by bonds not drawing down from BoE.

 

On one hand, everyone seems to know one person who have 1 BTL.

On the other hand, you bump into  the mega LL - people with 10+ IO BTL, leveraged like a fucking loon. Thats why theres sepcial rules on 'portfolio LLs'

On a side note - and this is totally anecdotal and a sgin of the time.

Had to take SpyJr (Rockefella) to deposit his xmas box from paper round and paper round earnings - 500. Little fucker had them  in his robot for 3 months.

SO off we go to HSBC, which is all open plan.

On one of the 3 seats, hot HSBC couter dolly was explaining to a foreign- foreign (subcontinental) bloke - Your mortgage finishs and you have 80K outstandingthat needs to be paid back. On hearing this, I was leaning back from the robot teller where spyjr was putting his money - the look of bewilderment of the hardworking homeowners face.

Ive commented on the other site - regulated banks should not be providing mortgages to non UK citizens. Waaay too risky.

Then  when we walking away some hot MILF type was on her phone to a kid (I guess) about her kid being evicted 'OK, the LL has to give you 2 months notice. He cannot come and get an evaluation/pricing until youve left'

 

 

 

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9 hours ago, spygirl said:

The level of voids on the To Lets I see around varius town must be averaging 4 months/year now.

What towns have an average 4 month void rate on rental property? What data did you use to come to this conclusion? 

Edited by Durabo
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12 minutes ago, Durabo said:

What towns have an average 4 month void rate on rental property? What data did you use to come to this conclusion? 

Various. Not specific to any, all seem roughly tge same.

A quick look on home.co.uk confirms this.

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8 hours ago, sleepwello'nights said:

The cold hard facts that I've presented reflect the actual performance. It seems OK to me.

Sure there are other investments that could have done better, he might have picked a share or two that performed well, equally he could have purchased others that didn't. 

As regards the tax changes he's now retired and his income, with the BTL, is unlikely to exceed the standard rate band so S24 will have no effect on the amount of tax he pays. 

Obviously the mortgage interest may increase when rates rise and he may or may not have a capital gain when the house is eventually sold. Its unlikely that it's value will fall lower than the outstanding IO mortgage and in the meantime he continues to receive the rental income profit.

BTW @MrXxx I don't understand your conclusion. £10k net profit before tax for 13 years equals £130,000 as opposed to £32,500 dividend income. Together with an unrealised gain of £100k 'ish.  What would the gain on the hypothetical share holdings be? It could just as easily be an unrealised loss.

As I've said before property investment is not illegal and I personally am not ideologically opposed to it on moral or ethical grounds. I've personally done well from it as have many others. Like many activities it grew to a level that drew attention to it and encouraged others to participate. From what I see the recent tax changes have caused many landlords to withdraw and I suspect property rental business will continue at a much lower level of activity as was normal pre 1996. Its been around for many years and will continue.

This is just a rehash of the many posts on this topic that were discussed on TOS. Many of the gripes related to the behaviour of landlords, there have always been good and bad landlords, Van Hoogstraten anyone, and there are just as many complaints about how housing associations treat their tenants

Ignore, `Should have gone to Specsavers!`...anyone know how to delete it?

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Wight Flight

With rental yields now down at sub 3%, it is all about capital gains.

And I think that is a very risky leveraged bet. Anyone jumping in now is a fool.

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48 minutes ago, spygirl said:

Various. Not specific to any, all seem roughly tge same.

 

So are you saying that no towns specifically have 4 months voids... they ALL do?

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41 minutes ago, Durabo said:

An article in the Guardian about the Peterborough by election. Places a lot of the blame for falling income and community anger on buy to let - https://www.theguardian.com/uk-news/2019/jun/02/peterborough-prepares-for-byelection-that-could-see-first-brexit-party-mp

One for the '10M Euers -+2m'

Dozens of people have lived in 124 Eyrescroft in recent years, records show. Yves Okofo, a care worker who arrived from France three years ago, lives there now. He works up to 60 hours a week and has little to do with his neighbours. “We don’t socialise much,” he said. “You get in and you get out.”

And thats a broad sense of EUer.

The owners, collecting rents of around £280 a month per room – which adds up to well over the rental price of a three-bed house – are a pair of prominent local buy-to-let landlords, Mark Homer and Rob Moore, who together built up a portfolio of some 500 properties in Bretton and across Peterborough since around 2005. They bought 124 Eyrescroft for £107,000 in 2007, which suggests it has long since paid itself off. Homer, 39, drives a bright white Porsche 911 Carrera S and lives in a listed farmhouse in affluent Stamford. Moore boasts of driving Ferraris and flying helicopters. The pair set up a business teaching others how to do the same, selling courses named Buy-to-Let Boom and No Money Down.

When Homer tries to show the Guardian the house he can’t find it, admitting: “I don’t think I’ve been here for 10 years.”

During the recession, he and Moore bought homes close to repossession and then rented them back to the original owners who had now moved on to housing benefit.

There has no been no real recession.

They all look well funded. Not.

https://suite.endole.co.uk/insight/people/12494975-mr-mark-adam-homer

Esp the biggy

https://companycheck.co.uk/company/OC361197/PROGRESSIVE-PROPERTY-VENTURES-LLP/financials

 

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  • 1 month later...

Maybe already reported here but HMRC are now sending letters to LLs who have not declared/paid tax on their rental properties ( I suspect the info is from the much-hyped HMRC supercomputer, and the volume of individuals targetted will rise rapidly)  https://www.accountingweb.co.uk/tax/personal-tax/landlords-fail-to-overturn-hmrcs-information-notices?utm_medium=email&utm_campaign=AWUKTAX130818&utm_content=AWUKTAX130818 Version A CID_c04f678819904df5fb6971d85665f71c&utm_source=internal_cm&utm_term=Read more

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Talking Monkey
5 hours ago, Andersen said:

Maybe already reported here but HMRC are now sending letters to LLs who have not declared/paid tax on their rental properties ( I suspect the info is from the much-hyped HMRC supercomputer, and the volume of individuals targetted will rise rapidly)  https://www.accountingweb.co.uk/tax/personal-tax/landlords-fail-to-overturn-hmrcs-information-notices?utm_medium=email&utm_campaign=AWUKTAX130818&utm_content=AWUKTAX130818 Version A CID_c04f678819904df5fb6971d85665f71c&utm_source=internal_cm&utm_term=Read more

brilliant, this is top news

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On 01/06/2019 at 09:34, sleepwello'nights said:

 This is just a rehash of the many posts on this topic that were discussed on TOS. Many of the gripes related to the behaviour of landlords, there have always been good and bad landlords, Van Hoogstraten anyone, and there are just as many complaints about how housing associations treat their tenants

This is no rehash.. 

This is asking “who is going to pay for all the tenants elderly care and ongoing accommodation costs” ???

Investment in property has winners (landlords) and losers (tenants) 

Who pays for the losers? There is no such thing as a free meal.. etc 

will BTL bankrupt the country:

tenants need:

housing

care homes

home help

food

council tax, water, gas, electric.. etc

funeral costs  

They can’t pay for any of this with their tiny pensions (in most cases)

No house to sell but they have bought 2 houses for landlords from their labour..

So how do the government fund this reckless greed that is the BLT apocalyptic fallout!

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UnconventionalWisdom
14 hours ago, macca said:

This is no rehash.. 

This is asking “who is going to pay for all the tenants elderly care and ongoing accommodation costs” ???

Investment in property has winners (landlords) and losers (tenants) 

Who pays for the losers? There is no such thing as a free meal.. etc 

will BTL bankrupt the country:

tenants need:

housing

care homes

home help

food

council tax, water, gas, electric.. etc

funeral costs  

They can’t pay for any of this with their tiny pensions (in most cases)

No house to sell but they have bought 2 houses for landlords from their labour..

So how do the government fund this reckless greed that is the BLT apocalyptic fallout!

Good post. Theres also no incentive to work if you are just breaking even each month in paying for someone else's mortgage. 

Monetary policy caused this mess. They knew it would inflate property prices but will argue they had to. Fiscal policy in housing was just stupid. I think system adjust themselves because if the reasons we are discussing. If they fight it, there will be more political revolution.

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sleepwello'nights
2 minutes ago, Wight Flight said:

This really boils my piss.

So the owner wants some person to farm for 10 months of the year, paying his mortgage and all of his,bills, and then kicks him out so the owner can enjoy a summer holiday.

 

Some people for whatever reason may want to rent a house for a short period. If all tenancies had to be for a period of more than two years, say, then anyone who wanted to rent for a shorter period would not be able to. 

The private rental market does fulfil a variety of needs, its not just to meet the housing requirements of those who can't afford to buy.

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Wight Flight
1 minute ago, sleepwello'nights said:

Some people for whatever reason may want to rent a house for a short period. If all tenancies had to be for a period of more than two years, say, then anyone who wanted to rent for a shorter period would not be able to. 

The private rental market does fulfil a variety of needs, its not just to meet the housing requirements of those who can't afford to buy.

Disagree. A house is either to rent for as long as the tenant wants to be there or you are not a professional landlord. The chances of someone actually WANTING to rent for 10 months are remote.

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