Buy To Let

[scooter1]

We rent a property out and as I'm aware you can only claim tax relief on the interest part of your b t l mortgage, not the capital. As for letting agents, we originally used a "friend of the Albion" and they were total *****. Without naming them, they have a pink logo and are based in Church Rd in Hove. Horrific service we received from them, and they just didn't give a shit. In the end we had to get legal with them, just to get the deposit returned. We now let through Gumtree, I vet the potential tenants and I've turned people away who I think are unsuitable. We have had great tenants and as long as you respect their needs with regard to swift repairs of any faults, then I think you get their respect returned. Or perhaps we've just been lucky with our previous 3 lots of tenants

 

[Uncle C]

Buy to let is the next bubble waiting to burst.

As one financial guru once remarked "the time to get out is when everyone one else is piling in"

 

[Herr Tubthumper]

Buy to let is the next bubble waiting to burst.

As one financial guru once remarked "the time to get out is when everyone one else is piling in"

It's been going for some time and has ridden out the current financial meltdown. Besides, everyone piled in decades ago.

 

[cloud]

Most people who are in property rental right now are making a loss each year.

Now that's not necessarily a bad thing, because the losses can be added up over time. If, at some point in the future, you ever did happen to make any profit from rental, you could start offsetting your losses, and you probably wouldn't have to pay any tax (on property income) for years.

Edit: the people who are making money from rentals are probably not being tax-efficient enough. They should take out an interest-only mortgage, invest the money somewhere it can earn interest, and use the mortgage interest payment to offset any profits, hence paying no tax.

 

[looney]

It's been going for some time and has ridden out the current financial meltdown. Besides, everyone piled in decades ago.

Not so. It was labour who changed the law so it could be used as a pension boost etc. I find the ethics of it dodgy to say the least and its economic value is risable. Morgages to be paid of by those who cant get morgages underwritten by debt financed oppertunists. This is vapid capitalism with zero net social value.

 

[nwgull]

I've rented my flat out for a few years now. I don't use an agent as they do absolutely FA for your money. Landlordzone.co.uk will tell you all you need to know about ASTs, references, drawing up inventories etc., and property can be marketed on rightmove via a few online agencies for £40 for a month.

 

[Herr Tubthumper]

Not so. It was labour who changed the law so it could be used as a pension boost

They modern day commercial mortgage for residential property pre-dates the last Labour government:

"Buy-to-let as a term was coined in 1995 as a marketing badge for a finance initiative launched by the Association of Residential Letting Agents (ARLA), although this type of lending had existed for many years."

 

[Indurain's Lungs]

Interest on the mortgage is deductable from the rental cost, but only for the amount you borrow when you buy. So if you re mortgage to raise funds the additional rental payments arent deductable.

I think you can remortgage up to the value of the property when you bought it (or it became rented out) and still claim this.

 

[Uncle C]

It's been going for some time and has ridden out the current financial meltdown.

Its 'ridden it out' because interest rates are as low as they have ever been in in our history. When they start to rise the whole thing will collapse.

 

[Butch Willykins]

I find the ethics of it dodgy to say the least and its economic value is risable. Morgages to be paid of by those who cant get morgages underwritten by debt financed oppertunists. This is vapid capitalism with zero net social value.

Well said. I personally think BTL is morally wrong and the social fall out with be with us for many years to come.

 

[Herr Tubthumper]

Its 'ridden it out' because interest rates are as low as they have ever been in in our history. When they start to rise the whole thing will collapse.

Rental demand is as high as it has ever been though, especially Brighton. I cannot see it myself.

 

[sully]

Well said. I personally think BTL is morally wrong and the social fall out with be with us for many years to come.

I don't see how it can be morally wrong when it provides homes for many who can't get a mortgage. Where would they live otherwise?

I'll echo what some have said regarding letting agents. We never use them to manage the property, just to find and vet the tenants and set up the agreement, then check out at the end. You still have to be careful, as we have recently sacked an agent who had twice agreed to take tenants who were unsuitable. It took me 5 minutes with the references to rip them apart, so they clearly hadn't even bothered. The best example was that the proof of address was a driving licence with a different address on it to the one it was supposed to prove! Someone also mentioned claiming mileage for inspection visits. Depending on where the property is, there's also the possibility of accommodation costs. Also, if you do any maintenance yourself, don't forget the mileage for collecting materials. We were also advised to put a nominal monthly "admin" cost in the spreadsheet.

Once you're set up with a decent spreadsheet, it doesn't take long to do the figures each year.

 

[Uncle C]

Rental demand is as high as it has ever been though, especially Brighton. I cannot see it myself.

Rental demand is high, partly because people cant afford to buy and are driven into it.

House prices are too high, so people who cant sell become reluctant landlords. In addition speculative 'amateur' punters are fooled by low interest rates into thinking its a good way to make money. Hence the first time buyer houses at the cheaper end of the market are bought up.

Do you not see the viscious circle that's building up.

 

[Uncle C]

I don't see how it can be morally wrong when it provides homes for many who can't get a mortgage. Where would they live otherwise?

So sorry. Didn't realise you were a charitable organisation.

 

[beorhthelm]

Buy to let is the next bubble waiting to burst.

As one financial guru once remarked "the time to get out is when everyone one else is piling in"

everyones been piling in since they were able to park the property in SIPPs. whenever there's talk about not enough properties/too expensive for first time buyers, the reason is really the buy to let market that hoovers up everything. you can remortgage and reinvest the profits into buying the next, building up a nice little pension, or to pay off the capital on your main home on which you have interest only mortgage. loverly jubbly.

it will take a large interest hike and a collapse in rent rates to reverse, an even then many could sit it out as long as property prices don't drop too much.

 

[Butch Willykins]

I don't see how it can be morally wrong when it provides homes for many who can't get a mortgage. Where would they live otherwise?

I'll echo what some have said regarding letting agents. We never use them to manage the property, just to find and vet the tenants and set up the agreement, then check out at the end. You still have to be careful, as we have recently sacked an agent who had twice agreed to take tenants who were unsuitable. It took me 5 minutes with the references to rip them apart, so they clearly hadn't even bothered. The best example was that the proof of address was a driving licence with a different address on it to the one it was supposed to prove! Someone also mentioned claiming mileage for inspection visits. Depending on where the property is, there's also the possibility of accommodation costs. Also, if you do any maintenance yourself, don't forget the mileage for collecting materials. We were also advised to put a nominal monthly "admin" cost in the spreadsheet.

Once you're set up with a decent spreadsheet, it doesn't take long to do the figures each year.

I agree, we will always need a rental sector and landlords play a vital role. It's specifically Buy to Let which doesn't sit easy with me. Tens of thousands of young people are being locked out of the housing market because of BTL.

BTL landlords tend to snap up the properties that are sought by first time buyers and young couples/families. Banks would much rather lend to BTL landlords, so rather than pay their own mortgages young people are stuck paying off their landlords mortgage, with little hope of being able to save a deposit, and therefore stuck in a life of renting and all the insecurity that goes with that.

If BTL was taken out the equation or heavily taxed (which I don't believe it ever would be) then it would go someway to reversing the colossal housing crisis we are sleep walking into.

That's my view anyway.

 

[Uncle C]

everyones been piling in since they were able to park the property in SIPPs. whenever there's talk about not enough properties/too expensive for first time buyers, the reason is really the buy to let market that hoovers up everything. you can remortgage and reinvest the profits into buying the next, building up a nice little pension, or to pay off the capital on your main home on which you have interest only mortgage. loverly jubbly.

it will take a large interest hike and a collapse in rent rates to reverse, an even then many could sit it out as long as property prices don't drop too much.

So you've discovered the holy grail. A way to avoid rising interest rates and/or falling house prices. Loverly jubbly.

 

[Shoreham Gull]

Not quite right - you don't deduct the whole mortgage payment, only the interest.

Yes I know that,
But most buy to lets are interest only morgages!!
Because most people can't afford repayment on 2 or more properties , if properties are without tenants..

 

[cjd]

Buy to let is the next bubble waiting to burst.

As one financial guru once remarked "the time to get out is when everyone one else is piling in"

On the 16th August 2010 you started a thread..."House prices to crash" .

Despite dozens of rubbish posts by you on that thread and the clear indication that you knew the square root f*** all, you continued.....and finally replied..." Lets visit this in 12 months shall we". You didn't.....but I did. I replied on the 2nd November 2011....."Just to remind you after all the utter crap you posted on this thread....you knew then nothing then and you probaly know nothing now. Full of shit."

I see nothing has changed with you. ......4th February 2013.

 

[cjd]

Buy to let is the next bubble waiting to burst.

As one financial guru once remarked "the time to get out is when everyone one else is piling in"

On the 16th August 2010 you started a thread..."House prices to crash" .

Despite dozens of rubbish posts by you on that thread and the clear indication that you knew the square root of f*** all, you continued.....and finally replied..." Lets visit this in 12 months shall we". You didn't.....but I did. I replied on the 2nd November 2011....."Just to remind you after all the utter crap you posted on this thread....you knew then nothing then and you probaly know nothing now. Full of shit."

I see nothing has changed with you. ......4th February 2013.