BTL market currently? Anyone have any?

[d8mok]

Anyone on here dabble in buy to let’s ?

Thinking of buying my first and need a impartial view. My mum owns a few (but without mortgages ) and thinks they are great but I’m keen to hear other views.

Is it worth it? Hidden costs? Risks to you ?

Long term investment is the aim.

 

[grey-beard]

I have a flat that is let. Mortgage free though and has been for nearly 20 years. It is a great long term investment. But you also need to be aware of the market and know when is the right time to sell in order to maximize that investment. If you're borrowing to buy, then make sure that you can pay it off quickly, a flexible payment mortgage. If you're relying on the extra income, then problems will occur in the future, expenses which you need a buffer to cover.
Just be 100% sure you can afford it.
Start small and cheap, don't be emotionally attached to the property.

 

[d8mok]

Thanks for the comment.

It would purely be for investment so no attachment apart from £.

The issues seem to be that it’s less and less appealing to buy one due to the extra stamp duty , ever changing capital gain rules and tax on any income.

Lots of looking online suggests it’s a dead duck now but maybe it’s worth it long term. I’d not be looking to take a income from it monthly (as long as it covered itself) but in 25 years I’d sell it for the lump for retirement.

It also seems that 25% dep is the norm so it’s a decent chunk upfront to play too.

 

[hookooekoo]

I'm not a landlord, but I'm guessing that it's been a rough year for some of those that are. I say that because the government stopped evictions for non payment of rent. Some tenants would have regarded that as an open invitation to stop paying. There's a buy to let in my road that's been empty for several months. Usually if the current tenants are leaving, then a To Let sign goes up before they've left. I don't know the story, but I'm guessing that the tenants stopped paying rent, and then did a runner while owing far more than their deposit. If that's the case then the landlord is probably waiting until September to see if the government renews all the legislation that enables them to re-impose lockdowns at the drop of a hat. If they do renew that legislation, then I'd guess that more eviction bans could be on the way. I can't think of another reason why it's standing empty, and I've just checked on Right Move, and it's not there, and there hasn't been a To Let sign put up either. The landlord is currently losing quite a lot of rental income, but maybe they find that more palatable than potentially ending up with some freeloading tenants. If I recall correctly, after 6 months landlords have to start paying council tax on vacant properties (unless they're being worked on). That would mean the landlord has another few months to play wait and see, before they not only lose rental income, but have to start paying council tax.

 

[d8mok]

I’m pretty sure the eviction ban ended last month as I’ve heard a few stories from people about being evicted whether true or not.

To be fair I guess it depends entirely on who you would rent to. I’d be very selective which has worked for my mums rentals so far over the last 10 years as she’s never had a empty house apart from when renovating one to be sold. However this situation is different as they are paid for and income isn’t needed necessarily.

My aim would be to have the house effectively paid for by the rent. I could pay it if left unoccupied but I wouldn’t want to.

 

[hookooekoo]

I agree, the eviction ban has most likely ended, but I think that as long as the government has COVID emergency powers, it could be reinstated at any time. If I recall correctly, the COVID emergency powers legislation is reviewed and re-voted on by parliament every six months. I think September is when we'll find out if the COVID emergency powers are extended for another six months.

The current tenants disappeared around about the end of March, which was probably about 1-2 months before they would have been evicted. If they avoided paying rent since the eviction ban was initially put in place, then the amount of rent they didn't pay would be quite large compared to their deposit.

And I expect a lot of landlords leave the business of tenant selection to a lettings agency. Often lettings agencies will say that they can guarantee your rent, which I think is typically achieved by requiring tenants to find a guarantor, who signs a legal agreement to pay your rent if you stop paying. However, I've no doubt that occasionally guarantors simply can't be traced.

 

[d8mok]

The other option is landlord insurance which can guarantee rent.

The part I’m struggling with is whether it’s worth it now in terms of yield , and what may happen to capital gains. The stamp duty is also a kicker too.

My pension is poor so I need to think of forms of income for 35 years time. Property always seems to do well but it’s definitely less appealing than it used to be.

 

[hookooekoo]

I think a lot of people probably struggle with determining if BTL is still worth it.

Probably the biggest gamble is that you don't know what government policy will look like in 1, 2, 5,10+ years from now. My general impression (from reading the news, not as a landlord), is that the government has been slowly turning the screw on BTL investors, and will continue to do so. Although, having said that, they need to be careful not to turn the screw too quickly, as that could cause a mass exodus. And in the area of housing, large step-changes that totally upset the market can be absolutely disastrous. I certainly remember knowing people back around 1990 who were stuck in a negative equity trap. I guess it comes down to working out some margins. For example, if interest rates increase to x.y%, is it still viable? Or if the property is vacant on average for x months per year, is it still viable? The only certainty is that the bigger your deposit is, the greater the margin of safety.

Maybe there is someone on here who has been through the process, and can give a better idea.