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I see so often statements on Property Tribes along the lines of - "My wife and I want to build a Business create and income stream and leave work"
I know I had similar thoughts and I achieved my goal back in 2000
My intention was to build a large professional business with my own estate office etc.
All in all I have done OK. I achieved my goal and left the rat race which I hated.
But the landlord's world is changing and changing fast ....
1. Abolishment of Section 21
2. Introduction of Rent Controls
3. Introduction of blanket licensing
4. Longer tenancies
5. End of discrimination against tenants
6 End of ASTSee - Direction of travel of the PRS
The list above I believe will be with us within 5 to 7 years.
Landlords buying via a company are now in business - there is no doubt about that factSee - Are you an investor or do you run a business?
My feeling the days of the everyday Joe re-mortgaging their home and leveraging up are over in 2019
I was an everyday Joe and it worked in 2000
When I look back and see how easy it was to borrow millions its quite unbelievable
The road I took in 2000 is now blocked
I know today I could not walk into a Local Branch and ask the bank manager for a Loan
The money to start my business was in my current account in 5 days
I then went to see a Mortgage Broker and I leveraged up to the hilt. 85% was normal LTV and it was like applying for a credit card
I did a few figures today and looked what I would have needed today to achieve the same result in 2000
The answer is I would need hundreds of thousands of pounds in my pocket of my own cash I am quite sure I could not have generated the cash from my home
Landlords like myself had such a one off opportunity start with little and build a large investment at a time when capital values were rising, even in the NE
I am so glad I did what I did! No regrets
But as an old Landlord I will not be investing more cash into BTL
The reason why is taxation, regulation and much tighter lending criteria and the fact that I have to do it via a company
The profits are still there for new Landlords if they can keep below the 20% Tax Threshold
If you go above that fig and even if you have a good yield, by the time you pay tax it will not be worth the effort and time and risk you have taken
I know I cant make a yield in Pensions and ISA as high as BTL but the net fig ie bottom line works out very similar over the years I invest
The "golden days" are over and they ended with Mr Osborne!
I wish anyone the best of luck who comes to our sector but you will need a great amount of cash in your pocket to achieve financial freedom in 2019 and get ready for the cost of regulation. It can be costly and when you do your figures think of Rent Control - will you have the level of rent needed if Rent Control comes?
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
Always find your posts informative. I have a flat I rent out no mortgage. My main residence paid for. Have inherited a sum of money enough to pay for a semi or flat out right. In two minds to look for a property and try and buy at a discount being a cash buyer or invest in equities.Already have a fair amount invested in managed funds and index trackers. Would welcome any thoughts you would have. I am a basic rate tax payer
Try and keep to being a 20% tax payer and you will be fine with BTL
Keep your leverage low
£50k a year is a tidy living
If you do become a 40% tax payer look at other avenues
Keep it simple and you will be fine!
Many thanks for your thoughts
The OP is proposing a cash purchase hence the marginal rate of tax is irrelevant to the answer.
My view is that if they live in an area with reasonable property prices and can look after their investment themselves, they will not get the same return elsewhere. I also believe that unless they are looking to invest in an area that has had significant property inflation on the back of QE, their capital should also be reasonably secure if they buy right.
Yes he is buying with cash so S24 has no relevance agreed
but most landlords borrow and it has a ceiling to which once reached your in higher rate tax and that’s whete it becomes a complicated investment
if a landlord has lots of cash they are rich to start with and money makes money
so if your rich plough on with BTL zero levarge is a good thing
the rich landlords will get richer because they don’t borrow
I find that statement insane.
"Try to be a low earner".
It’s not insane it’s a fact In BTL today
if you remain a 20% tax payer BTL in your own name works if you levarge
go above 50k a year and s24 just taxes a landlord more
I have said before the govt is taxing ambition
I don’t like it any more than you most like but it’s a fact
in the north 50k income is a good income in the SE it’s a poor income I would imagin
So stay ambitious and pay the tax.
Even if taxes went up to 75%, I'd rather have 25% of a million than 80% of 50k.
Well if your happy I am happy for you
I know I put my cash now in other places
a lot less tax and a lot less regulation and hassle
i think it depends if you have achieved what you want from BTL
i have so I don’t need more houses now
You've changed the subject onto whether to invest in more houses or elsewhere. That's not what we were discussing. We were discussing your advice that people should stay low earners, I'll repeat my opinion that I think that is insane.