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With increasing media coverage of the challenges facing BTL, we are seeing more and more first time landlords asking the $64million question as to whether BTL is still viable in 2018.Some of the issues deterring first time landlords are regulation, legislation, taxation, the stamp duty surcharge, and stricter lending criteria, not to mention policy threat, and uncertainty about house prices and the impact of Brexit.Despite this, according to a recent survey carried out by Perrys Chartered Accountants, with investment in property continuing to outperform other major asset classes, buy-to-let remains the investment of choice for more than a third of Britons.
The research found that 35% of people in this country are most confident in property compared to any other investment, thanks not just to rental returns but also capital growth, with 8% of respondents to the survey revealing that they are relying on the equity from their property as their main source of income for retirement.So we put all the important question of the viability of BTL in 2018 to John Eastgate of Kent Reliance and also discussed the way forwards for first timer landlords who do decide to take the plunge:Here are some of our recent newbie discussions:Advice please - 27 year old newbieBTL - Still an option for a wage slave?Thinking of investing in property? July 2018New investor - Single Let or Serviced Accomm?Best way to invest £500K in property?Please share your views on the viability of BTL for first time landlords.SEE ALSO - 9 irrefutable reasons why property is still a viable investment + Landlord SurvivalUP NEXT - Top 10 Property Tribes resources for novice landlords and BTL investorsDON'T MISS - Is BTL dead or am I just late to the party?NOW WATCH:
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
I will turn this around ?
Has a New Landlord got enough cash to enter the world of BTL
The video above suggests a Landlord will need between 50% & 60% deposit
and when you factor other costs ie Stamp Duty its higher
I am optimistic that a new Landlord can join us but they will need high levels of there own cash to make it work
Of course the further North a Landlord invests the less cash they will need to start with
Its become a Rich Mans/Women's game in 2018.
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.
I think there will be more inventive methods used to enter the property rental market, after all, there is no shortage of customers. Whether these will still be considered BTL is another matter.
As stated in the video, "cash is king", and this is likely to be the limiting factor.
A good teacher must know the rules; a good pupil, the exceptions.
Martin H. Fischer
In June the most searched criteria for buy-to-let on Knowledge Bank was minimum income, followed by first-time landlords, HMOs, the six month rule then lending to limited companies, Knowledge Bank’s monthly Criteria Activity Tracker has found.
Over 250,000 criteria searches have been made using Knowledge Bank since its launch in September 2017.
Nicola Firth, chief executive of Knowledge Bank said: “These results do really show what’s happening ‘on the ground’ in terms of mortgage activity.
“The buy-to-let category for example shows that despite several years of negative conditions and decreasing tax incentives for private landlords, the second most searched criteria by brokers is for first-time landlords.
“This shows that there is still an appetite out there for first time landlords looking to invest and that the enquiries are still there, even if they are not being followed through with applications. This could, perhaps, show that some are being put off by the levy on the stamp duty and other taxation.”Full/source article
The acid test on this is not enquires
Its the number of applications that go to offer that counts
I think there are still new landlords who want to be I the game
but taxation and criteria and lack of cash will halt there progress
its like salmon going up river to lay there eggs few are sucsessfull
Britain’s most controversial landlord, Fergus Wilson, says the recent changes in buy to let legislation means that if he was starting as a young investor, he would not enter the sector.“The government now obviously wants the sector to be run by companies and institutions, and it’s making life very hard for individual investors. I operate with the cards I’ve been dealt so I’m staying in the sector - but I wouldn’t have gone into it originally like it is now.”Full/source article
Surely for those starting out as new LL and not wanting to go corporate they would just have to ensure that the figures stacked!?
A choice denied to S24 LL.
The numbers still might work with S24 though it surely must be harder to achieve viability with S24.
But not impossible if investing wisely and for the right price..................same as it ever was!
In the SE I would say it's probably more difficult now than it's ever been due to higher house prices. This means a high deposit, extra stamp duty, etc.
For anyone considering it I would get them to answer to themselves the question, how much at the end of each month will I make out of doing this? If it's just a couple of hundred I don't think it is worth the hassle.
Most BTL'ers make mistakes with their early purchases (I know I did while I was learning the game - I'm still learning toda!), and to be lumbered with all of the potential hassles and only make a few hundred each month is just not worth it imho.
British Pearl have done some interesting research on BTL investments over a long time frame and concluded:James Newbery, Investment Manager at British Pearl, said: “This research shows investors who play their cards right and hold their nerve in the midst of economic or political upheaval are still likely to come out on top. History shows us that investors who are prepared to weather storms rather than run for cover are still able to make strong returns at times from investments that present a very limited risk of loss.
While our analysis shows housing has been a solid investment over time, we know that returns can be bolstered with careful property selection, identifying regional trends and areas of rental yield strength. The message, not just for investors but homeowners, too, is to play the long game. UK property has a track record of returns and, no matter how tempting it is to think prices are unsustainable, the level of demand for housing in Britain makes property one of the most attractive asset classes on an ongoing basis.
Those investors who ran for the hills after the dip between April 2007 and April 2013, only for growth to recover in the years that followed, will be kicking themselves for acting on impulse and abandoning property altogether.
The secret to successful property investing is ultimately the same now as it ever was. The market consistently rewards those who remain level-headed, diversify portfolios and do their research.”
The property market is a very diverse creature even in our own country forget yields for a moment but house prices have doubled across London and most of the SE over the last 10yrs hugely outperforming most sectors and inflation. However some parts of the North, prices haven't gone up at all - huge 100% disparity within the same sector within the same country! There will always be areas growing better than other due to various factors. Right now BTL in low yield / high value area is being hit pretty hard by tax - personally I don't think it's that bad a thing - people is this sector have made huge capital gains due to the artificially low interest rates (that was never sustainable). These areas were also the highest demand for people to move to and live - I don't really see what choice the government had to stop landlords buying in these areas.
Having said that the new opportunity is developing (they've made it easy to add sqft to a property and prices are so high now in London and SE that the cost to add sqft is at worst half the value it adds and often much more). BTL is quite different from developing and you'll need less contacts, knowledge and time for BTL so easier to start doing it. Those in the game - you'll have some contacts and knowledge now as an experienced landlord, there's now new opportunity if you move with the times.
Those in lower valued, High Yield areas - i'd imagine haven't had much ripple affect from the growth in the south and will probably not find their properties falling 10-15% in value like they have across most of London and the SE. Their investments are much safer as cash flow is king as well as crucial to not going under, They will generally make a profit even with S24 - interest rates are still very low and will never go really high again or for a very long time. This means huge cash surplus from rent vs mortgage on high yield way much more than a bit of s24 tax can get in the way of.
Once everyone has moved their properties into LTD comps and banks have brought their interest rates down similar to personal btl rates then its time the government S24'd ltd companies too! At least until the property prices were back in check with where their values should be and market needs stimulus not slowing down.
just my view and I could be completely wrong!
If I was in the same position again to go from the start would I - yes but with a much larger amount of planning, research, knowledge and contact building first. I wouldn't just jump in like was clearly obvious before in a rising market with many tax benefits. Before this risk was much larger with interest rates often being very close to rental yields! I had negative cashflow on several of my properties S24 would have meant losses and still having to pay tax! So I believe a lot will come down to interest rates, a bit down to s24 but not much at all down to Brexit. Buy well if developing, buy high yields if BTL (and ideally well) else don't bother.
regards Andrew Peers - property investor / sourcer - 07912674181
Property Redress Scheme Number 011436 NLA member 174404
88% of landlords have made a profit from their lettings activity in Q3, up by 2% from Q2, according to new research from BM Solutions.
Active landlords say they haven’t experienced any increased financial difficulty this quarter and are feeling upbeat when it comes to the near-term prospects for rental yields, the UK private rental sector and their own letting business compared to Q3 last year.
However, they are feeling less confident year-on-year when it comes to the prospect of capital gains and the UK financial markets.
The average rental yield dropped in Q3 from 6.2% to 5.9%, following the 0.4% rise recorded in Q2 when average rental yields were at their highest point since Q4 2014.Full/source article