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  • Buy-to-Let

    London-based landlords MEGA-THREAD

    Hello all,

    I have not seen a London focused landlord thread and so would like to start a dedicated one now.

    It would be brilliant if London based landlords could give a summary of their buy to let journey and future plans.

    I think london landlords have had the best of both worlds in the last 10 years in terms of capital growth and decent rental yield.

    London, especially prime central London, has come to a standstill and prices are decreasing daily (prime central especially). Yields are now at an all time low. Tax changes are coming in to full force soon. Many london landlords and southerners are looking to invest up north.

    My personal view is that buy to let for less than a 15% NET yield is not worth considering. In my opinion you are better off investing in an index tracking fund which returns 6-10% year in year out tax free (assuming you wrap in a tax wrapper) . Up north there is hardly any capital growth to shout about and historically it has never increased at the same rate as London.

    I believe it's only worth focusing on property development and refurbs to deliver a 50-100%+ cash on cash return on investment.

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    Hi Adam,

    Thanks for starting this thread.

    Nick and I invest in London - North and East - and I would be happy to share my experiences and views.

    I believe that London will always have a robust property market due to one simple thing - it is the home of GMT.  This is never going to change.

    That means it is open when both the markets in the East and West are operating, making it a financial hub.

    It is also one of the greatest and most powerful cities in the world and many people want to own property there.

    We have a portfolio of 1 and 2 bed flats and they have always done well over the last 13 years.  In fact, I am struggling to remember when we last had a void.

    We have enjoyed significant capital growth. A one bed flat we purchased in Holloway in 2004 for £147,500 is now worth £340K - that is what a comparable one in the development recently sold for.

    Close proximity to tube stations is vital imho and all of our apartments are within a 10 minute walk of a tube station or DLR.

    Parking is also a bonus.

    London is the only city where I would advocate buying flats.  Outside of London I much favour houses.

    I would also add that London has many micro-markets and it's important to fully understand your investment on a very granular level, as it can change by street.  Many people have been stung over-paying for new build flats, which are often sold as a premium to overseas investors.  I would never buy a new build flat in London for that reason.

    There is also this thread:

    How to ... Buy to Let (BTL) in London.

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    'In my opinion you are better off investing in an index tracking fund which returns 6-10% year in year out tax free (assuming you wrap in a tax wrapper)'

    Whilst it is certainly true that many index tracking funds have made solid positive returns year in year out for the past 5 or even 10 years this is certainly not always the case. You can easily lose 20%-30% of your capital in a bad year depending on the risk of the tracking fund. In short index tracking funds do not produce 'year in year out' returns even though they have for some time.

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    I think the london market is different to the rest of the UK, Very much dependant on supply and demand, also dependant on ability to make money either BTL or BTS as there is likely a slightly larger % in london out or all purchases doing this (because of the market perceived to be safer, easier to sell, and more made from developing). Adding sqft to a property in London is a no brainer - the cheapest areas of london are £400psqft and it only costs £150-200 psqft to extend or go into loft space, so even in worse areas you double your money by developing.

    Any landlord in London should probably look at extending their existing properties 1st ahead of buying new right now as markets have slowed (there's plenty of project managers and people that can help you do this if you look for them), and for the first time in 9yrs there is starting to become an over supply of properties and under demand to buy - this is what is driving prices down. Started in central and now is spreading further out.

    This is a good thing as prices had gone crazy high, yields crazy low and that trend was going to get worse unless the government did something about it - hence the stamp duty changes and s24. How else could they kill the high valued property market ahead of the whole country - personally think that you shouldn't add 3% stamp duty (maybe 1-2%) for all properties below 100k  (maybe 150k) in value for 2nd homes - this would help stimulate the North a fraction more as the NS divide is too large at the mo.

    To be fair to LL especially London - the Government has made them huge amounts of money in just 9yrs - its only fair they pay a little more tax to give back

    I also think the s24 rules could be very damaging to brand new london / SE - low yield landlords that are very high geared and didn't see this change coming. I'm not convinced they can get out now or change strategy fast enough before all the tax laws change and they have no choice put to pay tax and run at a cash flow loss. If they can't sell or refinance and run at a negative cash flow for too long how can they survive.

    Some would say tough, but its also a fraction harsh as who could have seen s24 coming, maybe if wise they could sell up before the real impact of it hits but prices are falling every day in London now - even the outer zones and slightly lower valued properties too.

    'just my opinions' i might be wrong.

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    regards Andrew Peers - property investor / sourcer - 07912674181

    andrewpeers@hotmail.co.uk