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Thread: Can buy to let work after the cut backs?

  1. #1

    Can buy to let work after the cut backs?

    I have always been sceptical of the possibilities of making decent returns from buy to let in most UK areas based on current property prices. (as distinct from rentingout a house bought years ago before the house price rises).
    Some say that it is still possible in places like the north east where property is cheaper and there are DSS tenants. However, given the government cut backs announced this week which include caps on rent allowances and the likelihood of 490,000 job losses we are likely to see reductions in house prices and rents. So does anyone think it's still a good investment?

  2. #2
    In my town you can buy a two bedroom flat for around 120,000 GDP, and rental return would be 6500 per annum. Not a great rate of return, but if you get a property that does not need too much renovation and maintenance adn you can manage it yourself probably as they say OK as part of a balanced portfolio. What I think is good about buy to let is that you have a fair amount of control, which is not true of pension funds or shares, or even bank interest rates. Of course it does depend on market conditions, but you can still have some input to achieve a good result.

  3. #3
    Since the government is drastically reducing the funds for social housing many poor people will have the choice of paying the market rent or living on the streets. It is boom time for the private landlord - and the soup kitchens. Homeless people do not vote and the poor do not vote Labour. Landlords tend to vote which way?

  4. #4
    If you are buying with cash then a 2% return is a good deal but a BTL mortgage is a different matter. With many people 90% of disposable income goes in rent. These same people may save a few pounds with the same people, who lend it back to you as mortgage.
    This is in effect, slavery whereby somebody is working with no reward for anyone other than the landlord, ie they are assured a life of poverty and labour with no forseeable escape. Been there, done that and I can assure you that nothing is more depressing.
    This is a matter for your conscience, if you want to sleep at night then try something else but if you couldn't care less then go ahead.

  5. #5
    A 2% return on a bricks and mortar investment given the current economic situation sounds pretty bad to me. The chances of capital appreciation are low and the likelyhood is that house prices will fall. In other words there is little upside opportunity. In this scenario the building society seems the safest option (if safety is what you want).

    Anonymous 1 refers to having some control with BTL, can you explain what control you have?

    Jeremy Bosk: Surely the "market rent" is based on what people can afford and if the government pulls the rug from under DSS people and 490,000 public sector people lose their jobs there will be a general knock on effect across the whole market in terms of renting and property prices.

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