Hi all
I am sure there are some very knowledgeable people on this forum to ask opinion on.
I have been thinking about buying an investment property to let out, likely to be a house over a flat.
Is property still likely to be a good long term investment?
I was somewhat surprised to read that many investors do mainly interest only mortgages as opposed to repayments.
Many thanks
Popeye. 
It’s a lot less attractive than it used to be: double stamp duty payable on purchases, interest not fully deductible for many, low yields in many areas, council tax payable even when vacant etc.
The reason people do interest only mortgages is because the interest is either deductible or partially deductible, depending on your personal situation.
I tried it about 20 years ago. Yes it was an investment, but I only lasted about 3 years. The problem for me was handing over of an investment you are hoping someone else will look after. In my case they didn’t. And then there is the worry of being called at any hour of the day to be told the toilet is leaking, and at the same time you have to juggle work. It was a big relief to sell the property at the end. We probably made a small amount, but for me it wasn’t worth the extra worry.
If you’ve got huge amounts of money, invest in commercial property. If not, invest in funds and use your full ISA allowance.
There you go. All the investment advice summed up.
I would echo @GadgetMan having had a small portfolio of houses over the past 10 years. Just trying to sell the last remaining 3 and it will be a relief when they are sold. Late night call outs, difficult tenants, replacing expensive boilers and general hassle when you least need it! all while doing a full time job. Do your research and get plenty of advice but it’s not as easy as made out to be by the likes of Tv’s ‘Under the Hammer’. Good luck whatever you decide.
Long term investment 10 years plus you should be fine, set up a company though now tax regimes are/ have changed. Company buys the property and runs it. I’m 14 years in and while the annual returns are small they are more than current mean share returns. There is also a reasonable increase in capital as the property price has risen even in these difficult times. Look carefully at the numbers though, particularly deposits if you are using btl mortgage, and interest rate movements you could accommodate. Allow for all costs of maintenance and use an agent to avoid the hassle of fixing problems. I find it better to pay someone else to look after the props. Unexpected things have mostly been changes to legislation, electrical regs and now eco regs.
Homes should be places to settle down and live in long term security, rather than investments for greedy landlords trying to make a quick buck. I’d ban buy to let tomorrow. It distorts the housing market and stops those wanting to buy a home a chance to do so.
I have limited experience - not buy to let, but letting firstly because the bottom fell out if the housing market when I had to move, and it took 5 years to find a buyer. The second was as a tide-over holding a property awaiting our being in a position to move.
In the first instance I had two tenants over a 5 year period. The first were fine, and the rent covered the mortgage. The second trashed the house costing us about £3k - in mid 90s so maybe about £5k in today’s money, - and no success trying to recover the cost.
We said never again, but circumstances meant we bought a house ready for a retirement move and needed to cover time before we were in a position to move, giving rise to the second instance. This time we used a rental agency. 2 tenants over 3.5 years so far, both good tenants so no problems other than things arising from property. Calculated against the capital we put in (no mortgage), return has averaged about 2.5% before the inevitable tax. It’s not why we bought the house, but is actually better return than had we left the money in building societies etc.
With the current rental I doubt the return would have been worth it had we used a mortgage to purchase, while our first experience shows the possible risk. For us it is not something we want to continue more than necessary, and hopefully will end soon: I am uncomfortable with the concept, and dislike the risk and constant dreading of a phonecall saying there’s a problem needing fixing.
As a professional investor the best advice I can give you is to not seek investment advice on a hifi forum.
The main value of having more than one house is over time the capital gain will (should/historically has) effectively paid your mortgage on both - If you only own one house the skyrocketing housing market doesn’t really help you as you still have to live in it and can only realise the capital gain if you downsize. Moral arguments about houses being homes not investments not withstanding, so i’m not advocating this - but property is still the safest leveraged investment for most retail investors.
I see the primary considerations as:
1- be sure you want to commit the monies in the longer term - acquisition costs for BTLs are far higher, and you’re still exposed to the whims of the wider market.
2- who knows what is coming in the BTL market (?), as legislation and various controls have massively enhanced the obligations on landlords (in many cases rightly), such that maintaining a property to adequate standard can be a challenge - and there’s more in view re energy challenges.
IIRC, the UK tax regime doesn’t normally allow you to set-off capital spends (which HMRC regard as supporting/enhancing the capital value of the property) against income. Make sure you understand this before buying.
3- Avoid any asset which could be problematic from a maintenance and repair basis - this generally rules out a massive chunk of the UK property stock, although new builds aren’t always clever. Buying a (potentially) depreciating lease also best avoided.
4- always have an agent, at least to start with,
5- make sure you understand your marginal tax position.
6- I think the provision of interest-only BTL mtges (at lower LTVs) is driven by the absence of a driving need to reduce the debt - there’s no need to do this and the marginal income won’t really enable this in many cases. Plus it may complicate CGT workings down the line.
Were it me, I’d look out property investment funds, which would deliver diversification and expertise in the wider market, and likely greater liquidity in the event of wanting an exit.
@anon4489532 Where do the people who either don’t want to buy or can’t afford to buy live if you ban buy-to-let? Why are landlords greedy? They provide a valuable service and most make a pretty modest financial return judging by this thread.
I’ve been a tenant for many years and been grateful for the flexibility this provides.
People buying property to rent out, either long term or furnished short term, is having a BIG effect on raising house prices. I’ve been directly effected, twice now, by persons wanting to buy a property simply to let out over paying by 50K! People simply wanting to buy a house to live in are being priced out by the landlords.
Or conversely the UK’s obsession with owning your own property has a big effect on house prices! In many other European countries the majority of the property market is rental and the system works fine.
Not only buy to let but right to buy factors into the history of the current situation.
Why I asked for opinion not advice…
A possible answer is to apply right to buy to private rentals. Why should it apply to social housing and not private? At the very least we need reform to tenancies and a legal obligation on landlords to maintain properly.
Exactly what we’ve run into in Ramsgate. With the high speed link to London and people now working from home the property prices here have gone through the roof. We’ve just had an offer excepted but had to go 15k over asking price. Thanet ie Margate Ramsgate and Broadstairs have seen the Rental market sky rocket. A one bed flat is now £850 a month and marketed at professionals wanting to move out of the city. Same flat pre lock down would have been £450 a month. The air bnb properties now number over 500 up by about 300 from this time last year.
The title of the thread would suggest otherwise, despite using the verb instead of the noun.