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First time BTL/ investment advice

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« on: April 13, 2021, 02:07:53 PM »

Hello, I have a question about the best way to invest in a first property/ whether it's a good idea.

Background:
- I have about 200k saved so far towards a deposit on a future London house purchase and available for investment in the meantime. My current accommodation with my boyfriend is rent free.
- My own credit rating is 999 on Experian but my boyfriend appears to have an unexpected CCJ relating to tuition fees for a course he ended up not attending. This will expire in sept 2022. I'm assuming a joint mortgage before this point will either be impossible or with unfavourable terms
- I have a full Help to Buy ISA available - ie. Could get 3k back on 12k of savings. This is fairly useless given London price caps but I have looked into buying something outside of London to either rent out or appreciate over two years.

My question: what is the best strategy here for growing my 200K? 

- I could buy something up north below 200K outright or with a small mortgage to achieve the 3K help to buy bonus (value under 250k)
- Or I could buy something with a mortgage up to 500k to take advantage of the current stamp duty cuts and forgo the Help to Buy bonus
- What sort of mortgage would be best? I realise BTL has been made less profitable and that there may be future tax raids, but if it's my sole property are my options better? Would the best option be interest repayments only for a few years to extract rental income and then sell at a point that would either see no loss or a capital gain? Or would I be better off with a repayment mortgage and accruing equity? 

Grateful for any advice/ comments! I've only just started looking into this.

Cheers
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« Reply #1 on: April 13, 2021, 03:29:12 PM »

Your questions are unlikely to be answered as categorically what is best... a lot is down to personal philosophy too, only some is down to cold, hard maths... so the best you can hope for is opinion and reflection on what people have done.

Myself, for instance... I much prefer buying a property outright, with no mortgage implications as I feel it adds that little extra attractiveness to you as a purchaser that allows you to negotiate harder. Even with a AIP in place it helps. I have a few mortgages now, though, and I have only ever gone repayment mortgage... because, yes, paying down that debt and building up equity is what is attractive to me and I think this jives nicely with my long-term approach. I am not looking to consolidate things in, say, two years. I would have always advised that a Landlord be in a workable distance of the property they own and let out if they intend to do any of the heavy lifting themselves... if you are engaging an Agent on a fully managed basis, then don't forget those costs and remember to emotionally detach from the property. Other Landlords may come along and say they only buy property to let with mortgages (so they're more highly leveraged) and they only ever do Interest Only too. They will be able to explain why. Others will come along and tell us that they self-manage their properties and they're 200 miles away from where they live... and they'll give their reasons.

But... what you have got right is... a) saving up a healthy amount, b) not thinking future tax raids in this sector are unlikely. If I had 200,000 burning a hole in my pocket right now I would probably buy something else... maybe a bungalow. Instead I've just sent another 10% lump sum overpayment to one of my NatWest mortgages as the anniversary came around... so that's what I'm up to. Paying down the debt. One of my others is a YBS offset mortgage, so I have that fully offset... yes, it counts as savings, but it is actually working for me. I could extract it if I really wanted to, but I won't. I have an apartment in a high rise and I fear what is coming my way on that front... despite seemingly recent good news.

I've just thought of one thing the Landlord population might unanimously agree on... stay away from Leasehold.
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« Reply #2 on: April 13, 2021, 04:42:07 PM »

Thank you very much for your considered reply.

I currently divide my time between Manchester and London so it would be achievable to self manage a property in the former.

Could you please let me know any more about the downfalls of a leasehold house? I viewed one the other week with 999 years remaining and I wasn't sure what the resulting limitations/ costs would be.

I do appreciate many decisions are not emphatically right or wrong, and that some of it is down to philosophy, but in terms of greatest return within a couple of years, would you say buying somewhere outright is going to be better than a mortgage? Or is that only the case if cash would potentially result in a better purchase price?

Would I potentially swerve any forthcoming tax raids as a result of this being my only rather than second property?
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« Reply #3 on: April 14, 2021, 12:00:25 AM »

I think you have to ask yourself whether you actually want to be a landlord or if you just want to park your money somewhere for a while (how long?) so that it'll hopefully keep pace with residential property prices until you're in a position to buy your own home.

Some advantages of buy-to-let:

You can gear your investment with a mortgage: nobody's going to lend you a hundred grand to buy shares but they'd be more-or-less queuing up to lend you that on a BTL, if you've got a big enough deposit (which you evidently have).

The performance of your investment should track the residential property market quite closely - because it's residential property.

It can be enjoyable.

You sort-of understand residential property already.

Some disadvantages of buy-to-let:

It's riskier than you probably think.

It's not suitable for a short-term investment: you've got to find a suitable property, go through all the conveyancing, pay the stamp duty (possibly not in your case), prep it for renting, market it, find good tenants (do you know what good tenants look like?) and then, when you want to get your money back out, you have to evict your lovely tenants with whatever notice period we're onto by then, hope they go quietly, market it for sale, find a buyer, do more conveyancing, and eventually you'll get your money back - more or less.

It's a responsibility. You can delegate some of that responsibility (for a not-so-small fee) so that it's not actually you that has to unblock the lavvy on Christmas Eve but, ultimately, you're responsible in law for your property.

Things can and do go wrong. You might end up with bad tenants, or just good tenants and bad luck. Have a scroll through the Landlord Advice section of this forum for a taster.

Nobody likes you, you fat-cat scumbag buy-to-let bourgeois capitalist pig-dog ...etc. Your tenants don't like you, and don't appreciate the lovely home you've provided for them. Society doesn't like you, because you're exploiting Generation Rent. The Government doesn't like you, because the voters don't like you, so they don't have to - which means they can squeeze you for cash and nobody will care.

...and, of course, the value of your investment may go down as well as up. It seems to me there are more opportunities for down then there are for up in the next few years, but I've been consistently getting that wrong for the past few years so what do I know?


If I were you I'd pay for a session with an Independent Financial Adviser and see if he can recommend something with a suitable risk/return profile for your situation.
« Last Edit: April 14, 2021, 09:32:10 AM by Hippogriff »
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« Reply #4 on: April 14, 2021, 09:31:39 AM »

Nobody likes you, you fat-cat scumbag buy-to-let bourgeois capitalist pig-dog ...etc. Your tenants don't like you, and don't appreciate the lovely home you've provided for them. Society doesn't like you, because you're exploiting Generation Rent. The Government doesn't like you, because the voters don't like you, so they don't have to - which means they can squeeze you for cash and nobody will care.

This was so eloquent and apropos I thought that it was worth pulling-out to highlight.

I may even go into the post and embolden it there.
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« Reply #5 on: April 14, 2021, 03:21:43 PM »

I think you have to ask yourself whether you actually want to be a landlord or if you just want to park your money somewhere for a while (how long?) so that it'll hopefully keep pace with residential property prices until you're in a position to buy your own home.

Some advantages of buy-to-let:

You can gear your investment with a mortgage: nobody's going to lend you a hundred grand to buy shares but they'd be more-or-less queuing up to lend you that on a BTL, if you've got a big enough deposit (which you evidently have).

The performance of your investment should track the residential property market quite closely - because it's residential property.

It can be enjoyable.

You sort-of understand residential property already.

Some disadvantages of buy-to-let:

It's riskier than you probably think.

It's not suitable for a short-term investment: you've got to find a suitable property, go through all the conveyancing, pay the stamp duty (possibly not in your case), prep it for renting, market it, find good tenants (do you know what good tenants look like?) and then, when you want to get your money back out, you have to evict your lovely tenants with whatever notice period we're onto by then, hope they go quietly, market it for sale, find a buyer, do more conveyancing, and eventually you'll get your money back - more or less.

It's a responsibility. You can delegate some of that responsibility (for a not-so-small fee) so that it's not actually you that has to unblock the lavvy on Christmas Eve but, ultimately, you're responsible in law for your property.

Things can and do go wrong. You might end up with bad tenants, or just good tenants and bad luck. Have a scroll through the Landlord Advice section of this forum for a taster.

Nobody likes you, you fat-cat scumbag buy-to-let bourgeois capitalist pig-dog ...etc. Your tenants don't like you, and don't appreciate the lovely home you've provided for them. Society doesn't like you, because you're exploiting Generation Rent. The Government doesn't like you, because the voters don't like you, so they don't have to - which means they can squeeze you for cash and nobody will care.

...and, of course, the value of your investment may go down as well as up. It seems to me there are more opportunities for down then there are for up in the next few years, but I've been consistently getting that wrong for the past few years so what do I know?


If I were you I'd pay for a session with an Independent Financial Adviser and see if he can recommend something with a suitable risk/return profile for your situation.

Lots of wise points there, thank you.

My objective is to ideally grow my deposit, or at least not have it devalue in real terms relative to inflation and the housing market. Currently the 200k is just stashed in savings accounts with an interest rate which has fallen to 0.5%, meaning just 1k return a year. I should speak to a financial advisor as you've suggested to look at a full range of investment products. Getting even 3% or 4% back on a 200k house purchase, per year, looks attractive, but I realise there are all sorts of fees and potential calamities, which is why i'm looking into it now. Being a first time buyer seems to present an advantage in terms of stamp duty and being chain free. I'm trying to weigh whether the loss of first time buyer stamp duty benefit down the line is worth it, however I believe there is none if the property is over 600k.

A few options i've considered -
1. Buying and letting to friends who I know are looking for somewhere to rent, with the potential pitfall of mixing friendship with finances
2. Buying a student HMO property - i've seen some which have tenants already in situ and/or committed to the next academic year. Possibly harder to sell on if everyone starts ditching their portfolios and it has to be made suitable for a family house? Possibly less risk in terms of tenants refusing to leave, if there are clear boundaries of their tenancy duration needs, but I haven't looked at whether the pandemic has affected anything.
3. Buying a house i'd be prepared to live in myself for a couple of years if it came down to it, and try to work remotely rather than in London or have it coincide with maternity leave. I viewed one last week which fell into this category. Attractive period property which would possibly earn less than a student multiple occupancy, but it's opposite a park and I would personally be happy to stay there if the market dipped, until it recovered.

A few questions, in case you know already know. I will also research.
- What sort of difficulties are there with a leasehold (999 years) in terms of renovation and extension?
- How easy is it to swap from a BTL to residential mortgage and vice versa, and is it costly in terms of fees?
- Would it be financially better to buy something outright for under 200k (or possibly with a tiny mortgage to utilise Help to Buy Isa, which I could maybe then pay off straight away depending on the penalty) or something of higher value with a mortgage (eg. 350k value)? Is the higher rental return of the latter cancelled out by mortgage interest and any other fees?

Grateful for any further insights. Thanks.


« Last Edit: April 14, 2021, 03:33:59 PM by caligula »
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« Reply #6 on: April 14, 2021, 05:15:21 PM »

Your 1 above is Landlording-101... as in never do it.

Your 2 is jumping in at the deep end... HMO is for the brave.

Your 3 is wise and pragmatic.

Leasehold... renovation should be no problem... extension and even just letting might be... letting parts of the property to different people is likely to be... the issue is one of overall control... there is an extra party involved who adds no value and only seeks to charge you for things and hinder you in what you want to do... it's just simpler to avoid Leasehold... thankfully Leasehold houses are quite rare, apart from where I live. What I guess we mean by try to avoid Leasehold is typical apartments... with ever-increasing Insurance and Service Charges that are completely out of your control. The length of a Lease is not usually very interesting at all.

Depends on the Lender. Some will allow a grace period, some will want their Pound of Flesh. I changed from Residential to CTL for one... because that Lender doesn't even offer BTL products... so I just have a perpetual CTL instead. That was lucky. HSBC allow (or used to) a grace period of, say, a year... then say they'll will move you to a BTL product... whether they forget or not is another thing. You're thinking of going the other way... I imagine they'd be less happy with that... they'll be getting less, so may want to charge you more.

Better to buy outright? Philosophy again.
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« Reply #7 on: April 14, 2021, 08:28:49 PM »

Is it entirely philosophy or does a higher value property inevitably lead to higher returns despite lender involvement and sunk cost mortgage interest?

What are the specific areas of caution with HMO tenancies? Is it the number of people involved correspondingly multiplying potential for problems or is there something else?
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« Reply #8 on: April 15, 2021, 01:02:35 AM »

Is it entirely philosophy or does a higher value property inevitably lead to higher returns despite lender involvement and sunk cost mortgage interest?

Time for Pambin's back-of-a-fag packet extravaganza:

Let's assume gross yields in your area are uniformly 5% and we'll ignore various tedious costs for the purpose of this exercise. It's not that big a fag packet...

You buy some property for 200,000 with no mortgage.
Your tenants pay you 10,000 for the year. Yay!
The tax man takes 40% of it - 4,000. Boo! (I'm assuming that's your marginal rate. If it's higher than that, you can buy your own fags)
You're left with 6,000. Buy yourself a new lavvy plunger. Go on: you've earned it.

Or...

You buy some property for 400,000 with a 200,000 interest-only mortgage at 3%. (I don't often recommend interest-only in real life but it makes the calculations easier)
Your tenants pay you 20,000 for the year. Double yay!
You have to pay the mortgage man 3% of 200,000 - 6,000. Meh
The tax man takes 40% of the 20,000 - 8,000. What? FFS!! (See, I told you the Government doesn't like you)
The tax man gives you back 20% of the 6,000 - 1,200. This is as nice as they're going to get. Send Rishi a thank-you letter.
You're left with 7,200. That's more than 23 extra a week. Whoop-de-frickety-doo.

Bear in mind those are all made up numbers, round and rough, like a coconut. Try plugging them into Excel (The fag-packet of the bourgeoisie) and having a play around. See what happens if the yield is lower, or the interest is higher, or the basic rate tax relief disappears.

Of course, the annual income is only part of the story. Consider what happens if property prices rise 10%. On your 200,000 property you'd gain 20,000. On your 400,000 property you'd gain 40,000 (all before tax - minimizing your CGT liability is a story for another day). Of course, what goes up can also go down, and if the market takes a 10% dive, then it's bath time: your 400,000 property loses twice as much as your 200,000 property and the mortgage man ain't gonna share your bathwater. He gets his 200k back either way. In your case, this wouldn't be such a bad outcome because a) you've got plenty of equity and b) you want this money to buy a home anyway so, if prices take a dive across the board, the house you're buying should be accordingly cheaper. (This assumes that the area where you want to buy isn't still climbing while the area where you want to sell is plummeting...)


What are the specific areas of caution with HMO tenancies? Is it the number of people involved correspondingly multiplying potential for problems or is there something else?

More turnover of tenants, more regulatory requirements, on balance a less affluent clientele, more likely to be furnished accommodation, which is a ballache, and the student market brings its own unique challenges. There's a lot to be said for a nice, basic, unfurnished, freehold three-bed semi.
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« Reply #9 on: April 15, 2021, 09:19:41 AM »

Is it entirely philosophy or does a higher value property inevitably lead to higher returns despite lender involvement and sunk cost mortgage interest?

You're different, you see? You want to temporarily dip your toes into something you think is lucrative, little effort and no risk with capital growth as a nice kicker... then step on out without ever having being burned. If you were asking a Landlord who wanted to be a Landlord... providing good homes for nice people at a reasonable price while making a tidy profit... then the maths between:

a) 1 x higher value property and...
b) 2 x lower value properties

...is the more interesting question... not mortgages and suchlike. There is more profit to be made at the lower end (yes, this can include HMO, but it's also fraught with extra challenges). That extra profit comes with extra effort and extra cost. Therefore... it's often down to philosophy... what can you, as the Landlord, handle? You have a job, you have a life, you aren't looking to change your career to being a Landlord... maybe you don't want to be thinking of being a Landlord all the time (like I do)... even with Agents doing the 'whole thing' they don't really do the 'whole thing' you see?

You're looking at your savings... and thinking "woe is me, this interest rate is crappity-doo-dah" and you're not wrong. We get that. But it's safe. It's no effort. It's no cost. Don't imagine residential letting is as good as people have let on. However, all that said, you have play money, ready to play... when someone comes here and tells us they have 5,000 in savings (an OK job and a residential mortgage of their own) and asks how they can get into being a Landlord - then grow their empire quickly to 50 or so properties... I dissuade them. You're different, you see?

You can afford to play... if you're going to play don't agonise over it too much... get started. I would buy something you'd be happy to live in yourself, if it came down to it - but that's just me. I always say look after your own home first, then play... but you don't have your own home at the moment (as in something you've bought and own). At the end of the day it's not about profit margins for some of is - it's about what you feel comfortable with. Hence, for me, it's mortgage-free residential freehold houses with no ground rent or Service Charge. If I have to have a mortgage then I have always ensured it's repayment and I've saved enough to go for the best deals - usually the 40% deposit. I then ensure the rent I'll receive is at least 200 over the mortgage payment each month. If I can overpay on the mortgage, I try to.

A few years later you've worked yourself into a position where:

1) you've got equity in the property due to market rises
2) you've got equity in the property due to paying down the debt
3) the mortgage payment may have decreased due to overpayments or a change in deal
4) the rental income has likely increased due to modest regular annual increases in rent
5) hopefully you've found long-term reliable Tenants who just live their lives and are somewhat capable

So your maths just get better over time... the rising cost of Insurance and GSCs and EICRs are noise level then... what you worry about is the boiler going kaput, the fence blowing down, or a leaking roof.

Although I know that (North here) 2 x 50,000 properties could net me 400 per month each... I still prefer to operate in a significantly higher rental property space... I don't want to mess at the very low end even though I know there's more profit. However, it has to be said that the worst Tenants (for me) are what I'd term young professionals. Their turnover is too high. They are aspirational and mobile. I like to have people who've got kids enrolled in a local school. Or a pet they like to run around the park. Or family in the area. Or, even, people in receipt of benefits - as they're tending to be less mobile and (dare I say this?) less aspirational. I've got a 4 bedroom new build with Tenants moving on every 18 months... 2 of the couples who've lived there now live on the same estate... in the same kind of cookie-cutter house! They asked to buy the property from me... persistently... thinking it would be attractive to me and they could get a great deal under market value... until I explained tax to them. Then they understood. It's a wise philosophy to be in this for the long-term. That's probably the main issue I have with your dip-in plan... those set-up and get-out costs are gonna be too close, in a temporal sense, and will weigh quite heavily.
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« Reply #10 on: April 15, 2021, 02:45:56 PM »

Is it entirely philosophy or does a higher value property inevitably lead to higher returns despite lender involvement and sunk cost mortgage interest?

Time for Pambin's back-of-a-fag packet extravaganza:

Let's assume gross yields in your area are uniformly 5% and we'll ignore various tedious costs for the purpose of this exercise. It's not that big a fag packet...

You buy some property for 200,000 with no mortgage.
Your tenants pay you 10,000 for the year. Yay!
The tax man takes 40% of it - 4,000. Boo! (I'm assuming that's your marginal rate. If it's higher than that, you can buy your own fags)
You're left with 6,000. Buy yourself a new lavvy plunger. Go on: you've earned it.

Or...

You buy some property for 400,000 with a 200,000 interest-only mortgage at 3%. (I don't often recommend interest-only in real life but it makes the calculations easier)
Your tenants pay you 20,000 for the year. Double yay!
You have to pay the mortgage man 3% of 200,000 - 6,000. Meh
The tax man takes 40% of the 20,000 - 8,000. What? FFS!! (See, I told you the Government doesn't like you)
The tax man gives you back 20% of the 6,000 - 1,200. This is as nice as they're going to get. Send Rishi a thank-you letter.
You're left with 7,200. That's more than 23 extra a week. Whoop-de-frickety-doo.

Bear in mind those are all made up numbers, round and rough, like a coconut. Try plugging them into Excel (The fag-packet of the bourgeoisie) and having a play around. See what happens if the yield is lower, or the interest is higher, or the basic rate tax relief disappears.

Of course, the annual income is only part of the story. Consider what happens if property prices rise 10%. On your 200,000 property you'd gain 20,000. On your 400,000 property you'd gain 40,000 (all before tax - minimizing your CGT liability is a story for another day). Of course, what goes up can also go down, and if the market takes a 10% dive, then it's bath time: your 400,000 property loses twice as much as your 200,000 property and the mortgage man ain't gonna share your bathwater. He gets his 200k back either way. In your case, this wouldn't be such a bad outcome because a) you've got plenty of equity and b) you want this money to buy a home anyway so, if prices take a dive across the board, the house you're buying should be accordingly cheaper. (This assumes that the area where you want to buy isn't still climbing while the area where you want to sell is plummeting...)


What are the specific areas of caution with HMO tenancies? Is it the number of people involved correspondingly multiplying potential for problems or is there something else?

More turnover of tenants, more regulatory requirements, on balance a less affluent clientele, more likely to be furnished accommodation, which is a ballache, and the student market brings its own unique challenges. There's a lot to be said for a nice, basic, unfurnished, freehold three-bed semi.

Thank you for the back of a fag packet calculations, I find it helpful to have it laid out like that. I've been trying to weigh up what is most advantageous in terms of not having to pay higher stamp duty on a BTL property as a first time buyer vs trying to use my HTB ISA vs retaining first time buyer stamp duty benefit down the line.

My boyfriend is currently a lower tax rate payer. Leaving aside whether the relationship is reliable enough to effectively sign over 200k, presumably I could in theory let him buy the property outright in his name, meaning a reduced tax burden on the rental earnings. It's only a few K difference so likely not worth it, just musing.

The capital value of properties increasing in general is a big concern. I may be wrong, as I haven't paid complete attention to the detail over the last few years, but from what i've seen recently it seems that if i'd bought something in say 2014 or 2015, i'd now be sitting on quite a big capital gain. I'd ideally like to grow my deposit but my big concern is progressively being able to afford less as time passes, despite hoping to save another c.60-70k over the next two years from employment income. Buying something now was partly an insurance against that - to have a stake and keep step. It always seems that house price falls are temporary and ultimately the only way is up - is that completely wrong?

Is it worth looking at auctions and trying to find something a bit under value, to insure a bit against house prices falling?
« Last Edit: April 15, 2021, 03:30:18 PM by caligula »
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« Reply #11 on: April 15, 2021, 02:55:46 PM »


At the end of the day it's not about profit margins for some of is - it's about what you feel comfortable with. Hence, for me, it's mortgage-free residential freehold houses with no ground rent or Service Charge. If I have to have a mortgage then I have always ensured it's repayment and I've saved enough to go for the best deals - usually the 40% deposit. I then ensure the rent I'll receive is at least 200 over the mortgage payment each month. If I can overpay on the mortgage, I try to.


How unfavorable do BTL repayment mortgages tend to be vs standard residential mortgages?

And in terms of leasehold houses, what do ground rents tend to look like? I went to see a house last week and nothing was said about this. I've been put off all of the flat leaseholds in Manchester City Centre because of the exorbitant building/ service charges of several thousand pounds a year, and also noted the avoid warnings on this thread.
« Last Edit: April 15, 2021, 03:31:04 PM by caligula »
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« Reply #12 on: April 15, 2021, 04:59:26 PM »

My boyfriend is currently a lower tax rate payer. Leaving aside whether the relationship is reliable enough to effectively sign over 200k, presumably I could in theory let him buy the property outright in his name, meaning a reduced tax burden on the rental earnings. It's only a few K difference so likely not worth it, just musing.

My wife and I have an arrangement like that: she actually owns all the beneficial interest in the property (whereas I just blather about it on the web). It is tax efficient but I'm not sure I'd do it if we weren't happily married.

The capital value of properties increasing in general is a big concern. I may be wrong, as I haven't paid complete attention to the detail over the last few years, but from what i've seen recently it seems that if i'd bought something in say 2014 or 2015, i'd now be sitting on quite a big capital gain. I'd ideally like to grow my deposit but my big concern is progressively being able to afford less as time passes, despite hoping to save another c.60-70k over the next two years from employment income. Buying something now was partly an insurance against that - to have a stake and keep step. It always seems that house price falls are temporary and ultimately the only way is up - is that completely wrong?

It's not completely wrong: limited supply and growing demand means that there's a long-term upward pressure on house prices. That doesn't mean they can't fall in the short term - and by short term I mean they could be in the toilet for a decade or so. There was a bloke on this forum a couple of years ago who was still in negative equity from the 2008 crash, working his balls off in London to service the interest payments on an unfavourable mortgage on a flat up north that he'd bought off-plan at the height of the boom. I mention that as a cautionary tale: you shouldn't find yourself in that position as you've got more than enough for a chunky deposit.

Have a look at the data here: https://www.gov.uk/government/statistics/uk-house-price-index-england-november-2020/uk-house-price-index-england-november-2020

Per the graph you can see that prices are going up maybe 6% per year on average over the last four years. Obviously that's a very high-level summary of  a lot of individual trends across areas and market sectors.

Out of interest I just looked at one of my old pension pots - a bog-standard multi-asset low-risk fund. Over the same period it's also gone up by about 6% per year. It hasn't generated any rental income, obviously, but it also hasn't needed a new bathroom because the tenants have turned the old one into an unfathomably brown biohazard.

What I suppose I'm saying is residential property is attractive because it feels familiar, but it's not the only rodeo in town.

Is it worth looking at auctions and trying to find something a bit under value, to insure a bit against house prices falling?

You could look at auctions if you feel lucky and you think you know what you're looking for. You get two kinds of people at property auctions: experts and idiots. The trick is working out which one you're bidding against before the hammer goes down.
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« Reply #13 on: April 15, 2021, 09:00:41 PM »

Useful link, thank you.

I had supposed that any fund investment required a longer term commitment to secure a return but I will definitely look into it. In the scenario of a 6% return though, it would be based on the actual amount I have vs the higher amount of a property's value on a mortgage purchase (eg. 400k).

I am happy to graft for a return, I should factor into discussions, in terms of dealing with tenants and maintenance. A bit after university I couldn't find anywhere in London I wanted to rent/ was sick of being interviewed by flatmates etc. So I gambled a big holding deposit on an 8 bedroom, 4 floor Georgian terrace in WC1 directly from a property dealer and then found people I liked to share it with me. Seven selected from 400 applications. They got a good deal but also subsidised my rent with the set up I laid down. I exclusively dealt with the landlord on behalf of everyone/ collected payments etc. This was a one off spot of good fortune with the particular property while the purchaser waited to move in, but this is just to say that I am prepared to put in effort.

Is your own investment situation laid out in any of the threads? Have you also dabbled in property development?


Best wishes
« Last Edit: April 15, 2021, 09:04:42 PM by caligula »
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« Reply #14 on: April 16, 2021, 01:17:22 AM »

Is your own investment situation laid out in any of the threads? Have you also dabbled in property development?

There's not a lot to my investment situation. I'm only on this forum to provide a dilettante counterpoint to Hippo's professional northern grit! When I got married we effectively ended up with a spare house and no mortgage to speak of, so there wasn't much incentive to sell. I let it through a local agent who I vaguely trust, on a fully-managed basis, so it doesn't make a lot (yields down here in Warwick aren't exactly stellar) but, on the other hand, I don't need to go near the place except between tenancies. If I actively wanted to pursue being a landlord as a way to make money then, yes, I could have half a dozen properties, all mortgaged up to the Modigliani & Miller, and look after them myself ... but that's not the life for me: I don't have the temperament or the desire for it. I know what suits me. :)
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