This is true for many investments.

If you buy on leverage holding for the long term is harder.

In Scotland minimum tenancy is 6 months. My let's are all advertised for a minimum period of 12 months. I don't find the student market to be cyclical, a lot of the students I rent to study for 9 months and work for 3 months or go away and travel etc and then come back for another year. I won't consider a 6 month let and then rolling as I find the turnover too high and the demand is such that renters will happily take a year lease and then move on to a rolling month to month lease with 2 month notice period. The ideal scenario is to create an environment that your student tenants are comfortable in and keep them throughout their university studies. I have one mechanical engineer in a one bed flat of mine that's been in for 2 years and is on rolling contract he has another two years left and has indicated that he will stay for that period.

Interestingly I know many investors with Edinburgh flats who work differently, landlords rent to students for the 9 months and then at end of term do holiday let's for the Edinburgh comedy festival which runs in July and August. Yields on this period are sky high. It's not a city I know particularly well though and have no experience investing there.

Good question about the mortgage rates, i stress test all mine using the bbc mortgage calculator which shows repayments at various rates, I'm on mobile just now, il send a specific example when back on Computer...

Given the example on page 2 of thread of interest rate rose to 8% (currently borrowing at 4%) my monthly repayments on loan of £49,500 would rise to £386, so by £220. Cash flow on the proper is currently £312 so it would reduce cash flow or profit to £92 per month. I think of interest rates rose to 8% I would be ok, as my investments are all high yielding and could handle it. However, a lot of buy to let landlords and homeowners would be repossessed.

Sorry grunching but what occupancy rate are you assuming? and how much for maintenance, bad debts, etc etc.

BTW I've owned some rental properties for a long time and the highest rate I paid was 13.5% - that wasn't for long but it was above 10% for years and was rising fast (and that was much lower than the highs of inflation a decade or so before). All I'm suggesting to you is that you build up some liquid investments to allow you to survive some -ve cashflow periods.

Just massively lever up on a high transaction cost, low liquidity, volatile, typically low yielding, hard and expensive to maintain, generally stock market lagging, non CG tax harvestable, interest rate vulnerable, wildly bubbly asset that's yield and value is heavily correlated with your ability to pay your debts back.

What could go wrong.

wp

Wins thread!

not sure why there are so many negative people on here. plenty have made millions borrowing at 4% and collecting rent at 10%+ and if youre so clever whats better?

Every European site was alot more juicy. I guess we were very lucky to be good when it mattered the most... I've always worked full time in corporate finance, as well as playing poker and very glad now.

I bought a two bed in London with my poker money and left myself a roll of £20k to play around with live and pay off mortgage.

Best of luck

Robert

I don't think anybody is denying this, but "have" is the important word there:

(1) Interest rates are at an all time low and there's only one direction they can move now.

(2) Rental yields are also at an all time low and appear to be trending downwards year on year (ie: because wages aren't growing at the same rate, etc).

(3) Property management/maintenance costs are growing year on year, further eating into yields.

Also, the current press slant here in the UK is of the "evil buy-to-let landlords" squeezing the working population, so in the future you can expect:

(A) Laws forcing longer tenancy agreements (ie: making it way harder to liquidate your assets and/or take a huge hit selling property without vacant possession).

(B) Extra tax levies (in the 1960s/1970s my grandparents ended up with a tax rate of 105% [yes, greater than 100%!!!] because rental income was classed as "unearned income").

Juk

I'd add that there's pressure building to something about the lack of housing that is supporting house prices and rents.

Also there's so many chasing the borrowing at 4%+, rent at 10%+ these days and many are highly professional with cheaper management/management costs. We have to take with a huge pinch of salt any newbie who thinks they can get good deals. Doesn't mean it's impossible but there will often be a reason while they're not being outbid by the professionals and more experienced.

Missing one of the main reasons which is transport.

I and my partner spent best part of a year looking for our house (about 10 years ago) anywhere remotely near london and it was dead easy to find exactly what we wanted providing it was just far enough away from a decent train station to make commuting effectively impossible. Move just close enough to that train station and prices started to rocket fast. We seriously considered a place where getting to and from from the station relied on a bus that ran once a day! Sanity prevailed but what a ridiculous situation.

Then again, someone with capital could arb those opportunities as transportation should improve in the future...

Increases in working from home as well.

In reality (at least the one we live in) only government can provide the necessary investment. The political will is growing.

What are all you UK landlords thinking about doing in response to Mr Osbourne's change in tax regarding BTLs?

Limited companies or dont buy with mortgages.

Sent from my D6503 using 2+2 Forums

I missed that..,,cliff notes please?

Income tax now payable on rental income not profit:

http://www.telegraph.co.uk/finance/p...150pc-tax.html

Yes but CGT will bite and getting paid via dividends is being changed:

http://www.rossmartin.co.uk/director...5-dividend-tax

Also now: Buy-to-let stamp duty rise 'final nail in coffin' for small landlords

Juk

^ I know, unreal, seriously what are people with a small number of BTL properties going to do?

I even had my old man on the phone tonight asking me what I thought.

Unless they can act fast there's no decision to be made. If they could complete a sale by April then it's worth considering that there may be a a pre Stamp Duty boom and/or a post Stamp Duty crash. Then again it may make minimal difference or it may starve the rental market forcing up rents.

In hindsight it will be obvious

I'm worried, my BTL funds my main property so I might end up needing to sell 2 houses and move somewhere new mortgage free.

Luckily I will carry over a big loss to the next tax year but I'm still struggling to know what to do for the best.

My CGT liability is likely to be low so I could transfer to a limited company or increase my rent which is currently a corporate let and likely to accept an increase when we next negotiate the rent.