Numbers just not stacking up anymore on my BTL - thoughts?

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    Numbers just not stacking up anymore on my BTL - thoughts?

    Hi All,

    I have one BTL and I am slowly coming round to the idea that its just not worth the hassle any more for what I am getting back from it. Its not so much the recent changes that have affected it, I guess its because I am getting taxed 40% on it more then anything. The property has gone down in value since I purchased it back in 2008 as well.


    Bought in 2008 - £150,000. Now only worth circa £140,000
    Recieve 5500 a year after overheads have been taken out (mortgage free)
    Tax man takes 40% (I have full time job that takes me over the limit)
    Come out with 2800 a year which is 2% of £140,000

    I am thinking it might be better to sell and drip feed into an ISA?

    Thanks


    #2
    I agree that a £5500 pre-tax return on a £140,000 asset is not great.

    Depending on your situation, might you be able to pay annually into a SIPP, which has the effect of moving the tax thresholds up?

    That aside, yes I think investment #1 for most people should be an ISA.
    There is a fine line between irony and stupidity. If I say something absurd please assume that I am being facetious.

    Comment


      #3
      I agree that, so far, the investment hasn't worked out.
      The killer is the fall in the value of the property, most if which, I'd guess happened in the first couple of years.
      Without any capital growth, your £140,000 probably wouldn't earn as much in any kind of investment with such low risk, but the tax free aspect of either an ISA or a pension (or paying down a mortgage on your own home) would swing it.

      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

      Comment


        #4
        How come the drop in value over the last 13 years when nearly all housing prices have risen considerably?

        Comment


          #5
          If he purchased in 2008 then he most likely suffered at least a 50% drop in the value at that time. i had a property drop from 100k to 30k!

          Comment


            #6
            Originally posted by Kape65 View Post
            If he purchased in 2008 then he most likely suffered at least a 50% drop in the value at that time.
            It's certainly possible but not 'most likely'. 15% drop was the average;

            https://landregistry.data.gov.uk/app...-12-01&lang=en

            Comment


              #7
              Selling up and putting your £140k (less expenses)in an ISA is probably the only way you are GUARANTEED to be worse off by at least half.
              As suggested , just put the rent in your SIPP and Rishi will give you back all the tax and you will be back to over 4% return plus hopefully capital growth on the property and SIPP shares. ...

              Comment


                #8
                Originally posted by Section20z View Post
                Selling up and putting your £140k (less expenses)in an ISA is probably the only way you are GUARANTEED to be worse off by at least half.
                I have to disagree! I think it is very hard to make a BTL work if you are a 40% taxpayer unless there is good capital growth. I think putting it into an ISA over several years is a great idea. I have several BTLs and I put all my profits into ISAs and have done very nicely thank you. You need to do some homework & manage the funds in your ISA but at least you will never need to put a new boiler in!

                Comment


                  #9
                  Originally posted by Section20z View Post
                  you are GUARANTEED to be worse off by at least half
                  How so?...
                  There is a fine line between irony and stupidity. If I say something absurd please assume that I am being facetious.

                  Comment


                    #10
                    The average UK property price rise between 2008 to 2021 should have risen from around £180K level to current £260K.

                    https://www.statista.com/statistics/...rice-in-the-uk

                    So Jimmy's valuation at £140K may be wrong.

                    Comment


                      #11
                      Originally posted by boletus View Post

                      It's certainly possible but not 'most likely'. 15% drop was the average;

                      https://landregistry.data.gov.uk/app...-12-01&lang=en
                      I haven't checked national statistics but in my area prices dropped by an easy 50%. I still own a property that I bought in 2007 that is still worth £5k less than I paid.

                      Comment


                        #12
                        Sorry for late response!

                        Its not a mistake, the property has lost value. I probably spent at least 5k on mine too as I lived there at first and added my own touches. The exact same house as mine on same street has recently been marketed at £139,000 and had been on the market for ages before it recently sold, so could be even less then 140k! I am just waiting for it to appear on sold house prices.... I have no idea why house prices have stagnated in the area (Leeds - LS12) I prehaps overpaid a bit at the time as it was a brand new house at the height of the market. Plus its only 2 bed - 2 bed houses don't seem to be very popular

                        Sticking it in a SIPP is not really what i want to do, I have a good public sector pension already. mmmmh not sure what to do

                        Comment


                          #13
                          It depends on various factors of course, but your original suggestion doesn't seem so unreasonable.

                          If you are not using your ISA allowance and will not otherwise do so, one option would be to sell the property and invest the proceeds at 20k per year.
                          There is a fine line between irony and stupidity. If I say something absurd please assume that I am being facetious.

                          Comment


                            #14
                            Right Move website posted this information on property prices in Leeds LS12 area :

                            Properties in LS12 had an overall average price of £154,161 over the last year.
                            The majority of sales in LS12 during the last year were terraced properties, selling for an average price of £127,496. Semi-detached properties sold for an average of £175,282, with flats fetching £121,717.
                            Overall, sold prices in LS12 over the last year were 6% up on the previous year and 9% up on the 2018 peak of £141,396.

                            Comment


                              #15
                              Originally posted by Gordon999 View Post
                              Right Move website posted this information on property prices in Leeds LS12 area :

                              Properties in LS12 had an overall average price of £154,161 over the last year.
                              The majority of sales in LS12 during the last year were terraced properties, selling for an average price of £127,496. Semi-detached properties sold for an average of £175,282, with flats fetching £121,717.
                              Overall, sold prices in LS12 over the last year were 6% up on the previous year and 9% up on the 2018 peak of £141,396.
                              Not mine I am afraid, unless it sells for 20k more then the same house 5 doors down did.

                              eg this is near to mine, lost 20k

                              https://www.rightmove.co.uk/house-pr...ountry=england

                              Comment

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