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

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  • Gordon999
    replied
    OP bought the property as brand new. So if the property price has not risen , the problem may be due to adverse location such as no off-street parking space..

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  • loanarranger
    replied
    Given the significant drop in value , can I please ask if this Development was heavily promoted by Investment Clubs and the like? Just curious?

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  • gnvqsos
    replied
    I think the purchase in 2008 has sunk the project-too few people paid attention to the downside risks involved in speculation .With 40 pc tax I would seek to reinvest rents in repairs and seek to take your reward when selling-at least you have a CGT allowance to shield a little of your gains

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  • jpkeates
    replied
    The problem with a BTL mortgage is that you're taxed on the rental income at 40% and the relief on the mortgage costs is capped at 20%.
    So you'll just get another hit.

    What you have there is an investment that's failed to date.
    But it's still delivering more income than most low risk passive investments could do.

    You either need to bite the bullet and see what happens over the next decade or so (in which case you're basically parking it in the hope of some capital growth).
    Or sell it and take the loss and move on.

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  • jimmytwoburgers
    replied
    Yeah I have - Even if i buy another I just think with the 40% tax its probably not worth it. I need to change my own residence in a year or so too so will taking out a BTL mortgage effect the amount I can borrow? I think it will ?

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  • BTL investor
    replied
    Have you considered remortgaging it so that you can keep the property but also get some money out of it to invest in a better yielding property or alternative investments?

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  • jimmytwoburgers
    replied
    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

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  • Gordon999
    replied
    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.

    Leave a comment:


  • doobrey
    replied
    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.

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  • jimmytwoburgers
    replied
    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

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  • Kape65
    replied
    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.

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  • Gordon999
    replied
    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.

    Leave a comment:


  • doobrey
    replied
    Originally posted by Section20z View Post
    you are GUARANTEED to be worse off by at least half
    How so?...

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  • jpucng62
    replied
    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!

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  • Section20z
    replied
    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. ...

    Leave a comment:

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