Is now a bad time to buy a BTL?

[Pixelpeep 135]

all the signs are that it would be, but what are the smart people expecting - 6-12 months? 2-3 years ? or might it just blow over?

[dingg]

If its only the one, then yes imo.

Tenants will be choosing to heat and eat rather than pay the rent, one bad tenant will make you reconsider whether it was all worth it.

Now do you feel lucky?

[LooneyTunes]

Depends largely on your risk appetite, how much capital you're putting in and what it represents to you, the degree of leverage you're using, and what your other options are.

FWIW, I have a reasonable property portfolio but am not planning any disposals or additions at the moment. Interest rate rises/cost of living may well result in some people needing to sell at a discount to current prices, at which point I may buy more.

[SturdyHSV]

Only if you have a very high ratio of rent to mortgage interest, and even then, I wouldn't bank on it turning an annual profit, plan for it to break even and hope for some long term capital growth if you can pick something up cheaply.

If you're putting a lot of capital in, you can probably get a better return elsewhere I would imagine.

[nickfrog]

dingg said:

If its only the one, then yes imo.

Tenants will be choosing to heat and eat rather than pay the rent, one bad tenant will make you reconsider whether it was all worth it.

Now do you feel lucky?

I pay for rental income and legal expenses insurance for our BTL at £100/year. I have never claimed though so I don't know what the experience would be like. The property is a new A rated flat so quite "cheap" to heat for the tenant.

Still a major hassle but when you've used up pension tax relief allowance and ISA allowances then BTL is still a good diversification tool IMO.

[98elise]

We own 4 and are looking to expand.

Looking in South Wales at the moment.

[Pixelpeep 135]

Thanks for the replies, we are not talking big money, this is a toe dip - rough math we had planned to put £30k down on a 120-150k property with the rents roughly 550-700 depending on how lucky we got with the purchase.

Had planned Ipswich area as the local rent cap for benefits is quite high, property prices are quite low and it's within an hours drive from our house

[Biggy Stardust]

Pixelpeep 135 said:

all the signs are that it would be, but what are the smart people expecting - 6-12 months? 2-3 years ? or might it just blow over?

AISI: rising interest rates, rising bills and tenants who believe that the landlord should be the first to go without, a hostile & litigious government, hostile & avaricious councils, a market likely to stagnate and social media thriving on exacerbating all of this.

I sold half my BTLs relatively recently, paid off all the mortgages & have dug in for a rough future. YMMV.

[Puzzles]

I’d like to but I’m now seeing btl mortgage rates equal to or higher than rental yields.


Scratching my head to understand why someone would bother. Area dependent.

[BoRED S2upid]

dingg said:

If its only the one, then yes imo.

Tenants will be choosing to heat and eat rather than pay the rent, one bad tenant will make you reconsider whether it was all worth it.

Now do you feel lucky?

That all depends at what price point you enter the market at. People think tenants are all struggling on minimum wage. There are wealthy tenants that need to rent as well.


Having said that I wouldn’t be buying now. Mortgages are at a 20 year high! Prices could cool off if guy I’ve it 6 months.

[nikaiyo2]

Pixelpeep 135 said:

Thanks for the replies, we are not talking big money, this is a toe dip - rough math we had planned to put £30k down on a 120-150k property with the rents roughly 550-700 depending on how lucky we got with the purchase.

Had planned Ipswich area as the local rent cap for benefits is quite high, property prices are quite low and it's within an hours drive from our house

That would seem ok on the surface, but would be the absolute minimum return for viability. IMHO.

I know nothing about Ipswitch so have no idea, but I would always rather buy a "worse" property in a better area, than the other way round. By worse I dont mean a hovel or anything bad, but a smaller place with a quirky layout, I love attic flats in Victorian conversions, for those reasons, they are usually a compromise, but very livable, no one wants to buy them to live in so they are cheap, but rent like hot cakes.

In my neck of the woods £150k would get a studio or tiny 1 bed in a great area a 1 bed in a decent/ ok area or a 2 maybe 3 bed in a virtual war zone.
My money would go to the Studio in the better area all day. If the market rate is £700 PCM I would advertise at £775PCM, to pre select those looking to live in and pay a premium for a great area.

Round here the rental market is mental, one of my studios went on last Monday, the agent had about 25 people express interest, showed the best 5 people round, ended up renting at £50PCM above the advertised price.

Find a GOOD agent, and pay them to fully manage (dont EVER EVER EVER use one to tenant find only) certainly round here half the agents know each other, so will here about PITA tenants via their mates that you will never know about.
Be very choosy over tenants, dont be tempted to accept sob stories or excuses especially when selecting a tenant. If they cant provide current AND previous landlord reference move on to the next one.
Insist and have it written into the rental agreement that the tenant takes out liability insurance, its usually included in tenant contents insurance.

[Biggy Stardust]

Pixelpeep 135 said:

Thanks for the replies, we are not talking big money, this is a toe dip - rough math we had planned to put £30k down on a 120-150k property with the rents roughly 550-700 depending on how lucky we got with the purchase.

With your £150k purchase & £700 rent it'll take 7 months just to claw back the 3% stamp duty. Then bear in mind low tax relief on finance costs, potential licensing costs (councils love their income streams), (rising) mortgage costs, refurb/prep costs & void period prior to getting first tenant. Will you manage to break even by the end of the second year?
Also factor in the long list of legal obligations including deposit registration, "How to Rent" booklet and all the other mandated crap plus inventory & similar.

Go in with eyes open & minus any rose tinting to the spectacles.

[BoRED S2upid]

Puzzles said:

I’d like to but I’m now seeing btl mortgage rates equal to or higher than rental yields.


Scratching my head to understand why someone would bother. Area dependent.

Because historically houses have appreciated in value I think this is what people are betting on rather than rental yields.

[nickfrog]

Biggy Stardust said:

Pixelpeep 135 said:

Thanks for the replies, we are not talking big money, this is a toe dip - rough math we had planned to put £30k down on a 120-150k property with the rents roughly 550-700 depending on how lucky we got with the purchase.

With your £150k purchase & £700 rent it'll take 7 months just to claw back the 3% stamp duty. Then bear in mind low tax relief on finance costs, potential licensing costs (councils love their income streams), (rising) mortgage costs, refurb/prep costs & void period prior to getting first tenant. Will you manage to break even by the end of the second year?
Also factor in the long list of legal obligations including deposit registration, "How to Rent" booklet and all the other mandated crap plus inventory & similar.

Go in with eyes open & minus any rose tinting to the spectacles.

It might still be the right decision for him despite the stuff that you quite rightly list (IME of being a LL it's not that hard work or onerous).

But still, I would max out pension tax relief first, although perhaps he has already done that?