Property Markets

[andrewducker]

Just throwing around some figures and briefly considering buy-to-let. It makes _no_ sense in Edinburgh, as far as I can see. Monthly rent for a decent place like this is £900 for a three bedroom place. Wandering over to a mortgage calculator, I note that for £900 mortgage repayments I could borrow about £130k, on a £160k place. Which would not get you anything like as nice a place as that, nor as close in.

Baffling - is buy-to-let as poor an investment elsewhere in the country?

Comments

[surliminal.livejournal.com]

Not sure but I suspect it makes sense if you have capital knocking around - return on stock market is por and uncertain, property goes up c 25% and obviously mortgage lower if capital sunk in.

[perceval.livejournal.com]

Have you read Rosie Millard's column in the Sunday Times Home section? From what she's saying, it only makes sense to go into buy-to-let if you are geared strongly enough and if interest is sufficiently low. or if you're prepared to scam off students. 5.25% base rate is not exactly conducive to good deals ...

[ami-bender.livejournal.com]

It does still make sence, but only if you have a lot of spare cash. If lets say you ad a spare 100k. you then buy house. Rent covers mortgage and repairs, plus little left over. You then have a good investment as real return is when sell house. The problem with buy to let is how much you have to pay bank.

[fjm.livejournal.com]

It's a very good long term investment (hence we are hanging on to our house in Reading for a few more years) but it is not an income generator unless you are a builder (like ny Dad) and can buy terrible properties and bring them up to rental condition (which is stricter than purchase condition).

[a-pawson.livejournal.com]

Yes and no. Remember with a buy to let mortgage you don't normally repay the capital investment, so the monthly repayments are based on interest only terms. An interest only mortgage costs significantly less to repay per month. You are then relying on the combination of rental income, and the property increasing in value, to make back your money.

The other half of the answer is that they used to, but the frankly ridiculous increase in house prices in the past few years has made them a poor investment. House prices have risen by 150% in the past 10 years, and that figure is adjusted for inflation. Rents have not kept pace with property values, and cannot since people renting cannot afford such increases.

The much fortold price crash shows no sign of happening, yet with the current level of prices, the number of people entering the market as first time buyers is going down all the time.

I know Susan and I are among those who cannot afford to purchase even a small flat as we have never stepped onto the property ladder, and would have to borrow somewhere upwards of £100k to even buy a small flat. Why bother when we are renting a 2 bedroom house for £450 a month. A house which is currently valued at about £120k, and if we bought it, would see us having to find mrtgage repayments in the region of £750 - £800 a month plus all the added costs of owning property. Financially our landlord would be best advised to sell up and reinvest the money in something else, but when he bought this place, it probably cost him less than £50k, so it is still making him money.

[channelpenguin.livejournal.com]

Yup. Same in london or surrey. People are stoopid. Only reason i am buying is cos it is costing me less to borrow the dosh for the 2 years that i will need it than prices will go up in that time.