Don't buy a Buy-To-Let in London! | Property Investment UK
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- čas přidán 29. 07. 2024
- London maybe the hotspot for the UK but should you invest in Buy-To-Let in London? This video is going to give you MY opinion why I wouldn't invest in Buy-To-Let within London! Buy-To-Let Is a great investment strategy but is Buy-To-Let in London the best place to be? Let me know in the comments if you have a in London! How does it work for you having a in London? Have you had a Buy-To-Let in London then decided it's not for you? Let me know in the comments below!
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00:00 - Intro
00:20 - Personal Situation
04:30 - Loan to value
05:30 - Lets talk numbers
All other things being equal, there is no doubt that London property will outperform anywhere else in the UK. This is a fact.
However, due to the lending criteria and government intervention in the form of taxes it massively complicates the attractiveness from a BTL perspective. Is is much harder to obtain leverage to finance property in London, it is still possible but you need to be selective.
Worth pointing out that London is a vast area which covers many areas with completely different characteristics. BTL in Mayfair is a very different proposition than BTL in Merton.......
I personally believe that affordability is much more of a concern in places like Leeds, Liverpool and Manchester. Most people living in these areas live pay cheque to pay cheque on a fixed salary, and so there is a limit to how much they can pay. This is not the case in London, where affordability is not so much dictated by peoples wages, and is determined by the wealth of rich people both in the Uk and overseas. This creates far more opportunity for capital growth which is where the majority of property investment returns are sourced.
Also it's not strictly correct that you will be making a loss on properties in London in the current market. I personally have quite a few BTL's in London, and rental yields have increased substantially over the last few years and it is fairly common to see yields of 6% plus on vanilla BTL in zone 2 at the moment. I view this as a huge opportunity, as when interest rates start to fall again, there is going to be some very decent capital appreciation in London.
Property values in London have been flat to down slightly since 2015, which means in real terms they are down quite substantially. At the same time, rents have been rising consistently every year, resulting in yields in London that historically could only have been achieved in northern cities.
Another factor is that Landlords in London have completely given up due to taxes and historically low yields, so there is a HUGE shortage of decent rental properties. This is makes is really easy to rent out properties in London. I have been invested in London BTL since 2015 and have NEVER had a single VOID period ever!!!!
Hi Davidpaterson7142, what type of properties would be 6% plus on vanilla BTL in zone 2? normal family houses or flats or maybe run down houses, I am actually looking into investing in London at the moment. Thanks for your advice!
@@naturaltherapyforall My experience involves property in south west London, specifically in the Wandsworth/Lambeth areas. The highest yielding properties tend to be flats and specifically ex-council, which can achieve north of 7% easily. If you buy ex-council in the best areas, you get same rent but price per sq/ft can be 25-30% cheaper.
If you can find a run-down property in the area, go for it, but they are rare.
Even Victorian family homes are now yielding over 5% and imo this is probably where you will see the most capital growth over the long term. However, there is a lot of stamp duty to pay at these prices so really depends on what you are trying to achieve from investing in property.
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Jamie your video s are very informative. .👍
Cheers mate! Glad they help! Thanks for watching!
Interesting perspective. I live in Outer London. I'm considering buying a 2nd property to live in (potential outside London) and converting my current property to a BTL. So both would be very longterm hold.
Though I do wonder if it might be easier to sell my property for a bigger place, and use my cash to invest elsewhere.
Like you say, I guess it depends on everyone's situation, and I'll need to run the numbers.
Great explantation Jamie your so precise and realistic. This information is valuable however London rental is so high you get great return for your money but the issue is that you need to put down a high deposit so it leverages out. The interest rates are so high at the moment it is not a great time to buy however as you said there are deals out there you just need to consistently sniff around for deals. i hope this makes sense cheers Jamie.
The good deals are hard to come by but there's some out there!
Hi Jamie, a off topic question, is it possible to let a property to the council or social housing provider with the property on a BTL mortgage? Is this something the banks ask before the mortgage, like who the tenant type will be?
How are you making negative cash flow when lenders require 125% coverage?
Probably got proof of a decent income, the lender will know he's got loads of properties let out that are making plenty.
Great Q… once you build up a portfolio, different lenders. One into play and they look at you as a whole, not just the individual property
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Jamie, nice content as always, but mate locality makes a difference, at least to starter investors. With all the property and agent hunting you have to do upfront (forget about in-life maintenance and inspections), having to travel from London to the north, while having a dayjob and a life, well isn't the most viable option let's say..!
Agreed if you do it the standard way. But I always eat up for doing things remotely, so locality makes very little difference in my opinion
Should have went to spec savers Jamie, to see those figures on the teleprompter! 😂
First comment!
Always good to see you mate!
Hope you are prepared for new legislation for landlords and tenants who damage properties etc.
Yep… easy stuff to manage. People scare off way too easily from this stuff!
Jamie, a family members has a house worth approx 700k she has 250k left to pay its similar to the situation what you said. What's her best next move as her mortgage prices are leaving her skint? If anyone can help please
Extend the term of the mortgage, or downsize, or get a lodger or 2 if she wants to keep the bigger house. Right now rental is crazy so she'll find good quality lodgers who will pay top price to live in a decent property.
@@marklewis3023 appreciate your time and help!
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APG
Thanks! Would be great to work together! Head over to www.aspirepropertygroup.co.uk/? and fill in your details, and a member of my team will be in touch! 😊
APG
Thanks! Would be great to work together! Head over to www.aspirepropertygroup.co.uk/? and fill in your details, and a member of my team will be in touch! 😊