Is now the time to pull out of the UK buy to let market?

[Buying Homes Overseas]

Despite the governments climbdown on capital gains tax(GCT) reform last week and a quasi introduction of a flat rate 18% it would seem that now is the time to capitalise on UK gains to invest in property markets around the world.

Basic rate tax payers with non-business assets, which include second homes, buy to lets and shares, will see that CGT RATE RISE from 12% to 18% from April 2008.

Thousands of people who have held off from making decisions while waiting for the chancellor’s reforms are now expected to make plans to sell an potentially re invest overseas.

[jvizman]

Well if you want to go abroad i would sugest Costa Rica! safe place to live! on the cusp of being the next hawaii !!! almost no property taxes! with no capital gain taxes!!!! let me know if i can help!! i am a american that lives here!!

[alexft]

Well the people who are in the game recently wont be investing because of the negative equity. Some cash rich investors will acquire buy to let properties at the fire sale prices and keep them long term. There is still money to be made in UK. Overseas investments can offer good returns provided you do due diligence. Look at the recent Spain property market collapse and rise in Dubai, India. Every day brings new opportunities to gain or loose and any offer to invest should be examined in the light of recent information together with fundamentals and historical returns. Ideally you would be informed by the agent if the area is family area or flatland, where is the nearest schools, parks and other facilities.


Regards,

Alex

[wyman100]

Originally Posted by alexft

Well the people who are in the game recently wont be investing because of the negative equity. Some cash rich investors will acquire buy to let properties at the fire sale prices and keep them long term. There is still money to be made in UK. Overseas investments can offer good returns provided you do due diligence. Look at the recent Spain property market collapse and rise in Dubai, India. Every day brings new opportunities to gain or loose and any offer to invest should be examined in the light of recent information together with fundamentals and historical returns. Ideally you would be informed by the agent if the area is family area or flatland, where is the nearest schools, parks and other facilities.


Regards,

Alex

Buy to lets have always been seen as a medium - long term investment which, in recent times, has been a 2 fold win for landlords making gains in both the property value and from a monthly rental income in excess of mortgage payments and maintainence.

While the current downslope in property value may be enough to scare off some investors, others will note that in this kind of market there is a higher demand for rental properties which will produce an increasingly positive effect on rental income.

This point, coupled with the risks of currency fluctuations in relation to overseas investments will ensure that the buy to let market remains boyant in the UK for years to come, irrespective of investor's ability to buy properties outright.


Paul

[alexft]

Paul,

Yes demand for rental accommodation generally tends to go up in such scenario. However which bank in UK will offer mortgage to cash poor potential buy to let investors? And will the slight increase in rental income be enough to offset higher finance cost and short term negative equity? UK repo properties bought for cash in a good location. That can be an good investment.


Regards,

Alex.

Originally Posted by wyman100

.

This point, coupled with the risks of currency fluctuations in relation to overseas investments will ensure that the buy to let market remains buoyant in the UK for years to come, irrespective of investor's ability to buy properties outright.


Paul

[wyman100]

Originally Posted by alexft

Paul,

Yes demand for rental accommodation generally tends to go up in such scenario. However which bank in UK will offer mortgage to cash poor potential buy to let investors? And will the slight increase in rental income be enough to offset higher finance cost and short term negative equity? UK repo properties bought for cash in a good location. That can be an good investment.


Regards,

Alex.

I think the key phrase there is short term negative equity, as buy to let investments are always deemed medium-long term. And as for finding a bank to offer a mortgage to cash poor potential buy to let investors?

Here are a few 85% LTV deals for your perusal:-

A&L 2 year fixed with no arrangement fee 5.54%,
Birmingham midshires 5.79% 3 year fixed with no arrangement fee, 3 year tracker 5.95%

Please feel free to call fairman-financial (co.uk) for a free quotation

As you can see the actual cost of financing these low equity deals is not as high as you seem to think.

Also i agree that repossessed properties can offer a potentially good investment but that holds no relevence to our conversation about buy to let investments. Reposessed and auction bid properties are more often used as a "quick win" situation, doing a little work and selling on.

The key to a good buy to let investment is research, research, research.
Check *sold* property prices in the area (not 'on the market' prices!) for as far back as you can find. Do the same for rental incomes. Assess the inpact of previous times of property value downturn on rental income and properties *in that area* (by % of the contemporary market prices). Check location in relation to local ammenities, schools etc. Check what types of people are looking to rent in the area.

And most of all, find a good mortgage broker fairman-financial (co.uk)

Paul

[jvizman]

i see it as any market. It will sooner or later shake out the speculators who do not belong there! as in any healthy market if you cannot afford to be there you will sooner or later be shown the door! if a market is to speculator heavy it will slip into a bear market. till it is normalized the go back to the bull market scenario. this happens with any commodity be it physical like gold or oil to housing to stocks!!! the law is simple if you cannot afford to play you will lose your ass!