Newbie to PRS?

Newbie to PRS?

9:15 AM, 16th January 2024, About 11 months ago 55

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Hello all, I am in the incredibly lucky position to soon have about £390k in cash, so no mortgage is needed. I want to invest and buy a flat in London and rent it out.

I would like to ask for advice. I have read a lot online but every website says different things. Where should I invest? Which area? I was looking into Canary Wharf. I also thought that a two bed flat was a good idea, but does anybody think otherwise? Would a one bed flat be easier to rent?

I was hoping to get about £2,000 a month on rent, however, I don’t know if that’s something I can realistically get with a property worth £390k.

I’m pretty new to this, so any insights would be really appreciated.

Thank you all,

A.L


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Lomondhomes

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9:18 AM, 20th January 2024, About 11 months ago

Dont, seriously dont. The government, the chancellor, nthe councils etc are all against you. I've been letting for 35 years. All was great till the above stepped in. Tenants were great and usually long term. Government and councils wont provide adequate housing but they sure don't want you to. Im getting out as fast as i can. Much easier ways with far less hassle than the PRS.

AP

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9:54 AM, 20th January 2024, About 11 months ago

I’m afraid I don’t think you will get a 2000pcm rent for a £390k property in inner (zone 2) London. My flats which yield 2k per month are worth around £500k at the moment, some even more. Rents are up and values are down, but not enough to hit your estimates.
Don’t forget all your buying costs (SDLT etc) and if you have a flat the annual management charges etc.
If you want to be as hands off as possible and involve an agent to manage the property, I think after tax you’d be walking away with quite a low return. However capital appreciation on a decent London property I think is still a pretty safe bet.

Laurence Stevens

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10:02 AM, 20th January 2024, About 11 months ago

In my opinion forget BTL and put the money into improving or extending your own Home.
The only way I know of making money Tax Free.
I’ve been in the rental business for 35 years and now I want to retire I will probably lose half my profit in Capital Gains Tax.

Londonlad

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12:08 PM, 20th January 2024, About 11 months ago

Odd that people answer completely different questions when OP has asked advice on where to buy a flat in London. But as it's been raised, the abolition of section 21 raises no fear in me as I've never used it once in 35 years. Make your property and contents idiot proof and choose tenants carefully. I find that now rents are rising and flats are scarce good tenants will stay longer and pay promptly.

Paul

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13:38 PM, 20th January 2024, About 11 months ago

If I was new to the market and in this current financial work. I would seek a different investment. Without a doubt Global Index Linked Tracker fund in a low cost SS ISA / SIPP mix. I say that from a 30+ year landlord with a decent portfolio.

Simon F

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14:22 PM, 20th January 2024, About 11 months ago

You can get a 5-bed student house in Portsmouth for under £360k yielding ~7.5% annually and so you'd have some change left over for 2 years maximum contributions into a SIPP too. Portsmouth has good connections from London. Portsmouth has a great local Landlord's Association too, easy to make all the acquaintances you need and monthly meetings are online. Let me know if you want to know more.

Stella

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14:49 PM, 20th January 2024, About 11 months ago

Reply to the comment left by Londonlad at 20/01/2024 - 12:08
You should be worried about loosing section 21
I have been a landlord for over 45 years and like others go to great lengths to get the very best tenants but sometimes all that glitters is not gold and it is only fair that we should have the property back without it costing too much time or money.
The way things used to be before the 1988 Housing act does not appeal to me and it looks like we might be heading back that way again.

Simon F

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17:34 PM, 20th January 2024, About 11 months ago

Reply to the comment left by Stella at 20/01/2024 - 14:49
Renters Reform & loss of section 21 is another good reason to consider Student market. Govt have acknowledged student market is naturally cyclical & that Landlords need to be able to get student tenants out at the end of an academic year and committed the final version of the bill will allow for that.

Londonlad

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18:02 PM, 20th January 2024, About 11 months ago

Reply to the comment left by Stella at 20/01/2024 - 14:49
Ah I see, not really the market I operate in. I prefer to provide quality long term homes. My longest tenant has been there 33 years and I certainly wouldn't think it "fair" to expect it back at two months notice.

SirAA

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19:21 PM, 20th January 2024, About 11 months ago

Reply to the comment left by Laurence Stevens at 20/01/2024 - 10:02You need not lose half of your profits in CGT with proper and professional tax advice. Mark, P118 and Cotsworld and similar Barristers can help you with that. All you need to do is seek good professional advice. Also, how will extending his home give him £2K per month cash flow he wants?

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