Indeed. If you require a mortgage for BTL, you're effectively just an agent for the bank. You take all the risk and pay the up-front costs, and the bank gets a good return for signing off a few forms.
BTL has been a good deal for the last few years, but it's getting squeezed now by tax changes. It looks like a sure thing but it really isn't, because profitability is very dependent on:
1. Tenant quality. One bad tenant can wipe out a few months of income.
2. Tax changes. The trend in the UK is clearly not in favour of landlords.
3. Interest rate changes. A good chunk of BTL property is overleveraged, and a change of a couple of percent will make it unprofitable. This seems unlikely now, but I think it's quite possible after Brexit a few years from now.
4. Legal changes, including rent controls and tenancy terms. We haven't had much of this in the UK, but it could happen with a different government.
5. Expenses. Insurance and replacement can take a gross rate of 5% down to a net rate of much less.
Some of these are UK-specific. But it seems likely that AirBnB is a better bet for property in a good location.
BTL has been a good deal for the last few years, but it's getting squeezed now by tax changes. It looks like a sure thing but it really isn't, because profitability is very dependent on:
1. Tenant quality. One bad tenant can wipe out a few months of income.
2. Tax changes. The trend in the UK is clearly not in favour of landlords.
3. Interest rate changes. A good chunk of BTL property is overleveraged, and a change of a couple of percent will make it unprofitable. This seems unlikely now, but I think it's quite possible after Brexit a few years from now.
4. Legal changes, including rent controls and tenancy terms. We haven't had much of this in the UK, but it could happen with a different government.
5. Expenses. Insurance and replacement can take a gross rate of 5% down to a net rate of much less.
Some of these are UK-specific. But it seems likely that AirBnB is a better bet for property in a good location.