By Mike Atwal
20th February 2020

Landlord or Car Collector?



Changes in the buy-to-let industry may well have made investing in certain cars even more lucrative. Property in the UK has generally been the go to asset where folk invest their extra hard earned cash, and simultaneously invest in a commitment to a lender should they need a mortgage – mortgage is the key word here.

Welcome to car vs the buy to let mortgage!

Before you deduce that my marbles have left me, let me elaborate with the remaining marbles. You see, I’m referring specifically to buying a property with a buy to let mortgage, holding the intent to rent it out, with aims of asset appreciation and recurring income integral parts of the plan.

Safe as houses. Can’t beat bricks and mortar. Housing shortage. People always need somewhere to live.

We are familiar with the above one-liners in support of putting money into an investment property.

However, rules have changed recently. And I have started to wonder if the tables have turned and we should be saying: “Can’t beat metal, plastic and rubber” – “They will never make another again” Or even… “safe as supercars”.



You see landlords, which is what you become once you delve into the rental market have taken a hammering over the last five years, with more bashing to come. Specific highlights of changes include landlords bearing all costs for tenants to move in that once upon a time were the tenants responsibility, along with stamp duty changes to buy the place in the first instance

And then there’s the real game changer, significantly new tax rules are almost fully phased in now, disallowing the off setting of tax due against certain borrowing financial elements. So being highly mortgaged can really be harmful.

Couple this with all the normal fees such as obligatory landlord insurance, licensing as of recent times and new energy certificate rules, a rental market that although “thriving” is actually pretty competitive when you are actually part of it. Competitive in the sense that it’s no walk in the park.



And to put it simply, costs went up, profit down and stress up.

Oh and don’t forget the letting agent fees, 10 to 12% plus vodka and tonic, or the cost you will incur to manage it yourself.

In my opinion, property investment is only truly profitable if you own outright now. It’s only real punt at producing recurring income.

So I say think twice before you burden yourself with the debt of a substantial buy to let mortgage, legal responsibilities and a duty of care to be on hand when you want to rest.

If you were thinking of using your hard earned cash as a down payment for a mortgage into a rental property, please do your numbers and research first.

How much will you pay in terms of interest on that mortgage? How much can you off set against tax? What tax bracket could it push you up into taking account your current income situation?

Understand HMRC’s rules inside out to check how much you tax you will pay. Remember payment on account exists too, so the time frame to settle a tax liability could be shorter than you expect.

What is the real rental income in that area? How easy is it to find tenants? How much is a landlord licence in that borough?

Fully comprehend the safe deposit scheme, right to rent rules, gas and electrical safety rules. And associated costs.

Is it likely the property in question will enjoy a rise in value? I feel generally it’s all been a bit stagnant of late; some areas even weakened in value a little over the last few years.

And remember being a landlord has running costs which are a lot less predictable than running a car.

Sounding like too much hassle? Are you bored just reading what I say?

Well, I’ve barely scratched the surface to be honest, it’s an expansive topic.

All of a sudden buying a car, insuring it online, taxing it online (assuming it’s not exempt) and a yearly MOT and service doesn’t doing so bad does it? Even with a few parts along the way. Especially if that car ends up sitting pretty value wise.

Maybe buy to let is dying. Could it be the time to let yourself buy?

Aston V8 vantage with 19,000 miles
This car, considering all the features and comforting ride is currently really affordable at the moment. With 19,000 miles on the clock the car has been used caringly by previous owners and has a full history. You should see an increase in value in the coming decade due to their desirability, as well as, hitting the 20-year mark by 2027 that should increase the value.


Jaguar E-type V12 with 8,000 miles
This is a very rare and unique V12 that is completely original having had one previous owner from Canada. This is a highly collectible car and has a sumptuous Fern Grey colour with a contrast Cinnamon interior. Take a look at the listings to find out more.


 

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Mike AtwalAndrewAffiliateLabz Recent comment authors
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Andrew
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Andrew

Hi mike, You are blinkered !!!! Of course cars can be a great investment potential BUT as most people know surely your portfolio must be diverse ? Since the early 1930s Bricks & Mortar have consistently out performed any other investments other than Bullion in the late 80`s. That said in my response to an earlier post of yours we ALL make mistakes in buying or not buying classics and I take your point ! That said however long you hang on to your 6 Series it will still only be worth tuppence ( reference to my age lol ).… Read more »

Mike Atwal
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Mike Atwal

Hello Andrew! You are most welcome, you know I love being controversial! And where are my BMW M Parallels please? 🙂 You made me smile, because that is why I love my pair of beloved BMW’s, they are indeed worth tuppence and will remain so, and that makes me feel calmer and less guilty for indulging myself with them! I just wanted to dispel the notion that financed buy to let investments are always a sure-fire win; financed too heavily, they can sometimes tie up a chunk of money without benefit, possibly a loss overall. May as well buy a… Read more »

Andrew
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Andrew

How nice to hear someone else puts humanity above profit. I had a long term tenant, a good person and friend who sadly died, it was my pleasure to be able to help with funeral costs and sundries. In these uncertain times money still seems to rule and that’s a shame. Thanks for your reply onwards and upwards ! Regards Andrew

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AffiliateLabz

Great content! Super high-quality! Keep it up! 🙂