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Buy To Let - Is It Dead in 2024?

Buy to Let is the most traditional form of property investing in the UK and so many people are saying it’s dead in the water in 2024 – BUT is it really?

What is Buy to Let Investing?


You buy a property in a good area with high tenant demand, and you let the property out to tenants.


This type of investing is most definitely a long-term form of property investing as you buy and hold onto the property for a number of years.


You’ll generate monthly cash flow via the rental income, which can be a modest but great way of generating some passive income. This rental income should cover the mortgage / lending you have on the property and give you some profit left over each month too.

Running Costs of BTL Investing


Typically, you’ll have maintenance costs from time to time and also repairs too.


Also don’t forget those inevitable void periods where the property is empty and not generating you any rental income – you’ll have to cover the mortgage when this happens!


On top of this you will have management costs if you have an agent taking care of all the above for you.


Buy to Let - Long Term Gains

Buy to let overall is a long-term strategy, as the investor is typically not going to make a great deal of money each month in terms of cashflow. However, property historically will increase in value over time, that’s where the pay-off comes…


In 15 to 20 years-time the property could be worth ‘almost double’ what you paid for it - if you’re lucky!


It used to be a saying and still is - that a property will double in value every ten years.

This is NOT the case these days and you would be better off assuming it’s closer to 20 years to see the real gains in your properties value.


It’s also worth pointing out that, not every property out there rises in value over time. Some areas just don’t benefit from that much capital-growth, and you may find some properties only increase in value by a small amount even over the course of 20 years!

Top Tips for Buy to Let Investing in 2024


The trick is to buy in the right area, in the first place!


An area that is popular for renters, close to amenities, desirable and historically properties in that area have experienced good capital growth. My top tip is that, looking back at historic capital growth data is often the best indicator of future growth!


When looking at areas, it’s vital you do understand that not every street or road will be a goldmine. There are bad areas in every town and city, and you need to have that local knowledge and know where to avoid buying too.


If a property looks like a bargain, then do your homework before investing. Don’t be sold just on the price alone, check it out, ask questions of multiple people, speak to the locals!

Tax Tax Tax


Other things to be aware of with BTL investing are your tax liabilities that come with property ownership.


It is often more tax efficient to purchase a buy to let property in a company and not personally. This is done by setting up an SPV (special purpose vehicle) which is a type of ltd company.


An SPV has different tax liabilities and can save you considerable amounts of money by structuring your portfolio this way. However, it’s absolutely vital you do get tax advice from a specialist tax advisor to discuss your own tax position specific to you.

Cost of Buying and Investing

Another thing that is often overlooked is the cost of investing in buy to let.


Using a mortgage means typically you pay interest on what you lent to buy the property, so work out your numbers over the long term and don’t assume you’ll make money and be better off. Don’t forget about inflation too!


Lots of buy to let investors use interest only mortgages so they only pay the interest off each month. They do this because they take a long-term view on the value rising sufficiently enough to give them a nice profit one day.


Demand & BTL Landlords Selling Up!

Buy to let is still a strong strategy. The PRS (private rental sector) continues to grow each year and demand is incredibly high for rental properties in most areas of the UK. This shows no sign of changing any time soon, if anything renters are increasing with the cost of living out of control.


Whilst the press reports that lots of investors are leaving and selling up their BTL properties, most are doing so due to mortgage lending being too costly - making their investment just not viable anymore. Interest rates are higher than they were 2 years ago and much higher than they were 5 years ago.

So what has been happening is... landlords whose mortgage deal has come to an end are being offered mortgage rates with much higher monthly costs, making their investment less profitable.


At the time of writing (Feb 2024) inflation is falling ‘very slowly’ and interest rates are starting to become more competitive - but like any investment, it only works if its viable for you to invest and get a return. Do your numbers and do your homework.


We’ve discussed the pros and cons on BTL as an investment option but what about letting agents…


Becoming a landlord does come with a whole host of legal responsibilities. Speaking as a former letting agent, I can tell you that these days, lettings legislation changes by the week, or it feels that way sometimes!


What’s worse is... if you don’t stay up to date on changes to these legalities… you can trip yourself up very easily.


It’s much easier to pass on the management to a good letting agent.


BUT…. Good letting agents that manage your property for you are scarily just not that easy to find!


There are lots of them about, but my advice is you really need somebody to be pro-active when it comes to dealing with repairs and more importantly when and if rent payments are missed or late.


Managing a property with tenants is not simply about rent collection! Sadly, some agents do take the lazy approach.


Be careful and choose wisely when looking for a managing agent – ask other investors for recommendations in your area is the best tack to take.


Is buy to let dead in the water in 2024?


No, it’s very much not dead. Buy to let is and always has been, a long-term strategy.

NOT a short-term strategy based on what is happening today.

Buy to let doesn't die purely because the interest rates are high at the moment. The property market is a cycle and liquidity in lending changes year by year, based on the economy.

There's lots of talk about other investment strategies taking the place of BTL but it's nonsense. It's the OG of investing in the UK!


BTL investors that are in a sticky situation now have had their profits squeezed by the high interest rates, yes. But if they can ride out this period, they will benefit in the long-term which has always been the plan right from day one.


If you would like help, advice, support and guidance on your property journey - apply now to get a property mentor and business advisor who will work with you forever.

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