"Mayfair real estate is an emerging market asset class," said Renaissance Capital deputy chief executive Andrew Cornthwaite, who got the idea from an investor deciding what to do with $1 billion (633 million pounds) made selling emerging market assets.
"I asked him what he was buying now," Cornthwaite told the Reuters Russia Investment Summit. "He said: 'I am buying coal in Mozambique, I am buying oil in Kurdistan, and I am buying buildings in Mayfair'."
I have to admit I have been reading TMF property board with interest for a while, with the likes of Bertee and King Of Nowhere talking up the property market etc
Recently Cliff D'Arcy said in a recent TMF article that it was a bad idea to buy a property in London or the South East.
I personally don't think such a general remark is valid as it deepnds on a number of factors such as location, cost of finance, if it is an investment then the ability to rent it out & potential yield etc
As readers will know I am a big fan of investing in companies that pay decent dividends & think it is a good strategy to make money in the stock market.
But I think it is a better strategy to buy a property in Central London, put about 50% deposit on the flat/house and take out cheap finance and then rent it out so the mortgage payments are easily covered.
For sure property is expensive compared to the 1990s, but when you look at it from a cashflow perspective especially in Central London where property can be let within days or 1-2 weeks at good rents that comfortably pay the mortgage then it does'nt seem like such a bad proposition.
House prices have been expensive for yonks.
But the truth is there are still a lot of people out there who just can't buy their own house/flat, with the high rents of the past year that is even more evident as I am sure most of these people would rather buy then rent.
We have had a recession/credit crunch since 2007, infact the worst financial crisis since the 1930s yet prices in London drops 10-20% only be bounce back strongly a year or two later. We have been in an environment where the banks won't lend with good rates unless you have a good credit record and a good deposit.
By no means am I bullish on house prices, but I am not bearish either.
I do think though if you can put 50% deposit on a Central London flat in a nice location that can easily be rented out then it's not a bad investment in the current inflationary environment especially when cheap financing is likely to last for a while.
The expenses you can deduct from letting income (unless it's under the Rent a Room scheme) include:
- letting agent's fees
- legal fees for lets of a year or less, or for renewing a lease for less than 50 years
- accountant's fees
- buildings and contents insurance
- interest on property loans
- maintenance and repairs to the property (but not improvements)
- utility bills (like gas, water, electricity)
- rent, ground rent, service charges
- Council Tax
- services you pay for, like cleaning or gardening
- other direct costs of letting the property, like phone calls, stationery, advertising
Filed Under: Property,