Technical benefits not included in buy-to-let model
The following potential technical benefits were excluded from the BTL investment model and comparison to listed property:
– Being involved (as a developer, real estate agent or renovator) in the property industry could lead to investors picking up BTL properties at bargain prices. It could also provide inside information about areas or properties that might surge in future due to certain developments. These advantages could make BTL a worthwhile investment.
– Investors with a mortgage on their own home can borrow from their BTL property and pay off their own home loan. By doing this they’re shifting their interest expense deduction, which in turn reduces the rental income profit earned, thereby reducing their tax burden.
– The BTL investment forces undisciplined savers to save. It’s a fact that the bank will repossess your property if you do not pay every month. With this in mind, investors will make sure they pay their mortgages every month. A debit order on a listed property investment can however have the same effect. – This comparison did not take into account that investing in rental properties through a company legal structure could offer significant benefits from a tax and expense write-off point of view.