Property vs stocks 🏡 📈

Don’t have a huge amount of info on AirBNB restrictions and practices across the UK (in London, you can only let out for 90 days I believe), but generally it seems like you would basically be trading the security of a long-term yield for more money per day/week/month from your tenant.

Generally, you can only get buy-to-let mortgages if you’re planning to rent out for 6 months or more so you might have to borrow differently to offer short lets over the long-term (i.e. with a holiday let mortgage).

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I actually had this choice to make last year, I Inherited a share of a house. We decided to sell rather than rent it out mainly because it’s less hassle and I’ve put most of my share in stocks

Some of it went in Freetrade R4 :slight_smile:

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I keep hearing good things about having a residential REIT within a portfolio. From what I’ve been told, people look to use REIT(S) for their regular income, and run them alongside their other value/growth stocks that might take a much longer period to pay out. I can see the sense in it.

Nice article and thanks for putting this together for us all. :slight_smile:

Matt

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Yep I’d like to have some REITs in my Freetrade portfolio. Like WP Carey. What’s the plan on seeing REITs in the app?

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It’s a great article, love it!
Question: why is this article (and other insightful ones about investing) not published in Freetrade blog or social media?
I feel this will benefit to a larger audience.
Also, is the Discourse platform optimized for SEO?
Curious to better understand your approach to content marketing

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We’ve shared this on social media, on twitter and we’ll share it on LinkedIn soon too :mega:

The community works well for SEO because we’ve seen that a lot of user’s posts here end up being popular search results, as well as the content that we share :speech_balloon:

So we tend to use the blog for news and the community to share everything else now.

When it comes to this aspect of our content strategy, Viktor’s summed up our approach nicely here -

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Very good write-up!

A couple of things:

  • You mention this in a reply, but yield isn’t the same as ROI if you are buying property with a loan (whereas for unleveraged stock acquisitions yield and ROI are more or less synonymous). Could be worth pointing out.
  • Some commentary on the transaction taxes which apply to residential property transactions in the UK:
    • The tax which applies in England is called stamp duty land tax (SDLT), not simply stamp duty.
    • SDLT also applies in Northern Ireland - ie, NI does not have a different tax.
    • With all due respect, you write about the transaction tax which applies in Scotland (and Wales) as if these places were slightly curious foreign countries - eg, capitalising the name of the Scottish tax, and referring to both places with “they” (which you don’t do for England). I think it would be possible to write this summary in a way which doesn’t treat any part of the UK as the ‘default’.
    • That said, well done for mentioning LBTT (and alluding to LTT) at all. Many companies based in London/England just wouldn’t bother!
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If you want to see some property hassle, I was on Channel 5’s Nightmare Tenants a few weeks ago.

https://www.my5.tv/nightmare-tenants-slum-landlords/season-5/episode-3-2-2-3-2-2-2

I let out a flat to a Zeyad Alsaffar, a convicted fraudster. My segment’s a bit of an anti-climax, because the guy fled the country.

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Is it me or has no-one realised property is insanely expensive, especially London. You wouldn’t buy a massively overvalued stock, at the peak… would you?

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I think most people are aware, but what can you do? The situation gets worse by the year. You either pay rent, pay mortgage or be homeless. The first two options further inflate the housing market.

And the longer you wait to buy, the more out of pocket you will be when you finally do thanks to this infinite housing boom.

It’s an unpopular opinion, but if all private properties had a right to buy clause for tenants, this issue would be over.

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There is nothing wrong with renting as long as you invest your money elsewhere. Especially for London I can be more profitable in the long run.

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I do agree. But your investment growth needs to be greater than the growth of your rent

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I’m not sure if London property really is overvalued? Is it not very simple supply and demand? The number of houses in the capital is fairly limited (either build up or further out) and at present the capital has a large concentration of jobs and wealth, ergo lots of people want to live there and value doing so highly enough to pay the prices in order to do so.

I do believe that the bubble is artificially inflated. As we have many Houses in London or flats that are unoccupied in order to push the price up.

Boris Johnson has pledged to change stamp Duty procedures which could see them being scrapped for property under 500k. This would be good news for landlords and might revitalise the buy to let market. Certainly if he reverses the tax changes aswell.

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Though of course it’s worth remembering that changes to SDLT (aka stamp duty) - including to the higher rates for additional properties - only apply to England and Northern Ireland.

It’s also worth remembering that Boris Johnson will say literally anything at this stage if he thinks it will make the other tories vote for him :laughing:

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Something like 0.5% of homes in London are long term empty, I’m not sure making those available on the market would have a huge impact on property prices overall.

A world exists outside of London so a change in the stamp duty tax would help people like me out a great deal so i would welcome this. But like Dave says above Boris would say anything I just hope he’s a man of his word as he’s likely to win the premiership.

Watch from the 9minute mark.

Real Estate rental income vs. Stock dividend income

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