Is Property Still Worth It? The Honest Truth for Dentists

Is property still the smartest investment a dentist can make — or has the game changed?

In this special episode of Just4Dentists, Dr Ruth Baidoo is joined by Andrew Brown (Mortgages4Dentists) and Martin Febery (Money4Dentists) for a dedicated deep dive into property strategy for dentists. From buy to let portfolios to first time buying, residential mortgages to interest only — this episode covers the questions dentists are asking but not always getting straight answers to.

Together they cover:

• Whether buy to let is still a worthwhile investment strategy for dentists in today's market — and how it compares to stocks, shares and pensions
• The leveraging advantage of property and why Martin believes using other people's money is one of the most powerful tools in property investment 
• The great debate — should a dentist in their 40s prioritise clearing their mortgage or maximising their pension pot?
• When the right time is to buy your first residential property and why the professional mortgage range could give newly qualified dentists a significant advantage
• Why interest only mortgages can work brilliantly for disciplined high earners — and become a disaster for those who aren't

Whether you're a newly qualified dentist thinking about getting on the property ladder, an experienced associate building a buy to let portfolio, or a practice owner planning your long term wealth strategy — this episode will help you make more informed decisions about one of the biggest financial commitments of your life.

Have a question or want tailored expert advice? 

📩 Email info@j4d.co.uk or visit www.j4d.co.uk

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Presented by Dr Ruth Baidoo 

Produced by Your Podcast Producer Ltd for the Just4Dentists team

Additional Information:

Dr Ruth Baidoo: https://dr-ruth-dentist.com/

Just4Dentists: www.j4d.co.uk

Your Podcast Producer: www.yourpodcastproducer.com

Disclaimer: The information provided in this podcast is for educational and informational purposes only and does not constitute formal financial or legal advice. Every dentist’s career pathway and financial situation is unique; therefore, you should not rely on this content as a substitute for professional advice tailored to your specific circumstances. The value of investments can go down as well as up, and past performance is not a reliable indicator of future results.

Transcript

Dr Ruth Baidoo 0:00

Hi everyone, welcome to another episode of Just for Dentists. I'm Dr. Ruth Baidoo and I hope that you've had a productive week. My week's been filled with conversations about long-term goals. It seems like every colleague I've spoken to recently is kind of planning the next big moves, to whether it's like specialising or new property projects, buying a house, there's so much going on. So usually we spend time with a guest before getting financial feedback, but today we're flipping the scripts just a little bit. Property strategy is such a complex area, especially for self-employed clinicians, so it deserves its own full episode. Joining me today to tackle this are our regulars, Andrew Brown, director and Mortgage Broker at Mortgages4 Dentists, and Martin Febery, principal advisor at Money 4Dentists.

Dr Ruth Baidoo 0:42

This podcast is for informational and educational purposes only. The views expressed by myself and my guests are our own and our providers of general expert guidance and industry insight. Because every dentist's circumstances are unique, you should always seek independent advice tailored to your specific situation before making any major financial decisions. Hi guys, how are you both doing today?

Andrew Brown 1:03

Very good, thank you. It's good to see you again and hear you again.

Martin Febery 1:07

Yeah, really good. Thank you.

Dr Ruth Baidoo 1:08

There's a lot of us as dentists and anybody else who's listened who might not even be a dentist who has interest in property or maybe you have a few properties yourself. So yeah, Andy, if you can just like express to us why this topic is so important and why we need to sort of unpack it a little bit more.

Andrew Brown 1:21

Yeah, well, absolutely. I mean, you hit the nail on the head. A lot of dentists own their own properties and night elect properties. A lot of the dentists I speak to, especially ones who are into the 30s, 40s, have portfolios of properties. So thinking about how you manage that portfolio, whether you make additions to it, how you're getting the best from that in terms of profitability, which is obviously a clear link then to your your major cost is a mortgage, usually, is really, really important. And nowadays, there's a whole topic of should I buy it in my own name or should I buy in a limited company? There's lots of different tax rules that impact, your CGT tax, income tax, it could be corporation tax, there's a dividend tax. So there's national insurance now, stamp duty, additional surcharging stamp duty, all your legal fees. There's so much going on that it's a really hot topic. And um it's really important that people are well educated before making these big decisions to buy assets, which are something that's gonna be the most money you're ever gonna spend in your life.

Martin Febery 2:23

And just to remember as well, that from the other side, properties isn't the golden ticket that it used to be. So you really need to plan for all of those things because it's not gonna work itself. You need to think about um your strategy and what you want to do with it. Don't just buy a property, sit there and hope it all works.

Dr Ruth Baidoo 2:42

Great. And then what about the whole buy-to-let situation? Do you still think, given the way things are, that it's still a good way, if you've got surplus cash, that you can invest that way?

Andrew Brown 2:51

Yeah, potentially. And this is where I think in the interview, I should confess now that um this is a bit of a passion for me, property investment, as well as um running a mortgage brokerage. It's not a coincidence um that I'm into mortgages and property. Um, so I've got um over the years, I've invested in a number of by to let development projects. And um I've now I feel quite old, but I feel young at 45. But actually, I've got around 25 years of experience now of making investments. And the it's not necessarily for everyone. And some of the key takeaways from making property investments is if you're doing that on top of an already busy life, which could include a busy day job and a family, it can be quite time consuming because no matter how much you outsource, you're still going to get asked questions. There's things that may go wrong, there's been decisions to make, it can cause stress. So it's not necessarily easy building up a portfolio of properties and then managing them and then overlaying your personal life. So you have to take that into account. In terms of if you ask me, is it a good investment strategy? Then absolutely, I think it it still is a good investment strategy, but it's probably not as good as it was 10 or 20 years ago. Um, house price is of of almost non-existent growth for the last 10 years when you take into account inflation. Um, so if you look at average house price, it's a nice graph going upwards, but inflation has also been very high, as we all know, yeah. The last five or six years. The house price inflation in London has slowed down. It used to roughly double every decade for the last 30 or 40 years, but the last 10 or 15 years it has slowed down. So it's not necessarily a safe bet that you're going to get massive capital appreciation, but you should get capital appreciation. Um, you also need to take into account your yields, um, and i.e., how much money are you earning when you get the rent in minus all the mortgage costs. And rental yields, you'll hear a lot of investors talk about that. Personally, I've never been interested in a yield myself while I'm young and working.

Dr Ruth Baidoo 5:04

Yeah.

Andrew Brown 5:04

Um, I'm more bothered about capital appreciation, and I suspect a lot of dentists will be as well. Yeah. Dentists tend to earn a good salary, definitely higher than an average salary for sure. And so potentially dentists may not want a good rental yield, they may be looking at capital appreciation. And it's not always easy to get both.

Dr Ruth Baidoo 5:25

Yeah.

Andrew Brown 5:25

Um, and and at the moment, up north, northeast, maybe Manchester is really good and strong for rental yields. Um, London is a lot lower, um, but the capital appreciation can vary between regions as well. So there's there's quite a few things to sort of unpack around is a bad slate a good investment? Yeah, and perhaps I could bring Martin in now as well, because I could make a case for property investment. Um, and Martin, you could maybe make a case for investing in stocks and shares, for instance, or into a pension.

Martin Febery 5:59

Yeah, sure. It was that it and it doesn't seem that long ago, really, does it? That buying property as an investment seemed like a no-brainer. It's it's not the gold standard anymore, I don't think. Maybe a a good solid silver, but it's just not as easy as it it was. Now it's more about being strategic and just making sure that uh you have got to take into account the yield and location tax efficiency and just understand that everyone uses the word uh or the the term passive income, it's it's not as passive as it used to be. There's a lot more work involved. Whereas, yeah, from my point of view, an investment in a good diversified portfolio of stocks and shares will give you the return you want. It is more flexible and tax efficient. But the fact is that uh because of our the way we are, we like bricks and mortar, we like things that we can touch. And it does give people a feeling of security. And that, unfortunately, well, from my point of view, is really important. You know, sleeping at night is just as important as um making money. And people feel comfortable with property because they understand it much more than they do necessarily outsourcing investments into things that they can't touch.

Dr Ruth Baidoo 7:15

But then how do you then um challenge that with people who buy into cryptocurrency and things of that nature? Um, is that a completely different ballpark or not necessarily?

Martin Febery 7:25

Wow. Um, cryptocurrency is a whole different episode, I think. Um I I like a really good conversation about cryptocurrency, but it'll take some time. So crypto is a completely different kind of thing because you're talking about um an asset without an underlying ability to create value other than scarcity and the requirement of other um investors. So it really does come into a completely different thing. There's also less tax efficiency with the crypto because you can't stick it in ISAs and things like that. But yeah, yeah, it really is a very different thing to property. The one big advantage, you would say, of property is that you can buy it with other people's money. So from my point of view, I'm not trying to knock it all down, but the way to use property efficiently is to mortgage properly. You cannot borrow money from a bank to buy stocks and shares, they won't let you do it, but they will lend you money to buy a property. And so that leverage is the thing that gives property the edge over stocks and shares if you're in that position. I would say never buy a property with your own cash, but um I'm sure people would not necessarily agree with that. But yeah, the leverage part of it, using somebody else's money to buy it is probably the most important part of property.

Andrew Brown 8:35

Yeah, absolutely. I was going to try and trump you in the argument then, Martin, but you did it for me. You presented a killer blow to investments potentially, is that that leveraging. And to give an example of that, if we had a £50,000 deposit for a buy-to-let property, you would be able to borrow £150,000, roughly 75%. You sometimes borrow a little bit more than that, but that's a sweet spot for rates. So you could buy a £200,000 property, and then you've got the value in that property increasing it, say if it's even 3% a year, then you're getting 3% on the £200,000, not your £50,000. And that's a massive advantage over stocks and shares. However, without we won't open a counter one because this is a property special, but there's also, you know, if you're in a stocks and shares ISO, it's tax-free your returns, whereas in a property, we've got something called capital gains tax to take into account as well. But leveraging is definitely a really important factor to being able to buy to let properties.

Martin Febery 9:35

And then just to finish that off, the leverage increases your risk. And that's what you have to understand. So it's really important to kind of stress test things like interest rates. We all got used to that really low rate, as Andy said, and it seems like it's um it's it became the norm, but it's it wasn't the norm, it was an anomaly. And we should realise that rates should be around three, three and a half percent bank rate, not necessarily mortgage rate. And you need to make sure that you you stress test your scenario that if you know if something else happens and the interest rate goes up, it's not going to cripple you and you're not gonna lose what you um have invested in.

Dr Ruth Baidoo 10:15

Okay, another question in the same sort of region regarding the you know, today's episode being uh about property and everything. So for a dentist who's maybe, you know, let's just say scenario-wise, dentist in their 40s, who's maybe been doing dentistry for a little while now, should the priority be clearing the home mortgage or maximising the pension pot in this situation, this scenario?

Martin Febery 10:35

This this one is a big philosophical debate, I'd say. Debt-free versus tax efficient. Um, the number one thing to think of is where you stand on risk. So penny off the mortgage gives you a guaranteed return, effectively, the interest you're saving. So it could be, you know, four at the moment could be four to five percent, hopefully a bit less over a bit of time. So that's pretty good. Guaranteed return. And it makes you feel good because your house has paid off. And again, we're a we're a nation of homeowners, so we kind of like that cuddly feeling, especially if you're slowing down work or moving to part-time. But a pension, so it's much more attractive when you start to look at the actual maths, forget the emotion part of it. Something like 40 odd years old, as you're saying, you're earning over the higher rate threshold. Every pound that you put into your pension costs you only 60 or 55p once you factor in tax relief. Then it grows tax-free in an environment that you can access from 55 at the moment soon to move to 57. So you really have to think about what's your objective. Do you want security now or growth later? Uh, you plan to say you practice at 55 and retire early. Do you have a healthy pension pot? Are you catching up? All those kinds of things. Most cases, a blended approach works really well with that. But if you're like me, I even go one step further, and this is an extreme, but work with me. Why would I give my perfectly good money to a bank that doesn't want it? So personally, I'd switch to partially or totally interest only and let inflation do its work on the outstanding capital and um put the capital I would have paid into the pension, sorry, that I would have paid off the mortgage into a pension or another tax efficient vehicle if you tapered. And then just let it grow through a pension rather than paying off the capital. You would expect to get a greater return on your pension, especially including the tax relief, than you would paying interest. But that is a higher risk strategy. So what we really want ideally would be kind of a hybrid between the two. I don't have trouble sleeping at night because um I'm a finance person. If mortgages keep you awake at night, then it's probably good for you to pay them off as quickly as you can. If it's not something that gives you a can concern, then certainly don't pay off extra. Use the money wisely and maybe even move to interest only if you've got that risk appetite. Andy, feel free to disagree with that.

Andrew Brown 13:04

Yeah, I mean, this look let's be really clear. This is a really hot area for the regulators. And our parents and 20 years ago, almost everybody had an interest-only mortgage and then they had an investment which is called an endowment, which the idea was you'd invest into that every month and it would grow, it would pay off your mortgage and give you a nest egg. Now, the problem is it doesn't always do that. It can be less than you're anticipating the investment returns. You can get to the end of your mortgage, ready to retire, age 68 or maybe even 65 was promised back then. And your endowment's not going to pay your mortgage off. Oh, I can't retire. And that that caused one of the greatest misselling complaint investigations that we've ever had in Britain in financial services. And sadly, from an advisor perspective, some advisors would have given really good advice, but it wasn't always very well documented, and it was hard to prove that someone did really understand an endowment and that there could be a shortfall. And it it almost got to the point where almost every complaint was being upheld, and therefore customers were being put in a position as if they'd had a repayment mortgage. So if you can imagine that how much that costs to rectify, we're talking billions of pounds. The market swung almost entirely the other way now. Most people have a capital repayment mortgage. And I think Martin makes a good point that for some people, it might be appropriate to have an interest-only mortgage, but there's a lot of risk there. And we we have to be really careful. And by the way, I meet people regularly that are 65 with a big interest-only mortgage that haven't got a repayment strategy and they're in a mess. It's a real, real problem. And we cannot risk that. So the consumers are going to have to be reasonably sophisticated, I'd say high earners, disciplined. If you're going to have a strategy where we're going to put money into an ISA, for instance, or it could be a pension, pension locks it in, which I quite like. You can't touch that until Martin mentioned until you're 55, soon to be 57, you then get a 25% lump sum. But if you put in an ICE, you could start to withdraw that. So there's got to be a discipline if you're going to save alongside an interest-only mortgage. Now, the good thing for dentists, which is primarily our listener base, a lot of dentists are going to own their own businesses and practices. So not only might they have a pension, they might have a practice to sell. It could be a building or it could be the practice with the goodwill of the patients. That's potentially a good strategy for paying off an interest-only mortgage, but there's still no guarantees what the practice might sell for, what the building might sell for, and potentially out your your investment performance. So I think we've got to be really careful when taking out an interest-only mortgage and look at it on a case-by-case basis, and ultimately it's going to go to someone's attitude to risk. That's the key in investing in pensions and mortgages. What risk am I prepared to take? But history tells us investments outperform bank accounts for the last hundred years, but it doesn't necessarily mean it will in the future, and that's why we've got to be careful.

Martin Febery 16:17

Right. So just to finish off, Andy, because I don't disagree with you at all on that. Yeah, the emphasis has to be around planning. So there is you absolutely don't reduce repayments to a mortgage without having a proper plan in place and a reviewable plan. So this is an ongoing thing. This is not a one-shot and off it goes. This is about actually financial planning, um, which is the the key, in fact, the key to all of these um things. But the fact is you need to be tracking it and making sure that you are going to be in the right position when you want to be in that position.

Andrew Brown 16:53

Yeah. And it's worth adding that if you have got a financial advisor that advises you on your investments, pensions, the way a charging structure generally works nowadays is you might pay them an initial fee to set something up or transfer something into them, but there's a an annual charge. And that annual charge, then the advisor's obligation is to meet with you regularly, which could be a couple of times a year, at least once a year. And and that that's the brilliant thing about having an advisor. You're gonna have the conversation regular. Now, how has my pension grown? How is my investment? Has anything changed my life? Have I had any children? Do we need to review our protection? Um, how's my mortgage doing? Should I make some overpayments? Um, should I put money into an ISA this year? These are this conversation you can have with a professional wealth manager regularly. And I think people who do that are potentially then very well suited to this type of interest-only mortgage. But for someone who then buries their head in the sand for 20 years and not really planning, it's probably a disaster having an interest-only mortgage. And you need to be really careful.

Dr Ruth Baidoo 17:58

100%. Andrew, you've seen it all probably. Okay. So when or is there a smart time for a dentist to actually start their property search? Yeah.

Andrew Brown 18:07

And are we talking sort of residential Ruth?

Dr Ruth Baidoo 18:10

Yeah, let's talk, let's talk residential. Let's, you know, yeah, let's talk residential in regards to you know, a dentist who's maybe somewhat newly qualified, now kind of, you know, finding their feet in their career and thinking, yeah, I want to buy a property somewhere for me to live. So is there a right time for this or should we just go straight into it as soon as they after they qualify?

Andrew Brown 18:27

Yeah. Well, I can tell you what I see a lot is dentists tend to buy somewhere small, maybe a flat to start with. Yeah. That could be in the 20s, and then often then will buy a house in the 30s. At that point, they may be married, thinking about children, potentially getting the forever home. So there is usually a stepping stone.

Dr Ruth Baidoo 18:45

Yeah.

Andrew Brown 18:45

Um, but what happens a lot is they don't necessarily sell the first property. That becomes an investment property.

Dr Ruth Baidoo 18:52

Yeah.

Andrew Brown 18:53

Um, so one reason to buy something smaller, you know you might you're gonna outgrow, let's say, in a five-year plan is that, well, maybe I'll keep that if you can afford to as an investment property. And if you've got house price appreciation in your region, that could really help you do that. So you could potentially remortgage it to a buy-to-let, which is actually called a let-to-buy mortgage, and then you could buy a new property. So I think having a bit of a think about your life plan is quite important. I think people often don't realise how quickly you'll outgrow a two-bed flat or a one-bed. I do tell a lot of my clients never buy a one-bed flat. And I know there'll be people listening thinking that's all I can afford. But you almost outgrow it instantly because there's no spare room for guests. If you have a child at some point, there's no room for them. And then you're under a bit of pressure potentially. And there is situations where couples have had a baby and they can't sell the flat and they're stuck in a one-bed flat. Sometimes you're not allowed to rent it out. In some leases, restrict you. So it can get a bit tricky. So I always think if you can buy something that you can grow into, so it's got a bit of a window. But ultimately, I think you'll know when you think it's right, when you're settling down, maybe you've met a partner and you you want that security, you maybe know where you're going to be working for the next five years. I I do think it is a sensible investment. I think timing is great at the moment for rates compared to what they have been. Um dentists, I don't know if many dentists know, but especially new newly qualified dentists, there's two or three mortgage lenders that have what's called professional mortgage range or applicable to solicitors and doctors and accountants. And that can allow you to borrow a slightly higher multiple of your earnings on the basis that it's likely you're gonna increase exponentially, essentially, with with your wage.

Dr Ruth Baidoo 20:47

Yeah.

Andrew Brown 20:47

So that that could be another reason to make a purchase because most of those are for a certain number of years you have to have been qualified within, which is typically sort of five to seven, as one lender does a little bit longer. So that could also be a reason why you might want to buy a property.

Dr Ruth Baidoo 21:04

Yeah, I think everything you said sounds really sound. I think from my experience as well, and even just talking to friends of mine who aren't dentists as well, sometimes it's the affordability. It's like, oh, I want to buy something, I want to, you know, get onto the property ladder, but this is how much, this is how far my money's gonna take me. So, yes, the idea, the ideal situation would be, yeah, buy something that you said that you can grow into. But there are a lot of people out there, what they can afford at the moment maybe is a one-bedroom flat, and it that's comfortable for them, but life can change very, very quickly and rapidly. So, you know, we know as we were discussing about property, things have changed massively over the years. It's not the same as it was 20, 30 years ago. So it's a very different situation, but I guess also very wise words from you about trying to stretch yourself a little bit more if you comfortably can, so that you've got the space and room to grow into it as your life changes as well.

Andrew Brown 21:52

Just to sort of add Ruth as well, that the bank of Mum and Dad is a big deal at the minute. Loads of first time buyer get gifts from parents to enable them to purchase. And I think a lot of people also don't realise that you don't necessarily need a huge deposit to buy a property. The rate is not as good, but you can proceed with 5%. There's now a lender as well that we can go up to 98% of borrowing 2% deposit. Wow. The same criteria to be met. So a 5% deposit, say it may be on a £250,000 property, is £12,500. That still sounds like a big number, but it's not as big as what some people maybe think. And potentially it could be a couple. Parents might be willing to gift them, in my example, just over £6,000 each to make it happen and to avoid paying rent. The rent gap to mortgage costs is now closed again. At one point, it made more sense to rent when interest rates were really high in the last few years. But because rates have come back down, rental rates have massively increased, massively. Because a lot of buyer to let landlords are selling properties. Their mortgage costs have gone up for landlords. They've therefore increased rent. It's a supply-demand thing. So potentially it's now making sense to have a mortgage and a property now and be paying your own mortgage off rather than sending your money to a landlord.

Dr Ruth Baidoo 23:16

Brilliant. Thank you so much for your insight, guys. It's been really, really interesting just to try to unpack this very complex topic. So thanks very much for your input. Appreciate it.

Andrew Brown 23:25

No worry. Thank you.

Martin Febery 23:26

You're very welcome.

Dr Ruth Baidoo 23:28

A massive thank you to Andrew Brown, Director and Mortgage Broker at Mortgages 4Dentists, and Martin Febery, principal advisor at Money 4Dentists, for stripping away the complexity of property strategy. It's such a major part of our long-term wealth plans that we felt it was absolutely required to dedicate this deep dive into it. If you have a property dilemma or a specific question about your mortgage options, please do reach out to us. For tailored guidance, email the team at info at j4d.co.uk. To connect with other dentists who are also building their own property portfolios or diversifying their income, join us in the Just4Dentists Facebook community group. For more insights and resources from today's property special, head over to the website www.j4d.co.uk. And if you're enjoying the show, please hit follow and consider leaving a review. Can't wait to see you in the next episode. Bye. You've been listening to Just 4Dentists, presented by me, Dr. Ruth Baidoo. Just4Dentists is brought to you by the Just 4 Dentists team, experts who are proud to provide dental professionals with the right insights to navigate the financial and business decisions dental school didn't teach us. For more resources, insights, and tools to help you get the most out of your career, head over to www.j4d.co.uk.