DGL,

He is not an UK taxpayer, also it is his sole residence.

Gross income here is gross income.

Surely the level of risk has to be looked at? Investing in a property equals all eggs in one basket whereas putting your money in an investment trust is spreading the risk over all the companies in which the IT invests.

Where ever you live, I think you will be taxed on the flat in the UK, as it is 'income arising in the UK'. You don't say how globally mobile you are, but I believe some countries (like Denmark) have a property value tax which also includes the value of property outside that country.

Investment Trusts are more liquid if your situation changes suddenly.

Personally I would invest in directly held blue chip high dividend paying shares, or an Investment Trust. The return on capital should at least equal and will probably exceed your net return on a BTL, without the worry, stress, and inconvienence.
An extreme example of what can go wrong renting property is in the City where I live, a few years ago a Mother murdered her three children in a rented townhouse, since then that property has lain empty, nobody will rent or buy it at any price, it is virtually worthless despite costing a buyer in excess of £250,000.
Terrible for all concerned, and a reminder that renting property is far from low risk.

Some excellent, informed posts on this thread.

We (my wife and I) have had several decades in property- renting and development-and running share portfolios here and overseas.

I think if you can afford just one property the advice to select a basket of high dividend yield shares is best. Spread the risk and buy quality companies on down days. Research thoroughly and look at dividend cover, P/e and cashflow etc. Only buy what you understand.

Property has been good to us but we always bought low and rented while they appreciated. That era is over. I doubt there will be property price rises any time soon.

When I hear stories of rental yields of eight, ten per cent etc I know that all costs are not being properly accounted for. Discounting capital appreciation, I would say the true yield is more like threee or four per cent. We have done this since the days when you had to bed and breakfast, and in two countries, so have stacks of experience.

Properties need constant maintenance to ensure quality tenants. Washine machines etc need service contracts. You need gas safety inspections, insurance, accountancy, etc etc. Lots of costs that people never count in.

I am on the board of a block of flats where we own two properties and this takes a lot of time, running about etc. The problems are quite frequent.

In Britain we get rates of 7.5 per cent from agents, but I oversee all maintenance as we have a team of maintenance men. Try and do it from afar and you will get ripped off. Agents are none too bothered what repais cost you. You have to be hands on and know your tenants.

We run properties in America without an agent, but only because we hand pick tenants who have a lot of responsibility. This year virtually all the rent from one house went on a new roof ($9,000), insurance ($1,600), local taxes about $2,500, new dishwasher, $350, maintenance, about $430, and so on. Not exactly instant riches!

Property works if you understand it, work at it, know the area, keep a close eye on things and have a very good agent. Putting everything into one property is unwise.