One for the buy-to-let empirists!

maccapacca said:
...you don't need landlords insurance, you just need buildings and a small contents insurance from a company OK with rentals (Direct Line is mine),
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I'd be careful with this though, horror stories do arise from people not having the 'right' insurance.
I had to change by buildings insurance over to a landlords. It was less than £1 pcm extra, so its hardly like they were ripping me off for no reason.
Direct Line offered me the same price, but was easier to stay with my existing.
management fees are 12% per month an introduction from an estate agent fee and vetting is usually 3 weeks rent.
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Mine is 8%, and a friend only pays 7%. I'll bet with multiple properties you could get even lower.

I've only mentioned the above as they aren't set in stone and do need to be looked into further.
 
Repossessed many B2L properties in my time, mostly from people like yourself who think its a simple rent - mortgage = profit.

Tenants can be a complete nightmare, all it takes is for one to lose their job and you can find yourself without rental payments for 3 months in no time. It then costs you a wack just to get them evicted, again, time is involved serving documents and getting them to court.

Wear and tear and things like boiler replacements, damp issues etc mount up and you have a duty of care. Tenants can also ruin your property which the deposit does not cover.

I would not touch new build properties. The amount that are overvalued due to dodgy builders and surveyors is ridiculous.

You also have to consider the area, its all well and good buying a cheap house, but if in 5-10 years there is huge growth in the area demand will reduce and therefore price.
 
Where in the country (roughly) are you planning this venture?
I predict the value of average UK housing stock will continue to devalue over the coming years. Be sure to factor in a similar assumption.
 
I am not a landlord at the mo but have had a couple of properties in the past. Having twice had non paying tenants I was pleased to have gone through an agent who had indemnity insurance against it, took an age to get paid but got there in the end.
 
You're really going to struggle to get a buy to let mortgage with an LTB greater than about 75% without paying a very high interest rate.

The issue I think you are going to be faced with is whether the amount your investment is actually yielding is worth the investment. The approach you are taking is going to be high cost and once you factor in management costs and tax you may well not feel you're getting a suitable yield for the investment you have made. Its a problem facing many BTL landlords right now.
 
Due to property prices there isn't much money at all in BTL - certainly not quick turnaround profits.

However, if you can get a deposit for a few properties, then why don't you buy one property outright - no interest payments and you can build equity that way.
 
Bottom line, if it was that simple everyone would be doing it with who had a bit of capital hanging around.

My parents have a flat they rent out, original not a BTL per se but where my sister and I stayed during university. It is really barely worth their time and effort to rent out without any mortage as it is is. They consistently seriously think about selling up and investing elsewhere, problem is capital gains tax will screw them over completely.


There are numerous cost which you just wont realise. Boiler packs up completely and needs replacing, bang a couple of K gone. Building roof needs serious re-work, bang your years profit gone. Leaking pipe which your renters knew about but did nothing to tell you until suddenly the ceiling in the flat below collapses due to water damage and bang, thats next years profits gone. Then the oven needs replacing, or the fridge, or a bed, you find damp is getting in form an outside wall. New regulations come in and you have to replace all your doors with fireproof doors and install mains operated fire alarms.

Your renters stop paying rent and you have to sort out legal measures - months pass before you have anyone paying that rent. Do you have sufficient funds to cover a mortgage before it gets repossessed?
 
I have one house I rent out. It was my house and I when I moved in with my G/F, the obvious option was to rent it out. A few things I can think of...

  • A couple of tenants have gone behind on payments but thankfully have got back on track before leaving, so I've not lost any money
  • The longest it's been empty is around 6 weeks but that was mainly due to me decorating, getting new carpets put in.
  • I pay 10% management fee (a new tenant is around £250 IIRC) though I don't think the agent does too much for the money. Best thing IMHO is them being able to get a tradesman down ASAP to fix a problem, saves me ringing around and playing piggy-in-the-middle arranging access etc
  • I've had a few unexpected repair bills eg plumber, sparky but nothing terrible (I rent unfurnished though)
  • One tenant left a load of junk so I coughed for a skip and spent a weekend slinging all their junk (furniture on the drive, toys in the garden, general junk), cleaning and painting
  • As maccapacca mentioned, I try to fit maintenance into the end of the tax year to reduce the tax bill right down
  • I usually go in and decorate between tenants, though existing tenant has been in for over a year now
 
oulton said:
nope
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it will be, trust me - you won't get offset mortgages for buy to let. Why offset capital against a BTL when you can just borrow less! Makes no sense and hence why it will be a residential mortgage.

No way will you get a BTL mortgage with a 5% deposit. There is no such thing on the market.
 
Was always under the impression buying to let will pretty much cover your mortgage. Untill that's cleared off your going to be breaking even?
 
I hope the OP isnt going to be one of those landlords that targets the low end rents and lets shabby properties.

For a proper btl mortgage your are going to need about 30% deposit if the markets are still offer the same LTV rates.
 
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Not sure you will see £450/m out of a £50K Terrace, although I haven't looked for a while.

Location is important, think about who might need to rent a house (nurses, Polish with family, etc) and where they might be working, this helps you advertise in the right place. Having a house miles from anything industrial won't help, having something next door to Cauldwell phones will.

Stoke has a lot of redevelopment areas, so what might be a poohole now (Cobridge, Hanley) might improve later and so will your asset.
 
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My BTL was the cheapest i could find and is a variable 1.5% above standard rate from my existing lender, who moved me onto a BTL when i (perhaps foolishly) told them i was letting it out.
My regular mortgage adviser has offered me a fixed rate of 5.45% for 5 years.

Both way more than a residential mortgage.

Only yesterday i was hit with a £230 bill for a PCB repair on the boiler. My tenants fell behind at xmas, the shortfall was made up from the deposit, they then built the deposit back up and paid me for the TV that they bought off me. They are decent people, but are young family and you never know what hardships cvould legitimately hit your tenants....and without indeminty (which i can't remember if i even have), it will hurt the landlord more.

Question:
for those who are landlords and self-assess; if you let at a rate that is less than your mortgage payments, would you be liable for any tax payments/refunds? I'm clueless as to how it works really.
 
I have one that I used to live in, decided to move in with my girlfriend but keep it as a btl as you never know what life may throw at you.

In the 2 years I have had it I have not been able to draw a penny in profit, every time it has gathered a few quid in the account something comes up, sofets, roof, water leak, shower, accounts fees.. I actually hope this year will be the first it starts to bring in a few quid at least but don't hold out much hope as I think the current tenant will be moving on so it will be cost to paint ready for the next one.

Remember, management fee's (10% for me) then have VAT added on, so your btl may reap 750 rent, giving a 75 management fee + 20% vat = £90 so only £660 to you a month. This minus insurance, then mortgage doesn't actually make that much money a month.
 
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