Buying to let , anyone done it ?
- Thread starter easyrider
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Soldato
Probably not as good as it used to be, as BTL mortgages are more expensive than normal ones, and you have to pay 3% of the cost for "2nd home" purchases.
Soldato
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Long term let or holiday?
I have two properties that are rented , one is a town centre flat and the other is a 4 bedroom rural property. TBH it depends what you are doing it for, what are your end goals? Its not a cash cow in of itself for me but they both wipe their own faces and mean i'll be asset rich at the end of the process.
I have two properties that are rented , one is a town centre flat and the other is a 4 bedroom rural property. TBH it depends what you are doing it for, what are your end goals? Its not a cash cow in of itself for me but they both wipe their own faces and mean i'll be asset rich at the end of the process.
I was just thinking to buy, get people in and pay the mortgage....maybe have some extra income when I retire...
Will you young enough to enjoy it or is it more asset rich to leave to loved ones on death?
Can't you find a legitimate way to earn some retirement income without resorting to parasitic BTL practices?
Sure you'll be better off, but do try to spare a thought for those who will be paying your mortgage for you.
The whole thing just stinks.
Or he could be helping out people who would like to live in said area but can't afford to buy.
it's unlikely to be that though isn't it? ultimately the prices go up because there aren't enough homes and he's buy one just for his own personal benefit
B@
Associate
If you intend to do up and flip, likely fine provided the margins work out. however unless you are a cash buyer then recent tax changes have likely made BTL unaffordable for rental purposes if you are taking a mortgage. look up S24 and the impact on mortgaged landlords.
Perhaps try propertypartner or propertymoose.
Soldato
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Buy it using an LTD, or setup an LTD to do the purchase, then you can continue to claim tax relief on the mortgage interest rate.
It was only self investors who got the new nerf tax, the companies got away scott free.
It was only self investors who got the new nerf tax, the companies got away scott free.
Jesus, get your pitchforks out why don't you. 
It's not like he's planning on building up a giant portfolio of run-down hovels that he can rent out at astronomic fees and get fat off the profits. It's one or two places that he can use as a long-term investment to provide for himself when he retires.
It's an entirely legitimate investment strategy. FoxEye, what other investments would you recommend?
Interest rates and bonds are rock bottom, the stock and currency market are volatile and property is one of the few (relatively) low-risk, high return options.
Easy, as others have said, it's becoming less attractive for private BTL landlords, especially with the new tax rules coming into place next month. But it's not totally without merit.
Were you planning on using an interest-only mortgage or capital repayment?
Capital repayment is obviously beneficial in the sense that you will own a larger share of the property over time, and you tend to need a smaller deposit, but it's more expensive month-to-month.
Interest-only requires a minimum 25% deposit but means your monthly outgoings are reduced. All being well, you can actually repay some of the capital with any profit, which will also reduce the monthly repayments.
From experience, it's not as simple as it sounds. My Fiancé owned her own flat when we met. I was already saving for a house deposit when we met but I really ramped up the savings after I moved in with her.
By the time I had a deposit ready, her loan to value was under 75%, which meant she could keep the flat on an interest-only BtL mortgage and we could buy a house with my deposit.
Flats are slightly different compared to houses because you have extra costs like ground rent and management fees, and we're also using an agency to let it, which is another expense.
However, over the last two years the 'profit' on the flat has been close to zero. Once you subtract all the planned costs (and the unplanned costs like replacing the built-in fridge) from the rental income, there really isn't much left. If it were a capital repayment mortgage there would be a significant shortfall which we would have to make up from our salary.
We're just banking on the long-term appreciation of its value, so that we can either sell both properties to buy somewhere bigger, or keep it as a retirement fund.
It's not like he's planning on building up a giant portfolio of run-down hovels that he can rent out at astronomic fees and get fat off the profits. It's one or two places that he can use as a long-term investment to provide for himself when he retires.
It's an entirely legitimate investment strategy. FoxEye, what other investments would you recommend?
Interest rates and bonds are rock bottom, the stock and currency market are volatile and property is one of the few (relatively) low-risk, high return options.
Easy, as others have said, it's becoming less attractive for private BTL landlords, especially with the new tax rules coming into place next month. But it's not totally without merit.
Were you planning on using an interest-only mortgage or capital repayment?
Capital repayment is obviously beneficial in the sense that you will own a larger share of the property over time, and you tend to need a smaller deposit, but it's more expensive month-to-month.
Interest-only requires a minimum 25% deposit but means your monthly outgoings are reduced. All being well, you can actually repay some of the capital with any profit, which will also reduce the monthly repayments.
From experience, it's not as simple as it sounds. My Fiancé owned her own flat when we met. I was already saving for a house deposit when we met but I really ramped up the savings after I moved in with her.
By the time I had a deposit ready, her loan to value was under 75%, which meant she could keep the flat on an interest-only BtL mortgage and we could buy a house with my deposit.
Flats are slightly different compared to houses because you have extra costs like ground rent and management fees, and we're also using an agency to let it, which is another expense.
However, over the last two years the 'profit' on the flat has been close to zero. Once you subtract all the planned costs (and the unplanned costs like replacing the built-in fridge) from the rental income, there really isn't much left. If it were a capital repayment mortgage there would be a significant shortfall which we would have to make up from our salary.
We're just banking on the long-term appreciation of its value, so that we can either sell both properties to buy somewhere bigger, or keep it as a retirement fund.
Couldn't have said it better myself. BTLers providing a "service"? Don't make me laugh, they're the primary reason most young people can't buy a home for themselves nowadays.
I was responding to the spare a thought comment. The people paying his mortgage could be grateful to have somewhere to rent.
Not everyone has the GD (yes I'm aware) bitterness when it comes to these things. Such a predictable vitrolic response thus far.
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If somebody pushed you into a well, would you be grateful to that person if he subsequently lowered a rope down for you to climb out?
The only renters who will be "grateful" to pay off a BTL landlord's mortgage are those who don't understand how BTL landlords are making home ownership (more) unaffordable for all.
Soldato
Good lord. Buy yourself a second home as an investment if you want. People rent because they can't afford to buy. I rented until i was 31. I didn't care, i had a roof over my head and a good quality of life.
There's a huge difference between buying a second property for future security and buying properties to make a monthly profit. Rented accommodation has always been a thing.
There's a huge difference between buying a second property for future security and buying properties to make a monthly profit. Rented accommodation has always been a thing.
Soldato
Landlord here (3 properties in the UK).
As other posters have said, this is not a way to release cash flow month in month out anymore, once I have paid all of my associated costs :
-Mortgage
-Self Assessment Taxation (about to get a whole lot worse)
-Management fees (anywhere between 8 to 12% of the rental cost) - Optional cost
-Landlord insurance
-Maintenance
-Rent insurance - Optional
-Various legal duties and checks associated with the rental (gas and electric checks)
-Tenant set up costs (could also get worse if the government decides to follow through with its tenant exempt scheme meaning that the agents might pass on their costs elsewhere)
I don't make anything month in and month out, some months I even lose.
But all being well I will be equity rich by the end of my mortgage term, and then consequently once my costs go down my cash flow will sort itself out.
Ignore all of the landlord haters, if they were able to do the same they would. Don't hate the player, hate the game.
As other posters have said, this is not a way to release cash flow month in month out anymore, once I have paid all of my associated costs :
-Mortgage
-Self Assessment Taxation (about to get a whole lot worse)
-Management fees (anywhere between 8 to 12% of the rental cost) - Optional cost
-Landlord insurance
-Maintenance
-Rent insurance - Optional
-Various legal duties and checks associated with the rental (gas and electric checks)
-Tenant set up costs (could also get worse if the government decides to follow through with its tenant exempt scheme meaning that the agents might pass on their costs elsewhere)
I don't make anything month in and month out, some months I even lose.
But all being well I will be equity rich by the end of my mortgage term, and then consequently once my costs go down my cash flow will sort itself out.
Ignore all of the landlord haters, if they were able to do the same they would. Don't hate the player, hate the game.
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Soldato
Either this or accept the long game with it.
The first house I bought (2007), if I sold it today taking into account ALL costs I would probably make 100k on it. Initially we lost on it with the crash in 2007 and 2008, but it has gained in value to around 25k (approx) year in year out for the past five years. Even taking into account the increased costs coming in, this is a great return.
One of our other houses (according to a recent valuation) had gained in value by around 40k a year since we have owned it.
Cash flow is the main concern though, and the reality is the separate bank account we use to cover the property costs will need topping up regularly to cover costs every year.
Short to mid term pain for long term gain.
In terms of a property crash? We are bound to see a huge bump in the road at some point, but by how much?
Too many people (domestic, corporate and political) are heavily invested in the property market for them to allow it to crash in an epic way. So while they artificially keep interest rates low to prevent market correction its only going to go one way while the population in the UK continues to boom and housing development continues to fall short of demand.