Looking to get a buy to let house?

Dawnrazor

Well-Known Member
I've always had a tied house with jobs I've had and have never got on the property ladder, we've been talking about getting a buy to let but have no real idea about how to go about it, I know I'll need to go to my bank but is there anyone else that can be as or more helpful? Is there any point in getting Pointers from a property agent first? Is there companies that deal primarily with buy to let mortgages?
Thanks.
 
My pennies worth:
B2L is not capital gains tax free unlike your own home so decide if you want to live in what you buy, eventually. Bigger homes tend to have a lower percentage yield unless they are HMO's (houses of multiple occupancy like students, license required, fire regs etc beware). Lower yields often result in higher capital growth if you can manage the cash flow.
Canvass at least three letting agents for advice on easiest to let type and area.
Flats/ apartments and some homes have management fees from rip off management companies. Avoid them and go for freehold only as it makes a big dent in the return. Bear in mind an unlet month costs more than a few tens £ / month on the rent for an average 2 - 3 year let and tenants only have to give you one months notice by law so it's a bugger if they give notice on 20th December ! (Landlords have to give two and then it takes another 6 months through the courts to get possession).
Down south I have one agent on full management at 7% plus fees for credit checks etc and one at 9% all in, both are plus VAT. (VAT is not recoverable even tho' I'm a VAT registered business). Be wary of paying less and having a bad service and getting sued !
Osbourne gave us a hard time recently (what a shame he was sacked and relegated to the back benches and out of his tied house with less than 48 hours notice - couldn't have happened to a nicer bloke) and you will need to research his new tax implications on mortgage costs of which I am privileged to be unaffected by. Just bear in mind his extra 3% stamp duty over say ten years is 0.3% / year which you should expect to be a small dent in the growth %.
There is never a good time to take the leap, except in hindsight, but go for it and in the long term it will be ok. Interest rates certainly look likely to stay low so good luck.
 
I can recommend a broker to talk to if you want some advice. I would look at what area you wish to buy in and the rental rates against the purchase price. Decide if you're going to manage it yourself or pay an agent.

Returns are important. I get the same rental for my properties, but there is a large difference in the value of each of the properties. This will have a bearing if you want it to be cash neutral on a monthly basis - and you need to account for those management and upkeep fees - and the risk of it not being let. Also understand that a B2L mortgage will probably require a 25% deposit - and you will pay more in terms of interest.
 
My 2 pennies worth. Your Buy to Let may well be capital gains tax free or certainly you're likely to qualify for considerable relief? It depends on many things and the fact that you're required to live in tied accommodation with your job will almost certainly mean that you qualify whilst it is the only home that you own! A quick call to HMRC will confirm this!
Recommendations of Brokers are much better than going to your local bank too! They often have access to much better deals which can save you thousands over the years!

Additionally, you will only get tax relief on the interest part of the mortgage and will be liable for tax on any capital that the rent pays off so don't over pay. IE, The Mortgage is £800 a month of which £650 is interest. If the rent brings in £800 then you will be liable for tax on £150 x 12 =£1800 (minus any bills such as insurance and repairs).
 
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Thanks, it's fried my brain a wee bit!!! The deal is, we don't own a house, would this exclude us from a btl?
We want to get a btl as we live in a tied house, I'm a keeper, we want the house as somewhere to live after we retire in 20/25 years and not as an investment to sell in future.
Is a broker a better idea than going to the bank? Would a broker be more expensive?
A really big thanks for the advice.
 
Thanks, it's fried my brain a wee bit!!! The deal is, we don't own a house, would this exclude us from a btl?
We want to get a btl as we live in a tied house, I'm a keeper, we want the house as somewhere to live after we retire in 20/25 years and not as an investment to sell in future.
Is a broker a better idea than going to the bank? Would a broker be more expensive?
A really big thanks for the advice.

No exclusion from BTL at all - it is your ability to service the loan that is the criteria, not where or how you currently live. We sold our main residence and lived in rented for what turned out to be almost two years while we found and sorted the next property. Understand the point on investment vs somewhere to live in future. While it is not a pure investment, you do still need to maintain an element of emotional detachment to the property - and ensure it pays its own way while you're not living in it - although the last bit is by no means mandatory. I think we were just flagging that you do need to consider how self sufficient the mortgage is.

Some brokers do not charge fees and will frequently have access to far better deals from a wider portfolio than. A bank who may only sell their own product. Use the advice as a sounding board if nothing else. I can only applaud your foresight, but just go in with your eyes wide open. Happy to give as much assistance as I can - if you want it.
 
Additionally, you will only get tax relief on the interest part of the mortgage and will be liable for tax on any capital that the rent pays off so don't over pay. IE, The Mortgage is £800 a month of which £650 is interest. If the rent brings in £800 then you will be liable for tax on £150 x 12 =£1800 (minus any bills such as insurance and repairs).

Tax relief is gone on the interest as far as I'm am aware.....

anyhow, anyone can buy a house to let, doesn't matter if you don't actually have your own house. As long as you can afford the deposit then you can buy. You will have to show that you can cover the mortgage as well. The broker will be able to advise. Regarding tax relief as you have a tithe house I don't know what tax implication or benefits are however it is a sound idea to have somewhere to move to when you retire. The first couple of years are a pain in the ass money wise but it gets better over time as, hopefully rental and wages increase.
if you get a house then there are positives and negatives to using an agent.

positives, they deal with all the cack.
negitives, they want their share of the income.

things to note. Percentage is negoitable and also consider insurance if the tenets do not pay. Reads the agency's t's and C's very carefully. If it's not in writing it's not covered, no matter what they say.

depending on where you buy either get a two bedroom or a three bedroom. 1 person in a 1 room house or beds it will, when they get a boyfriend/girlfriend usually move to a bigger place for space. If they rent a 2 bed then they are more likely to stay. A 3 bed is likely to attract a family. 4 bedrooms and above start to move into more specialist areas with less tenants so can be harder to rent out. Depending on where it is.

and of course a lot depends on things like location, business in the area, speak to the estate agents in the area to find out what the market is like and what do people want to rent.
 
As your location sounds as if it is in a great part of the countryside an option maybe a house purchase for holiday let, same rules as BTL purchase apply but different and less onerous tenancy problems + higher rental. We manage occupation of ours all year round now.
 
Be aware that if you have own things like gas cookers and gas fires that are in the property, you will have to get them serviced every year at £50 ish an item. I made that mistake when the items were worth next to nothing. I should have sold them to the tenant for £1 instead and then they would have been his problem!
 
I will be watching this thread closely, I am in the same boat as the OP , tied house to the job and I too plan to retire in 25 years or so.

A buy to let is exactly what the wife and I have been discussing.
 
As your location sounds as if it is in a great part of the countryside an option maybe a house purchase for holiday let, same rules as BTL purchase apply but different and less onerous tenancy problems + higher rental. We manage occupation of ours all year round now.

As a furnished holiday let its treated as a business therefore you have better write offs against the tax on the income, you can also offset all of the interest at the moment due to it being a business enterprise, whereas the interest offset against profits is being phased out for BTL. The downside is that the gains on a Furnished Holiday let are likely to be liable to CGT, but if you buy it with your wife you currently have two lots of CGT allowance against your net profit on disposal. As part of an overall investment strategy one of my clients has a portfolio of 10 BTL properties, he did away with the agents and went to his tenants and said that following completion of 12 month tenancy providing they've paid their rent on time etc he would give them 50% of Decembers rent back, its reduced his void periods and increased tenant loyalty, he's only given them back the fees he would have paid agents anyway.
 
Every tenant seems to want a new kitchen and carpets fitted then after they move in they will have trashed them in less than a year so they just move on to another poor BTL sucker and often they do a runner on the last months rent so that the deposit you had from them only covered the rent loss.
1. Take 1.5 months rent as deposit as a minimum.
2. Get a rental security insurance from the agency renting the property for you.
3. Meet the prospective tenants face to face to get a feel (this can still go wrong )
4. Buy the cheapest kitchen and carpets as there is no benefit in fitting upmarket stuff for tenants.
5 Get spare keys for the double glazins as these always get lost by the tenants.
6. If they want to repaint walls for their kids when they move in you must take upfront the estimated costs of a decorator to return the walls to magnolia or whatever from them as a non refundable payment.

We still do BTL but have learnt lots over our 25 years of doing it.
Maybe the property will increase in value maybe not but as your own home later this is not an issue.

Martin
 
Thanks very much for the info, I can't tell you how much it's helped, just need to get the deposit hurdle cleared.........anyone need a kidney!!!
 
Thanks very much for the info, I can't tell you how much it's helped, just need to get the deposit hurdle cleared.........anyone need a kidney!!!

Again the same hurdle were trying to jump, I kick myself for not buying when I was 18, instead I was drinking hard and chasing women, didn't even shoot back then either so I can blame that for sucking up all my money!!!!
 
Probably a good idea to do something like this in a tied house, but an awful lot of folk are doing it now so pushing house prices up.

Some good advice above, i'd say go with a proper letting agent so everything is above board etc.
But also buy somewhere semi local so u can do some of the work urslefs or close t family if u move around with ur job just to keep an eye on things.
 
Been to the bank today, wow!! There's a lot to get your head round, seems as it's a house that we "intend" to live in even though it'll be let in the mean time, we can get a "residential" rather than a "buy to let" mortgage, doing away with the 25% deposit and higher fees/interest rates and they'll "loan" us more than enough for the deposit!!!
Really good and knowledgeable women who deliver with us, completely understood our position in a tied house and got us where we wanted to be, now we've got a "mortgage promise" for a house should we find one that suites.
Thanks to everyone for the advice, and any one who's been thinking about it for years, go and speak to the bank.
 
Speak to a mortgage broker..... ahem! Which bank was that DW?
 
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Speak to a mortgage broker..... ahem!

Do you not agree?
We went to one last week, a wander of the most arrogant type, I wouldn't give him the steam off my pish let alone the keys to a house, despite the truly fantastic meeting with the bank today, we are going to see another broker on Thursday, an appoint the wife booked last week, good idea??
 
Do you not agree?
We went to one last week, a wander of the most arrogant type, I wouldn't give him the steam off my pish let alone the keys to a house, despite the truly fantastic meeting with the bank today, we are going to see another broker on Thursday, an appoint the wife booked last week, good idea??

I am a mortgage broker... have been for 22 years

Sent you a PM
 
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I am a mortgage broker... have been for 22 years

I hope to feck you're not a jumped up arrogant wee nyaff that works in Lancaster??!!!
Any advice or Pointers in the buy to let area, tips welcome........not trying to get free advice you understand!!!
 
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