Buy to let.

Liam_O · 4 April 2016 at 12:29AM

Hi,
Im a newbie as far as buy to let goes. I live in Scotland have been mortgage free for a couple of years now.
I've spotted a flat that would probably cost me around £70,000 and wondered if anyone had any advice for me.
Im also a self employed contractor will this hinder me.
thanks in advance.
Liam

theartfullodger · 4 April 2016 at 7:39AM

You will no doubt be aware of the Private Housing (Tenancies) (Scotland) Bill 2015 which has completed Holyrood process (votes 84 in favour, 14 against) i.e. it will happen.
http://www.journalonline.co.uk/News/1021515.aspx#.VwIOeR9yvQp
Queen due to sign it soon.

It has many changes to private lettings: There will be no "no fault" eviction process (equivalent to the Section 21 process in England), so landlords wishing to evict tenants will have a more interesting time. There will be no initial "fixed term" - tenancies carry on day-by-day: A tenant may give notice of 28 days to landlord after 28 days from start of tenancy. Rent controls are improved for tenants.

If a landlord wishes to evict he can use one of 17 new grounds (eg no rent paid) and a new tribunal will assess the case. Or he may say he wishes to (say) sell or move back in: Tenant can appeal. If tribunal finds for landlord, in the 3 months afterwards if landlord does not seriously move to sell or move back in tenant may appeal and be awarded up to 6 months rent.

Student lettings where a landlord will be unable to certainly end a tenancy at end of summer seems more than hard on both landlord and any new students looking for a property.

http://www.landlordzone.co.uk/forums/showthread.php?73142-The-Private-Housing-(Tenancies)-(Scotland)-Bill-2015-completes-Holyrood-process

http://www.livingrent.org/2016/03/scotlands-tenants-celebrate-historic-housing-win/

Your income can easily be proved by supplying copies of last 3 years tax returns.

Slàinte mhath!

MortgageMamma · 4 April 2016 at 9:54AM

In terms of the mortgage itself the fact you are a self employed contractor shouldn't be a problem so long as you:

Can provide proof of income
Income can support the loan

Will you be buying at fixed price, sealed bids or auction? Do you know how much the property will rent for and what improvements will need to be made? how long is the lease and what are the arrangement for management fees?

Liam_O · 4 April 2016 at 11:25AM

Hi,
The flat in question is offers over £65,000 so my bid would probably be £70,000. I am a joiner builder to trade and have glanced at the overall condition of the building which looks fine.
The flat is in good condition with nothing major needing done and is in a very good location, I would say it would bring in a minimum of £350 per month rent.
Im sure I did hear something recently, that the laws where shifting more for the tennant and will have a read at the link you have posted.
I also wondered, do I go buy to let as this is my first foray into the market and fork out 25% deposit, or do I just buy it as normal and lay down 10%.
Ive heard some say if its your first don't go buy to let.
Thanks for your help.

marksoton · 4 April 2016 at 11:32AM

You can't let out a property on a residential mortgage unless you have consent to let and you won't get that initially so it'll have to be BTL and chances are a much larger deposit.

Liam_O · 4 April 2016 at 11:33AM

When you say "How long is the lease and what are the arrangement for the management fees".
I take it you mean, how long do I plan to lease it out, the answer being indefinitely, but would probably only offer 6 months at a time. As far as the arrangement for management fees,I may or may not get a letting agency to look after it.

Bluebirdman_of_Alcathays · 4 April 2016 at 11:33AM

Bear in mind you will need £2100 up front for extra LBTT.

Liam_O · 4 April 2016 at 11:39AM

At the moment Im currently living in a large property that I have paid off, I may look into remortgaging and go that route if that makes it easier, oh well time for an appointment with an FA.

Liam_O · 4 April 2016 at 11:41AM

LBTT ? can you expand I'm new to this.

booksurr · 4 April 2016 at 11:42AM

Liam_O wrote: »

Ive heard some say if its your first don't go buy to let..

so your "advisers" advocate mortgage fraud from the outset then?

(350x12)/70,000 = 6%
so your gross yield will be a nice round 6%. Only you know the local property market in terms of capital growth but that is rather low for a property which (presumably) will not produce "much" capital growth otherwise it would be worth more than 70K

professional LL will cost their purchase on yield and capital growth not on the price you'd pay if you wanted to live there yourself. Compare 70k to the "value" of other properties in the area and find out what the rental is on them before deciding what to offer

Liam_O · 4 April 2016 at 11:52AM

I take it you mean 6 months rent in advance 6 X 350 = 2100

Buy to let.

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