Buy to let.

booksurr · 4 April 2016 at 12:03PM

Liam_O wrote: »

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

no, those going into the letting market do so with an understanding that they are starting a BUSINESS, so look at it as an investment decision. They are not buying somewhere to live, they are investing money with a view to making a return. They therefore need to know what the return is, in your case 6% per year before costs and tax. Gross yield is a standard benchmark test for comparing properties and informing how much to offer on them

it is good that you ask questions but you have a huge lack of background knowledge
LBTT is the Scottish equivalent of stamp duty given that you now have devolution and can set your own taxes

https://www.revenue.scot/land-buildings-transaction-tax
I am surprised given your interest in LTB that you did not notice the changes made in the March budget. If you own more than one property (BTL or not) you must pay a higher rate of LBTT when you purchase.

you need to do some research yourself. How about going down the local library and getting out a book on property investment - just because you are in the building trade does not mean you know what you are doing when becoming a LL. There are many such books, google it, here is a random title to start with (don't buy it, read it for free in the library!)
http://www.amazon.co.uk/Successful-Property-Letting-Buy-Let/dp/1472119940

Bluebirdman_of_Alcathays · 4 April 2016 at 12:05PM

Liam_O wrote: »

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

LBTT is the Scottish version of Stamp Duty. Like the rest of the UK, there is now a 3% surcharge for second properties. 70000*0.03=£2100 - you need this up front, you cannot add it to the mortgage. Add this to the 25% you'll need for the mortgage and this is over £20k you'll need up front.

theartfullodger · 4 April 2016 at 12:56PM

Liam:

Strongly suggest you join SaL
https://www.scottishlandlords.com/about/joinus.aspx
- then do the free courses with LaS
http://www.landlordaccreditationscotland.com/courses/

You appear to have a lot to learn. When I started as a landlord I was even more ignorant than I am now: It cost me a lot in time, money & aggravation.

The time & money SaL & LaS will cost you will be cheaper than the mistakes you might otherwise make...

Pixie5740 · 4 April 2016 at 3:02PM

MortgageMamma wrote: »

how long is the lease and what are the arrangement for management fees?

In Scotland we don't buy leases, we buy buildings or at least parts of buildings in the case of flats.

Being a flat there could be a factor or it could be self-factoring which is something the OP should look into as part of his business costs along with all the other costs and suggestions made by the posters above.

Join a landlord association, learn from other people's mistakes.

Maybe look at some other types of investments as well because whilst a 6% gross yield is ok you could probably find a better return for less hassle investing somewhere else.

Conrad · 4 April 2016 at 4:45PM

marksoton wrote: »

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.

I've seen it done many times, and lets face it, who's to know what someone does from day one, and in all my years no one ever got a scolding by not telling a lender, worst comes to worst you just apply for consent to let later or even sell the place if it really came to it (which it wont)

OP - millions of people buy their first place with the 'intention' of occupying it, but never move in - lots of mates of mine did this. I even did it once myself and in my case the lender was perfectly happy with it. If they weren't I would have sold, no biggie

booksurr · 4 April 2016 at 4:49PM

Conrad wrote: »

I've seen it done many times, and lets face it, who's to know what someone does from day one, and in all my years no one ever got a scolding by not telling a lender, worst comes to worst you just apply for consent to let later or even sell the place if it really came to it (which it wont)

OP - millions of people buy their first place with the 'intention' of occupying it, but never move in - lots of mates of mine did this. I even did it once myself.

advising someone to commit mortgage fraud is not what this forum is for - even if you "got away" with it yourself

Conrad · 4 April 2016 at 4:53PM

Liam_O wrote: »

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.

Then if it were me I'd remo it (its almost a crime not making your equity work when mortgage rates are so low), and invest in B2Ls.

I've been in the business for years and the vast majority of LL's end up well off. Just stick to common sense rules - such as only let to sensible nerdy type people, always keep a healthy sum in reserve - I paid about £20k into my B2L current account (a 123 account) and this just sits there in case of extremis

Remember even in the tumultuous credit crunch of 2007/8, and thereafter, decent property fell some 20% or so in value, but so what, it came back and has accelerated in value the last 3 years.

Aim to make a decent monthly profit on each (personally I would favour Interest Only, and keeping the profits from this aside to either buy further property or from time to time pay off a lump - B2L is a business so minimising monthly outgoings is the priority in terms of sound day to day cashflow)

20 years from now you'll be sitting on a very healthy pile, this gives you options in life - especially as you get older - my builder mates have shattered knees and backs by 50

Conrad · 4 April 2016 at 4:57PM

booksurr wrote: »

advising someone to commit mortgage fraud is not what this forum is for - even if you "got away" with it yourself

If you can point to where I advised him to commit fraud, go right ahead.

Most people daily break local speed limits, a 'casual' offence that could result in worse injury to others (faster speed makes a huge difference to damage done to bodies), I would consider that a far worse offence, yet people still do it.

Liam_O · 4 April 2016 at 5:16PM

Thanks to all for there comments, I clearly have a lot to learn, but Im no fool Ive been in business for 25 years and know how to make money.
Conrad Im sitting on a 300k property so I think I will remortgage, at the moment I just want to clue myself up on the basics and put my toe in the water If it works then I'll buy more just trying to get some investment for old age.
In my mid forties at moment and know I have to prepare for this.

And yes I will look into Sal and see what I can glean from this.
Got to start somewhere.

marksoton · 4 April 2016 at 5:18PM

Conrad wrote: »

I've seen it done many times, and lets face it, who's to know what someone does from day one, and in all my years no one ever got a scolding by not telling a lender, worst comes to worst you just apply for consent to let later or even sell the place if it really came to it (which it wont)

OP - millions of people buy their first place with the 'intention' of occupying it, but never move in - lots of mates of mine did this. I even did it once myself and in my case the lender was perfectly happy with it. If they weren't I would have sold, no biggie

I was simply being factual.

I'm not going to advocate or endorse that behaviour. You initially did.

I'd also suggest that when you did this lenders had a much more laissez faire attitude...

Buy to let.

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