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  • FIRST POST
    • darrrren
    • By darrrren 23rd May 17, 7:51 PM
    • 23Posts
    • 19Thanks
    darrrren
    buy to let, is it worth it?
    • #1
    • 23rd May 17, 7:51 PM
    buy to let, is it worth it? 23rd May 17 at 7:51 PM
    Hi everyone. I browse here regular but only post every so often. As it stands,i turn 28 next month, and i have 36k left on my mortgage. My salary is about 29k a year. I've had my house three years next month and have over paid on it since I've had it using my 10% over payment allowance each year. I have about 12k in stocks and shares isa, and a mutual fund which i want to keep going. What i normally do is save in my normal Isa, then when there's a big lump i overpay the house. I've worked out i can pay the remaining mortgage off by my early thirties, and im trying to gain some guidance. I've always said to myself, pay off my house first, then get another and let it out, so i only have one mortgage at any time. Another part of me is wondering instead of overpaying, am i better using that money and saving for another deposit, and get a buy to let. This would be more risk having two mortgages. A guy i know has 4 houses he rents out but obviously they all still have mortgages on them. My mum says buy to let is full of horror stories and to sta
    Y as i am. I just want maximum return for an investment, and although im happy as i am ticking along, i know with risk there's more potentiol for bigger earnings. However just overpaying my house saves me 30k in interest alone on my house over the period. Any input and stories appreciated.
Page 2
    • darrrren
    • By darrrren 24th May 17, 6:32 PM
    • 23 Posts
    • 19 Thanks
    darrrren
    Those of you who said in todays environment you would do thongs different, what suggestions? What's best to do with your money i. Todays climate?
    • mn2203
    • By mn2203 24th May 17, 6:36 PM
    • 24 Posts
    • 1 Thanks
    mn2203
    only if you sign a Deed of Trust stating that when sold you will not get one penny from the sale. As soon as you share the sale proceeds then you have established a beneficial interest and would be liable to the higher rate SDLT
    not how it works -

    Ah, good to know thanks - not an option then thanks

    - it is exempt for the time you physically live in it as your main residence (plus the final 18 months of your ownership of it irrespective of whether you live there or not)
    - it is liable for the period you do not live there (excl the final 18 months). Obviously living with the BF, even if you do not co-own his property, means you cannot claim your property to be your main home as the facts show it isn't. Naturally letting the property also means it cannot be your home since it is the tenant's home.

    do some reading?
    https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet
    Originally posted by 00ec25
    Great thank you, I always find everyone here so helpful :-)
    • Crashy Time
    • By Crashy Time 24th May 17, 9:02 PM
    • 5,002 Posts
    • 2,157 Thanks
    Crashy Time
    Those of you who said in todays environment you would do thongs different, what suggestions? What's best to do with your money i. Todays climate?
    Originally posted by darrrren

    http://forums.moneysavingexpert.com/showthread.php?t=5650537


    https://www.amazon.co.uk/Investing-Demystified-Speculation-Sleepless-Financial/dp/0273781340
    • Pixie5740
    • By Pixie5740 24th May 17, 9:08 PM
    • 10,986 Posts
    • 15,170 Thanks
    Pixie5740
    Those of you who said in todays environment you would do thongs different, what suggestions? What's best to do with your money i. Todays climate?
    Originally posted by darrrren
    Instead of the conventional thong you could try a schlong thong....less tan lines.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • Cakeguts
    • By Cakeguts 24th May 17, 10:42 PM
    • 2,853 Posts
    • 3,902 Thanks
    Cakeguts
    To get buy to let to work you need more than one property and you have to do a lot of research. What you are looking for is a gap in the market. There are generally enough 1 and 2 bed flats so the tenants can choose. What you want as a landlord is to be in the position where you do the choosing so for that you need properties that a large number of tenants want to rent. Only you can know what that will be in your area.
    • Crashy Time
    • By Crashy Time 24th May 17, 10:51 PM
    • 5,002 Posts
    • 2,157 Thanks
    Crashy Time
    To get buy to let to work you need more than one property and you have to do a lot of research. What you are looking for is a gap in the market. There are generally enough 1 and 2 bed flats so the tenants can choose. What you want as a landlord is to be in the position where you do the choosing so for that you need properties that a large number of tenants want to rent. Only you can know what that will be in your area.
    Originally posted by Cakeguts

    Most tenants want to rent 1 and 2 bedroom flats though?
    • Cakeguts
    • By Cakeguts 25th May 17, 5:54 PM
    • 2,853 Posts
    • 3,902 Thanks
    Cakeguts
    Most tenants want to rent 1 and 2 bedroom flats though?
    Originally posted by Crashy Time
    Depends on the area.
    • elephantrosie
    • By elephantrosie 25th May 17, 11:59 PM
    • 365 Posts
    • 102 Thanks
    elephantrosie
    Most tenants want to rent 1 and 2 bedroom flats though?
    Originally posted by Crashy Time
    yes. one bedroom flats are hot cakes in the letting market.
    Another night of thankfulness.
    • elephantrosie
    • By elephantrosie 26th May 17, 12:01 AM
    • 365 Posts
    • 102 Thanks
    elephantrosie
    I see my boss has a one bedroom flat for rent for six months now.

    honestly, i would start panicking if i couldnt rent out for that long. i suppose shes rich enough to cover the mortgage.
    Another night of thankfulness.
    • Thrugelmir
    • By Thrugelmir 26th May 17, 12:04 AM
    • 55,516 Posts
    • 48,872 Thanks
    Thrugelmir
    At the moment however im overpaying the mortgage as the interest is 4% and i don't get anywhere near that on any accounts i have
    Originally posted by darrrren
    Then worth persevering with at the current time. Being mortgage free will allow you plenty of freedom in the years that follow.
    “ “Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.” Sir John Marks Templeton
    • Crashy Time
    • By Crashy Time 26th May 17, 12:33 PM
    • 5,002 Posts
    • 2,157 Thanks
    Crashy Time
    Depends on the area.
    Originally posted by Cakeguts

    Yes, fair enough I suppose.
    • mn2203
    • By mn2203 29th May 17, 12:52 PM
    • 24 Posts
    • 1 Thanks
    mn2203
    - it is exempt for the time you physically live in it as your main residence (plus the final 18 months of your ownership of it irrespective of whether you live there or not)
    - it is liable for the period you do not live there (excl the final 18 months).
    do some reading?
    https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet
    Originally posted by 00ec25
    Hi _ I have read that link, thanks - just wanted to check if I'd understood it correctly - so I were to move out to live with bf and rent, as long as I sold within 18 months of moving out I would not be liable for CGT? Or say I sold 24 months after moving out, I would be liable only for the first 6 months I'd moved out?

    Thanks
    • 00ec25
    • By 00ec25 29th May 17, 1:11 PM
    • 5,012 Posts
    • 4,356 Thanks
    00ec25
    Hi _ I have read that link, thanks - just wanted to check if I'd understood it correctly - so I were to move out to live with bf and rent, as long as I sold within 18 months of moving out I would not be liable for CGT? Or say I sold 24 months after moving out, I would be liable only for the first 6 months I'd moved out?

    Thanks
    Originally posted by mn2203
    yes, although you'd also be able to claim letting relief which may cover those 6 months anyway. See example calculation, note it should use months not years but for simplicity I use years...

    example 1: own it for 10 years, move out after 9 years, let it for final year until sold

    PRR = 9 years occupation + final 18 months = 100% exempt

    example 2: own 10 years, move out after 8 years, let for final 2 years. Gross gain on selling £100,000

    PRR = 8 + 1.5 = 9.5years. PPR amount £100,000 x 9.5/10 = £95,000
    LR = lower of
    a) PRR (£95,000)
    b) gain in the let period: 10 years - 9.5 = 0.5 years. £100,000 x0.5/10 = £5,000
    c) £40,000 max allowed

    lowest is b)

    net taxable gain: Gross Gain - PRR - LR - personal allowance (if needed) 100k - 95 - 5 - (PA not needed) = ZERO

    remember the calculation applies to each owner so where more than one owner the gain is split and each person does the calculation on their respective share of the gain so each gets their own element of PRR and LR plus personal allowance
    Last edited by 00ec25; 29-05-2017 at 5:44 PM.
    • mn2203
    • By mn2203 29th May 17, 1:31 PM
    • 24 Posts
    • 1 Thanks
    mn2203
    yes, although you'd also be able to claim letting relief which may cover those 6 months anyway. See example calculation, note it should use months not years but for simplicity I use years...

    example 1: own it for 10 years, move out after 9 years, let it for final year until sold

    PRR = 9 years occupation + final 18 months = 100% exempt

    example 2: own 10 years, move out after 8 years, let for final 2 years. Gross gain on selling £100,000

    PRR = 8 + 1.5 = 9.5years. PPR amount £100,000 x 9.5/10 = £95,000
    LR = lower of
    a) PRR (£95,000)
    b) gain in the let period: 10 years - 9.5 = 0.5 years. £100,000 x0.5/10 = £5,000
    c) £40,000 max allowed

    lowest is b)

    net taxable gain: Gross Gain - PRR - LR - personal allowance (if needed) 100k - 95 - 5 - (PA not needed) = ZERO

    remember the calculation applies to each owner so where joint owners the gain is split and each person does the calculation on their respective share of the gain
    Originally posted by 00ec25
    Great, thank you.

    I bought for £83k and valued at £125k. I only earn £20k per year. So for a short term solution to make sure me and bf like living together, and to see where careers go (his could take him to move to another part of the country in the next 2-5 years) this doesn't sound as bad a financial option as I feared learning of the new regulations. Thanks
    • robatwork
    • By robatwork 29th May 17, 1:48 PM
    • 3,942 Posts
    • 4,272 Thanks
    robatwork
    You can go property another way, by investing with housecrowd or picking the property investments from thincats.
    Originally posted by quotememiserable
    As a matter of interest - have you had personal experience of those 2 platforms?

    ta
    • Crashy Time
    • By Crashy Time 30th May 17, 11:59 AM
    • 5,002 Posts
    • 2,157 Thanks
    Crashy Time
    Great, thank you.

    I bought for £83k and valued at £125k. I only earn £20k per year. So for a short term solution to make sure me and bf like living together, and to see where careers go (his could take him to move to another part of the country in the next 2-5 years) this doesn't sound as bad a financial option as I feared learning of the new regulations. Thanks
    Originally posted by mn2203

    The new regulations are designed to hit portfolio landlords who are over-leveraged, forcing them to sell so the government can say "Look at all the supply for FTB`s we have created", you should be fine.
    • wellspurs
    • By wellspurs 11th Oct 17, 5:09 PM
    • 8 Posts
    • 0 Thanks
    wellspurs
    BTL Kent
    My mother in law has sold her dilapidated but valuable house in Oxford to move to a nursing home near us in Kent.
    The cost of the home is £720 per week and with some £400k in the bank I was thinking of BTL in the Kent area.
    With interests rates low and not willing to gamble on traditional investments we've been considering BTL.

    We have LPA but will it be buying in her sole name. Any advice would be appreciated.
    • 00ec25
    • By 00ec25 11th Oct 17, 6:31 PM
    • 5,012 Posts
    • 4,356 Thanks
    00ec25
    We have LPA but will it be buying in her sole name. Any advice would be appreciated.
    Originally posted by wellspurs
    PAY for professional advice from a registered independent financial adviser, anything less leaves you wide open to not having taken proper care of your trustee duties

    nursing home or care home???

    average length of stay in a nursing home before death is <2 years

    for a care home, her 400k will cover upwards of 10 years so as LPA holders how old is she and what is most prudent for HER money for what remains of her life - presumably as an LPA is in place and you are already administering it, her prognosis is relatively short?

    Buying a property in a high cost part of the SE England and thus exposing her to the costs and risks of being a LL may not be deemed to be appropriate actions of her trustees given housing market uncertainty
    Last edited by 00ec25; 11-10-2017 at 6:41 PM.
    • wellspurs
    • By wellspurs 11th Oct 17, 11:46 PM
    • 8 Posts
    • 0 Thanks
    wellspurs
    PAY for professional advice from a registered independent financial adviser, anything less leaves you wide open to not having taken proper care of your trustee duties

    nursing home or care home???

    average length of stay in a nursing home before death is <2 years

    for a care home, her 400k will cover upwards of 10 years so as LPA holders how old is she and what is most prudent for HER money for what remains of her life - presumably as an LPA is in place and you are already administering it, her prognosis is relatively short?

    Buying a property in a high cost part of the SE England and thus exposing her to the costs and risks of being a LL may not be deemed to be appropriate actions of her trustees given housing market uncertainty
    Originally posted by 00ec25

    Thanks, her total assets are about £750k so there is plenty of provision for a 93 year old in a CARE home!

    I will seek the advice of a registered financial advisor but BTL I thought would be one way to reduce the impact of a £38k a year outgoing.
    • chappers
    • By chappers 12th Oct 17, 12:33 AM
    • 2,673 Posts
    • 1,514 Thanks
    chappers
    My mother in law has sold her dilapidated but valuable house in Oxford to move to a nursing home near us in Kent.
    The cost of the home is £720 per week and with some £400k in the bank I was thinking of BTL in the Kent area.
    With interests rates low and not willing to gamble on traditional investments we've been considering BTL.

    We have LPA but will it be buying in her sole name. Any advice would be appreciated.
    Originally posted by wellspurs
    I know it's a bit late now but you might have been better off tarting up her Oxford house and renting that.
    Recently I was in a rent or sell dilemma in Oxford, ended up selling a 3 bed terrace for £600k rent could have been circa £2250 pcm
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