Buy to Let - How I made £100 @ month

kinster_2

Which lenders lend based on DSS tenants?

deemy2004

Don't waste your breath on DSS tenants - AVOID at ALL costs !

kinster_2

I have located a property that produces a good amount of rental income on 6 flats. Also found a mortgage lender that allows DSS tenants.

Is £65 per week for DSS tenants a 'normal' amount?
Do you need to be 'accredited' by the council to take on DSS tenants?
Are DSS tenants usually long-term and like to renew their tenancies?

From what I have read in this thread do you mean that I do not get taxed on the interest I pay on the mortgage?

Thanks

dougk_2

I was advised the mortgage had to be on the house being let in order to be able to use "tax offsetting", hence why I went to the maximum i could borrow based on rent on an interest only basis (why do repayment as the capital reduction means you can use less tax offsetting?)

With B&W's current BTL rate of 5.29% fixed for 3 years this is less than many normal mortgages available.

kinster_2

dougk wrote:

(why do repayment as the capital reduction means you can use less tax offsetting?)

So you reduce your interest payments when your loan capital is decreasing...

dougk_2

But then you pay more tax (especially as a 40% tax payer).
In my opinion you are far bettr going down the savings route to pay off your capital if you are BTL - or simply wait till you sell the property.

cash99

garysletters wrote:

Going back to the original post, you have been told that you can claim the interest payments on the extra 50K you took out on your residential mortgage against tax. I have to say that I would be double checking this ASAP. as far as I am aware, you cant claim the interest back from a residential mortgage, certainly not if the mortgaged house is not that being rented out.
Secondly, you mentioned you could claim the money for the solicitor against "tax".
Any fee to do with the purchase (i.e. solicitors fees, stamp duty etc. ) can only be put towards capital gains tax when you sell the house. These fees are not deductible against the rent.

If you borrow money to buy a btl house then you can offset the interest against the letting income . If the debt is secured on your current property then this makes no diffrence. However be very sure you can prove the money was used to buy the property. i.e. get the money sent directly from your mortgage lender to the solicitor dealing with the sale.

Howdie

whitevandriver wrote:

Result - bought at £64,500 4 bed flat in October 2004. Was refubished by a local handyman in two weeks and let by me within three weeks of purchase. I used neither solicitors or letting agents. Gross yield is 8% and Council is paying my tenants rent.

There was a bit of hassle but to create an income after costs of £100 a month for a bit of hassle is worth doing.

I dont know if you realise this, but the DSS tenants can ask the council to pay the rent to them directly so that they pay you directly, ie they can say that they are in dispute with you.
We had an experience of this and after months of non payment of rent we got rid of the so and so's by going to court. This resulted in us losing about 5 months rental, court fees and never renting to the council tenants again. Once bitten twice shy!!

Straykitten

whitevandriver wrote:

Result - bought at £64,500 4 bed flat in October 2004. Was refubished by a local handyman in two weeks and let by me within three weeks of purchase. I used neither solicitors or letting agents. Gross yield is 8% and Council is paying my tenants rent.

Be careful! You should aim for at least 12% yield - any less and you could be in for problems as you'll need a contingency. Settle for less than 12% and any cash needed could end up coming out of your own pocket and not the rent. Also, some lender insist that the potential monthly rent is at least 130% of your monthly mortgage payment. Buying to let is a big financial step - But do your homework first and it could be very lucrative!

Forewarned is prewarned

kinster_2

Howdie wrote:

I dont know if you realise this, but the DSS tenants can ask the council to pay the rent to them directly so that they pay you directly, ie they can say that they are in dispute with you.
We had an experience of this and after months of non payment of rent we got rid of the so and so's by going to court. This resulted in us losing about 5 months rental, court fees and never renting to the council tenants again. Once bitten twice shy!!

works both ways. If the tenant is in arrears of more than 8 weeks you can consult the council to pay you directly.