Advice on Buy To Let

cliffh

Hi all,

first off Happy New Year to you all.


I was just wondering if anyone can give me some advice on Buy To Let please? We currently have a mortgage on a house with luckily some equity in it. Our plan is to emigrate in the next 5 years selling our house and using HOPEFULLY the equity in it to both finish our existing mortgage and give us a minimum of a deposit but hopefully enough to buy our overseas property.


However, we don’t want to cut all ties with the UK and we’re therefore thinking of doing a buy to let. We could raise the deposit using the equity in our current house and then going forward the rent would more than cover the mortgage (with any extra rent we receive we’d want to try and use it to pay the mortgage off quicker). Then when the mortgage is finished on the BTL the rent would give us enough to survive on come retirement.
Now being a complete newbie to BTL I’m just wondering if now is the right time to be starting this or if we should wait until the economy picks up?
I’m also assuming that it’s not just rent we are going to need to worry about but I’m assuming there will be some sort of management fees for a company to manage the property, making sure we get the rent in case either the property is empty or the tenant does a runner.


I’d REALLY appreciate any thoughts, experiences, pointers on BTL.

clutton_2

have a read of www.landlordzone.co.uk to see the full range of responsibilities that LLs have these days.... www.singingpig.co.uk is also a good site to read up from

in theory your plan sounds ok to me (i am a LL) - but there are a lot of pitfalls - finding a good agent is your first difficulty, as, if the agent screws up and steals the deposit, or rent, you are responsible in law for reimbursing the tenant.

i would also read the first few sticky threads on this section about renting ... you will learn a lot

Fire_Fox

It's not as simple as the rent covering the mortgage - you need to factor in vacancies, tenants who don't pay the rent, letting agents fees and possibly income tax.

GDB2222

So, you're going to emigrate and try to operate a BTL property from overseas? As you say, you'll need a decent agent who does management. Allow 15%+VAT for their fees. Any work needing to be done will be subbed out, so a new lightbulb to be fitted will cost say £50. Any proper repairs will cost an arm and a leg. Allow for refurnishing and recarpeting pretty often. Then there will be vacant periods - the average is about 5-6 weeks a years (see the ARLA survey). Council tax and expenses during the vacant period. There are one or two rental guarantee schemes operated by agents, but generally there's no 'fairy godmother' to make it all okay for you if the tenant trashes the place or does a runner.

Finding a property that will meet all the costs and still be attractive to decent tenants is a major headache. As Firefox says income tax is payable on any profits, although you are quite likely to find that there aren't any, and there have been quite a lot of stories of people on this forum subsidising their tenants.

clutton_2

""Council tax and expenses during the vacant period."" - council tax not payable for the first 6 months of vacancy provided the house is unfurnished...

GDB2222

That's true, but round our way (London) virtually all lettings are furnished. It may be different where you are.

clutton_2

i never offer furnished accommodation ... as i then have to PAT test electrical goods, check out furnishings, replace furniture,

and tenants who bring all their own stuff are a bit less likely to do a moonlit flit...

GDB2222

You know, I hadn't thought of it like that... Very clever! Does it take long to find tenants, though?

clutton_2

""Does it take long to find tenants""

that is a piece of string question

it depends on the area, the time of year, the demand, the type of property, the rent level, the deposit level, the length of the AST, the competition etc etc etc