Buying flat upstairs to let (initially) - a good idea in north London right now?

Vikki55555

I would really welcome views about this.

The house is a 1900s terrace house with four floors. We have the ground floor/garden flat and the rest of the house (splitinto 3 flats) is owned by 3 siblings. They plan to sell off the rest of the flats over the next few (tax) years and are about to put the flat above us on the market.

We are looking to buy it on a buy-to-let. We have the 25% deposit etc and our mortgage adviser reckons it's do-able. The flat is currently valued at c.270k which appears to be in line with others that are similar and selling in the area (in 2006 it was valued at c. 300k and in 2008/9 c.249k).

Our longer term aim is to put the stairs back in to make one larger 4-bed flat and possibly, depending what's happening in 5 years time, buy the remaining 2 flats (one at a time) from the owners to let out.

My question is... do you think this is a good time to do this?

All views gratefully received as I am feeling quite rushed on this decision in case it is bought by somebody else.

Many thanks

kmmr

Firstly I would say don't feel too rushed. If they are putting it on the market at a fairly aggressive price (with it sounds like it is to me based on the prices) then it will take a little time to sell. And you are probably the preferred buyer from their point of view.

I am always tempted by sales within my block of flats, but you should ensure you are clear what you want to get out of it. If you want it as a rental flat, assess it completely as you would any other investment flat. Is the yield enough, can you cope with void periods, are you ready to be a landlord, etc.

One big advantage will be that you are there onsite to deal with the management, but this could also be a negative as you will be considered always 'on call' and depending on tenants may find you are constantly being asked to do this and that. Tenants also may not be keen to have the landlord so close, but then again, maybe they would like this. It all depends on your tenants and your temperament, but to me it would be good to be next door… may not be great for the tenants!

If you want this as a place to extend your flat into, take into account that the value of the joined up flat will probably be less than the two seperately. But, if it makes it a nice place for you to live, then it may be worthwhile. So, this would be more of a lifestyle decision, rather than a financial one, unless you get upstairs at a decent discount. Plus the costs of actually doing the work. There would be quite a lot of work to re-arrange the layout to get rid of excess kitchens and bathrooms to really make it one big flat, and not appear as two that have been just put back together.

Also, you may need permission to do this. I think joining flats permission is easier than splitting them - as the council tend to like the idea of family homes being re-created.

Vikki55555

Thank you that's helpful.

Vikki

Fire_Fox

When you take about valuations are you talking about estate agent valuations or have your researched land registry sold prices for the area? Are you aware that even tho you will be living in the same building, the tenant has the right to quiet enjoyment so you can't just pop up for a chat whenever you feel like it? For this reason it can be tough being an on site landlord - letters seem heavy-handed, phone calls don't leave a paper trail and visits can be deemed harassment.

Vikki55555

The valuations are estate agent valuations. How do I research land registry sold prices - via google?

Thanks for the pointers on the tenant's rights, they are really useful. I think I will be able to manage this ok but appreciate some of the difficulties you highlight are not to be under-estimated.

Thanks

Fire_Fox

https://www.houseprices.co.uk
Do also join a landlord's association, there is apparently reams of legislation that you need to comply with - if this board is anything to go by it is very easy for an amateur landlord to get done over by a professional tenant.

Vikki55555

Yes thanks for the heads up. I have rented a house before but used a managing agent who were belt and braces on everything (I think I needed a certificate just to breathe the air in the house!)

Just checked www. housepricesco.uk and am happy with value on the flat we're looking to buy. Think we'll probably go for it and pray interest rates don't change massively in the next 18 months.

Thanks again for you help.

roses

I wouldn't buy it with the plan that you will eventually have the whole place. As nice as it sounds, plans don't always work out and one sibling may decide they don't want to sell....

silvercar

Check onthe mortgage board, but some lenders are not happy to lend when you already own an adjoining property. Also to combine the flats will require both lenders agreement and the freeholder. The lenders may be difficult especially if one is a BTL. One more thing, I thought the max LTV on a BTL was 65%, who is offering a 75% LTV BTL mortgage?

Vikki55555

silvercar wrote: »

Check onthe mortgage board, but some lenders are not happy to lend when you already own an adjoining property. Also to combine the flats will require both lenders agreement and the freeholder. The lenders may be difficult especially if one is a BTL. One more thing, I thought the max LTV on a BTL was 65%, who is offering a 75% LTV BTL mortgage?

Thanks that's all really helpful. Even if we continued to let the flat out we would be happy as this is a long term investment for us - whether we (are to)live in it or not.

It Birmingham Midshires I think we were looking at last Tuesday but they weren't the only ones at 75% LTV BTL.

Vikki55555

Any views about what might happen with house prices in the next 12 months?

Thanks