Higher rate for Consent to let

franklee

tribalboy wrote: »

Do people normally make a good profit in lettings, pardon my ignorance but I havent let before and dont know of any mates who have

Profit depends on where you are and what figures you're looking at. Often rental yield is discussed as the value of the property vs rent before costs. So letting a property "worth" 250K for say 850pcm give a yield of about 4.1%. That is a very typical yield say in the south but for the life of me I can't see it making much profit, unless the value of the property goes up (which I guess many landlords invested for in the boom).

Then there's looking at the rental income vs costs such as agent's fees, mortgage interest, repairs, tax etc. Also the lost opportunity cost of the deposit or equity you have locked up in the property (what that could earn elsewhere) and of course any changes to mortgage rates if you're outside any fixes.

If you're just letting for a shortish time whist abroad then you're not looking to make a profit like a pro landlord would. Do make sure any tenant knows upfront the length of time it's going to be available if you're returning in the next year or two as moving can be costly and stressful for tenants so they may not be that happy at say being asked to move on after a year.

PS: I presume you know about the non resident landlord's scheme, it's probably easiest to register to get the rent without tax deducted, the agent will I guess know all about it:
http://www.hmrc.gov.uk/cnr/nr_landlords.htm

property.advert

poppysarah wrote: »

Letting is a business.
You pay more

But the premium some robber lenders try to extract cannot be correlated to the actual increased risk, whatever minute sum that may well be.

In any case, at a lower LTV, the risk is nigh on the the same as owner occupation but they still try to take the !!!!.

G_M

I don't think poppy (or I) were trying to justify lenders' business models, simply explain to the OP that, yes, if he rents out a property his mortgage rate is likely to go up!

de1amo

i asked my financial advisor to recommend a letting agent--he seems to have come up with a gem(of course the financial advisor gets a drink from the letting agent)--i have been offered full management for 12,5pc-i havent seen any contracts but price and reputation is a good place to start!
My İFA has come up with about 4 to 5 pc on a btl deal---i havent really set him searching as yet because i am abroad presently--i keep a uk property for a place to return to if it all goes wrong!!

N79

franklee wrote: »

Profit depends on where you are and what figures you're looking at. Often rental yield is discussed as the value of the property vs rent before costs. So letting a property "worth" 250K for say 850pcm give a yield of about 4.1%. That is a very typical yield say in the south but for the life of me I can't see it making much profit, unless the value of the property goes up (which I guess many landlords invested for in the boom).

That is the straight yield. The magic of BTL is (was) that you can leverage to increase the yield using someone else's money. But in general I agree with you that the figures make little sense for new purchases in much of the SE rental market at the moment.

abankerbutnotafatcat

I have just done the same. NatWest charged me a fee of a few hundred pounds but that was it - no increase in the mortgage payments.

tribalboy

Hi de1amo,

Does that include rent guarantee & legal costs to evict the tenant if they default

de1amo

tribalboy wrote: »

Hi de1amo,

Does that include rent guarantee & legal costs to evict the tenant if they default

He said it was fully managed--i asked him about default fees before so i presume he quoted the full package--i have yet to see the full shake down like i said--but i know what you mean!!--i will ask the question!

zcrat41

Hi,
I'm in a similar pos. Did it recently at Nat West charged me £100. Fair do's really as I'm now making money out of it.
Sounds to me like you need to do a bit more research! I had a tenant in for 3 months who's now upped and left. Its taken nearly 2 months already to fill which isn't a problem for me as I'm lucky enough to live rent free with my fiancee and its just spending/saving money really but if I wasn't in such a lucky position it would be a major problem. You will have periods without a tenant so best plan for that.

Good luck
ZC

franklee

N79 wrote: »

That is the straight yield. The magic of BTL is (was) that you can leverage to increase the yield using someone else's money. But in general I agree with you that the figures make little sense for new purchases in much of the SE rental market at the moment.

I thought it was that leveraging is using a deposit to borrow thus amplifying the capital gains when the house value goes up (or losses when it goes down). You still need to look at straight yield as you need to service the debt which is where looking at the value of the property vs rent comes in to make sure "someone elses's" money covers paying the mortgage. For much of the boom landlords on the forums I read seemed happy with breaking even with rent of 4-6% of property value and mortgage rates not much different. But that's bubble talk, the traditional way landlords used to make money was in getting a profit from the rent, that maybe still be possible with HMOs I guess but then the costs are higher.