help..wanting to buy to rent...

hin501

Hi there, im 22 and am looking to save up enough money to put a deposit down on a house (around 70-80,000) and then rent it out,
how straight forward is this, and ideally, how much of a deposit would i need to make to make it worthwhile and sucessful?

(i am not intending on getting my own house for at least 3/4 years so it is something i am keen to do until then)

Thanks in advance...

Nick Hird

[Deleted User]

Ooops misunderstood original post.., please delete.

00ec25

presumably you really meant to say Buy to LET or BTL (as shown in thread #2, buy to rent can be misinterpreted as rent to buy which is something else entirely)


a BTL mortgage is typically based on minimum 25% deposit (ie 75% LTV) and is based on rental income multiples, not on your own income multiples

But, as your intention is to let it out from the start you would not be allowed to have a residential mortgage and you will also struggle very hard to get a BTL mortgage at all if you do not already have a residential property of your own.

as for how straightforward it is becoming a LL when you have no knowledge of what that entails then no, it's a disaster waiting to explode in your face

Werdnal

You will need:

BTL mortgage - generally higher payments than normal residential terms.
Landlord insurance - minimum of buildings cover, but contents too if you are letting it furnished.
Gas safety certificate if applicable
Annual PAT test of electrical items you supply (not compulsory, but very wise).

Are you planning to advertise and let through an agent (advisable for first time LLs)?

Even if you are, you should now start researching all the legal obligations of tenancy agreements, deposit protection, inventories, giving notice to tenant, your obligations to repair and maintain the property, eviction procedures etc? Do you know how to vet and credit check tenants?

You will also need to declare your income for tax.

As you are relying on mortgage for the purchase, would you have enough money in reserve to cover the payments for several months if the tenant(s) stopped paying? What about costs for maintenance? Are you happy to receive a call at 3.00am saying they have a burst pipe?

When you have 100% solid gold tenants who devote many hours to cherishing and caring for your property the way you would yourself, pay their rent on the button every month, and never cause you a moments grief, letting can be very good. Then there are the others, who pay you the first 2 months rent, then stop, and you discover they are keeping 3 rotties in the place and chain smoking wacky-baccy, even though its a no pet/no smoking tenancy. They totally trash the property, cause major hassle with the neighbours so the police are frequent visitors, and you have to take them to court to get them evicted, leaving you owed several months rent and with a huge repair bill, which you then have to sue them to recover the costs for - then they plead poverty and you get a court order agreeing to pay you £1.75 a week!

Sorry to give you a pessimistic view, but I feel you need to be realistic about it too!

Read, learn and inwardly digest everything you can on letting and if you still have specific questions, come back here and ask before you go any further. There are many posts here pleading ignorance of the regulations, or frequently starting with "I'm a first time LL and I've been stupid/didn't know/understand (delete as appropriate)" Don't let your future posts be one of these ....

flecker

I'd just add that locking yourself into property ownership at the age of 22 in a market that looks likely to at best stagnate and at worst fall over the next few years is taking a gamble with your future freedom, unless you have a big deposit. (I probably wouldn't give this advice if you were buying for a home, but as you're buying as an investment, you need to think long and hard about the potential risks - and make sure you know your onions when it comes to historical interest rates etc.)