Opinions Please.......

Stevo10

Hi There

I currently live in a 2 bed flat which I bought 6 yrs ago at 23yr old and plan is to move to a 4 bed house with the wife (she lives here too now) in the same area. Looking at current market I'll probably get approx £95k for my flat, which I bought for 105k and new place will be approx £250k.

Been saving like mad as knew I would lose on my flat (bloody banks) so needeed to offset this and have enough for the larger deposit.

My options now are sell up and buy the house, probably getting a 75%LTV, or change the flat to a buy to let, rent it out and buy a house with 85-90%LTV.

Should I just cut my loses get a new house and move on, or become the next property tycoon lol?????

Caz3121

If you want to change the flat to a BTL you will need to get the LTV down to 80% max, so mortgage of £76k (or less depending what it is valued at) what is the current mortgage on it and how much of your deposit would that take

Stevo10

Current mortgage left is approx £73k, so could probbaly just about squeeze onto a BTL at 80%LTV and have approx £27k additional saved for deposit, so with a couple more months to save for fees etc could just about manage 10% for new house. Or I could just use approx 50k deposit for new place and sell up.

BitterAndTwisted

Sell up. Being a professional landlord is not necessarily a life of beer and skittles. It brings risks and responsibilities. Ones which you may not relish if it affects the security of the roof above your own heads.

Stevo10

But is the other arguement not that if tennants pay the mortgage on the flat off, then this could be sold at some point to clear the mortgage on the house early?

Anyone any experience of being a landlord - is it a pain in the ****?lol

tristinh

I was a landlord for 5 years and I have to say I had a reasonably easy ride, but I paid a management company to sort it all out for me and I was lucky that my tenants and the management company were fab!!

There are additional costs such as carpet cleaning, servicing of gas appliances, maintenenace of the property, building insurance etc. You also have tax responsbilities.

There are also significant risks. I have friends who have had nightmares and incurred significant costs for repairs - not just wear and tear! They had management companies too! I had one friend who couldn't get her tenants out and when they did move, they had trashed the place!

googler

Stevo10 wrote: »

Anyone any experience of being a landlord - is it a pain in the ****?lol

I have no experience, but - if you do rent it out, you're going into business; taking money for providing a service.

That carries legal responsibilities - using a letting agent does not pass your legal responsibilities as landlord on to them

It carries financial responsibilities; tax, accounting, etc.

It carries moral responsibilities; all of a sudden, you're responsible for the roof over someone else's head as well as your own.

You have to regard the letted flat as a business asset; it won't be 'your' flat anymore

etc etc

If you can sign up for all this and more......

mrsp80

It depends what you want to do with it in the long term. Make sure you are aware of the rules surrounding Capital Gains Tax too (if you were to sell it in the future...).

If I could afford to keep hold of my existing place and rent it out, I would, as I think it's a good investment as long as your rental income can cover the mortgage.

Werdnal

I have been a LL for 11 years, and yes it can be rewarding, but my property is owned outright, without the added stress and complications of a mortgage that must be paid, so when one of my tenants stopped paying rent, I managed to keep things going. I would think very differently about going into it with mortgage payments hanging over me, particularly if I had my own mortgage to maintain as well.

You also need to declare your rental income for tax, so if you are a high tax payer already, that can have implications on you aswell (only mortgage interest is allowable as a cost against your tax due).

Meanwhile, you need to learn everything there is to know about the legal obligations of letting. This is a good starting point:

http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12

We get frequent posts here from "accidental landlords" who have felt compelled to let their property as the market is so poor at the moment. However, there is a lot that can and sometimes does go wrong, and it can create financial stress and additional hassle that you may want to avoid.

In your position, I'd sell and move on, get on with your life!


PS Is it Leasehold? Check your lease as you may not even be allowed to let it!

Yorkie1

You will need to double check your lease of your flat. Sometimes subletting isn't allowed or you need extra consent.