Opinions please? (BTL / HUtH Wanabee!)

GDB2222

Right, we are getting somewhere! What you need is a firm game-plan. Is the intention to do it up and sell on, or do it up and let it out?

Either way, you need a full specification of EXACTLY what work needs to be carried out, and a firm quotation from the builder for that work. It's a lot of work to decide on the spec before you have bought it, but it's the only way to avoid nasty surprises. I suspect that when the builder has to quote the cost will shoot up.

To draw up the spec, you need to know what the state is of the boring stuff. Electrics, plumbing and heating all eat up money. So, you need to have all that stuff tested by tradesmen.

You also need to decide whether your boyfriend can do any of the work himself. If he is working 70 hours a week, he may not be able to do that much on the house. It's a trade-off between the cost of employing someone and the extra time it takes if he does it (which costs money in financing costs, empty rates, etc.)

There are other costs, eg insurance and council tax whilst the place is empty. That needs to be factored in. You need to check it can be insured if uninhabited. To sell it, you'll need to redecorate and recarpet/sand floors. The garden will need to be neat and tidy, too.

If it is worth £165k when finished. That means £160k net after selling costs.

Purchase price is £120k + legal fees + remortgaging costs on the flat + survey costs (surely he needs a homebuyer's report if not a full survey). Say £123k.

That leaves £37k to cover the cost of the work plus the rates & insurance. That's a bit tight.

You need to work out an extremely detailed specification for what needs doing, with absolutely everything you can think of included. Then get that completely costed down to the last £1, including firm quotes from builders etc.

When you have done all the hard work, you will know exactly how much the house is worth to you (provided that you can indeed sell it for £165k, of course). So, the risk is much reduced, and you can always renegotiate with the vendors if necessary.

The first stage, I suggest, is to get the builder in the house, so he can advise you what he thinks needs to be done. Then draw up the spec and get him to give you a formal quotation for each item of work. To give you an idea, these specs often run to dozens of pages when drawn up professionally. You would probably be looking at 5 to 10 pages or so. (You don't just say "repaint". You need to specify what paint, and how many coats. Will it need relining? Replastering?) Will the polystyrene ceiling tiles mean that the ceiling will need to be replastered? That's the sort of thing the builder can advise you on. Your spec will say something like "Remove ceiling tiles, and make good, with a finish suitable for redecoration."

GDB2222

Right, we are getting somewhere! What you need is a firm game-plan. Is the intention to do it up and sell on, or do it up and let it out?

Either way, you need a full specification of EXACTLY what work needs to be carried out, and a firm quotation from the builder for that work. It's a lot of work to decide on the spec before you have bought it, but it's the only way to avoid nasty surprises. I suspect that when the builder has to quote the cost will shoot up.

To draw up the spec, you need to know what the state is of the boring stuff. Electrics, plumbing and heating all eat up money. So, you need to have all that stuff tested by tradesmen.

You also need to decide whether your boyfriend can do any of the work himself. If he is working 70 hours a week, he may not be able to do that much on the house. It's a trade-off between the cost of employing someone and the extra time it takes if he does it (which costs money in financing costs, empty rates, etc.)

There are other costs, eg insurance and council tax whilst the place is empty. That needs to be factored in. You need to check it can be insured if uninhabited. To sell it, you'll need to redecorate and recarpet/sand floors. The garden will need to be neat and tidy, too.

If it is worth £165k when finished. That means £160k net after selling costs.

Purchase price is £120k + legal fees + remortgaging costs on the flat + survey costs (surely he needs a homebuyer's report if not a full survey). Say £123k.

That leaves £37k to cover the cost of the work plus the rates & insurance. That's a bit tight.

You need to work out an extremely detailed specification for what needs doing, with absolutely everything you can think of included. Then get that completely costed down to the last £1, including firm quotes from builders etc.

When you have done all the hard work, you will know exactly how much the house is worth to you (provided that you can indeed sell it for £165k, of course). So, the risk is much reduced, and you can always renegotiate with the vendors if necessary.

The first stage, I suggest, is to get the builder in the house, so he can advise you what he thinks needs to be done. Then draw up the spec and get him to give you a formal quotation for each item of work. To give you an idea, these specs often run to dozens of pages when drawn up professionally. You would probably be looking at 5 to 10 pages or so. (You don't just say "repaint". You need to specify what paint, and how many coats. Will it need relining? Replastering?) Will the polystyrene ceiling tiles mean that the ceiling will need to be replastered? That's the sort of thing the builder can advise you on. Your spec will say something like "Remove ceiling tiles, and make good, with a finish suitable for redecoration."

Teresa_Green

GDB2222 wrote: »

Right, we are getting somewhere! What you need is a firm game-plan. Is the intention to do it up and sell on, or do it up and let it out?

Either way, you need a full specification of EXACTLY what work needs to be carried out, and a firm quotation from the builder for that work. It's a lot of work to decide on the spec before you have bought it, but it's the only way to avoid nasty surprises. I suspect that when the builder has to quote the cost will shoot up.

To draw up the spec, you need to know what the state is of the boring stuff. Electrics, plumbing and heating all eat up money. So, you need to have all that stuff tested by tradesmen.

You also need to decide whether your boyfriend can do any of the work himself. If he is working 70 hours a week, he may not be able to do that much on the house. It's a trade-off between the cost of employing someone and the extra time it takes if he does it (which costs money in financing costs, empty rates, etc.)

There are other costs, eg insurance and council tax whilst the place is empty. That needs to be factored in. You need to check it can be insured if uninhabited. To sell it, you'll need to redecorate and recarpet/sand floors. The garden will need to be neat and tidy, too.

If it is worth £165k when finished. That means £160k net after selling costs.

Purchase price is £120k + legal fees + remortgaging costs on the flat + survey costs (surely he needs a homebuyer's report if not a full survey). Say £123k.

That leaves £37k to cover the cost of the work plus the rates & insurance. That's a bit tight.

You need to work out an extremely detailed specification for what needs doing, with absolutely everything you can think of included. Then get that completely costed down to the last £1, including firm quotes from builders etc.

When you have done all the hard work, you will know exactly how much the house is worth to you (provided that you can indeed sell it for £165k, of course). So, the risk is much reduced, and you can always renegotiate with the vendors if necessary.

The first stage, I suggest, is to get the builder in the house, so he can advise you what he thinks needs to be done. Then draw up the spec and get him to give you a formal quotation for each item of work. To give you an idea, these specs often run to dozens of pages when drawn up professionally. You would probably be looking at 5 to 10 pages or so. (You don't just say "repaint". You need to specify what paint, and how many coats. Will it need relining? Replastering?) Will the polystyrene ceiling tiles mean that the ceiling will need to be replastered? That's the sort of thing the builder can advise you on. Your spec will say something like "Remove ceiling tiles, and make good, with a finish suitable for redecoration."

OK, Thankyou. (Forum seems to be having technical issues of its own tonight!?).

Intention is to sell it on but maybe live in it when it is done for a while depending on options at the time...

I too suspect the quote to shoot up if Builder is formally asked to quote, maybe rather than make a formal offer at this stage we should request third viewing with Builder in tow or should we offer first? Vendor has said no lower than 120 and Estate Agent has mentioned they are umming and ahhing about taking the Property to Auction (doesn't mean it will sell, and I assume it will cost them to go down that route too?).

Boyfriend is able to do preparation work initially and final decoration i.e. painting, but is not a skilled Tradesman by any stretch. His Dad can do stuff but takes an age and he is still working also. Working hard is fine but as you say there needs to be a viable game plan too, no good working oneself into the ground for nothing!

Forgot to mention Garden is OK - will need tidying of course, but there is also a large puddle at the bottom of the garden that will need draining and the level of the grass sorting out too... more expense potentially...

I agree it is going to be tight to cover all that needs doing for £37,000 but can start working on looking into the detail you have suggested, Thank you

GDB2222

It's absolutely fine to take a builder round.

Generally, sellers get less at auction than through a private sale. Provided you have your finance sorted, an auction might suit you perfectly.

dinofabio

With two properties on the go, there is a possible taxation issue that will need to be addressed when he comes to sell.

Teresa_Green

dinofabio wrote: »

With two properties on the go, there is a possible taxation issue that will need to be addressed when he comes to sell.

Hi dinofabio, I believe that may be the case, please correct me if I am wrong - from what I have read I gather that as the first house is currently his main residence then if it is rented out he will have to do a Tax Return each year regardless of profit, but only pay Capital Gains accordingly if he sells it more than three years after he moves out to a new main residence?

The new house will then be his main residence and for that reason if he sells it there will be no Capital Gains to pay unless he rents it out and then the above rules will apply to that house also?

dinofabio

Teresa_Green wrote: »

Hi dinofabio, I believe that may be the case, please correct me if I am wrong - from what I have read I gather that as the first house is currently his main residence then if it is rented out he will have to do a Tax Return each year regardless of profit, but only pay Capital Gains accordingly if he sells it more than three years after he moves out to a new main residence?

The new house will then be his main residence and for that reason if he sells it there will be no Capital Gains to pay unless he rents it out and then the above rules will apply to that house also?

There are people on here that are a lot more knowledgeable on tax matters than me, so they may be able to answer.

He certainly needs to be watertight on his tax planning otherwise he will receive an unwanted bill from the revenue. You need to know the rules.

If it is perceived that he has bought and sold a house (s) purely from a business point of view and make profit; and not a place to live in, it will be regarded as a business and he will be taxed accordingly.

With proper planning, tax can be avoided (legally) in the short term. But if he plans to buy - renovate- sell for profit, on a frequent basis; he will be collared.

Teresa_Green

dinofabio wrote: »

There are people on here that are a lot more knowledgeable on tax matters than me, so they may be able to answer.

He certainly needs to be watertight on his tax planning otherwise he will receive an unwanted bill from the revenue. You need to know the rules.

If it is perceived that he has bought and sold a house (s) purely from a business point of view and make profit; and not a place to live in, it will be regarded as a business and he will be taxed accordingly.

With proper planning, tax can be avoided (legally) in the short term. But if he plans to buy - renovate- sell for profit, on a frequent basis; he will be collared.

Thanks, I see what you are saying. In the future then, depending on how things progress it may be an idea to involve an Accountant and also consider running as a proper Business / Limited Company?

dinofabio

Teresa_Green wrote: »

Thanks, I see what you are saying. In the future then, depending on how things progress it may be an idea to involve an Accountant and also consider running as a proper Business / Limited Company?

If his plan is to 'flip' homes for profit and repeat, then he will need to make himself very familiar with property taxation. There are lots of things you can legally do to limit this (Private Residence Relief, 36 month rule etc) but it needs timing and planning.

Alternatively, he could seek professional advice.

Buying frequently (eg every few months) -renovating-selling for profit and repeating ad infinitum and he will be flagged up as trading.

Jellybean_Jo

Just a thought, but is this property advertised online anywhere? If it is, you could post a link here and people who have experience of what he's intending to do could give more information of whether or not they think it would/wouldn't work, and things maybe to look out for that might help in the research aspect?

Or even maybe just an outside opinion on the house...he seems to have his heart set on the idea and that alone can cloud your judgement, whereas you are representing the other side of the coin; maybe an unbiased view might point out some obvious flaws in his plan that neither of you have spotted?