Buy to Let advice

Kendonak

Hello all! First post, not sure if right place.

Basically myself and my wife own a flat in Aberdeen (£195,000) with approx £48,000 left to pay on the mortgage. We are relocating to Australia for a year or two and are going to be renting this flat out which should be simple enough.

However, we are also in the process of selling my wifes late mothers house and are going to have approximately another £130,000 to invest in about 3 weeks or so.

Now I am not happy just sticking it in the bank and seeing as Aberdeen has such a large student population and very high rent returns I am looking to purchase another property as a buy-to-let.
I have found a place that needs a bit of work, probs close to £10k's worth (most of which I could do myself) and its on for £170,000. Could get approx £1300 in return in rent a month from the 3 double bedrooms.

What would be the best way of making this happen, if it can happen at all? Im not too sure if this is a good idea or not! Any advice much appreciated. (sorry if its in the wrong place )

BitterAndTwisted

Getting a Buy-To-Let mortgage is fairly straightforward with that much equity. Most lenders want to see 25% equity and the proposed monthly rent at 125% of the mortgage-payments.

Borrowing the money is the easy part, administering it from abroad and the tax-implications when you are non-resident not so easy.

Consider the worst-case scenario and work from there. What would happen if you were fully committed to two rental properties and you never saw a penny in rent bar the first month and your tenants, several thousand mile away, trashed your properties? Could you still afford to service the mortgages then?

Fire_Fox

Do you have consent to lease from your lender? Can you pay two mortgages if your tenants don't pay rent and it takes months to evict, or they trash the place or both? Who is going to manage the properties - including evicting through the courts - and how much will that cost? Have you factored in insurances, income and capital gains tax, repairs and maintenance, service charge/ factor, voids between lets, reduced rent in the summer, letting agents finders fees, monthly management fees?

Being a landlord really is not that simple there is reams of legislation to comply with, and you are going to be completely at the mercy of a decent agent. Remember you can delegate tasks but you cannot delegate your legal responsibilities and obligations, the buck stops with you.

Werdnal

Also, you need to check out the specific rules and regs for letting in Scotland. I am no expert, but understand you have to register as a landlord and letting laws differ from England and Wales.

There is a good post here, which is based on the Eng/Wales legislation, but many things do overlap, so might be worth reading to see what you could be getting into:

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

Also, as you are overseas, you have to register with HMRC as a non-UK resident landlord for tax - this is important as if you don't HMRC can come after your tenant(s) to deduct your tax liability direct from the rent they pay you!

G_M

Werdnal is right that Scottish regulations are different. The post he links to will be a good starting point to give you an idea of what is involved, and many of the rules overlap (gas safety, tax etc).

But yes, in Scotland the landlord must register with the council, and contracts are different (an English AST is not the same as a Scottish SAT!)

Werdnal

g_m wrote: »

werdnal is right that scottish regulations are different. The post she links to ...

G_M

Werdnal wrote: »

Knew that really. Just can't ever quite believe a girly could be so knowledgeable....

Werdnal

G_M wrote: »

Knew that really. Just can't ever quite believe a girly could be so knowledgeable....

I'll take that as the compliment which I am sure you meant it as

Kendonak

Thanks for the replies guys.

This is only a very recent idea, just not happy sticking a large amount of cash in the banks accounts for an extended period of time so trying to think of other options!

Seeing as we still have £48,00 remaining in our current mortgage deal, is there any benifit in just paying that off or would that be like putting all your eggs into one basket?

Then any rent we got from it would be straight into our pockets.