First time buyer options - occupy, rent out or leave empty

richy4

I'm a first time buyer and have been saving up a deposit for a property in local area (South East).

However, currently I live with my long term girlfriend in her flat which she owns and pays mortgage on, I contribute significantly to her costs and bills etc as if I was her tenant basically.

I am now in a position where I want to get onto the property ladder myself, and was hoping to purchase a 2 bed flat in the local area and then rent this out, in order to continue living with my girlfriend as she does not want to move from her current property and wishes to stay for at least the next 2-3 years.

This obviously puts me in an awkward situation, as I am of course well aware that it is unusual to be a FTB who is going for buy-to-let and the dilemma around the associated extra costs here as opposed to owner occupying.

Ideally, I'd like to buy a flat and rent this out but on an owner occupier mortgage and then the tenants are paying my mortgage, I have a bit extra on the side and also the equity in the property rising over the years. I appreciate this is frowned upon, do people get away with it? How does this really work in practice with landlord insurance etc and do people get 'caught' doing this often?

My other option would be to purchase a property and then simply leave it empty, if it is not possible to 'get away with it' in the above situation.

As a FTB it just seems that the costs of actually doing buy to let 'properly' as it were are far too prohibitive what with the higher mortgage, higher deposit required etc. and the obvious tax on top.

I appreciate this may be a contentious subject, any thoughts would be great though! Right now I'm tempted to just buy and leave it empty as crazy as that sounds :cool::(

AnotherJoe

richy4 wrote: »

As a FTB it just seems that the costs of actually doing buy to let 'properly' as it were are far too prohibitive what with the higher mortgage, higher deposit required etc. and the obvious tax on top.

What is the "obvious tax on top"??????? plus, receiving rental income would far outweigh the costs of a higher mortgage so buying and leaving empty would be barking.

As for being found out, no idea of the odds, but if it happens, how do you fancy then not being able to get another mortgage for many years?

richy4

What is the "obvious tax on top"??????? plus, receiving rental income would far outweigh the costs of a higher mortgage so buying and leaving empty would be barking.

I was under the impression that all income from rental property is subject to 20% tax, or whatever your relevant PAYE tax rate is...

iantojones40

The ex chancellors measures (both existing and proposed) at deterring amateur spivs and chancers from piling into btl really have failed quite spectacularly...

AdrianC

richy4 wrote: »

I was under the impression that all income from rental property is subject to 20% tax, or whatever your relevant PAYE tax rate is...

Yes, your income is taxed through income tax.
Income from property rental is just as much income as income from trading or salary or interest or...

Of course, there's expenses - including mortgage interest, not repayments - which are set against that before the profit is counted as income.

If you get a normal residential mortgage, then immediately let the property, you run a high risk of the lender finding out and withdrawing your mortgage. You will also find that no reputable agent will touch your property if you can't prove that the lender have given CtL.

Marvel1

richy4 wrote: »

Ideally, I'd like to buy a flat and rent this out but on an owner occupier mortgage and then the tenants are paying my mortgage, I have a bit extra on the side and also the equity in the property rising over the years. I appreciate this is frowned upon, do people get away with it? How does this really work in practice with landlord insurance etc and do people get 'caught' doing this often?

My advice either do it properly or not all all, you can't pick and choose which ones you like and don't.

Also I would research other things:
https://forums.moneysavingexpert.com/discussion/937335

https://forums.moneysavingexpert.com/discussion/1377883

https://forums.moneysavingexpert.com/discussion/comment/41155280#Comment_41155280

There are other links that G_M has - read those too.

G_M

richy4 wrote: »

....

This obviously puts me in an awkward situation, as I am of course well aware that it is unusual to be a FTB who is going for buy-to-let and the dilemma around the associated extra costs here as opposed to owner occupying.
Nothing awkward at all. You are planning to purchase a property for business reasons ie not to make it your home. There are certain business costs associated with this.

Ideally, I'd like to buy a flat and rent this out but on an owner occupier mortgage
So ideally you would like to:
* commit tax evasion
* commit mortgage fraud
etc
and then the tenants are paying my mortgage, I have a bit extra on the side and also the equity in the property rising over the years.
that is called 'running a business'.
I appreciate this is frowned upon,
'frowned upon' morally here, and legally by various authorities
do people get away with it?
Some do, some don't. The same applies to burglars, drug users/dealers, rapists and even murderers.
How does this really work in practice with landlord insurance etc and do people get 'caught' doing this often?
I don't know your definition of 'often' so cannot answer. 'Ever'? Yes.

My other option would be to purchase a property and then simply leave it empty, if it is not possible to 'get away with it' in the above situation.
Expensive and difficult
* Unoccupied property insurance
* mortgage conditions
* council 'empty property' policy

etc
As a FTB it just seems that the costs of actually doing buy to let 'properly' as it were are far too prohibitive what with the higher mortgage, higher deposit required etc. and the obvious tax on top.
Those costs apply o everyone equally. Why is it more 'prohibitive for a FTB?

I appreciate this may be a contentious subject, any thoughts would be great though! Right now I'm tempted to just buy and leave it empty as crazy as that sounds :cool::(

Yes. Crazy. Think through the issues of that.

Now read:

* New landlords: advice, information & links

* Letting agents: how should a landlord select or sack?