is it still worth buying a second home to let?

Ollie345

If your gross income is under 43k then the tax changes make no difference right? So if you have one or two buy to lets you may not be affected.

iantojones40

Don't beat yoursrelf up too much o.p.

Yes you've been (deservedly) stitched up, but at least you appear to be aware of the implications and aims of proposed government policy to deter over leveraged, amateur, chancers who fancy themselves as property entrepreneurs... unlike the majority of wannabe btl landlords out there, who are blissfully unaware how they will be affected.

Ollie345

I have just been looking at properties for sale as I was considering a second property, letting mine out and living in a new one.
It has taken about 10 minutes for me to realise it's just not worth it. I would be paying about 10k in stamp duty for about a 4% gross yield.
I think the best thing people can do now is stick to one property and pay it off as much as possible.

Ray_Singh-Blue

I have a friend who left his job in finance and now just lets houses. His formula is to buy a certain sort of house, at the right price, in the right place, give them a basic refurb, and then let them quickly to tenants receiving housing benefit.

Most of his houses are in northern or midlands towns, he only buys 2 or 3 bed terraced houses. The basic refurb usually involves new UPVC windows, new bathroom and kitchen, new flooring all done extremely economically.

I don't know how many houses he owns but it seems to keep him busy. He is a clever guy & I think he said he looks for a yield of 8% to make it work for him.

seven-day-weekend

We own our B TL outright and bought it at the beginning of 2016, before the stamp duty increase came in.

Having said that, it was £85k. (For a two-year-old 2-bed flat). We get £550 a month for it. Service charges, ground rent and insurance come to around £1000 a year. Tax will be at 20%. I don't expect there to be much maintenance , and there is no gas so I don't have to fork out for a landlord's certificate.

I think we have a good deal here.

So I would say to the OP, whether it is a good idea or not to buy a BTL, depends upon several variables. If your property is expensive it may not be worth it, especilly with the extra stamp duty.


(I would also like to ask those who seem to be against BTL Landlords - where would the rental housing come from otherwise? There is very little social housing being built).

Pixie5740

BTL isn't the only way to invest in property. You could sell the current property to buy your next home with a smaller mortgage and/or invest indirectly in property through a fund.

iantojones40

SevenDayWeekend - To answer your last question it's quite simple really... BTL creates it's own demand, for every property that's snapped up by a BTLer usually with preferential access to credit, a FTBer is bring priced out and denied the opportunity to become a homeowner.

(Admittedly you being a rare BTL cash buyer the credit aspect doesn't apply in your csse, but the principle is still the same)

Pixie5740

seven-day-weekend wrote: »

(I would also like to ask those who seem to be against BTL Landlords - where would the rental housing come from otherwise? There is very little social housing being built).

It's all a balancing act. There is a need for the private rental market because as you rightly say very little social housing is being built and the social housing that does remain is being flogged.

Likewise not enough new homes are being built to keep up with demand so when people decide to keep hold of their first home to let out whilst buying a new residence it takes a FTB property out the market for decades. I see a lot of new build family homes being built where I live (detached 3+ houses) but not much for FTB.

The SDLT surcharges (LLBT surcharge in Scotland) might make some people think twice about retaining their current home therefore freeing it up for a FTB which is what I think the surcharge was designed to do. The extra 3% will also help FTB compete against investors because investors don't want to overpay (who does?) so will probably try and negotiate a lower price with the vendor to take into account the additional SDLT/LLBT than a FTB would giving the FTB a sporting chance of getting to buy the property.

The surcharge might also help dissuade people from buying holiday homes in areas like the Lake District and Cornwall where locals are out-priced by those rich city folk coming in and snapping up homes which will si empty most of the time.

seven-day-weekend

iantojones40 wrote: »

SevenDayWeekend - To answer your last question it's quite simple really... BTL creates it's own demand, for every property that's snapped up by a BTLer usually with preferential access to credit, a FTBer is bring priced out and denied the opportunity to become a homeowner.

(Admittedly you being a rare BTL cash buyer the credit aspect doesn't apply in your csse, but the principle is still the same)

I accept your point may apply in some areas.

With my own BTL flat, it was £85k, had recently been reduced from 98k. No-one bought it at £98k. I'm sure most people could afford £85k. And many BTL places are at the cheaper end of the market.

itchyfeet123

seven-day-weekend wrote: »

(I would also like to ask those who seem to be against BTL Landlords - where would the rental housing come from otherwise? There is very little social housing being built).

To a degree you're right. There are people who prefer renting to owning, and obviously that market needs landlords. But not everyone renting at the moment is doing so because they prefer it. The BtL landlords are in effect manufacturing demand for their investment -- people who would prefer to buy but find the market is moving too fast because prices are being driven up in part by the BtL crowd. It's basically a real life game of Monopoly.