Thoughts on let-to-buy

The_Logans

Hi folks, hoping for some opinions on both sides here! We have a small mortgage remaining on our current home, that we have really outgrown now for our family of 4. We love our house, it's a lovely old cottage and we are very fond of it. Hubby and I can see ourselves moving back here in later years when the kids have moved on. Also, to sell it now would mean losing money as we have spent quite a bit on it on the last few years. We have done some sums and it seems perfectly feasible to remortgage it as a rental, and allow us to use some of the capital from this place to buy a bigger house that would suit us better for the time being. Even if we had no tenants for a period we could manage the payments on both properties, and with the rental income we could reasonable expect this place would pay for itself and then some.


Craziness or not so crazy?

tlc678910

Hi,
If the numbers stack up when you have double checked then it sounds good to me.

I assume you are aware that higher rate tax payers will only be get basic rate tax relief on their mortgage interest of the let property (and that income from the let property can push you into higher rate tax band).

You will have to pay 3% more stamp duty on your new home as you will be buying a second property (you know this?).

My best guess is that government policy against second homes/ buy to let will continue to be anti and make it less attractive so are you ready for that?

Will you still feel the same about your cottage after 15/20 years of tenants who will not look after the place how you would?

If you have your eyes wide open and your figures stack up it could be the right choice for you.

Tlc

The_Logans

tlc678910 wrote: »

Hi,
If the numbers stack up when you have double checked then it sounds good to me.

I assume you are aware that higher rate tax payers will only be get basic rate tax relief on their mortgage interest of the let property (and that income from the let property can push you into higher rate tax band).

You will have to pay 3% more stamp duty on your new home as you will be buying a second property (you know this?).

My best guess is that government policy against second homes/ buy to let will continue to be anti and make it less attractive so are you ready for that?

Will you still feel the same about your cottage after 15/20 years of tenants who will not look after the place how you would?

If you have your eyes wide open and your figures stack up it could be the right choice for you.

Tlc

Thank you. Yes, the stamp duty calculation did smart a bit! However over time the profit from the rental will pay for that. We are in a fortunate position that we can absorb changes in the tax etc (we currently overpay our mortgage and save quite a bit each month too) so I think we are happy to play the long game. As for what state the house will be in at the end of the rental, I don't know - it's a good point you make but we'd probably want to change things a bit when we move back anyway - life with 2 small kids is very different to life with 2 big ones off at uni/travelling so I'm not too worried about that.


I have an appointment with an FA later this morning to make sure that my sums are correct and we're not asking for anything ridiculous from the banks.


It's just the idea of all that debt... it's entirely manageable but I come from a family who had a cold sweat at the idea of a credit card.

MyOnlyPost

Hi

I have 5 BTL properties, I would never let a house I have a sentimental attachment to. When planning ahead plan for the worst case scenario. How would you feel if tenants didn't respect/damaged the property. As a landlord you have to make decisions with a level head and an emotional attachment to the property wouldn't allow that.

The_Logans

MyOnlyPost wrote: »

Hi

I have 5 BTL properties, I would never let a house I have a sentimental attachment to. When planning ahead plan for the worst case scenario. How would you feel if tenants didn't respect/damaged the property. As a landlord you have to make decisions with a level head and an emotional attachment to the property wouldn't allow that.

Thank you, that's a very good point

Cakeguts

You are making assumptions that a house that you bought to live in will appeal in the same way to a tenant who may only be there for 6 months. When you buy a house you might buy something that doesn't completely meet your needs or has a few problems like it is a bit damp. A tenant won't put up with damp or a house that costs a lot to heat. You need to read through the threads on here about damp in rented houses to get an idea.

The wrong kind of tenant could completely wreck your house. They could damage all the internal fittings so I hope that you haven't put in an expensive kitchen or bathroom. There is a reason why many landlords buy new or nearly new properties. They are better insulated. What kind of insulation is there in an old cottage?

Just because you like living there doesn't mean that anyone else will.

Letting property is a business.

C.C.L.

We did that, re-mortgaged and bought a smaller property. In theory it was fine, the rent more than covered the mortgage payments. I never really settled in the smaller house bought so we decided that we would go back to the bigger house.
It was in a terrible state, worse than we expected ( the tenants wouldn't allow us in for the last 18 months) and I was gutted, couldn't believe it used to be my lovely home. Even after a full refurbishment I couldn't bring myself to move back in there, all I could see was the dirt, holes in walls & doors & ruined fixtures. It was the dirt that got to me most though and we ended up selling it 6 months ago. It's so true that you should never rent out a home you are emotionally attatched to. I learned a very harsh lesson from it believe me.

G_M

* Tenancies in Eng/Wales: Guides for landlords and tenants This thread is intended to provide information to both landlords and tenants relating to Assured Shorthold Tenancies (ASTs) in England and Wales.

Topics covered:

* Repairing Obligations: the law, common misconceptions, reporting/enforcing, retaliatory eviction & the new protection (2015)

* Deposits: payment, protection and return

* Ending/renewing an AST: what happens when a fixed term ends? How can a LL or tenant end a tenancy? What is a periodic tenancy?

* Rent increases: when & how can rent be increased?

* Repossession: what if a LL's mortgage lender repossesses the property?

* New landlords: advice, information & links

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