2nd home not sure what to do

AlexMac

satmanuk44 wrote: »

...My brother is gas certified and a plumber while I do roofing. I will not be using a letting agent ...House has new kitchen, bathroom and re-plastered...boiler is 18 months old.

Sounds like a no-brainer- go with it. Dunno how old you are but I never regretted becoming "an accicdental landlord" 20 years ago. (bought a flat to get my GF's grand daughter out of a scummy, mould-ridden rental).

Mucho successo; grandaughter now grown up. GF now wife. Mega capital gains. Reliable tenants for 20 years.

Glass overbrimmng; not just half full!

MyOnlyPost

satmanuk44 wrote: »

My workings out are based on:

Current rented properties on my street circa £650 a month.

£80K BTL mortgage 4.74 APR = £417PCM

My brother is gas certified and a plumber while I do roofing. I will not be using a letting agent and have the time to manage 1 house. House has recently had new fitted kitchen, bathroom and re-plastered. Oh and the boiler is 18 months old.

As for the £150 it doesn't matter to me if its £0 as long as the mortgage is paid that the only goal as its a long term investment.

Please can someone give me some reasons instead of throwing in their 2p's........

Well there are several reason for throwing in the 2p's. Chielfy £150 pcm profit is a poor return for £650 pcm rent. Why would you pay 4.74% for a BTL mortgage when you can fix for under 3% for up to 10 years for starters? For a 2 year fix you can probably get down to 2.19%

When you ask people their opinion but don't actually give out the information in your first post then you invite questions. I have calculated doesn't mean anything as most people who haven't been landlords don't have a clue of the costs involved and so calculate wrong. Are you going to do your own tenant finding, referrencing, tenancy agreement etc. Or are you going to pay an agent for a tenancy find?

Judging by the size of mortgage you think you can attain I assume you are in the 40% income tax bracket? You will only be able to claim 20% tax relief on your mortgage interest in the future so therefore have you calculated your extra income tax burden?

There are loads of things you need to consider before jumping in and in particular what if things go wrong? Bad tenant, long eviction process, trashed house £1,000's in lost revenue and damages. It may be a small risk but for £150 pcm do you really want to take it?

booksurr

satmanuk44 wrote: »

Need to look into your first point.

let me save you the bother....

if by "partner" you mean living in sin with ANO then this applies:
"3.42 Where a transaction is entered into by joint purchasers the higher rates will apply if the transaction would be a higher rates transaction for any of the purchasers considered individually. So if there are two individual purchasers and Conditions A to D are all met for one of them only, the transaction will be charged at the higher rates."

if by "partner" you mean the legally married version, then this applies:
"3.44 Where an individual with a spouse or civil partner purchases an interest in a dwelling and their spouse or civil partner is not a joint purchaser, the spouse or civil partner will be treated as a joint purchaser in respect of the transaction"

the long and the short of it is: buy an additional property and you WILL pay the higher rate SDLT whether you own it, she owns it or you both own it.

read the guide!
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/570876/SDLT_Higher_rates_for_additional_properties.pdf

AnotherJoe

satmanuk44 wrote: »

My workings out are based on:

Current rented properties on my street circa £650 a month.

£80K BTL mortgage 4.74 APR = £417PCM

My brother is gas certified and a plumber while I do roofing. I will not be using a letting agent and have the time to manage 1 house. House has recently had new fitted kitchen, bathroom and re-plastered. Oh and the boiler is 18 months old.

As for the £150 it doesn't matter to me if its £0 as long as the mortgage is paid that the only goal as its a long term investment.

Please can someone give me some reasons instead of throwing in their 2p's........

What if it's minus £150 (quite possible if you area high rate taxpayers)

Does your £150 profit include the extra cost of the bigger mortgage you'd need on your new house with a higher LTV and therefore a higher interest rate ?

And the extra SDLT ....at £150/month that will take quite some time to pay off a £10k extra SDLT bill. Heck of a gamble on house prices rising.

Why would you overpay the £150 to reduce the mortgage when that would decrease the tax offset ? Have you looked at what that £150 before tax would add you your pension, if this is what this is for ? £150 in a pension would cost you about £100. £150 off the house would cost you £200 that in what you had to earn.