Buying the flat downstairs?

Yawn

Could I ask for your advice? I am trying to work out whether something is a) possible and b) smart.

In 2015, I bought the upstairs flat in an early 20th century terraced house. My downstairs neighbour told me recently that she is considering selling her flat now that her tenant moved out. Everyone I mentioned this to, my parents included, is pushing me to see if I could buy it.

Now, I should say that I'm a single and that I'm not looking to expand into the flat downstairs, like other posts on the forum that I have seen. It is just that the previous downstairs tenant made aware how important good neighbours are when all that separates you is a wooden floor.

I also suspect that that the two flats are worth more separate than put back together. Houses on my street go for around £240-£250,000. I bought my two bed-room flat for £147,000 (and it will have remained fairly static or even fallen slightly since). According to Zoopla, the downstairs flat was last sold ten years ago for £118,000. My neighbour tells me that an estate agent valued it at £135,000, but I can't see it go for more than £125,000, if that. The flats are leasehold.

So for better or worse, I'm considering the possibility of becoming a landlord. Not the best time for that, I know.

In any case, there is roughly £33,000 of equity in my flat. I have about £6,000 of savings and no student or other debts (other than the mortgage obvs). I may be able to borrow/receive £10,000 from my parents, if I really press them (they didn't help me buy my own flat, so they owe me ). I'm currently earning about £40,000 a year.

Sorry, I realize I'm throwing a lot of numbers at a group of virtual strangers, but I would like to know what is and isn't possible. The flat hasn't been put up for sale yet, so I can't go and speak to a professional about it just yet. Plus, if it isn't possible, then I can just put the idea out of my head and stop thinking about it.

Thanks for the advice!

AnotherJoe

I don't see how anyone can venture an opinion on whether it's worth doing financially unless you state what the rent would be likely to be, which I didn't see in there unless I missed it ?

However, am I correct in thinking that your main reason for doing this is so you can evict the tenants downstairs if you take a dislike to them? Why not buy a detatched house instead?

ACG

It is possible, but not all lenders will do it (for fear you will make it into one).

Take into account the high er rate stamp duty and the tax implications and if it stacks up, go for it. But try to do it based on a businss decision as being a landlord is a business.

Yawn

AnotherJoe wrote: »

I don't see how anyone can venture an opinion on whether it's worth doing financially unless you state what the rent would be likely to be, which I didn't see in there unless I missed it ?

However, am I correct in thinking that your main reason for doing this is so you can evict the tenants downstairs if you take a dislike to them? Why not buy a detatched house instead?

I would guess the rental income would be around £450 a month.

And no, I'm not that heartless. It is just that as it stands, I have no control over who goes in there at all. If someone decides who my downstairs neighbour is going to be, I would rather have it be me than an absentee landlord.

Number75

Honestly my first thought was "what if they're the kind of tenants who knock on my door at 22:00 on a Sunday night to tell me that a tap is leaking"?
I don't think I'd want tenants so close!

Also if they turned out to be poor tenants and you have notice, you're neighbours during the notice period...

AnotherJoe

Yawn wrote: »

I would guess the rental income would be around £450 a month.
.

So about 4% return before tax and costs. Pretty poor you'd get better in your pension or a LISA.

Yawn wrote: »

And no, I'm not that heartless. It is just that as it stands, I have no control over who goes in there at all. If someone decides who my downstairs neighbour is going to be, I would rather have it be me than an absentee landlord.

I didn't accuse you of being heartless I was just being factual, if they annoy you, you can get rid. You won't know what they are like without them being a tenant, so whilst you can weed out some folks, you won't cut out all potential issues that way.

So, why not buy a detached house instead ? Any house price gains are tax free, no legal issues being a landlord, no hassle being a landlord (with the LL upstairs I can imagine every tiny issue needing fixing might lead to a knock on the door from the tenant )

p.s. if you do happen to get in a tenant who you wish to get rid of, and they take umbrage about that, then instead of evicting at arms length, they could be on your doorstep and in your face, almost literally, for months.