Buying first house to rent?

TheMoonAwoke

Hello,

Me and my partner are in our 20s and are looking to buy a property. We have saved £25k or so for a deposit. We currently rent in Bristol but want to move to London in the next few months for the job prospects. However, we realise that we would probably never be able to buy in London, at least for 10 years or so.

We thought that it might be wise to buy a property in Bristol to rent out, whilst we rent in Bristol for a few months and then move to London, where we would also rent. Effectively we would never live in our first property.

Do you think it would be worth doing this? Would we make any money on it?

Cheeky_Monkey

House prices being what they are in Bristol, I don't think that £25k is anywhere near enough for a BTL mortgage on a house.

Plus the fact that, I believe, you can't even get a BTL mortgage if you're not already a home owner but I could be wrong!

Pixie5740

I think there are some lenders who would consider a BTL mortgage for non-homeowners but they are in the minority. For a BTL mortgage you're looking at a maximum LTV of 75% and the rent to be 125% of the mortgage payments and in some cases as much as 145%.

You've not given any figures so it's impossible to say whether you'll make any money. Like any other business venture you'll need to work out your income and expenditure to estimate whether it will be a success or not.

teddysmum

Pixie5740 wrote: »

I think there are some lenders who would consider a BTL mortgage for non-homeowners but they are in the minority. For a BTL mortgage you're looking at a maximum LTV of 75% and the rent to be 125% of the mortgage payments and in some cases as much as 145%.

You've not given any figures so it's impossible to say whether you'll make any money. Like any other business venture you'll need to work out your income and expenditure to estimate whether it will be a success or not.

Not forgetting that you can't count the whole of the incoming rent as balancing the outgoing for the London rental. Only the interest on the Bristol property's mortgage (ie not capital repayments) and expenses can be deducted from the former, before tax is payable; this tax making quite a hole in that incoming rent.

Guest101

TheMoonAwoke wrote: »

Hello,

Me and my partner are in our 20s and are looking to buy a property. We have saved £25k or so for a deposit. We currently rent in Bristol but want to move to London in the next few months for the job prospects. However, we realise that we would probably never be able to buy in London, at least for 10 years or so.

We thought that it might be wise to buy a property in Bristol to rent out, whilst we rent in Bristol for a few months and then move to London, where we would also rent. Effectively we would never live in our first property.

Do you think it would be worth doing this? Would we make any money on it?

I don't know, but I doubt you'll find a lender to support this. Are there many £25k properties in Bristol?

Cakeguts

Aren't there any jobs in Bristol? People forget that London is so much more expensive than anywhere else that even if you get paid a lot more for a job you might not have as much spare money to spend as you would have if you earned a bit less but lived in a cheaper area.

If you have a buy to let property you have to be able to continue to pay the mortgage even if your tenants have stopped paying the rent. So can you afford to pay a mortgage and your rent if you aren't getting any rent from your buy to let property? If not this is a bad idea. The best idea is to buy a house to live in in Bristol and work there.

saajan_12

Its generally better to live in the house you own rather than let an owned property and rent elsewhere because
* Tax inefficient to Pay ‘gross’ rent but only receive rent ‘net’ of tax (mortgage interest can reduce the tax bill the lenders rules will need rent to be significantly higher than the mortgage and with new rules for higher rate tax payers, the amount you can offset will reduce.
* Residential mortgage typically has much lower interest than BTL and as a first property, you will be severly restricted on the choice of lenders.
* Extra responsibility of being a Landlord (be on call / pay an agent to handle tenant issues / repairs especially from a distance, legal responsibilities of deposit protection, notice, gas safety etc etc).
* Paying rent + mortgage when there are voids / tenants don’t pay.

Murrey

I'm considering buying a property to rent out. I don't currently own a property (I live in my partner's house). Do still have to pay the extra buy-to-let stamp duty?