BTL Expert advice needed!!

Quest123

steampowered wrote: »

Op, why do you want to be a BTL landlord?

Furthermore, won't you want to buy a property of your own in a few years time? This will be more difficult if you have to sell the BTL property first. And as a former property owner you won't be eligible for government assistance (such as through the help-to-buy scheme or help to buy ISA). - The idea would be to sell the property and then to purchase my own, i'm not time pressured. Secondly, the help-to-buy schemes aren't ideal they have their cons, you're essentially paying rent and a mortgage simultaneously. Help to buy ISA only provide a max additional £3k, which won't drastically change my ability to purchase my own place.

It all sounds like an extremely high risk investment without the prospect of a high return to go with it. For now I think you are much better off putting your money into a savings account or investing it into stocks & shares. Consider investing into a help to buy ISA. I'm in the early stages of looking where to invest and in my opinion housing would be a better investment long term, i'm just getting to grips with the feasibility and financial implications of it all

Just trying to work out whether it's a good idea or not essentially.

Comms69

on top of which you seem to have forgotten landlord insurance, budgeting for repairs and for legal costs.

Crashy_Time

http://www.section24.org.uk/landlord-tax/

00ec25

Crashy_Time wrote: »

http://www.section24.org.uk/landlord-tax/

as ever Crashytime posts the usual misleading article without even considering its relevance to the OP

OP earns 16k, which is, more over, tax free, thus he has a very long way to go before the higher rate tax band applies and the purpose of that article kicks in. All the while he is a zero or basic rate taxpayer that article is wholly misleading since section 24 has no impact at all on them

for the record....
https://www.gov.uk/guidance/changes-to-tax-relief-for-residential-landlords-how-its-worked-out-including-case-studies

amanda_p

I think also one problem you may encounter is a lot of mortgage providers won't lend on a house under a certain threshold especially for a first time buyer/ landlord. My son has just bought a BTL in Manchester, his first purchase. Slightly different as he lives and works in HK, so it was the only way to get a house in the UK, his place of birth, as no one if you are an ex pat will give you a residential mortgage, as you are not a resident. His broker got him a mortgage through Swinton who are based in Guernsey, one of the criteria was the value of the house had to be over £140,00 for them to lend 75%. He also had to pay a very high mortgage fee, presumably as he is out of the UK. The affordability luckily for him isn't a problem but you do need to have money put aside for repairs. As a landlord it is not something that can be left. If the boiler breaks and needs replacing it has to be done, washing machine breaks, oven breaks has to be replaced straight away. There are a lot of LL checks that have to be carried out before the tenants are in, none of them very expensive, but a lot of them so the ££ racks up. Then LL insurance, furnish the property or not.Will you employ a letting agent, another 10% off the rent each month. The list is endless. His rental is £750 a month in a very popular area of Manchester and it is a house. I would be surprised if you would get that level of rent for a one bedroomed flat in Birmingham, whatever Rightmove may say. Before you go ahead do your homework well.Budget for the worst scenario and hope for the best.

Cakeguts

If you get a non paying tenant you have to be able to pay the mortgage for at least 6 months without getting any rent. You also have to be able to carry out repairs without getting any rent. It takes several months to evict a tenant who has stopped paying rent which is why you have to be able to pay the mortgage without getting any rent. You have said that you wouldn't be able to pay the mortgage without getting any rent therefore this investment is too high risk for you.

parkrunner

Quest123 wrote: »

THIS IS WHERE IT GETS (MORE) DIFFICULT:

I’m currently eating £16,000 a year, however this is tax free as it’s a PhD scholarship. Thus £16k is net.

Try Weight Watchers.......................

FBaby

Lenders might consider someone who isn't home owner IF they earn over £50K. They might consider someone who is earning £25K If they are a home owner.

Even then, you will only find a handful of lenders if that.

You seem not to meet any of the requirements, on this basis, I can't see how you would get anywhere.

You also seem to ignore the costs associated with being a LL when things go wrong, and they do go wrong! As already pointed out, if you go for a property that is in need of refurbishment because that's all you can afford, then be prepared for high repair costs, much above what you would expect as a home owner as you can chose to put up with some needs of repair that tenants will consider essential for the rent they are paying.

kingstreet

FBaby wrote: »

Lenders might consider someone who isn't home owner IF they earn over £50K. They might consider someone who is earning £25K If they are a home owner.

Even then, you will only find a handful of lenders if that.

£50k?

No. They test the proposition and see if the applicant could afford it as a residential because then they are not likely to be gaming the system because they will lose out by doing so...

You are right on the handful of lenders willing to lend to non-homeowners. If you have small hands.

Crashy_Time

00ec25 wrote: »

as ever Crashytime posts the usual misleading article without even considering its relevance to the OP

OP earns 16k, which is, more over, tax free, thus he has a very long way to go before the higher rate tax band applies and the purpose of that article kicks in. All the while he is a zero or basic rate taxpayer that article is wholly misleading since section 24 has no impact at all on them

for the record....
https://www.gov.uk/guidance/changes-to-tax-relief-for-residential-landlords-how-its-worked-out-including-case-studies

Does this affect him?


http://www.bbc.co.uk/news/business-41523941