Londoner attempt to get on the ladder!

mui

Would love some thoughts. I'm in London and have no hope of affording what we (family of four) need to live in, so am considering alternatives. I'm looking into buy to let outside of London so we can hopefully get something behind us long term to be able to afford a better home in the future. We can afford under 200K, so are looking at one beds along the Elizabeth line. I haven't owned before, but my husband has, so research is telling me we'll be up for 5K stamp duty. I'm feeling with a 15K deposit, 5K stamp duty, 2K fees/checks and a few K towards some new paint/carpet, we could be looking at a buy to let for 20K. Thoughts?

need_an_answer

Check out the criteria for a BTL mortgage, many lenders suggest a 25% deposit is required.

mui

Wow, looks like 25% is minimum... which would take us to £37,500 deposit, 5K Stamp duty, 2K fees/checks and 2ishK paint/carpet... £40K total

They really don't want Londoners to get on the market in any way do they...

lisyloo

so am considering alternatives

Most people commute combined with working from home (although I appreciate that's not possible in all jobs). Is there any reason you can't buy outside London?


I personally don't think it's a great time to get into BTL investment wise, both because of the property market but also recent changes in the tax regime for landlords.

There is also a lot of work involved which has increased in recent times.
Do you have a good handle on the obligations?
Why do you think BTL is a good investment?


Have you also looked at other opportunities for investment.
For example my employer offers salary sacrifice which gives me a 45.8% uplift on my pension contributions. There are major downsides but even so you should make comparisons with other investment opportunities.
BTL is the most labour/obligation intensive.
For example a stock and shares portfolio doesn't call you at 4am with a leak.

I think you've missed the boat by quite a lot for BTL as a good investment.

Comms69

mui wrote: »

Would love some thoughts. I'm in London and have no hope of affording what we (family of four) need to live in, so am considering alternatives. I'm looking into buy to let outside of London so we can hopefully get something behind us long term to be able to afford a better home in the future. We can afford under 200K, so are looking at one beds along the Elizabeth line. I haven't owned before, but my husband has, so research is telling me we'll be up for 5K stamp duty. I'm feeling with a 15K deposit, 5K stamp duty, 2K fees/checks and a few K towards some new paint/carpet, we could be looking at a buy to let for 20K. Thoughts?

Many require a LTV ratio of 70-5%. Many will not lend on a BTL scheme to non homeowners. - I wasn't clear if you own your current home.


The max you can afford is quite low, even for my area - which is almost as far north as you can go!


Why are you staying in London?


In any case a BTL will not be the answer to your problems. After tax, fees, repairs, mortgage you'll be just about breaking even.


AND if it goes wrong you end up paying your own costs and a mortgage on an empty (or worse occupied) property...

Comms69

mui wrote: »

Wow, looks like 25% is minimum... which would take us to £37,500 deposit, 5K Stamp duty, 2K fees/checks and 2ishK paint/carpet... £40K total

They really don't want Londoners to get on the market in any way do they...

Sorry who's 'they'? There isn't a committee setting prices. It's basic supply and demand.


(also your maths seems off by about £5k-7k)

Cakeguts

https://www.rightmove.co.uk/property-for-sale/property-77816678.html


This one iss sold but there may be others come up. https://www.rightmove.co.uk/property-for-sale/property-55165548.html


Just a couple of examples of shared ownership with 3 beds that you could afford to buy to live in?

mui

Thanks for the comments, much appreciated. We currently rent, yes. We can not live outside London unfortunately (kids are young, our working hours are long, commute = not seeing them etc.)

I have considered shared ownership, yes but haven't seen anything which suits.

I'm not looking to make money monthly, we can afford to cover mortgage repayments without a tenant so that's fine. I'm interested in longer term investment... and don't mind the occasional 4am wake up.

need_an_answer

Whats a 4am wake up got to do with anything?

Being a LL means you run a business and are responsible for the upkeep of the property.

Void periods can be hard too when its not just the mortgage payment and any management fees if leasehold that you need to keep up but utilities at a minimum and CT....
Then there are agencies to consider
self manage or agency manage?


Running repairs and insurances and compliance.


You need quite a healthy slush fund.

That's just for good tenants, you need to be aware of eviction costs too if necessary

Comms69

mui wrote: »

Thanks for the comments, much appreciated. We currently rent, yes. We can not live outside London unfortunately (kids are young, our working hours are long, commute = not seeing them etc.) - I'm somewhat confused about why you're not moving and looking for new work? The salary, combined or not - it's unclear - isn't particularly high; and is low for London.

I have considered shared ownership, yes but haven't seen anything which suits.

I'm not looking to make money monthly, we can afford to cover mortgage repayments without a tenant so that's fine. I'm interested in longer term investment... and don't mind the occasional 4am wake up.

If you can borrow a max of approx. £200k; that gives you approx. a family income of £40-65k - you could make that kind of money anywhere in the country.

pollyanna24

Comms69 wrote: »

If you can borrow a max of approx. £200k; that gives you approx. a family income of £40-65k - you could make that kind of money anywhere in the country.

Might be a case of always having lived in London, where all their family etc.

I was like that, but accepted what I could afford. Grew up in Zone 2, my parents then moved to Zone 4. I now live in Zone 7, so on the very outskirts. But you know what, it's much much nicer than where I grew up in Zones 2 and 4!!!