New at buy to let .. help!

Running_Horse

wii_man1 wrote: »

Don`t you know buy to let is screwed :rotfl:

The OP did not ask if BTL is screwed.

m00m00

as it's a repayment mortgage, is it a residential mortgage, rather than a specific BTL one ?

and if so, do you have permission to let from your mortgage company

reformedEffortMaker_2

thriftybabe - thanks for your post, please ignore the negative posters

granville - whether its 'late in the day or not'....at least the OP is thinking about it now!...remember one of the mantras of the forum 'no such thing as a stupid question?'.

I for one am thinking of a BTL (and before the HPC's starts, I will be buying at least 30% below current market value, its in an area of London which has always performed well). The answer to the OP's question would be beneficial to me in helping me do my sums, so whilst some people might find it easier to criticise, please could others actually answer the question as you may be helping others too!

meanmachine_2

It's an "area of London that's always performed well".

Er, show me an area of London that hasn't performed well in the last 10 years up until the Credit Crunch...

And if you're buying 30% below market value, that 70% price sets the new market value, or am I just being dumb?

I think you'd have to be PHENOMENALLY brave, given the current market conditions, to look on property as an investment.

A way to lose money, yes, if you need something as a tax write off...

m00m00

reformedEffortMaker wrote: »

thriftybabe - thanks for your post, please ignore the negative posters

granville - whether its 'late in the day or not'....at least the OP is thinking about it now!...remember one of the mantras of the forum 'no such thing as a stupid question?'.

I for one am thinking of a BTL (and before the HPC's starts, I will be buying at least 30% below current market value, its in an area of London which has always performed well). The answer to the OP's question would be beneficial to me in helping me do my sums, so whilst some people might find it easier to criticise, please could others actually answer the question as you may be helping others too!

30% BMV just doesn't matter for BTl
what matters is the rental yield

all you saying is you are buying below the current inflated market value, that has no bearing at all on what any future value may be, and should not be the primary concern in your calculations
what is the likely rental yield going to be ? what is the local rental market like
this are the primary questions you should be asking yourself, before any concerns about the actual value of the property. In many london properties even 30% BcMV will still put you into negative gearing with the rents.

reformedEffortMaker_2

meanmachine/m00m00 ok, so its settled, I am very brave, and will be in negative equity soon. Please take note of the word 'thinking' of a BTL.

I am using this site to help me decide (after void periods/rental yield etc-whether it will be worth it) hence answers to questions of this kind would be appreciated.
Its no good criticising posters for not doing their sums beforehand, and then when someone posts asking before they commit themselves, and all everyone keeps talking about the inevitable HPC

So, to answer thifty babes original question, How much tax will be paid?

HugoSP

Pastures New has it spot on.

There is profit to be made in BTL if you choose your property wisely. The only problem I would forsee is if the OP wants to sell in a years time at a profit. I doubt it will happen.

HMRC has leaflets about BTL, but there are a host of other allowable deductables, not least the costs of running the btl business from your own home. There is another thread here.

We have just decided to take our flat that is let off the market, as the market is dead in the water here and it's not the first choice of flat for buyers, there is also a glut of flats on the market in the area. We would prefer to carry on getting the rent, which will be reviewed in Feburary. We have a very good tenant who has been there for 9 years.

With a number of BTL investors having got out of the market recently, there will be a shortage of reasonable places to rent in the future, so, according to the principles of supply and demand, anyone thinking of a BTL at the moment could be in a very good position in the future if they choose their property carefully now.

Generali

meanmachine wrote: »

It's an "area of London that's always performed well".

Er, show me an area of London that hasn't performed well in the last 10 years up until the Credit Crunch...

And if you're buying 30% below market value, that 70% price sets the new market value, or am I just being dumb?

I think you'd have to be PHENOMENALLY brave, given the current market conditions, to look on property as an investment.

A way to lose money, yes, if you need something as a tax write off...

IMO, BTL is always a good investment as long as you satisfy the following conditions:

1. You are basically never looking to sell (that is you're going to hold the place for such a long time that the net present value of any realised loss is close to nil - I'm too lazy to do the sums but I would think a minimum of 25-30 years).
2. The property is and will almost certainly remain cash flow positive (that is the rent covers all costs including voids, tax, depreciation, opportunity cost on the deposit etc).

The OP's position doesn't satisfy the 2nd condition IMO.

Good luck OP, I hope you make money!

meanmachine_2

HugoSP wrote: »

With a number of BTL investors having got out of the market recently, there will be a shortage of reasonable places to rent in the future, so, according to the principles of supply and demand, anyone thinking of a BTL at the moment could be in a very good position in the future if they choose their property carefully now.

But will the CGT changes not bring a fresh deluge of flats onto the market in April?

Genuine question. I assumed it would, but as you're a BTLer, I just wonder why you even put your property on the market at this time (except to escape the nominal HIPs charge).

thanks

HugoSP

Generali wrote: »

IMO, BTL is always a good investment as long as you satisfy the following conditions:

1. You are basically never looking to sell (that is you're going to hold the place for such a long time that the net present value of any realised loss is close to nil - I'm too lazy to do the sums but I would think a minimum of 25-30 years).
2. The property is and will almost certainly remain cash flow positive (that is the rent covers all costs including voids, tax, depreciation, opportunity cost on the deposit etc).

The OP's position doesn't satisfy the 2nd condition IMO.

Good luck OP, I hope you make money!

In general I would agree with what you've said but I don't think it will take that long for the market to recover. Judging by the last crash it may take around 5 years, depending on how much below BMV the OP paid for it. Also I fear that BTL investors could once again push the market up, or stop it falling below prices that would make acceptable investment yields, given the low interest rates we have compared to the late 80s.