Rent on £125k purchase?

Charlton_King

What kind of rent would BTL landlords be looking for on this ballpark buying price?

I'd be interested to know if there's a 'range of acceptability'.

Lazy_Runner

There are two figures to consider here:

1) what the landlord needs to turn a profit
2) what the market will stand

Sometimes 1 is higher than 2 and at other times it is the other way around

Say the landlord is on a 7% interest only mortgage. This means £729 monthly mortgage payments
10% estate agents fee for finding the tenant say 90/ month based on a rent of 900/month
plus service charge (if applicable) and other 'business costs.

You are looking at 900 - 1000 per month.

As to what the market will stand, only the landlord will know that by knowing the area and supply / demand situation at the time. And then the tenant might make an offer if the market is slack.

As to what the m

m00m00

where I live properties that are selling for 125k or so, are lucky to get 500 a month in rent at the moment, due to the utter glut of property available

Lavendyr

Doesn't really work like that I don't think OP, it's more about what comparable market rates are. Also depends on whether it's a flat or a house, what demand is in the local area, the condition of the property and so on. I don't think you can so easily directly relate it to value. Like Lazy Runner is saying post-edit

michaels

Too much personal info

Lazy_Runner

Hmm

That last line isn't meant to be there. However I was having a lot of problems posting at that time, either because the site or my computer were slow.

HugoSP

The range of acceptability as the OP puts it really depends on why you are investing in a BTL.

If you expect the market to be slack before you come to sell then you would want to cover the mortgage costs plus make a bit of profit over and above the costs of ownership (interest payments, insurance, maintenance etc)

If you are buying in a rising market then just covering your costs may be enough, as you are hoping for an increase in capital.

Having said that there are other factors to consider.

• Is the property just a rent machine or is it likely to be a future development project. With the exception of 1 place, which produces the best yield, our properties have potential for further development in the future. Hence the tenants are providing us with a reasonable yield now, and we have bagged the properties to do something with later.
• How long do you want to keep the property for? If it is for a short time only you need to be buying at a very reasonable price to protect yourself against likely short term devaluations. If you want to be making a profit on it in 20 years time then a lower yield now may be acceptable, in leu of its markatability. The flat we have is worth pants at the moment but does produce a good ROI. The houses on the other hand do hold their value well but the ROI is not as good.
• How are you raising the finances? If you are a cash buyer then a lower yield may be more acceptable compared to what you would get if you invested the money elsewhere, but if you are raising a mortgage on it and are long term vulnerable to interest rate fluctuations, then you may view a higher yield as protecting you better from the whim of the [STRIKE]govt[/STRIKE] BoE