Buy to Let Property

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  • edited 1 July 2020 at 9:25AM
    steampoweredsteampowered Forumite
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    edited 1 July 2020 at 9:25AM
    Miranda25 said:
    I am planning that too for small amounts so losses will not be so painful :-))
    Your plan is just as risky as investing in the stock market (assuming you would be investing through a diversified investment fund, rather than trying to pick individual shares).

    You are wanting to buy with a mortgage - that's leverage, and will magnify your returns or losses. If house prices drop or your tenants stop paying rent, you would lose money on the investment.

    f you are willing to take a reasonable level of risk to secure a return on your money, a diversified stock market investment through an ISA is a better route:
    - Much more tax efficient - no income tax to pay on the rent, no stamp duty.
    - The costs involved are lower (e.g. no stamp duty, estate agent fees, mortgage lender fees). Costs will eat into your returns significantly if you sell within just a few years.
    - Much less hassle.
    - Better returns - the average return generated by the major stock markets is 7-8% per year.
    - More flexible - you can sell in whole or in part, and you can sell at any time.
    - You retain first time buyer benefits - such as the ability to invest into a Lifetime ISA, which gives you a top-up from the government on your deposit; and first time buyer stamp duty relief - which could be worth thousands of pounds if you end up buying in London.

    If you prefer not to take risk, you could open a Lifetime ISA as a cash savings account, which would still get you a 25% return if the money is used for a deposit due to the government top-up.

    Can you even get a BTL mortgage? Remember BTL mortgages typically need a deposit of at least 25%. On a £200k property that would be £50k. Can't you buy a house of your own if you have a £50k deposit?
  • edited 1 July 2020 at 12:01PM
    greatcrestedgreatcrested Forumite
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    edited 1 July 2020 at 12:01PM
    Have you read the stickie at the top of the forum board?

    ** Tenancies in Eng/Wales: Guides for landlords

    This thread is intended to provide information to both landlords and tenants relating to Assured Shorthold Tenancies (ASTs) in England and Wales.

    Updated April 2020 to include the Coronavirus Act 2020.

    Topics covered:

    Post 2: Repairing Obligations: the law, common misconceptions, reporting/enforcing, retaliatory eviction & the new tenant protection (2015) plus the Homes (Fitness for Human Habitation) Act 2018

    Post 3: Deposits: Payment, Protection and Return.

    Post 4: Ending/renewing an AST: what happens when a fixed term ends? How can a LL or tenant end a tenancy? What is a periodic tenancy?

    Post 5: Rent increases: when & how can rent be increased?

    Post 6: Repossession: what if a LL's mortgage lender repossesses the property?

    Post 7: New landlords (1):advice & information :see links in next post

    Post 8: New landlords (2): Essential links for further information

    Post 9: Letting agents: how should a landlord select or sack?


  • Miranda25Miranda25 Forumite
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    hazyjo said:
    You request CTL if short term, or BTL if long term. If the former, you may just be charged a fee. If the latter, it will be a pricier product and you'll need at least 25% deposit.

    They are very likely to refuse if you've not long bought the property or if they suspect this was your plan all along (for example by not committing to a fixed rate).
    Thank you.
    I also read this one:
    Do you need to tell your mortgage company if you rent your house?
    Unfortunately, you're legally obliged to do so. You must ask for a 'consent to let' - if you do not inform them, you are in breach of the conditions of your mortgage contract, according to the Council of Mortgage Lenders, which claims lenders are "very likely to charge you retrospectively a higher rate of interest".
  • Miranda25Miranda25 Forumite
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    Miranda25 said:
    I am planning that too for small amounts so losses will not be so painful :-))
    Your plan is just as risky as investing in the stock market (assuming you would be investing through a diversified investment fund, rather than trying to pick individual shares).

    You are wanting to buy with a mortgage - that's leverage, and will magnify your returns or losses. If house prices drop or your tenants stop paying rent, you would lose money on the investment.

    f you are willing to take a reasonable level of risk to secure a return on your money, a diversified stock market investment through an ISA is a better route:
    - Much more tax efficient - no income tax to pay on the rent, no stamp duty.
    - The costs involved are lower (e.g. no stamp duty, estate agent fees, mortgage lender fees). Costs will eat into your returns significantly if you sell within just a few years.
    - Much less hassle.
    - Better returns - the average return generated by the major stock markets is 7-8% per year.
    - More flexible - you can sell in whole or in part, and you can sell at any time.
    - You retain first time buyer benefits - such as the ability to invest into a Lifetime ISA, which gives you a top-up from the government on your deposit; and first time buyer stamp duty relief - which could be worth thousands of pounds if you end up buying in London.

    If you prefer not to take risk, you could open a Lifetime ISA as a cash savings account, which would still get you a 25% return if the money is used for a deposit due to the government top-up.

    Can you even get a BTL mortgage? Remember BTL mortgages typically need a deposit of at least 25%. On a £200k property that would be £50k. Can't you buy a house of your own if you have a £50k deposit?
    Thank you for summarising everything. You are all so helpful on the forum, thank you.
    Just to explain my situation better:
    I already have a nice flat back home where I don't live. So I don't want another flat in the UK. But I cannot afford to buy a house somewhere near London (as I have to travel to Central London daily for work). Or I just cannot figure out nice areas with affordable house prices. I looked at 1-bedroom houses with garden, not a lot on the market!
    I have HTB ISA with around £8000. I have a fixed rate ISA for 1 year. I want to find some extra income to my salary.
    Because I am not planning to live in the UK forever, I thought I can take mortgage from the bank and make this money work for me:-))
    I will have 25% deposit in one year time (if everything as it is now). Or I will start with CTL like it was recommended.
    I still have a lot of thoughts but I think my main purpose is: to find something which would bring me income in the UK while I live in another country. 
    Can I do investments in stock markets if I do not live in the UK in future? Thanks.
  • tom9980tom9980 Forumite
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    Miranda25 said:
    Miranda25 said:
    I am planning that too for small amounts so losses will not be so painful :-))
    Your plan is just as risky as investing in the stock market (assuming you would be investing through a diversified investment fund, rather than trying to pick individual shares).

    You are wanting to buy with a mortgage - that's leverage, and will magnify your returns or losses. If house prices drop or your tenants stop paying rent, you would lose money on the investment.

    f you are willing to take a reasonable level of risk to secure a return on your money, a diversified stock market investment through an ISA is a better route:
    - Much more tax efficient - no income tax to pay on the rent, no stamp duty.
    - The costs involved are lower (e.g. no stamp duty, estate agent fees, mortgage lender fees). Costs will eat into your returns significantly if you sell within just a few years.
    - Much less hassle.
    - Better returns - the average return generated by the major stock markets is 7-8% per year.
    - More flexible - you can sell in whole or in part, and you can sell at any time.
    - You retain first time buyer benefits - such as the ability to invest into a Lifetime ISA, which gives you a top-up from the government on your deposit; and first time buyer stamp duty relief - which could be worth thousands of pounds if you end up buying in London.

    If you prefer not to take risk, you could open a Lifetime ISA as a cash savings account, which would still get you a 25% return if the money is used for a deposit due to the government top-up.

    Can you even get a BTL mortgage? Remember BTL mortgages typically need a deposit of at least 25%. On a £200k property that would be £50k. Can't you buy a house of your own if you have a £50k deposit?
    Thank you for summarising everything. You are all so helpful on the forum, thank you.
    Just to explain my situation better:
    I already have a nice flat back home where I don't live. So I don't want another flat in the UK. But I cannot afford to buy a house somewhere near London (as I have to travel to Central London daily for work). Or I just cannot figure out nice areas with affordable house prices. I looked at 1-bedroom houses with garden, not a lot on the market!
    I have HTB ISA with around £8000. I have a fixed rate ISA for 1 year. I want to find some extra income to my salary.
    Because I am not planning to live in the UK forever, I thought I can take mortgage from the bank and make this money work for me:-))
    I will have 25% deposit in one year time (if everything as it is now). Or I will start with CTL like it was recommended.
    I still have a lot of thoughts but I think my main purpose is: to find something which would bring me income in the UK while I live in another country. 
    Can I do investments in stock markets if I do not live in the UK in future? Thanks.
    You own another property abroad?

    You are not a first time buyer and you will be liable for extra stamp duty at 3%

    You can invest in the stock market in any country in the world pretty much, however you may not be able to use UK based pension and ISA wrappers if you move abroad again.
    When using the housing forum please use the sticky threads for valuable information.
  • [Deleted User][Deleted User]
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    Nor are you eligible for the HTB ISA bonus.
  • Miranda25Miranda25 Forumite
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    tom9980 said:
    Miranda25 said:
    Miranda25 said:
    I am planning that too for small amounts so losses will not be so painful :-))
    Your plan is just as risky as investing in the stock market (assuming you would be investing through a diversified investment fund, rather than trying to pick individual shares).

    You are wanting to buy with a mortgage - that's leverage, and will magnify your returns or losses. If house prices drop or your tenants stop paying rent, you would lose money on the investment.

    f you are willing to take a reasonable level of risk to secure a return on your money, a diversified stock market investment through an ISA is a better route:
    - Much more tax efficient - no income tax to pay on the rent, no stamp duty.
    - The costs involved are lower (e.g. no stamp duty, estate agent fees, mortgage lender fees). Costs will eat into your returns significantly if you sell within just a few years.
    - Much less hassle.
    - Better returns - the average return generated by the major stock markets is 7-8% per year.
    - More flexible - you can sell in whole or in part, and you can sell at any time.
    - You retain first time buyer benefits - such as the ability to invest into a Lifetime ISA, which gives you a top-up from the government on your deposit; and first time buyer stamp duty relief - which could be worth thousands of pounds if you end up buying in London.

    If you prefer not to take risk, you could open a Lifetime ISA as a cash savings account, which would still get you a 25% return if the money is used for a deposit due to the government top-up.

    Can you even get a BTL mortgage? Remember BTL mortgages typically need a deposit of at least 25%. On a £200k property that would be £50k. Can't you buy a house of your own if you have a £50k deposit?
    Thank you for summarising everything. You are all so helpful on the forum, thank you.
    Just to explain my situation better:
    I already have a nice flat back home where I don't live. So I don't want another flat in the UK. But I cannot afford to buy a house somewhere near London (as I have to travel to Central London daily for work). Or I just cannot figure out nice areas with affordable house prices. I looked at 1-bedroom houses with garden, not a lot on the market!
    I have HTB ISA with around £8000. I have a fixed rate ISA for 1 year. I want to find some extra income to my salary.
    Because I am not planning to live in the UK forever, I thought I can take mortgage from the bank and make this money work for me:-))
    I will have 25% deposit in one year time (if everything as it is now). Or I will start with CTL like it was recommended.
    I still have a lot of thoughts but I think my main purpose is: to find something which would bring me income in the UK while I live in another country. 
    Can I do investments in stock markets if I do not live in the UK in future? Thanks.
    You own another property abroad?

    You are not a first time buyer and you will be liable for extra stamp duty at 3%

    You can invest in the stock market in any country in the world pretty much, however you may not be able to use UK based pension and ISA wrappers if you move abroad again.
    Tom, property abroad is bought for my money but I did documents on my mother's name. Then I am a FTB here.
    I pay pension contributions right now so would have access to them?
    As you know what is being a landlord in the UK, what do you think would be better source of extra income for somebody like me: to invest in 1-2 flats in the UK or in the stock market? Thanks.


  • FirstTimeSoloFirstTimeSolo Forumite
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    You should speak to a Financial Advisor and they will provide you all the options available to you based on your individual circumstances. You can then make a decision on what to do in terms of investments based on what suits you best. 
  • [Deleted User][Deleted User]
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    Miranda25 said:
    tom9980 said:
    Miranda25 said:
    Miranda25 said:
    I am planning that too for small amounts so losses will not be so painful :-))
    Your plan is just as risky as investing in the stock market (assuming you would be investing through a diversified investment fund, rather than trying to pick individual shares).

    You are wanting to buy with a mortgage - that's leverage, and will magnify your returns or losses. If house prices drop or your tenants stop paying rent, you would lose money on the investment.

    f you are willing to take a reasonable level of risk to secure a return on your money, a diversified stock market investment through an ISA is a better route:
    - Much more tax efficient - no income tax to pay on the rent, no stamp duty.
    - The costs involved are lower (e.g. no stamp duty, estate agent fees, mortgage lender fees). Costs will eat into your returns significantly if you sell within just a few years.
    - Much less hassle.
    - Better returns - the average return generated by the major stock markets is 7-8% per year.
    - More flexible - you can sell in whole or in part, and you can sell at any time.
    - You retain first time buyer benefits - such as the ability to invest into a Lifetime ISA, which gives you a top-up from the government on your deposit; and first time buyer stamp duty relief - which could be worth thousands of pounds if you end up buying in London.

    If you prefer not to take risk, you could open a Lifetime ISA as a cash savings account, which would still get you a 25% return if the money is used for a deposit due to the government top-up.

    Can you even get a BTL mortgage? Remember BTL mortgages typically need a deposit of at least 25%. On a £200k property that would be £50k. Can't you buy a house of your own if you have a £50k deposit?
    Thank you for summarising everything. You are all so helpful on the forum, thank you.
    Just to explain my situation better:
    I already have a nice flat back home where I don't live. So I don't want another flat in the UK. But I cannot afford to buy a house somewhere near London (as I have to travel to Central London daily for work). Or I just cannot figure out nice areas with affordable house prices. I looked at 1-bedroom houses with garden, not a lot on the market!
    I have HTB ISA with around £8000. I have a fixed rate ISA for 1 year. I want to find some extra income to my salary.
    Because I am not planning to live in the UK forever, I thought I can take mortgage from the bank and make this money work for me:-))
    I will have 25% deposit in one year time (if everything as it is now). Or I will start with CTL like it was recommended.
    I still have a lot of thoughts but I think my main purpose is: to find something which would bring me income in the UK while I live in another country. 
    Can I do investments in stock markets if I do not live in the UK in future? Thanks.
    You own another property abroad?

    You are not a first time buyer and you will be liable for extra stamp duty at 3%

    You can invest in the stock market in any country in the world pretty much, however you may not be able to use UK based pension and ISA wrappers if you move abroad again.
    Tom, property abroad is bought for my money but I did documents on my mother's name. Then I am a FTB here.
    I pay pension contributions right now so would have access to them?
    As you know what is being a landlord in the UK, what do you think would be better source of extra income for somebody like me: to invest in 1-2 flats in the UK or in the stock market? Thanks.


    Just because you’ve put the property in your mum’s name instead of your own that doesn’t necessarily make you a FTB in terms of HTB ISA or SDLT. 
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