Buy to Let Property

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  • tom9980tom9980 Forumite
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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.


    So you are potentially about to commit fraud? either you pay your taxes or risk HMRC finding out. 
    When using the housing forum please use the sticky threads for valuable information.
  • Miranda25Miranda25 Forumite
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    Tom, 
    Firstly, legally it is my mum's property and not mine. 
    Secondly, I don't think I am going to use HTB as I cannot afford to buy new house here and I don't want a flat. 
  • AdrianCAdrianC Forumite
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    Miranda25 said:
    Tom, property abroad is bought for my money but I did documents on my mother's name. 
    You bought your mother a house? How very generous of you.

    Will you buy me one, too?
  • Miranda25Miranda25 Forumite
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    AdrianC said:
    Miranda25 said:
    Tom, property abroad is bought for my money but I did documents on my mother's name. 
    You bought your mother a house? How very generous of you.

    Will you buy me one, too?
    Maybe if you are my relative.
    I don't care too much about assets. I just like a process of doing business (this is what I did back home). This is what I want to do in the UK. Hence my question to very knowledgeable Adrian: what would you recommend as source of extra income- 1-2 flats in the UK or to invest in stock markets. Many thanks.
  • Mutton_GeoffMutton_Geoff Forumite
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    How much actual cash do you have to invest? If you're looking at £200k properties, do you have £80k in hand (ie 40% deposit) or less?
    Signature on loan to someone else
  • Miranda25Miranda25 Forumite
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    How much actual cash do you have to invest? If you're looking at £200k properties, do you have £80k in hand (ie 40% deposit) or less?
    I rounded up to £200k. I saw online flats for £160-180k in South East England (do not consider London).
    I would start with 1 flat and currently have less deposit. But I can make 25% deposit by next year or can go with CTL what people advise me here. If everything goes more or less smoothly then in the future I would buy second flat to rent it out. 
    So actually I am not thinking about short-term investment, I think about longer term, something which gives me extra income in the future.
    That's why my thoughts: -which way to go - flat or stocks
                                           - if flat then what location in England might be profitable (near universities, seaside or anything else)
    I need to take into consideration that I highly likely will not be living in the UK and then I would deal with agency to manage the flat, not sure how good they are in terms of managing tenant's queries.
    Also don't want the problems here in the UK like owners-foreigners of properties facing now in Spain a lot (squatting).
    Thanks.
  • NinjaTuneNinjaTune Forumite
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    Miranda25 said:
    Tom, 
    Firstly, legally it is my mum's property and not mine. 
    Secondly, I don't think I am going to use HTB as I cannot afford to buy new house here and I don't want a flat. 

    Have you actually looked at property prices in some of the areas you mentioned earlier?  You won't get a house in Bracknell for £200k, only a 1 bed decent flat or a 2 bed with a short-ish lease/in a less salubrious area.  Personally I wouldn't be tempted to live in Slough but, again, you will be restricted to flats with your budget.  Not familiar with Swindon so can't comment on that area.
  • sharp910shsharp910sh Forumite
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    You will need 25 percent in you are planning to rent it out long term. Do you have 50k+ fees and stamp duty to hand for a £200k flat? Sounds like you only have £8 currently, which is not enough. Remember you cannot use the HTB ISA to rent out a property, so will not get the bonus. 
  • edited 1 July 2020 at 4:57PM
    steampoweredsteampowered Forumite
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    edited 1 July 2020 at 4:57PM
    Miranda25 said:
    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.
    Hi, as you already own a property, I'm pretty sure you are not entitled to benefit from "first time buyer" products like the HTB ISA. The fact that the property is outside the UK generally doesn't make a difference.

    It sounds like your financial goals are as follows:
    - Get as much of a return as possible on your investment.
    - Be able to use your investment when you leave the UK.

    I don't think a BTL investment is suitable for someone in your circumstances for all of the reasons in my last post - BTL comes with a lot of additional cost and tax that will eat into your investment returns.

    While you might be able to get a BTL mortgage, remember that you will be paying interest on that. The effect of a mortgage is to magnify both profits and losses on your deposit. There's a pretty good chance that you might lose money if you have non-paying tenants, or if house prices drop, or if you want to sell within a few years (given the costs you'll need to pay on acquisition - stamp duty; conveyancing costs; lender fees; and costs on sale - estate agent fees). 

    You can keep your stock market investments no matter where you live in the world. Unlike a tenanted property, stocks can be sold at any time. The only restriction is that you can't pay into a stocks & shares ISA while you are resident abroad (though you can keep what is in an ISA you have already paid into).

    If for whatever reason you wanted to have funds generated in the UK while you live overseas, you could consider a FTSE 250 tracker - though I'm not sure why you would want to do this? Most seasoned investors would recommend investing in a manner which is globally diversified - such as a Vanguard Global ETF which you'll be able to get through any investment platform.

    The return generated by the major stock markets over the past 50 years is on average 7-8% per year, so that's what you might expect on a long term stock and share investment (though some shares will be better and some years will be worse, it will average out).


  • Miranda25Miranda25 Forumite
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    NinjaTune said:
    Miranda25 said:
    Tom, 
    Firstly, legally it is my mum's property and not mine. 
    Secondly, I don't think I am going to use HTB as I cannot afford to buy new house here and I don't want a flat. 

    Have you actually looked at property prices in some of the areas you mentioned earlier?  You won't get a house in Bracknell for £200k, only a 1 bed decent flat or a 2 bed with a short-ish lease/in a less salubrious area.  Personally I wouldn't be tempted to live in Slough but, again, you will be restricted to flats with your budget.  Not familiar with Swindon so can't comment on that area.
    NinjaTune, 
    I don't want house in Bracknell, Slough, Swindon. I don't want to live there. I mentioned those areas because those areas are good for investments (from online sources). That's why I asked people which do invest into flats how they make their mind- do they follow researches or they have different way of thinking? :-)
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