Can i buy a house with a 5% deposit and then rent it out after 2 years whilst travelling?

newsgroupmonkey_

Comms69 said:

A s.21 is a landlord telling a tenant they plan to potentially evict at some point in the future. So not sure what i'm advising that isnt correct?.... 

And here we go again. I remember why I blocked you before.

An S21 has the following line:

You are required to leave the below address after [                                      ][1].  If you do not leave, your landlord may apply to the court for an order under Section 21(1) or (4) of the Housing Act 1988 requiring you to give up possession.

You are required to leave. That's as black and white as it comes. You have been TOLD to leave. Given a date.

Anyhow, I'm going to block you. I've only been back on this forum a few days and I've already found out why some people really need to get themselves a life. Bye

grumiofoundation

newsgroupmonkey_ said:

Comms69 said:

A s.21 is a landlord telling a tenant they plan to potentially evict at some point in the future. So not sure what i'm advising that isnt correct?.... 

And here we go again. I remember why I blocked you before.

An S21 has the following line:

You are required to leave the below address after [                                      ][1].  If you do not leave, your landlord may apply to the court for an order under Section 21(1) or (4) of the Housing Act 1988 requiring you to give up possession.

You are required to leave. That's as black and white as it comes. You have been TOLD to leave. Given a date.

Anyhow, I'm going to block you. I've only been back on this forum a few days and I've already found out why some people really need to get themselves a life. Bye

But as said in the second line - 'if you do not leave your landlord may apply to court...'

For someone who wants to become a landlord this is crucial to understand, that a upon expiry of section 21 the tenant does not have to leave and the landlord must go to court in order to end the tenancy. 

In the same way that a tenant is legally required to pay rent, but this does not mean they always will. 

foxy-stoat

harvoo said:

newsgroupmonkey_ said:

harvoo said:

Comms69 said:

Maybe, but it sounds like a terrible idea. 

Thanks for reply, why does it sound like a terrible idea?

Because Comms69 suggest that everyone should sit out a section 21 (that's what you give someone when they want to move out) and tell the tenant to ask for thousands of pounds to do so.

Basically, during Covid, the Government have extended notice a Landlord (that's you in this case) must give from 2 months to 6 months. In addition, no courts are hearing cases right now and it's unlikely that you'd be able to evict a tenant much before 2022.

Now clearly, we're sitting in worst case scenario. But let's say you go off travelling for 2 years. Firstly, I hope you've got deep pockets, because not only will you be potentially liable for tax on the income, but it's unlikely to cover the cost of a mortgage. In addition, anything that goes wrong (boiler blew up, electric blows, roof falls down etc.) you're liable for and have to do quickly. Plus you'll have to pay management fees to someone.

Next up, you return from your travels. You've given a section 21 to the tenant, with 2 months notice. Except that they don't want to move out. And did you forget to get that gas safe fella to check your heating system? ooh dear, you're starting your section 21 again. Didn't fill it out properly? Oh noes, we're starting that yet again. that's 6 months notice you've given.

At which point, you then apply to the courts to get possession. Best scenario, that'll take 3 months. At which point, the tenant has decided to stop paying you, so you're really stuck, because you're trying to pay that mortgage too. The judge sees that the tenant has protected characteristics (mentally or physically disabled etc.) and decides to give them 6 weeks or more to get out.

You get my point. Accidental landlording is not something anyone would suggest. There are too many pitfalls. I'd be very surprised if you'd get consent to let. And if you're not actually resident, you can't play the lodger game (I've seen people try to play that card before too).

Thanks for all the replies.

The aim wouldn't be to make any money 

If that is your number 1 aim, then keep renting.

Mutton_Geoff

harvoo said:

In terms of managing the property whilst I'm away I have a relative who is a gas certified engineer who is willing to manage the property for me for free.

I'm sorry but that's just another bad idea. Never mix business with pleasure. You risk getting exactly the level of service you've paid for.

newsgroupmonkey_

grumiofoundation said:

But as said in the second line - 'if you do not leave your landlord may apply to court...'

For someone who wants to become a landlord this is crucial to understand, that a upon expiry of section 21 the tenant does not have to leave and the landlord must go to court in order to end the tenancy. 

In the same way that a tenant is legally required to pay rent, but this does not mean they always will. 

The tenant is required to leave. I never said they HAD to leave (although "required" would imply that they're expected to leave).

If you see my full post on the previous page, I mentioned all of these. I quote...
You've given a section 21 to the tenant, with 2 months notice. Except that they don't want to move out........

At which point, you then apply to the courts to get possession. Best scenario, that'll take 3 months at which point, the tenant has decided to stop paying you.

I made it quite clear that the tenant wasn't moving out upon expiry of the section 21 notice.

Thrugelmir

harvoo said:

I have just seen that the government are trying to re offer 5% mortgages.

News to me. Boris suggested the concept in his address at the Tory party conference yesterday. That's very different to an actual policy being in place. 

steampowered

harvoo said:

The aim wouldn't be to make any money it is just to stop wasting money by paying rent over the next few years.
In terms of managing the property whilst I'm away I have a relative who is a gas certified engineer who is willing to manage the property for me for free.

Money on rent is not "wasted money". You are paying for a place to live.

It is critical to understand that you will have wasted money if you buy a property too. You cannot avoid wasting money on property. Interest on the mortgage; stamp duty; conveyancing fees; mortgage fees; letting agent fees; maintenance costs; income tax on the rent you receive from tenants; estate agent fees on sale; capital gains tax on sale - these are all examples of wasted money you will face as a landlord.

If you would be buying another property when you come back to the UK, you should bear the following in mind:
- You will be paying higher rate stamp duty. This alone will wipe out any profit you will have made from renting out the first property.
- Will you need to access the money tied up in your first property, in order to have enough of a deposit to buy the second when you come back from travelling? If so, you will have to sell the first property.

I think this is a bad idea because there is really very little merit in doing it. Nearly all of the mortgage repayments are simply going to be interest rather than capital. The interest rate on a 95% mortgage is going to be far higher than the interest rate on a 10% or 15% mortgage. I'd be amazed if you made a profit at all on letting the property after taking account of a mortgage like that and all the other costs and taxes involved. 

jimbog

There are times when renting is better than buying. This is one of them

sweetsand

Hi
Generally, if you have a loan on the prperty, you need to consult the ins co otherwise if things go belly up, you may be left
with a massive mortgage plus costs but no property.
Impotantly, if you are luck and property has gained price rises you may be liable to CGT

HTH

Angela_D_3

harvoo said:

Comms69 said:

Maybe, but it sounds like a terrible idea. 

Thanks for reply, why does it sound like a terrible idea?

I did it in 1998,  best decision I’ve ever made.  Didn’t know it at the time obviously