Let to Buy Vs Just Selling and then Buying

gemjar2

Hi everyone

i have owned my current home for 9 years and have recently got the moving itch, really badly! I need a change of scene after a few street politics where I am, and whilst it’s nothing horrendous, I am ready for a fresh start somewhere else. Having recently started a new job which pays £12k more than my previous role, it has opened up my options!

i have always had the goal to own up to 3 investment properties plus my own home and I have 2 options right now in order to move from where I am. Option 1 is a straight forward sell my current place and buy the next place, in which case I could probably buy something worth £40k more than my current home.  Option 2 is to do a Let to Buy... keep my current house, convert to a BTL mortgage and buy another property at the equivalent or slightly higher value of where I am now. Option 2 also makes me chain free and so potentially a more proceedable purchaser.

I realise we are in tricky times for BTL landlords but the numbers just about work and I am motivated by the long term investment rather than short term cash flow.

I don't need more space, I just want the added extras of off road parking and a less overlooked feeling. 

Any opinions out there on what you would do if you were me, and why please? .....Option 1, Option 2, or option 3 which is to resist the gut feeling telling  me to move now and sit tight for a couple of years to build up a higher deposit but risk current house going down in value in the meantime and so having less equity to release.

Thanks fellow MSEers! 

MultiFuelBurner

What experience have you got as a landlord and if you do have a rental how many months could you pay all the bills if a renter stopped paying you and trashed your property?

Not trying to scare you off but you need to do some good research and hard thinking and no one on the internet can really say "yeah do it"

Have you already read through the good links stickied to the top of this forum?

https://forums.moneysavingexpert.com/discussion/5180214/tenancies-in-eng-wales-guides-for-landlords-and-tenants/p1

gemjar2

Thanks @MultiFuelBurner, appreciate your reply. I’ve done a lot of research so am aware of the risks. If I followed only my head and not my heart I would build up a bit more slush fund first. Head and heart at odds here!  

I have had lodgers for 9 years and did let the whole place at one point for a year. The financial margins for converting to BTL are tight, so it’s weighing up if the long term gains would be worth some short term nail biting and crossing fingers and toes and as much due diligence as possible and having faith in finding good tenants. 

I guess at the nub of it it all is wondering if the long term investment of retaining a property I bought at its price 9 years ago would be a risk worth taking for a long term gain. Or if keeping life more simple and just moving on cleanly and investing later down the road is more prudent. 

housebuyer143

Have you factored in the 3% additional stamp duty? You will need to pay that and there is no refund unless you sell within 3 years.

gemjar2

@housebuyer143 I have, thank you. One of the reasons I’m finding it hard to figure out short term pain Vs potential long term gain...

tiger135

why the hell would you want to be a landlord?!?

InMyDreams

gemjar2 said:

 but risk current house going down in value in the meantime and so having less equity to release.

Current house going down in value is not a problem if you are wanting to up-size. If the more expensive house has also gone down in the same proportion, then the difference between the two, the extra you will have to pay, will be smaller.

(This assumes any reduction hasn’t wiped out your equity all together which is an all together different problem.)

_Penny_Dreadful

gemjar2 said:

Hi everyone

i have owned my current home for 9 years and have recently got the moving itch, really badly! I need a change of scene after a few street politics where I am, and whilst it’s nothing horrendous, I am ready for a fresh start somewhere else. Having recently started a new job which pays £12k more than my previous role, it has opened up my options!

i have always had the goal to own up to 3 investment properties plus my own home and I have 2 options right now in order to move from where I am. Option 1 is a straight forward sell my current place and buy the next place, in which case I could probably buy something worth £40k more than my current home.  Option 2 is to do a Let to Buy... keep my current house, convert to a BTL mortgage and buy another property at the equivalent or slightly higher value of where I am now. Option 2 also makes me chain free and so potentially a more proceedable purchaser.

I realise we are in tricky times for BTL landlords but the numbers just about work and I am motivated by the long term investment rather than short term cash flow.

I don't need more space, I just want the added extras of off road parking and a less overlooked feeling. 

Any opinions out there on what you would do if you were me, and why please? .....Option 1, Option 2, or option 3 which is to resist the gut feeling telling  me to move now and sit tight for a couple of years to build up a higher deposit but risk current house going down in value in the meantime and so having less equity to release.

Thanks fellow MSEers! 

Do you think the street politics will improve when your a landlord?

The first step would to be to find out if your plan is even feasible i.e. speak with a mortgage broker to see if you will pass affordability with a let-to-buy mortgage and a new residential mortgage.  If you can't get the borrowing you require for your plan it will be a non-starter.

You also need to consider whether the property you currently own will make a good BTL.  For example, my home is a Victorian property with no extractor fan in the bathroom but there is a window you can open which I do and have never had an issue with mould.  Would I trust a tenant to open the bathroom window?  No.  All of my rental properties have good extractor fans, as well as bathroom windows, with humidity detection capabilities.  I realise that mould issues are not always down to lifestyle (There was a cracking case up in Orkney of a rental with very bad mould in every room which there had never been with any previous tenant.  Turns out that before this particular tenant moved in the landlord, thinking he was doing the right thing, took a Green Deal and in doing so the ventilation in the property became almost none existent hence the ridiculous amounts of mould.) but quite often it is down to people drying clothes over radiators and not cracking a window open once and a while.  Mould is something I worry about as a landlord whenever there is a change of tenants.

What EPC can your property currently achieve?  My rentals are all B or C but my own home is a D.  With the prospered  changes in legislation I wouldn't be looking at anything less than a D that only requires a little work to become a C.