Buy/let Plans

0lawrenz0

Hey there! I am due to graduate in June, and am beginning to work my plans out for the medium term future.
The plan I am considering is to buy a 3-4 bedroom house in my area (Leeds), which are currently around £100,000. I would then let the other rooms to students, in order to cover my repayments as much as possible and ideally allow me to live rent free (possibly saving any extra for a mantainance fund).
I have £25,000 in savings, partly inherited and partly my student loan in a HSBC bond. I do not know about salary after graduation but I do not have high hopes!! However, my parents, who have significant capital and no mortgage themselves, would be willing to be my guarantours, and I have also considered buying a larger place (6-8 bed) with a friend for the same purpose.
Please give advice on the above, do you think it is a good idea? What would be a potential plan of action?

Many thanks

Danny

PasturesNew

Bad idea probably.
For starters, with the number of people living in the house you'd have to modify it to meet with the legal requirements to be a House of Multiple Occupancy (HMO), which can cost thousands.

Loads of other reasons why it's a bad idea... I'll let others get their halfpence worth in though

Guy_Montag

See where life takes you, now really isn't the best time to do this, graduate & get a job first. What happens if you are offered a brilliant but underpaid job somewhere exotic & exciting just as you've tied yourself down to a house in Leeds?

Running_Horse

Life is fun as a student tenant, but a real pain renting rooms to them.

Do you really want to risk your £25,000 capital disappearing in a falling market?

poppy10_2

HMO is a real headache, one you can do without at your age.

0lawrenz0

Thanks for your replies. I have thought about them and done some research:
The reasons given for not doing this were:

1.HMO regulations are difficult and expensive to get in line with.
2.Students are awkward to let to.
3.Falling market.
4.Shouldn't get myself tied down.



1.If I live in the property and there are 2 other tenants it would not be a HMO. In a carefully chosen property, I could use a portion of the capital to make any relevant modifications (anyone know where I can find out exactly what is required? The leaflet I read was quite vague- health and safety and "appropriateness" for no. of occupants)

2. I could just as easily rent to proffessionals or migrants, there is a good demand in Leeds.

3. If we are talking about the next year or two, might the market not be in a different situation?

4.This is true, I have a number of potential job offers, some here and some abroad, and all are underpaid! However, if I could somehow get a HMO licence, Would I not be able to travel by renting my vacated room and arranging for someone to act as landlord in my absence?

Thanks

Danny

clutton_2

the number of letting agents who will deal with students is quite small and they charge a lot. i believe that HMO regs are about "housholds" and 3 unrelated people are three separate households and therefore is a HMO - read Leeds councils website for more info.

how will you get a Buy to let mortgage if you have no job ? "self-certification" is now being looked at much more carefully than before the "Credit Crunch".

red40

0lawrenz0 wrote: »

1.If I live in the property and there are 2 other tenants it would not be a HMO.

It will still be a HMO under Part 1 of the Housing Act 2004, to which section 254 applies. If its only 2 unrelated people then only Part 1 of the above act applies, if there are 3 persons forming two seperate households than the management regs also come into play.

0lawrenz0 wrote: »

4.This is true, I have a number of potential job offers, some here and some abroad, and all are underpaid! However, if I could somehow get a HMO licence, Would I not be able to travel by renting my vacated room and arranging for someone to act as landlord in my absence?

It depends on what licensing scheme your council are running, if its only mandatory then you may not need a licence.

Running_Horse

Sounds like you are trying to convince yourself in the face of some good advice. Fine. If you feel that strongly you should go ahead. Please bump this thread in a couple of years to let us know we were all wrong. Good luck.

huddy_2

red40 wrote: »

It will still be a HMO under Part 1 of the Housing Act 2004, to which section 254 applies. If its only 2 unrelated people then only Part 1 of the above act applies

sorry red, I am a little confused now are you saying that if 2 people in 2 households can still be a HMO?

red40

huddy wrote: »

sorry red, I am a little confused now are you saying that if 2 people in 2 households can still be a HMO?

Yes, for the purposes of Part 1 of the Housing Act 2004