Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

    • Lewis2312
    • By Lewis2312 12th May 18, 8:22 PM
    • 1Posts
    • 0Thanks
    Advice for First-Time Buyers with a view to letting in a few years...
    • #1
    • 12th May 18, 8:22 PM
    Advice for First-Time Buyers with a view to letting in a few years... 12th May 18 at 8:22 PM

    New to the forums but was told this may be a good place for some advice.

    My girlfriend and I have been renting a city centre apartment over the last year whilst saving up for a deposit to purchase our first property. Our tenancy is up in August 2018 and by then we will have the £20,000.00 deposit we targeted. Originally, our plan was to purchase a house outside of the city centre, however, we have thoroughly enjoyed the convenience of living here and whilst still in our 20s want to live here for a few more years before starting a family.

    We are looking for some advice on the following idea that we have;

    -Purchase a city centre apartment in the area we live now (we want to put a 10% deposit down so up to the value of £200,000.00 property).
    -Live in the apartment for 3-5 years.
    -Purchase a second property, a house on the outskirts of the city, that we would move into.
    -Be in a position to rent out our apartment by changing over to a buy-to-let mortgage.

    Just looking for some advice on the basic principle of the idea and things to be weary of (i.e. tax implications etc.), almost like a pros/cons list.

    Thank you for any information.

Page 1
    • Slithery
    • By Slithery 12th May 18, 9:12 PM
    • 1,261 Posts
    • 1,973 Thanks
    • #2
    • 12th May 18, 9:12 PM
    • #2
    • 12th May 18, 9:12 PM
    Tenancies in Eng/Wales: Guides for landlords and tenants - Forums

    Read all of the above and all of the links it contains before even thinking about becoming a LL. If you still think it's a good idea then prepare yourself a detailed financial plan to see if it's economically worthwhile.
    • steampowered
    • By steampowered 12th May 18, 9:24 PM
    • 3,035 Posts
    • 3,021 Thanks
    • #3
    • 12th May 18, 9:24 PM
    • #3
    • 12th May 18, 9:24 PM
    It doesn't sound like you'll be in a position to buy a second property after such a short period of time.

    BTL mortgages generally require a 25% deposit.

    Plus you'd have to fund the deposit on the new place.

    Plus you'd have to fund the higher rate of stamp duty.

    Plus you'd need savings to cover void periods and repairs.

    For now, I would just focus on buying your first place. Excess savings should go into a stocks and shares ISA.
    • GoingOn30
    • By GoingOn30 12th May 18, 9:37 PM
    • 130 Posts
    • 83 Thanks
    • #4
    • 12th May 18, 9:37 PM
    • #4
    • 12th May 18, 9:37 PM
    As above, unless your incomes are much higher than average it's very unlikely you'd have enough equity/savings to make your first property BTL and purchase a second property with all the associated costs.
    Sounds like a flat in the city centre will suit you for now, make sure you get a mortgage that you can port if you think you will outgrow it in a few years.
    If you want to purchase soon after August you should start looking at properties in the next few weeks.
    • dimbo61
    • By dimbo61 12th May 18, 9:51 PM
    • 10,149 Posts
    • 5,490 Thanks
    • #5
    • 12th May 18, 9:51 PM
    • #5
    • 12th May 18, 9:51 PM
    Consider an offset mortgage if you really want to do this !
    All you have to do is pay the mortgage over the next 3/5 years while also building up the deposit for the House you want to buy and all the fees, stamp duty and other costs.
    Now this is not easy as you need to be " moneysavingexpert " on every single penny you spend.
    So Moto G smartphone and not iPhone 8 or X
    Cheap car not BMW 520 even if you could afford it.
    Camping holidays or eurocamp not a two week cruise.
    You get the picture
    • Gwendo40
    • By Gwendo40 13th May 18, 5:54 AM
    • 219 Posts
    • 226 Thanks
    • #6
    • 13th May 18, 5:54 AM
    • #6
    • 13th May 18, 5:54 AM
    Amazing how many people STILL don't understand or appreciate how over-leveraged, amateur BTL 'entrepreneurs' are (quite rightly) being targeted with tax changes, deposit/income requirements etc etc
    • Mutton Geoff
    • By Mutton Geoff 13th May 18, 6:54 AM
    • 1,301 Posts
    • 1,451 Thanks
    Mutton Geoff
    • #7
    • 13th May 18, 6:54 AM
    • #7
    • 13th May 18, 6:54 AM
    I think itís a bad idea. Why not follow the traditional route of upsizing as your family grows then downsize as the kids leave home and then when you retire.

    Your plan will have you in a first time buyers flat then a small first time buyers house outside the city later. Why not invest any property growth equity into a nicer house, room for the kids, decent garden etc rather than buying into a business you donít know anything about?

    If there are level or declining property prices over the next five years what does your plan look like?

    Buy to let or, in your case, let to buy, is not the magic money tree people think it is.
    Compensation/Refunds - £4,655 | Stooz Profits - £7,636 | Quidco - £4,060 | Tax Avoidance - £107,000
    All with a big thank you to Martin and from Mutton Geoff!
    • Cakeguts
    • By Cakeguts 13th May 18, 11:33 AM
    • 5,527 Posts
    • 8,471 Thanks
    • #8
    • 13th May 18, 11:33 AM
    • #8
    • 13th May 18, 11:33 AM
    You can only do this if you can afford to pay two mortgages from your earnings. People who don't know anything about letting property assume that you put the property on the lettings market and nice tenants rent it for years and years without any problems. It just doesn't work like that. Even the most careful landlord cannot avoid someone who lies to get a tenancy, or a tenant who loses their job or someone who just decides to stop paying their rent. If this happens it can take longer than 6 months to get possession of the property through the courts. In that time you will have to pay the mortgage without any rent coming in.

    Letting property is a business. Like any other business you have to spot a gap in the market to be successful. Letting a 2 bed flat in a city where there are already a lot of 2 bed flats owned by professional landlords is not a good idea. It could be vacant for most of the time.
    • Cash-Cows
    • By Cash-Cows 13th May 18, 12:23 PM
    • 224 Posts
    • 165 Thanks
    • #9
    • 13th May 18, 12:23 PM
    • #9
    • 13th May 18, 12:23 PM
    You would be buying a flat for quite a short length of time. Fees, flat or falling markets could scupper your future family home plans. The BTL idea just adds another area of risk in my opinion. Instead of being in a rush to buy a flat have you thought about just saving for a much larger deposit for a family home?
    • need an answer
    • By need an answer 13th May 18, 12:30 PM
    • 1,119 Posts
    • 1,341 Thanks
    need an answer
    All may seem well in principle but remember that sometimes when starting a family that means a drop in earnings for at least one of you for a time and a shed load of money that's needed to support the young ones through the early years.

    What may seem achievable now on what is a dual income may not seem such a priority to spend your money on when a family time arrives.

    Those early years can really stretch you and rental properties are furthest from your mind.

    However keep it in mind,and revisit it later.

    We always saw the rental market as a good investment and would have loved to have got into it years before we did,our children were teens before we took the plunge and 5 years on its going well with a modest portfolio.However to have started the purchase process in our 20s would not have been the right time for us.
    Last edited by need an answer; 13-05-2018 at 12:40 PM.
    in S 2 T 1 F 7
    out S 4 T 5 F 5
    2017 -32 2018 -33
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

3,244Posts Today

7,107Users online

Martin's Twitter