I’m considering a buy to let property. I’m looking at around £50-60k for a terraced house in my home village, at least one of which already has tenants living there. They pay in the region of £500 per month, although I think they’re on a good deal at present and I’d guess property rent will be increasing soon if it hasn’t already. Simple question (ha!) - is this a good idea or should I just throw the money at the Desmo I’ve always wanted (I know I’d need to add another few thousand!!)? The main downside seems to be after the estate agent and HMRC takes a pound of flesh each the £500 turns to less than half - out of which I need to maintain the house. I can’t see a reasonable regular return on the cash to be honest, and I doubt the property price will continue its recent trend of increase. The property would be mortgage free. As an aside I don’t think I’d get a Desmo. I’d want to ride my Desmo and I’m pretty sure they aren’t cheap to insure, service and generally use! I know this is a huge question, I’m just after general thoughts really please!
Check the rental market in your area, speak with various agent to make sure theres a demand. The agents shouldn't be charging anymore than approx 9% of the gross rent, depends on the market in your area. Regards HMRC you'd be best speaking with an accountant. You need to remember any profit from the rent goes on top of your salary, so depending what your currently earning may change your tax bracket. You might also want to checkout high interest rate savings accounts that lock your money away for a period of time and compare the return from savings in a high interest account compare to what your nett income will be from renting the property. A lot will depend on what your earnings are and what tax bracket you'll be in including the rental income. Long term property is always a good investment. One thing to remember is if you ever want to sell a rental property you'll end up paying capital gains tax on any profit to the value. As a long term investment and for an income I doubt you'll go far wrong. Another little pointer, check out commercial property in your area, they're normally a higher return and a lot less hassle than residential. Hope this makes sense.
It’s a good idea if it’s a house in good condition, as you’ve stated you have maintain it or pay someone else. The rent might be low but if they’re good tenants it may be worth only increasing the rent marginally, unless it’s ridiculously low for your area. Better in my experience to let an agent do the heavy lifting, the one I used was excellent and took about 10%. They looked after the viewing, vetting and guarantor, also there was a policy in place to cover non payment and they insured my property. I later went solo which tbh turned into a PITA so much so I’ll not go that route again. Good luck.
I have looked after many rental properties over the years and that’s the reason I’d never own one. Most are destroyed beyond belief! If you have the cash buy a Desmo and enjoy!
Make sure you've decent agents who vet the tenants properly and do regular inspections. I think you'd be very unlucky if the tenants destroyed the property. Try to stay away from benefits tenants if you can.
With interest rates as they are locking in £60k for 5 years would give you a very nice return with no headaches. If you have £60k spare then follow your dream. If you decide to sell at a later date you may make some interest but at least you had the pleasure and memories of owning a dream bike.
Wasn't there a lot of dark mummerings re CGT on second property sales? My brother has a couple of BTLs, with rising interest rates the rents are barely covering the mortgages, add the threat of the above, it would make me jolly nervous.
Isn't that something to do with having a second, non primary address, home for which you pay 50% GCT when sold.
You would need to assure yourself any property meets the government environmental efficiency rating. A lot of stuff in the press fairly recently regarding the challenge and cost of uprating older properties. Andy
Yep EPC certs, gas certs electrical certs, right to rent checks, deposit protection scheme There was a time many years ago when strapping a pair on borrowing a shit load of money turning your hand to what ever job was needed working your balls off and dealing with tenants, pre agreement , was all that was required to run your own businesses, but then that’s progress. Bitter, me?
Consider it a very long term investment with not so great returns at the moment. Get the bike, more fun, less greif and a sound investment long term.
if your considering turning it into a short term/holiday let there is a large push towards way higher council tax levels with figures looking at around 300% increases being recommended in C.Tax.
You know it’s curtains when the banks are buying investment portfolios. No single investor can compete The opportunity to make serious returns was in the eighties/ nineties Buy a motorcycle from the returns of your investment, don’t use the capital.
I’ve been watching the answers with great interest and thanks to all who have replied. I’m a bit inclined to think that BTL seems to have stalled by all accounts. Maybe you’ll see a thread started saying ‘Desmo - best insurance policy?’!
I bought a few BTL's in the early 00's - did well for a few years as interest rates low and paid peanuts for them. However, the tide turned when the government started the war on landlords with rules that protect tenants only, and the HMRC war on what you could claim against them tot he point in about 2015 I sold one a year to keep the gap gains low (except 1 as had a long standing tenant who paid every month and I made money on) The last year I had it, the boiler went and roof leaked so lost about 4 years profit in a month so decided to pack that one up too. She went to the council to say the property was being sold and the councils advice was wait until the eviction notice is served and the bailiffs turn up, which costs 4 figures these days! Luckily, we got on well so I paid her deposit somewhere else and she went as agreed so saved me a fortune there. I also know someone who's tenant stopped paying, and as per the bailiff programs he was probably about 6-7k down by the time he got the place back in lost rent, repairs and legal's I for one was very lucky with the tenants and how it went but personally wouldnt even consider it anymore - one bad tenant and its not worth it. Get the desmo, have some smiles and dont take on the stress!
