[Ask an Expert] - Buying to Let

Buying to let

Does anyone have any information on this?

My martner and I are thinking of buying a home to let but are unaware of the facts.

I know that most lender will only give 80% of the mortgage price of the house, so we'd have to stump up the other 20% ourselves.

Does anyone know other facts? Vat on the rent. Letting taxes (if any). Other areas needing to consider before taking the plunge.

Do you have any mortage lender recommendations?

There must be experts out there somewhere.

Cheers

Without teaching you to suck eggs I would recommend shopping around...some lenders will throw money at you and you may get more than the 80% required. the one thing I did find out is that you can't buy a council house or ex council house on a buy to let..probably doesn't affect you but just an interesting point I didn't realise.

The other tip I would give is when you have let the property out try and use the as much of the rent to pay off the mortgage even if you have some left over. Rent will be classed as income and thus taxable but if the rent is actually paying for something else then you won't have to pay tax. Bit complicated to explain but I think you should get my drift

Get some info on the property first before considering a mortgage... the lending part should be secondary to thinking about whether the property will gain in value and if people will want to move there. If you go to a company like blundells or saxton mee, they act as agents for "letters" and will advise you as to the process... Good luck mate! I've been thinking about doing that for a while but don't have the cash yet!!

Some of the websites I have looked at say that you only need 20% deposit... well that's possible via a loan.

You dont need proof of income, just so long as the rent you'll charge covers the mortgage (so the sites say). So it sounds easier than I thought.

Any more advice... throw it my way!

There was an interesting article in, yes you guessed it, The Gruniad last week:

Article on buy to let

Originally posted by max

There was an interesting article in, yes you guessed it, The Gruniad last week:

 

Article on buy to let

A very interesting article that max cheers.

I read with interest about the fact that a bust is on the horizon and that values of homes could drop as much as 45% in a two yr period. Would that be the case in Sheffield tho?

I think that possibly the Hallam region (Whirlow/Fulwood/Dore and that student tip Ecclesall) may see a decline in property value. However some of the not so extremely sought after areas as the affor mentioned might not (if at all) drop as much in value.

I'm thinking long term here. Not profit on house value, but more an income for my retirement years (I dont trust private pensions).

What goes around comes around too.

The housing bust and high interest surfaced... it will again.

However when wages increase (over the years with inflation they do) so will house prices. There'll be another boom as people get to afford more.

Originally posted by DaBouncer

I read with interest about the fact that a bust is on the horizon and that values of homes could drop as much as 45% in a two yr period.

Don't confuse people's opinions with facts DaB. The article clearly stated:

On Monday, Mr Pannell caused a stir with his prediction that the housing market is heading for a devastating crash.

The operative words here being his prediction.

Also bear in mind that if we join the Euro interest rates in Euroland stand at about 2.5% which will mean cheaper mortgages and, imo, another housing boom.

Lot to think about so good luck mate.

Hmmmm yeah good point.

Can't see us joining the Euro, but I like the idea of it.

Another boom = higher house prices = no first time buyers period.

I've noticed a lot of houses up for rent recently, so I'd build in to any calculations you do the fact it may not always be let, and you'll have to pay the mortgage.

Taking the long term view is sensible, and from everything I've seen on house prices, the next two years are likely to rise by up to 10%, hence if you decide it's not worth the hassle you can be secure in the knowledge the investment is safe. Take care not to over-commit if your looking at taking a loan for the deposit.

Originally posted by zxczxc

I've noticed a lot of houses up for rent recently, so I'd build in to any calculations you do the fact it may not always be let, and you'll have to pay the mortgage.

 

Taking the long term view is sensible, and from everything I've seen on house prices, the next two years are likely to rise by up to 10%, hence if you decide it's not worth the hassle you can be secure in the knowledge the investment is safe. Take care not to over-commit if your looking at taking a loan for the deposit.

Excellent advice... I'll bear that in mind!

Tip No 1 - choose up and coming areas around the centre.

Tip No 2 - invest for the long term.

Tip No 3 - get a deposit down AS SOON AS as you hear about something.