Buy to let

If my memory serves me correct the laws around buy to let are changing. I think the government is tightening the loopholes around any gains made when selling properties other than your main dwelling.

Hopefully others on here will know more.

Hildagard
I've had the best and the worst and 'friends who've let me down.
I've had glowing references from a church ( they were the worst) and taking a chance on 2 18 yr olds with a baby ( they were the best. I also had a 'lady of the nigh' which I didn't know about, she was wonderful. I've had a 'couple' rent and then found that 6 were living there and were 'hot bedding' it, they got short shrift .
All I would say is: if you are raising a mortgage, think long and hard because if someone trashes you property and it's empty for a month can you swallow that.
Are you able to do DIY yourself? If/when things go wrong it will cost you dearly if you go through the agency.

We kept some inherited property and rent it out, in the years interest rates have been so low it has been the an important of income for us. Initially OH did repairs and management, whilst we used agents to find new tennants and take references etc. Now as We are getting older we let the agents manage for us, they have tradesmen they use regulary who respond for repairs etc.
We own outright no loans on the property, I think itwould be different if we had to borrow to buy. Only one bad experience, and we learnt it is necessary to use a third party to take photos and assess condition of fittings etc, so we now let agent sort this for us.

Hildagard I agree with petra. I sold my ‘buy to let’ properties several years ago. I also had a holiday let cottage. and was lucky as they were both within a few miles of where I lived so I could keep an eye on them.

My first BTL tenant was great. Looked after the property and paid the rent on time. He lived there for 10 years. The second tenant was not to reliable and after defaulting for two months on the run, I arranged to pick up the rent check personally. He was in a 6-month contract so I didn’t renew it and sold up.

The holiday let was a much better investment. Money was paid up front. I gained control of the property each week, gave it a thorough clean and an inventory. Very little was broken or stolen in the 12 years I had it and everything was easily replaced. I didn’t bother claiming on insurance as they were little items eg a milk jug broken, the kettle blew a fuse, etc..

If I was going down that path again it would definitely be a holiday rental I would go for.

Personally my feelings are pretty negative towards it as I've found myself as "landlord" renting out my eldest son's property after his relationship broke down and he took a job working abroad to get over it. It's been nearly ten years now and he tells me he's coming back next year but probably not to that flat. It's been a lot of hassle, we use a letting agent they collect the rent, do the suitability checks which I now know is a case of can they afford it rather than collecting actual references as we were led to believe. People are mingers, no one has left the flat in what I would call a clean condition so either you have to pull on your marigolds and get stuck in or pay out for professional cleaners and having the flat empty etc. The last tenants left early, I didn't penalize them in any way just let them go etc. only to find most of the furniture trashed and the carpets ruined because they'd clearly had a cat when no one in the block is allowed animals and the cat had ruined all the carpets in every room. On top of that the letting agent claimed it was general wear and tear and gave the deposit back and they promptly left the country. The flat was empty for 3 months in total because the timing was bad for us, the flat needed to be completely redecorated, and scrubbed from top to bottom it was truly disgusting. All the furniture went to the tip as did the carpets. New carpets fitted and new white goods, no furniture replaced and relet within a week of going back on the market. So great if you get good tenants and a money pit if you don't. I also wouldn't borrow to buy but would buy to let if I had money just sitting in the bank so to speak, depends on area but his flat has increased in value by £100 k in the 10 years he's been gone, nowhere else would give that kind of return. I would decorate well and supply good quality appliances and carpets etc but wouldn't furnish. Letting agents great for finding tenants and collecting rent but not so speedy at passing on messages etc when things don't work, I once had a tenant left with no hot water for 3 days when had they passed the message on it would have been sorted in minutes. Bit like estate agents a necessary evil.

I think there's been a recent change in the tax allowances for buy-to-let landlords - mortgage payments on the property can no longer be set against tax (I think; best check this out for certain).

There is no tax allowance on any mortgage plus if you own a property already you will have to pay 3% Stamp Duty on your buy to let in addition to any normal stamp duty when you buy.

Buy to let mortgages are at a higher rate of interest than ordinary mortgages.

You will have statutory expenses such as a gas safety certificate, electrical testing etc as well as upkeep and repairs and insurance.

Then you will pay tax on any profit.

It needs careful calculation before you go down the buy to let route.

And then if you’re as soft as me, you don’t put the rent up because they’re a young couple and you remember what it was like........

We have a property other than the one where we now live , but originally bought it to live in. We lived there for 2 years, then rented it out for 16 years, intending to return to it eventually. But the tenants wouldn't budge, it took court proceedings and 9 months, until now it's empty. The last tenants were a pain to say the least, just paid a fortune to make it presentable.
And like you, Eglantine, haven't put up the rent for years.
Now we can't decide what to do, sell or rent again. We've managed to keep the level of our small mortgage as residents, but probably would have to pay CGT if we sold.
We really need good legal advice.

Hildagard -
There are other factors from your point of view, eg
Would you be doing it as an investment for extra income in retirement?
Would you manage it yourself or use an agent?
Is it in an area where houses sell quickly if necessary?
Do you have other income that could put you into a higher tax bracket?
It might be an idea for you to discuss with a lawyer or accountant.

Thanks for all the comments. I am making an appointment with a financial advisor. Problem is I am naturally suspicious of them?

Presume your advisor has been recommended to you and is independent.
We have a really good one who we trust completely.
I think it all depends what you want from a property. We have had 2 for about 20years. Our daughter lives in one, lower rent than we could otherwise get but after tax it doesn’t make much difference. The big advantage is no hassle.
The other one we’ve just sold with a massive sigh of relief! The tenants caused us so much money, they broke almost everything and then we had to fight them for their deposit.
However we sold the property for 120k more than we paid for it and over the years have had a very small income from it and paid off the mortgage.
Basically it’s so difficult to give advice but remember that it’s difficult to access the money quickly if you need it. You’d probably get better income from investments, we’re averaging 11% at the moment and we are in med/high risk. My friend in higher risk bracket is getting 13 but remember that they can go down as well as up.

We have one BTL that was sort of accidental, largely down to a dd's mortgage (we were going halves with her) being turned down at the last minute because of an absentee freeholder. Having intended to live in it she then took fright at all the complications, and we went ahead anyway.

It has worked out well for us - we've been lucky in having had a very good lead tenant since the beginning, but then we always see very promptly to any repairs - or get the managing agent to do so - and have not been greedy with the rent - in fact we have never raised it. I am all too aware that we've been lucky, though. If the current tenants decided to leave, I think we would probably sell.

However we bought in 2010, since when prices (around here anyway) have soared into the realms of the ridiculous, though they are beginning to come down now. Given yields at current prices I doubt I'd embark on it now.

It does depend so much on prices/rents/demand where you are living or thinking of, and of course you have to take into account recent tax changes, which could seriously affect any income.

You absolutely must do your own very thorough research, and not be guided by what any estate agent or other property-investment advisor may tell you. (Though I am sure you would do this anyway.)

I have heard of too many cases of BTL investors coming very badly unstuck, having bought in areas they don't know at all, and having done no research of their own - after being sold the property by some very persuasive property investment 'expert' (aka shark) or other.

I have researched it and the only way I would do it is if the property already had a long term tenant, my preference being an older person unlikely to have a change in circumstances.