Buy to let investments

Old Aug 28th 2012, 7:06 pm
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Default Buy to let investments

Original plan was to save a good house deposit, buy a flat and live in it, I am now thinking a buy to let may be a good option as the market in my home town is currently looking quite attractive as a long term investment. I'm going to meet with my bank manager when I 'm next home but just wondering if any finance people or people who already have buy to lets that could just answer a few questions, I have googled but started to get brain freeze so if anyone could answer the following as if they are talking to an idiot;

Expat mortgages- any good deals about? Deposits- what % is expected?

solicitors fees? any rough estimates?

tax implications? unearned income etc, what should I be thinking about?

Letting agents- whats the standard % they take off the rent?

furnished or unfurnished?

What else should I be thinking about?
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Old Aug 29th 2012, 5:22 am
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Default Re: Buy to let investments

Drop me an email Kitty.

You'd need at least 25% deposit, but I wouldn't rush as I think property prices are going to fall further in the UK. Any income arising in the UK is taxable, but only in excess of your personal allowance. I'll put you in touch with an independent mortgage professional.
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Old Aug 29th 2012, 5:28 am
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Default Re: Buy to let investments

My mum is buying a house in the UK at the moment. House is something like 190k. After four quotes, the legal fees are about 2k + 2k in stamp duty.

I also keep toying with this idea (thank you Meow for the contact) - but I also believe that with the UK on the verge of another recession and rising unemployment house prices must fall - even if only to unwind the gains over the last 3 years.

Of course, with the BoE are printing money like crazy central London is a market all to itself.
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Old Aug 29th 2012, 6:04 am
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Default Re: Buy to let investments

Originally Posted by kittycat1 View Post
Original plan was to save a good house deposit, buy a flat and live in it, I am now thinking a buy to let may be a good option as the market in my home town is currently looking quite attractive as a long term investment. I'm going to meet with my bank manager when I 'm next home but just wondering if any finance people or people who already have buy to lets that could just answer a few questions, I have googled but started to get brain freeze so if anyone could answer the following as if they are talking to an idiot;

Expat mortgages- any good deals about? Deposits- what % is expected?

solicitors fees? any rough estimates?

tax implications? unearned income etc, what should I be thinking about?

Letting agents- whats the standard % they take off the rent?

furnished or unfurnished?

What else should I be thinking about?
If it's the UK you're talking about I'd only buy in certain areas of London if you are looking at investment property right now. Or I'd get involved in Student Accommodation development in university towns like Edinburgh, Cardiff, Oxford etc as there is a huge shortage of that in the UK. I'd also consider New York, Kuala Lumpur and perhaps Munich if buying residential property that's going to make me money.

We are part of a global investment property concern with it's own management and mortgage service. It's not my field of expertise but we have people who can answer all those questions and provide a selection of developments they bulk buy into then pass savings on to their investors.

You're more than welcome to contact me if you'd like me to put you in touch with them.

N.
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Old Aug 29th 2012, 7:29 am
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Default Re: Buy to let investments

We rent a 2 bed riverside apartment in the beautiful coastal shitty of Dundee. We bought off plan, its increased in value even post the 2008 slump and its always been rented out at a value greater than our mortgage.

Previous clients were a couple of RAF officers from Leuchers and currently a saudi doctor.

Interestingly, recently the police, acting on some drugs tipp off, smashed down my front door causing 500quid's worth of damage. It was incorrect information and the police screwed up. Our agent told us (and we checked with the police) that there was no recourse for us to get our money back.

Cheers Tayside police.
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Old Aug 29th 2012, 7:45 am
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Default Re: Buy to let investments

Originally Posted by commander View Post
We rent a 2 bed riverside apartment in the beautiful coastal shitty of Dundee. We bought off plan, its increased in value even post the 2008 slump and its always been rented out at a value greater than our mortgage.

Previous clients were a couple of RAF officers from Leuchers and currently a saudi doctor.

Interestingly, recently the police, acting on some drugs tipp off, smashed down my front door causing 500quid's worth of damage. It was incorrect information and the police screwed up. Our agent told us (and we checked with the police) that there was no recourse for us to get our money back.

Cheers Tayside police.
My old man is from Dundee, well Broughtyferry.

He's got some blinding stories about him and his brothers ****ing around with the police (just menial, teenage jokes, nothing truly criminal). Said it was the best free fun you could have in Dundee.
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Old Aug 29th 2012, 7:51 am
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Default Re: Buy to let investments

Originally Posted by Meow View Post
Drop me an email Kitty.

You'd need at least 25% deposit, but I wouldn't rush as I think property prices are going to fall further in the UK. Any income arising in the UK is taxable, but only in excess of your personal allowance. I'll put you in touch with an independent mortgage professional.
I think they've got a long way to fall. Until they're back to the point where they are 2.5x the average salary, they're just going to drop.

The only reason they're not is because the government is doing everything it can to prevent it from happening. However, this is the one thing that must happen before the economy gets back on track.
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Old Aug 29th 2012, 8:01 am
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Default Re: Buy to let investments

Originally Posted by auzdafluff View Post
I think they've got a long way to fall. Until they're back to the point where they are 2.5x the average salary, they're just going to drop.

The only reason they're not is because the government is doing everything it can to prevent it from happening. However, this is the one thing that must happen before the economy gets back on track.
Average salary is what, 24,000 quid a year. You think the average house price should be 60,000 quid?

It's currently 161,000

It hasn't been close to 60,000 (roughly 65,000) since 1977. Source: http://monevator.com/wp-content/uplo...use-prices.jpg

At which point the average salary was about 4-5,000 quid from what I can find.

Making a house today 7 times the salary (roughly) and a house in 1977 roughly 13 times the salary.
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Old Aug 29th 2012, 8:07 am
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Default Re: Buy to let investments

I'd dispute that the average house price was GBP 60k in 1977. It was nothing like it at that time. More like 20k then.
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Old Aug 29th 2012, 8:12 am
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Default Re: Buy to let investments

http://www.housepricecrash.co.uk/gra...ings-ratio.php


This is real terms though, not nominal as most people will think.
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Old Aug 29th 2012, 9:04 am
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Default Re: Buy to let investments

Millhouse. That graph you posted the link to is the most important one.



The simple fact is that average first time buyer house prices are still above the level that triggered the housing crash in the early 90s.

The ratios need to return to levels such as those seen in the mid-90s before people will be able to clear their debts and set the market back on course for growth again.
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Old Aug 29th 2012, 9:16 am
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Default Re: Buy to let investments

Originally Posted by auzdafluff View Post
Millhouse. That graph you posted the link to is the most important one.

http://img338.imageshack.us/img338/8...20829at130.png

The simple fact is that average first time buyer house prices are still above the level that triggered the housing crash in the early 90s.

The ratios need to return to levels such as those seen in the mid-90s before people will be able to clear their debts and set the market back on course for growth again.
Sorry, didn't realise you were talking about first time buyers....I was just speaking in general terms.
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Old Aug 29th 2012, 9:52 am
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Default Re: Buy to let investments

Originally Posted by Scamp View Post
Sorry, didn't realise you were talking about first time buyers....I was just speaking in general terms.
All house price crashes are caused at the first time buyer end.

The market can only increase as long as people can sell their houses. Eventually you get to a point where the people buying are first time buyers. Without them, it's like removing the bottom level of a house of cards. It all collapses.

The problem is that end of the market is being supported by the buy-to-let market. There needs to be some serious regulation where only companies (which individuals will be of course be able to set up) can own and operate buy to let.

That will make the gains (liquidity or otherwise) taxable via capital gains. That'll soon take the pressure off that part of the market.

Also, there needs to be a fairly simple change in the mortgage market. Ban those purchasing property for the purpose of buy-to-let from obtaining interest free only. They need to be made to take out full repayment loans.

The way it is now, they are essentially making money with the bank's capital (i.e. pay no interest, let it appreciate and sell it on at a profit, all while charging rent).
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Old Aug 29th 2012, 11:44 am
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Default Re: Buy to let investments

Originally Posted by Meow View Post
I'd dispute that the average house price was GBP 60k in 1977. It was nothing like it at that time. More like 20k then.
Agreed - 60K would buy a very big house in 1977!

http://www.wwwk.co.uk/culture/housing/index.htm

Kittycat, we have buy to let investments and haven't regretted them. The secret is to get a good agent and this is the difficult part. Check out the rentals in the area you are looking at and then next time you are home go and see the agents and see what you think. If you have time view some of the agent's rental properties to see what state they have been left in and this way you can judge their standards! This is the time consuming part but once you have a good agent you can leave it to them and their fees are classed as an expense for tax purposes. House prices in UK are definitely reducing but good buy to lets (IMO 2 bedders) are fairly stable at the moment but it obviously depends on the area you are looking at.
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Old Aug 29th 2012, 12:08 pm
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Default Re: Buy to let investments

........... yes, yes, yes, but unlike in previous boom-and-bust house price cycles, this time there is a major distortion caused by overseas buyers coming straight in at the upper end as cash buyers with no house to sell.

A mate of mine tells me that in his part of SW London, prices are either going gently upwards, moderately upwards or rapidly upwards. In some ways this has always been the case (London going up while, say, Humberside was falling) but it's becoming much more specific to particular areas now, even to the extent of house prices in a particular road going up while they are falling less than half a mile away.

Going back to the original question, the guideline seems to be to rent out a place at roughly 6-8 pct of the market value (i.e. a house costing GBP 100,000 would rent for 6,000-8,000 per year). The student market, bizarrely, often brings in a higher percentage than this, mainly because letting can be done per room, not per flat/house. The rental income can, to some extent, offset a fall in the price of course.

[Hint: I read that the biggest shortage of student accom in the whole of the UK is in Cardiff ]
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