kittycat1

Hi all,

I'm thinking of possibly investing in a buy to rent property in the UK, while prices are low and I'm earning enough to get a half decent mortgage (compared to being self employed) so it seems like a sensible idea. Has anyone bought a rental property in the UK whilst being here and can anyone give me some pros and cons. Obviously, keeping it full of tenants I imagine is the hardest, but does anyone know if furnished or unfurnished is better? How much do letting agents take as commission? What size properties are easiest to rent etc? I'd probably look at renting in my home town which is in the London commuter belt but also has a big university there- does anyone know which would be a better investment, a student property or professional? also whats the tax implication? just general advice would be good. Is buying there whilst living abroad an absolute nightmare? is borrowing whilst living abroad relatively painless?

Any sensible advice would be appreciated or any nightmare stories if its not a good idea.

Thanks

Kittycat
xxx

the_red_sheep

I'm considering doing the same thing in my home town (Aberdeen), and as there is a large student population there am also drawn to that market. However, I'm also considering somewhere around the hospital (lots of young doctors and nurses rent apparently) or west end where it'd be more of a 'young professional' market.

Pro and cons where I could probably get a two bed if going down the student or hospital route, or one bed in the west end. Rent would be slightly (but not significantly) higher for the two bed. Students are definitely more likely to be hard work as tenants, and the flat would have to be furnished, cheaply though. Having made initially tentative inquiries with a friend who works for an estate agency, who also will act as a letting agency, they have properties available for sale which already have tenants in place.

Give a few letting agencies and estate agencies in the town you intend buying in a call and see what rental demand and prices for different properties is like at the moment.

I believe the you'd be taxed on any profits you make from the rental income. So, if you maxed out paying the mortgage and agency fees there would be no profit. However this leaves no cash float in the UK to pay for plumbers, electricians, replacement furniture etc, or mortgage payments if you have no tenants for a period.

A colleague at work recently bought a flat in London to rent out and it was a nightmare, took months - literally - with endless sending of employer letters, proof of Dubai address, bank statements and hosts of other things.

As an expat who is buying to let, you have to get a specific 'expat buy-to-let' mortgage, so expect to have to put down between 25% and 40% of the property value. Interest rate will also be around 1% - 1.5% higher than on a 'regular' mortgage.

All in all, I'm expecting it to be a nightmare to start with, worth it in the long run.

Let me know how you get on, I'm happy to share experiences and tips as things develop.

MacScot

As an example, letting out a 2-bedroom flat in Brighton marina village brings in rent of around GBP 850/month with letting agent commissions of GBP 150/month.

Furnished 2-bed units go for GBP 900 while unfurnished go for GBP 850, i.e., GBP 50 less.

Not sure of rents for student accommodation, though.

Roadking

Major difficulty as an ExPat is that for BTL you need a mortgage of 100'000 Sterling. With most BTL offers at the moment requiring a min 30% deposit, or 70% LTV, you need to buy at 143'000 and put up 43'000 deposit plus costs.

For me, the ideal market is around 90'000 with 30% LTV, but you can't get a mortgage for that. These properties, in most high rental markets, return 9-10% Gross.

When you can buy in the US, in Buffalo NY for example, for the less than the deposit required in the UK and get returns of $900 +/- per month, I have to ask the sense in UK BTL.

Saying that, I am buying a property in the UK but not BTL. Hey ho!

Little Toot

Roadking is correct about the BTL mortgage situation. Have just seen independent financial advisor in UK. There are not many lenders around at the moment who are willing to offer BTLs. The best deal we have been offered is 5.95 variable. We have a 50% loan to value. It is our current mortgage lender who are offering this deal and the IFA could not come up with anything better.
In the current rental market this would not cover the mortgage!
Agents take a fee of about 12-15% dependendeing on what service you would like them to provide.
I can't see this situation getting better especially at the moment. Lenders have still got the jitters.

Hello.Kitty

For the most hassle free, aim for a young professional couple - so a nice 2 or 3 bed in a good enough area, close to amenities and a station. Your aim would be to have longer-term tenants, ie those who would stay more than a year and actually treat the house as their home (and look after it better!).

Students have a high turn-around (obviously) and generally (but not always) look after the house slightly less well - not trashing it, but maybe not cutting the grass or cleaning properly. You'd also need to redecorate every year in order for it to not lose rental value. On the plus side, you can get a bigger house and fill every room, but it's hard work. You could always get a smaller place and aim for a couple of student friends sharing, which is less risky.

Down near Brighton, on the commuter line (about 1h from London), 1 beds are at around 450-550 per month, 2-3 beds 750-950 and 4 beds (hard to rent to families because the target demographic have usually settled in their own home) maybe 1100-1200.

lionheart

You might want to read this article...

http://uk.biz.yahoo.com/07052010/389...se-prices.html

Ronnie Biggs

I rent out properties in Brighton - 4 beds go very quickly as there is a shortage of family homes here.

Arcadia

You could buy two decent sized properties oop North for 80,000..I know of lots of DSS (but good) families looking for homes. The DSS pay 480 a month for a 2 to 3 bed.

I could even property manage for you..for a small fee, sort out repairs, form filling etc.

this is exactly what I am moving home to do.

al dente

Don't they give the rent to the tenants now for the tenants to then pay the landlord. A misguided attempt to teach them about managing money. My cousin invested in 3 properties like that and the new system drives him mad. Has to spend alot of time chasing the rent although it does seem to be working out now.

flares

good old sussex by the sea

my 2 bed cottage in preston village has been rented out solid* eversince we moved out to ME 5 years ago.

* well up to few months ago as trying to sell it now so haven't renewed tenancy

zoukla

As far as is possible stay away from DSS Tennants. Many are unemployed and do very doggy stuff to the point of using the allowances given to offset the habits they develop. so your rent will most surely be late after a few months. Great if you can find a good family.
Renting in the midlands and have a fab agent.. Key to managing the property from a distance.

agree with earlier poster Florida north is a ripe opportunity of bargains.

Arcadia

Of course DSS tenants are unemployed..this doesnt make them all drug dealing crackheads..some decent people have lost thier jobs at Wilton Steelworks..good families who would work tomorrow if the jobs were there.

I hate that stereotyping ''No DSS'' shit! I rented houses out to people who worked for the council in white collar jobs and had to get cleaners in to wipe dogshit off the walls of the living rooms.

Ive also had a single parent who was a day late handing in keys because she wanted to make sure the paintwork and the kitchen were clean.

zoukla

Calm Doon.

This is my experience not everyone's experience. As i said screening and references are important. Also a good agent who writes a good contract and does periodic inspections. Being here and dealing with a BTL property from here is not easy feat and can turn out to be an expensive affair.

e.g. I have BT Homecare which covers all the appliances,boilers, alarm etc. For a minimal charge less headaches and full replacement if appliances are beyond repair.

Believe me i am with you stereotyping sucks but at the end of the day your experience colours your perspective.It takes all types to keep the good ol' earth spinning.

Brains1983

steorotyping is bad, but a lot of the time is the safest way. the issue with the "no DSS shit" is probably 70% accurate. if you can get a "proper" tennant take it,if not balance it up with hopefull DSS payments against you paying the mortgage.

however, when we start renting again, "No DSS" is going to feature at the start of our advert. no different to "no pets" "no gays" and "huns" really...

my apologies to any animal, homosexual or unwashed in advance.