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AnsweredHot!Buy To Let

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Big_Tom
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2017/01/11 12:13:57 (permalink)

Buy To Let

Hi all,
 
I am thinking about buying another house/flat to rent out. Other than the mortgage, what other costs are involved?
 
I'm looking at something like a small 3 bed around 100k, rent around the area is around 850-950 pm.
 
Anyone else have a buy to let mortgage?
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NotForTheWeak
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Re: Buy To Let 2017/01/11 12:30:55 (permalink)
Big_Tom
 like a small 3 bed around 100k




lol, where do you live? seems very cheap
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Floydy
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Re: Buy To Let 2017/01/11 12:39:12 (permalink)
NotForTheWeak
Big_Tom
 like a small 3 bed around 100k




lol, where do you live? seems very cheap


What sort of constructive comment is that? Do you not do anything else but wind people up? Give it a rest.
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Rasputin
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Re: Buy To Let 2017/01/11 12:48:57 (permalink)
Big_Tom
Hi all,
 
I am thinking about buying another house/flat to rent out. Other than the mortgage, what other costs are involved?
 
I'm looking at something like a small 3 bed around 100k, rent around the area is around 850-950 pm.
 
Anyone else have a buy to let mortgage?




 
I dont have but looked at it. Costs are letting the damn thing which can be punchy, insurance, tax issues, maintenance and upkeep. Just the same as a normal house just your not actually living in it. 

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NotForTheWeak
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Re: Buy To Let 2017/01/11 12:49:51 (permalink)
Rasputin
Big_Tom
Hi all,
 
I am thinking about buying another house/flat to rent out. Other than the mortgage, what other costs are involved?
 
I'm looking at something like a small 3 bed around 100k, rent around the area is around 850-950 pm.
 
Anyone else have a buy to let mortgage?




 
I dont have but looked at it. Costs are letting the damn thing which can be punchy, insurance, tax issues, maintenance and upkeep. Just the same as a normal house just your not actually living in it. 



Pretty sure it was being made more difficult to go the buy for let route?


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ANIMAL
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Re: Buy To Let 2017/01/11 12:55:53 (permalink) ☄ Helpfulby NotForTheWeak 2017/01/11 12:58:08
a 100k wouldn't even buy a bedsit round my way. Beach huts are going for near 80k for good ones.

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Branch666
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Re: Buy To Let 2017/01/11 13:13:10 (permalink)
Me and the wife own two houses in Harrogate, motgage on both, the smaller is a buy to let. Mortgage is £450 a month and we get £695 rent. We wanted to try get another on a buy to let but due to the amount owed on both properties and not having a really high joint income (about £140k left on one mortgage and £80k on the other) we were told we would need a 75% deposit before we could get another on buy to let. When a one bedroom flat in Harrogate is about £150k, it's impossible for us.

I'm not sure how it works if you don't have a mortgage of yet and it would be your first property but I know you can't keep getting buy to let's with small deposits.
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Big_Tom
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Re: Buy To Let 2017/01/11 13:13:31 (permalink)
Granted there's not much around for 100-110k, but there are a few that need some work which isn't a problem. To be honest it will be more like 125-130k ish but I was just looking for opinions and tips from experience. 
post edited by Big_Tom - 2017/01/11 14:46:57
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G00SE
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Re: Buy To Let 2017/01/11 21:35:15 (permalink)
I'm looking at buying another but it's the mortgage deals that put me off and they are really good at the moment lol!

If the interest rates go up it could sting you, but with the government making life tougher and tougher for landlords, and the extra cost they like to put on to them will only get passed onto tenants so rents will rise at quite a fast rate I think. So if your smart or lucky you could be onto a winner.

The market does favour cash buyers, could you raise equity from your existing properties?
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NuttySS
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Re: Buy To Let 2017/01/12 18:07:33 (permalink)
I'm looking at it for the end of this year. from what I've researched you have the usual buying expenses and stamp duty on it as a second property. then landlord insurance, tax and management fees if you choose that route typically 10% of the rental amount
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Cowley
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Re: Buy To Let 2017/01/16 08:19:31 (permalink)
NuttySS
I'm looking at it for the end of this year. from what I've researched you have the usual buying expenses and stamp duty on it as a second property. then landlord insurance, tax and management fees if you choose that route typically 10% of the rental amount



The 10% is calcuated on your gross rent of course, whereas you're paying it out your profits. So the management fee may snaffle a third or more of your profits. When you factor in voids (empty periods) and maintenance it can make things a bit tight.
 
 
 
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robert123
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Re: Buy To Let 2017/01/16 10:43:59 (permalink)
I am in the process of letting my property, costs will obviously be different depending on the letting agent you use.
 
However if you are asking them to manage the fee;s will be around 10% from what i've found. 
 
You also have to remember that your capital gains allowance is 11K - so depending on how much you are getting each month you could easily get close to this.
 
You are however allowed to remove the set up fee's, admin, professional clean if you are having one. Which can help keep you within allowance, otherwise you'll be giving away even more money thanks to the government.
 
It's a relatively easy process from end to end, landlords insurance isn't too expensive, my mortgage provider will give me 6 months at my current rate but then up it by 1% for the remainder of the contract. Not ideal but as I only have one property it's not so bad.
 
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old goat
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Re: Buy To Let 2017/01/16 11:15:06 (permalink)
robert123
I am in the process of letting my property, costs will obviously be different depending on the letting agent you use.
 
However if you are asking them to manage the fee;s will be around 10% from what i've found. 
 
You also have to remember that your capital gains allowance is 11K - so depending on how much you are getting each month you could easily get close to this.
 
You are however allowed to remove the set up fee's, admin, professional clean if you are having one. Which can help keep you within allowance, otherwise you'll be giving away even more money thanks to the government.
 
It's a relatively easy process from end to end, landlords insurance isn't too expensive, my mortgage provider will give me 6 months at my current rate but then up it by 1% for the remainder of the contract. Not ideal but as I only have one property it's not so bad.
 




Isn't capital gains tax paid on the profit you make on the property itself? ie, the difference between what you paid for it and what you eventually sell it for.
 
What you get each month counts as income (rent, less deductible fees and expenses) and is dealt with as such for tax purposes.
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robert123
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Re: Buy To Let 2017/01/16 11:52:25 (permalink)
Sorry you are right, two things going on at the same time with me.
 
It;s a personal allowance of 11K I believe - as I don't have a job here anymore thats all which is applicable for me.
 
 
 
 
 
 
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Cowley
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Re: Buy To Let 2017/01/16 12:42:06 (permalink)
robert123
Sorry you are right, two things going on at the same time with me.
 
It;s a personal allowance of 11K I believe - as I don't have a job here anymore thats all which is applicable for me.




I am not sure whether your rents received will be high enough to affect you, but from April this year the tax rules change for individual landlords)
 
Your gross rent is deemed to be income and where once you could offset all your mortgage interest against profit, you'll only be able to get relief at the basic rate. If you're only getting £20kpa in rents and have no other UK income it won't change for you. For those that have multiple properties with mortgages in their own name (as opposed to a company) it's all changing (and not for the better).
 
 
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robert123
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Re: Buy To Let 2017/01/16 14:11:18 (permalink)
Cowley
robert123
Sorry you are right, two things going on at the same time with me.
 
It;s a personal allowance of 11K I believe - as I don't have a job here anymore thats all which is applicable for me.




I am not sure whether your rents received will be high enough to affect you, but from April this year the tax rules change for individual landlords)
 
Your gross rent is deemed to be income and where once you could offset all your mortgage interest against profit, you'll only be able to get relief at the basic rate. If you're only getting £20kpa in rents and have no other UK income it won't change for you. For those that have multiple properties with mortgages in their own name (as opposed to a company) it's all changing (and not for the better).
 
 




Im moving abroad so there is a specific number i need to reference number or something I need to acquire to give to the letting agent. otherwise they hold 20% of the rental each month until i do, i rang the government on this to chase my application and the lady there informed me the allowance is 11K.
 
After the 11 i have to pay tax on it as its an income
 
where did you get 20K from
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Cowley
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Re: Buy To Let 2017/01/16 14:20:46 (permalink)
robert123
Cowley
robert123
Sorry you are right, two things going on at the same time with me.
 
It;s a personal allowance of 11K I believe - as I don't have a job here anymore thats all which is applicable for me.




I am not sure whether your rents received will be high enough to affect you, but from April this year the tax rules change for individual landlords)
 
Your gross rent is deemed to be income and where once you could offset all your mortgage interest against profit, you'll only be able to get relief at the basic rate. If you're only getting £20kpa in rents and have no other UK income it won't change for you. For those that have multiple properties with mortgages in their own name (as opposed to a company) it's all changing (and not for the better).
 
 


 
where did you get 20K from




It was an arbitrary figure I pulled out the air.
 
If your rents fall into the lower rate tax band and you have no other UK income then all is good regarding mortgage interest (if you have a mortgage on the property).
 
 
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robert123
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Re: Buy To Let 2017/01/16 14:50:52 (permalink)
The lady informed me that I cannot offset the mortgage at all, the only offset is fees related to being a landlord for point of set up. We didn't get into a conversation any further about maintenance etc.
 
All I know is that she said and from what I've read if I go past 11K I have to pay tax.
 
So if you have a job and looking to get a second property you have to factor in will you pay even more tax when calculating your monthly figures
 
Unless I'm wrong.
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Cowley
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Re: Buy To Let 2017/01/16 14:58:54 (permalink)
robert123
The lady informed me that I cannot offset the mortgage at all, the only offset is fees related to being a landlord for point of set up. We didn't get into a conversation any further about maintenance etc.
 
All I know is that she said and from what I've read if I go past 11K I have to pay tax.
 
So if you have a job and looking to get a second property you have to factor in will you pay even more tax when calculating your monthly figures
 
Unless I'm wrong.




To be honest, I don't know how the rules are applied if you're out the country. But if you're here and a UK taxpayer it currently stands that you can deduct all your costs including all mortgage interest before paying tax.
 
 
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Re: Buy To Let 2017/01/16 21:16:58 (permalink)
The tax rules will change fully by 2020, so you will get 12k tax free then 20% tax from 12 to 50k, so if you salary plus your gross rental income exceeds 50k you pay 40% on your income above 50k, if your total is below 50k then the tax changes won't affect you.
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