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Kurt Barlow

I'm thinking about getting into BTL

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I'm thinking about buying a place near to where we currently rent and then renting it out for a year before moving in. 

The place is a 3 bed semi with plenty of space down the side. What I would plan to do is put a two storey extension on the end with a dining room, office and tandem garage on the ground floor and two bedrooms and an ensuite above. Minimal work in the existing house other than creating a landing through to the extension and knocking through. Would also combine the two smaller existing bedrooms. I reckon the extension would be about 100K if planned carefully. Total cost would be about 500K to get a house that would cost 600K plus where we are. 

But,  we have rented a house for a year so I thought we could rent out the purchase and during this period sort out the planning permission and architect plans. 

The rent would easily cover the mortgage which would be approx 50% LTV

The extension could be funded from savings. 

The house would have a big south facing roof so good for solar PV and has a chimney so an opportunity to get a wood burner for when the lights go out in 2025. 

The house is about half a mile from the station which can get you into Liverpool st in 35 minutes. 

Good schools catchment for the nipper. 

Mrs B is determined to 'invest in property ' next year and if I don't agree she will go and buy a fecking apartment so my thoughts are might as well invest in a house to live in. 

As most of my savings don't have tax free cover (I'm maximising ISAs etc but the amount is limited each year) I'm getting bum raped by HMRC.

Finally owner occupancy means no more cnut slimeball  Landlords to deal with

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The downside considerations

how much does the DOSBOD collective think House Prices will fall? 

How high does the DOSBOD collective think interest rates will go? 

What effect will my foreign travels / Mrs B's spousal residency status have on mortgage applications? 

 

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I have been repeatedly wrong on my house price / interest rate forecasts so will keep schtum on those.

It sounds like a really interesting thing to do, one that you're not crippling yourself financially to buy, and as you want to live there rather than turn a quick profit then you have the luxury of time if house prices do crash as you're not intending to sell it on any time soon.

I'd probably do it if it was somewhere I wanted to live for a long time once it was finished.

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3 minutes ago, Kurt Barlow said:

how much does the DOSBOD collective think House Prices will fall? 

How high does the DOSBOD collective think interest rates will go? 

What effect will my foreign travels / Mrs B's spousal residency status have on mortgage applications? 

 

  • I think house prices will fall minimum 50% and more like 90%, but I have no idea when that will happen, what currency we will be using at the time, and what would have happened to your net worth if you hadn't piled it into a house, so to me that's a moot point.
  • I think interest rates will remain at or near zero for as long as we still have GBP. I have no idea when the currency will finally die a death.
  • I don't know anything about your travels or wife's residency, but unless it's major I don't see much affecting a mortgage application. AFAIK we live in an economy that lives and breathes on ever expanding credit, so the entry criteria will theoretically always get easier (albeit not necessarily in a straight line) until the collapse I mentioned in points one and two.

In other words, that's the shittest, most generalised response I could possibly have given, but it also happens to be my very honest opinion. Short answer - if your head and your heart say go for it, then go for it. Just don't be a cunt of a landlord, but since you've experienced that I'm sure you won't.

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2 minutes ago, Fully Detached said:
  • I think house prices will fall minimum 50% and more like 90%, but I have no idea when that will happen, what currency we will be using at the time, and what would have happened to your net worth if you hadn't piled it into a house, so to me that's a moot point.
  • I think interest rates will remain at or near zero for as long as we still have GBP. I have no idea when the currency will finally die a death.
  • I don't know anything about your travels or wife's residency, but unless it's major I don't see much affecting a mortgage application. AFAIK we live in an economy that lives and breathes on ever expanding credit, so the entry criteria will theoretically always get easier (albeit not necessarily in a straight line) until the collapse I mentioned in points one and two.

In other words, that's the shittest, most generalised response I could possibly have given, but it also happens to be my very honest opinion. Short answer - if your head and your heart say go for it, then go for it. Just don't be a cunt of a landlord, but since you've experienced that I'm sure you won't.

I have previously been a Landlord and Mrs B is one now. We are both very reasonable. When I sold my house I let the moderate  cleaning issues go  as the tenant had paid on the dot every month for 4 years. 

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I mostly agree with Fully Detached’s forecast for between 50%-90% declines with the exception of family homes in affluent areas built prior to this the 90s and onwards frenzy. Well proportioned houses on decent sized plots having south facing gardens will be largely immune from the coming correction. GBP will be toast too. 

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28 minutes ago, Kurt Barlow said:

I have previously been a Landlord and Mrs B is one now. We are both very reasonable. When I sold my house I let the moderate  cleaning issues go  as the tenant had paid on the dot every month for 4 years. 

You'll have a portfolio ?

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Just now, Long time lurking said:

V engers back on TOS i`m sure they would give you a comprehensive answer :D

I'm trying to detox my mind and am avoiding that place. 

Is Venger an HPI VI? 

1 minute ago, Hopeful said:

You'll have a portfolio ?

Stretching across the planet - Mrs B's are in Australia and Iran (shared with  her 2 brothers) 

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On your work it sounds like you are now both reasonably stable work / area wise and asked off on the renting side so own place makes a lot of sense. If wide is determined to buy anyway as well in those circumstances giving yourself some decent owned living space would be a better option - especially if falls are on their way - doesn't make quite so much of a mental dent compared to falling investments.

Be sure (as much as you can be at this stage) that you can get planning though - has the place already been extended anywhere near planning limit, what percentage over original house are you looking to extend, check that kind of thing against guidelines or does PD rules allow a workaround - those may be scaled back in the next few years as currently double in certain circumstance to what they were. Those percentage figures who'll give rough extension build cost - what meterage are you lookout at increasing by? If you get arse into gear as soon as purchase through and nothing big as a planning block the process cane surprisingly quick. Lob an architect just a small additional sum and designs/plans should not take long - as long as you know what you want done - sometimes this is difficult awn honestly need to live in a place until you realise what you want (our situation).

I wouldn't rent it out to be honest.You have some funds available already so I'd be tempted to have a clear shot at doing up existing / building extension with the place empty and use to the time wisely to get the work done - work on the basis you can have quick, good, cheap - pick two. Much easier to plan and organise work if not on a compressed timescale.  Once completed you then don't have to pay rent so your missed rental income gets offset at that point by not having to pay rent out yourself.  

On the Q's - If they lose control (including interest rates) all bets are off, pick a number - never has such a financial game been played like the one we have now but you do need somewhere to live.

Travels / wife - suspect none at all especially with a lumpy deposit.

 

 

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I'd note that you'll have to pay tax on your income from the rent -- renting out and living in rented isn't a tax-efficient place to be.

I'd suggest you buy it, move in while you sort out your permissions, then move into rental temporarily while you sort out the work.  This will almost certainly be thousands cheaper than renting out (voids, insurance, mortgage 'complications', etc) and given that you don't know in advance how much lead time there'll be in builders, etc.  You can also work around holidays etc to reduce the financial impact of the 'moved out' period.

As for house prices, etc -- just go with what suits you. Don't fret about prices so much.

As for interest rates -- IMO they'll suppress interest rates for years because the economy can't support higher rates.  I've got about 50% debt fixed and 50% on variable (sort of hedging).

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12 minutes ago, onlyme said:

On your work it sounds like you are now both reasonably stable work / area wise and asked off on the renting side so own place makes a lot of sense. If wide is determined to buy anyway as well in those circumstances giving yourself some decent owned living space would be a better option - especially if falls are on their way - doesn't make quite so much of a mental dent compared to falling investments.

Be sure (as much as you can be at this stage) that you can get planning though - has the place already been extended anywhere near planning limit, what percentage over original house are you looking to extend, check that kind of thing against guidelines or does PD rules allow a workaround - those may be scaled back in the next few years as currently double in certain circumstance to what they were. Those percentage figures who'll give rough extension build cost - what meterage are you lookout at increasing by? If you get arse into gear as soon as purchase through and nothing big as a planning block the process cane surprisingly quick. Lob an architect just a small additional sum and designs/plans should not take long - as long as you know what you want done - sometimes this is difficult awn honestly need to live in a place until you realise what you want (our situation).

I wouldn't rent it out to be honest.You have some funds available already so I'd be tempted to have a clear shot at doing up existing / building extension with the place empty and use to the time wisely to get the work done - work on the basis you can have quick, good, cheap - pick two. Much easier to plan and organise work if not on a compressed timescale.  Once completed you then don't have to pay rent so your missed rental income gets offset at that point by not having to pay rent out yourself.  

On the Q's - If they lose control (including interest rates) all bets are off, pick a number - never has such a financial game been played like the one we have now but you do need somewhere to live.

Travels / wife - suspect none at all especially with a lumpy deposit.

 

 

House hasn't been extended. The extension would effectively take up space already occupied by a detached double garage. No need for windows in the gable end. I would extend along the existing front and back building lines to keep costs as low as possible (ie no fancy intricate 90 degree turns in roof slope etc). The extension would cover 45-50m2. 

15 minutes ago, dgul said:

I'd note that you'll have to pay tax on your income from the rent -- renting out and living in rented isn't a tax-efficient place to be.

I'd suggest you buy it, move in while you sort out your permissions, then move into rental temporarily while you sort out the work.  This will almost certainly be thousands cheaper than renting out (voids, insurance, mortgage 'complications', etc) and given that you don't know in advance how much lead time there'll be in builders, etc.  You can also work around holidays etc to reduce the financial impact of the 'moved out' period.

As for house prices, etc -- just go with what suits you. Don't fret about prices so much.

As for interest rates -- IMO they'll suppress interest rates for years because the economy can't support higher rates.  I've got about 50% debt fixed and 50% on variable (sort of hedging).

That would only be for a year. What we would actually do is shovel all the income generated  into our pensions so effectively get 40% tax relief on it. 

Problem is we are committed to renting the current place we are in until Feb 2019

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I think I'd buy a house you were happy with, as is, with maybe a reasonable sized garden for the kids to play in and put the spare money into an average BTL property that's always easy to let or sell. 

I'm not sure extensions are a great investment and really provide the extra amenity people believe they do. This country is full of dining rooms, studies and guest bedrooms that are never used and just an extra room to heat. In fact, I'd say in general large houses are very overrated and I do wonder if they'll have the status symbol cachet they did with previous generations similarly to the way the status symbol value of cars seems to be fading.

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2 minutes ago, SNACR said:

I think I'd buy a house you were happy with, as is, with maybe a reasonable sized garden for the kids to play in and put the spare money into an average BTL property that's always easy to let or sell. 

I'm not sure extensions are a great investment and really provide the extra amenity people believe they do. This country is full of dining rooms, studies and guest bedrooms that are never used and just an extra room to heat. In fact, I'd say in general large houses are very overrated and I do wonder if they'll have the status symbol cachet they did with previous generations similarly to the way the status symbol value of cars seems to be fading.

Does this mean you've seen the light on Dacias SNACR? :P

I agree on big houses; a few more hikes on energy prices and they'll be dumped like old big-engined saloons in the mid 2000s.

I remember that back in the early 90s if you had a big hotel in an unglamorous location and in need of extensive renovation you could barely give it away; there were ten bed hotels going for £60k when an average house was going for £100k and still no buyers.

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TPTB will never allow the state funded tulip mania, also known as the housing bubble, to burst. They were quite willing to turn us into a zombie economy for it.  We now have a failing high street, no disposable income and insecure work. They will happily send us back to the stone age before they let house prices fall a penny.

So fear not, once the lights go out and we go mad max you'll still get to tell everyone at dinner parties how much your house has gone up in value that month.

Edited by gibbon

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21 minutes ago, SNACR said:

I think I'd buy a house you were happy with, as is, with maybe a reasonable sized garden for the kids to play in and put the spare money into an average BTL property that's always easy to let or sell. 

I'm not sure extensions are a great investment and really provide the extra amenity people believe they do. This country is full of dining rooms, studies and guest bedrooms that are never used and just an extra room to heat. In fact, I'd say in general large houses are very overrated and I do wonder if they'll have the status symbol cachet they did with previous generations similarly to the way the status symbol value of cars seems to be fading.

Outbuildings, Sheds, Garages ... much better than Dining Rooms and Guest Bedrooms :)

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35 minutes ago, Kurt Barlow said:

House hasn't been extended. The extension would effectively take up space already occupied by a detached double garage. No need for windows in the gable end. I would extend along the existing front and back building lines to keep costs as low as possible (ie no fancy intricate 90 degree turns in roof slope etc). The extension would cover 45-50m2. 

That would only be for a year. What we would actually do is shovel all the income generated  into our pensions so effectively get 40% tax relief on it. 

Problem is we are committed to renting the current place we are in until Feb 2019

About £100k probably not that far off for the extension then. 

Feb 2019 will fly round, you could get internal works done in interim (likely no planning issues). Are you planning to live in the place when extension done, is that viable, i.e. separable works that does not involve extensive break through into existing house? 

 

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24 minutes ago, onlyme said:

About £100k probably not that far off for the extension then. 

Feb 2019 will fly round, you could get internal works done in interim (likely no planning issues). Are you planning to live in the place when extension done, is that viable, i.e. separable works that does not involve extensive break through into existing house? 

 

The plan would be to live in it - I wouldn't BTL other than as an interim arrangement.

 

Id leave the internal works on the original house till last as that would involve turning it into a 2 bed from 3. 

We could live in it while the extension is being built as the extension would require little or no interference with the existing house. Looking at the floor plan would only need to make one cut through upstairs. Downstairs might concede to Mrs B and put in an archway between the Kitchen and dining room. We wouldnt have to exercise the extension option immediately and could leave it a couple of years or as long as the PP remains valid. 

A large dining room very important to Mrs B as culturally she is from a background that is big on home entertainment. 

24 minutes ago, Cunning Plan said:

What do you think it will rent for - given that it sounds like a family house and you will want to be honest with any tenant and tell them that they will be kicked out after 12 months?

About 1150 pcm is the going rate. I'd be prepared to discount on that on the basis the let would end after 12 months. 

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I reckon non prime London will hammered.

I also reckon regional southern towns are fucked. These all had financial services as 1, 2 and 3 biggest employer. These jobs have all gone in the last 10-15 years and nothing has replaced them. Its like the north and manufacturing jobs 78-86.

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1 hour ago, gibbon said:

TPTB will never allow the state funded tulip mania, also known as the housing bubble, to burst. They were quite willing to turn us into a zombie economy for it.  We now have a failing high street, no disposable income and insecure work. They will happily send us back to the stone age before they let house prices fall a penny.

So fear not, once the lights go out and we go mad max you'll still get to tell everyone at dinner parties how much your house has gone up in value that month.

I don't want prices to rise and I would be happy with moderate falls. I am wary though of a SHTF situation where our entire wealth is wiped out. Thats one of the caution points I have over this proposal. 

Also I have to balance this against the other scenario of Mrs B taking her 100K and spunking it on a 250K apartment 'investment property'. 

1 minute ago, spygirl said:

I reckon non prime London will hammered.

I also reckon regional southern towns are fucked. These all had financial services as 1, 2 and 3 biggest employer. These jobs have all gone in the last 10-15 years and nothing has replaced them. Its like the north and manufacturing jobs 78-86.

This is West Essex. 

Aside from being commuter belt for London there is also a lot of light and heavy manufacturing alone the Thames estuary and locations like Chelmsford. 

Edited by Kurt Barlow
addition

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1 minute ago, Kurt Barlow said:

I don't want prices to rise and I would be happy with moderate falls. I am wary though of a SHTF situation where our entire wealth is wiped out. Thats one of the caution points I have over this proposal. 

Also I have to balance this against the other scenario of Mrs B taking her 100K and spunking it on a 250K apartment 'investment property'. 

This is West Essex. 

Dont know Essex.

I do know towns South, North and West of London.

Here you get middling towns - 50-100k - since the 80s, financial services have driven jobs and wage growth. That all reversed from 2000-2010.

Ok, answer with question.

Is it walkable to a train station that lets you get to an area of London with high paying jobs in under 80m?

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2 hours ago, Fully Detached said:
  • Just don't be a cunt of a landlord, but since you've experienced that I'm sure you won't.

Is that possible? I don't think so. Landlords are all cunts. It's part of the deprivation of a home for another person mantra. 

Edited by Green Devil

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7 minutes ago, Kurt Barlow said:

The plan would be to live in it - I wouldn't BTL other than as an interim arrangement.

Id leave the internal works on the original house till last as that would involve turning it into a 2 bed from 3. 

We could live in it while the extension is being built as the extension would require little or no interference with the existing house. Looking at the floor plan would only need to make one cut through upstairs. Downstairs might concede to Mrs B and put in an archway between the Kitchen and dining room. We wouldnt have to exercise the extension option immediately and could leave it a couple of years or as long as the PP remains valid. 

 

Internal works till last is unfortunate as that means big disruption once moved in, you'd have to move out or live with the mess and could seriously slow down build. Better (I think) would have been other way round - buy, get plans done ASAP, do internals of existing (and some prep for extension and cut-through), move in, then do extension at leisure down the line however PP durations are so short not much flexibility there anyway and probably still makes sense to not delay the extension if you are going to have one and just get it done. 

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