How does Buy to Let END!

[Ash4781b]

25 minutes ago, JoeDavola said:

Went on Money Suprmarket here and took a look at the BTL loans...seems they aren't quite as steep as I'd thought?

 

That's a repayment on a £180K flat with a £36K deposit.

A city centre 2 bed flat seems to rent out for £1100-1300 a month (which is shocking to me but that's the figures I'm seeing).

So even take £1200 - 850 (repayment mortgage 25 years) - 100 (building maintenance fees) - 90 (council tax that the owner pays not the renter) - 40 (mortgage provider product fee 1000 over 24 months) = 120 quid a month to cover letting agent fees and any repairs to the inside of the flat over time.

It's maybe just about possible to make it work, but it's pretty fucking tight, and thats with a 20% deposit as well.

They can have an extra £300 a month by going interest only on the mortgage, but that's a ballsy fucking move these days. And even if some are doing that now, will there be many wanting to enter the BTL market these days as IO mortgage holders?

I really don't see there being much scope to put the rentals up either, it already amazes me that there are people willing to chip in £600 a month each to share a pokey 2 bed slave box flat in Belfast.

Overall however....I don't see those figures being so dire as to completely put people off BTL.

Assuming higher rate tax payer and they work Don’t you have to pay over a massive wedge to HMRC? There are calculators but I had roughly £5k a year on. Is that in your numbers ?

[JoeDavola]

4 minutes ago, Ash4781b said:

Assuming higher rate tax payer and they work Don’t you have to pay over a massive wedge to HMRC? There are calculators but I had roughly £5k a year on. Is that in your numbers ?

So if your job income is say £60K, then the rental income from that flat is getting taxed at 40% before costs?

So your saying of that 1200 a month £480 goes to government?

Edited June 18, 2023 by JoeDavola

[JoeDavola]

6 minutes ago, With a crooked smile said:

True, I can't imagine many do this. But those that do must have zero imagination and zero work ethic. I'd look to start a new business frankly.

I think for many they'll just look at what capital appreciation is likely to be like over 20 - 30 years and the fact you can avoid capital gains tax and inheritance tax when you pass over to your kids (if you time it right and preplan)

As a chronically single bloke I'm more and more liking the idea of owning a place outright that's just big enough that I can 'rent a room' at a premium in a way where we can both have our own areas of the house and I could max out that £7500 tax free rent a room allowance. So someone gets a bedroom, their own living room and bathroom but we share a kitchen.

No mortgage or rent outgoings plus 7500 interest free coming in is a hell of an income boost for scum like me!

Edited June 18, 2023 by JoeDavola

[With a crooked smile]

Have to agree @JoeDavola. When we've finished doing up the current house (to a high level) the top floor will be dedicated to a lodger. Its got great mountain views an is ensuite. 

Despite changing my job in August I expect still to be paying 40% tax so its the equivalent of 12k salary to me.

I imagine rent a room will be used by loads of people who get stretched by interest rates over the next 2 years. With decent interest rates despite what BoE say there will be upward pressure on wages allowing catch up over time and the whole cycle to repeat.

[Ash4781b]

5 minutes ago, JoeDavola said:

So if your job income is say £60K, then the rental income from that flat is getting taxed at 40% before costs?

So your saying of that 1200 a month £480 goes to government?

Well not sure of exact figures as people should always get tax advice but I just work on basis there’s no mortgage cost deduction now. So it’s just income to be taxed…. It’s changed in phases though.  Oh I see there’s a note about child benefit @Wight Flight mentioned.

 

https://www.gov.uk/government/news/changes-to-tax-relief-for-residential-landlords

https://www.natwest.com/mortgages/news-and-articles/tax-changes-for-btl-landlords.html

 

[JoeDavola]

4 minutes ago, With a crooked smile said:

Have to agree @JoeDavola. When we've finished doing up the current house (to a high level) the top floor will be dedicated to a lodger. Its got great mountain views an is ensuite. 

Despite changing my job in August I expect still to be paying 40% tax so its the equivalent of 12k salary to me.

I imagine rent a room will be used by loads of people who get stretched by interest rates over the next 2 years. With decent interest rates despite what BoE say there will be upward pressure on wages allowing catch up over time and the whole cycle to repeat.

Yeah I don't need a lot of room, but if a flat is going to be £180K but I can get a house big enough for two or more for say £280K then that might actually be the better option. Not about what you earn but what you keep and all that.

[With a crooked smile]

1 minute ago, JoeDavola said:

Yeah I don't need a lot of room, but if a flat is going to be £180K but I can get a house big enough for two or more for say £280K then that might actually be the better option. Not about what you earn but what you keep and all that.

My one piece of advice would be to be picky with who you choose. I wasn't with my first lodger. Big mistake. Had to get rid of him and wasn't most pleasant experience. 

[JoeDavola]

Just now, With a crooked smile said:

My one piece of advice would be to be picky with who you choose. I wasn't with my first lodger. Big mistake. Had to get rid of him and wasn't most pleasant experience. 

Yep 100% - and if getting a lodger is a "nice to have" rather than "I need this income now" then you can just take your time choosing one.

[spygirl]

39 minutes ago, JoeDavola said:

So if your job income is say £60K, then the rental income from that flat is getting taxed at 40% before costs?

So your saying of that 1200 a month £480 goes to government?

Yes.

The ball kicker is if you have a medium ish earned income -say 30k - and have a few flats.

The rent will take you into the HRT band, losing child support etc etc.

The utilmate is if you have not released/not been filling in a tax return/using accountant  that and you owe a few years back tax - several 10k to low 100ks.

 

 

 

[JoeDavola]

3 minutes ago, spygirl said:

Yes.

The ball kicker is if you have a medium ish earned income -say 30k - and have a few flats.

The rent will take you into the HRT band, losing child support etc etc.

The utilmate is if you have not released/not been filling in a tax return/using accountant  that and you owe a few years back tax - several 10k to low 100ks.

So just to clarify, someone on £30K job with a £1200/mo BTL rental will be getting taxed at 20% of that full 1200 i.e. giving the gov £240 a month of it?

[Wight Flight]

1 hour ago, JoeDavola said:

And in that respect buying a £180K flat outright to rent out for £1200 a month is still better return than a bank gives you.

It is on the margin of sensible if you can get that yield. (8%)

Good luck with that in the SE. I pay £1,200 for a £550k place.

 

[spygirl]

10 minutes ago, JoeDavola said:

So just to clarify, someone on £30K job with a £1200/mo BTL rental will be getting taxed at 20% of that full 1200 i.e. giving the gov £240 a month of it?

I tried to look for a good calculator - a lot of them are wrong.

https://taxscouts.com/calculator/rental-income-tax/

Based on the horror from mrs spys baby classes.

~4k month rental income (iirc she has 4 houses now @ 1k/m rent

About 20k earned income

Earnings from rent

£48,000

£1,000 tax-free property allowance

Property tax to pay - £12,746

After-tax rental income - £35,254

However ..  spread between rent n mortgage is under 200/m for each place.

Something like ~500k-700k of debt.

Her mortgages will be above 7% now.

So about 35k-49k mortgage to pay each year.

 

 

[spygirl]

1 hour ago, JoeDavola said:

 

 

And in that respect buying a £180K flat outright to rent out for £1200 a month is still better return than a bank gives you.

The BTL hot spots near me - Scabby, Boro, various CoDurham towns.

All have have high levels of voids - 2-3 months yearn between tenants.

Ifyou are churning tenants every ~6 month, which does happen i.e. people move in, find they cant afford rent, then leave at first opportunity - or just do a runner after 1 months deposit + 1 month rent, which is common.

 

 

[JoeDavola]

5 minutes ago, Wight Flight said:

It is on the margin of sensible if you can get that yield. (8%)

Good luck with that in the SE. I pay £1,200 for a £550k place.

I think rentals on city centre flats are particularly high.

So you could have a two bed flat for £1200, but I can also see detached houses a bit further out that would be £300K+ on for £1200 a month to rent.

[Frank Hovis]

51 minutes ago, With a crooked smile said:

My one piece of advice would be to be picky with who you choose. I wasn't with my first lodger. Big mistake. Had to get rid of him and wasn't most pleasant experience. 

 

Somebody I know takes lodgers referred to him by the main NHS hospital in Cornwall, Treliske.  NHS staff relocating and wanting a cheap place to live.

As they know he could just complain to the NHS if they give him a problem lodger he is effectively receiving pre-vetted lodgers and has never had a problem despite having two or three lodgers most of the time and having done this for over five years.  It's not a big house by any means, the kitchen and bathroom are shared, but he doesn't seem to mind.  He is "on the spectrum", though highly intelligent, and that may have something to do with it. 

Someone I knew in Plymouth wanted to rent her house out and I said how successful this had been so try contacting the Plymouth hospital, Derrifiord, to see if they opearted a similar scheme.  They didn't which seemed a missed opportunity for them.

[onlyme]

1 hour ago, JoeDavola said:

Went on Money Suprmarket here and took a look at the BTL loans...seems they aren't quite as steep as I'd thought?

 

That's a repayment on a £180K flat with a £36K deposit.

A city centre 2 bed flat seems to rent out for £1100-1300 a month (which is shocking to me but that's the figures I'm seeing).

So even take £1200 - 850 (repayment mortgage 25 years) - 100 (building maintenance fees) - 90 (council tax that the owner pays not the renter) - 40 (mortgage provider product fee 1000 over 24 months) = 120 quid a month to cover letting agent fees and any repairs to the inside of the flat over time.

It's maybe just about possible to make it work, but it's pretty fucking tight, and thats with a 20% deposit as well.

They can have an extra £300 a month by going interest only on the mortgage, but that's a ballsy fucking move these days. And even if some are doing that now, will there be many wanting to enter the BTL market these days as IO mortgage holders?

I really don't see there being much scope to put the rentals up either, it already amazes me that there are people willing to chip in £600 a month each to share a pokey 2 bed slave box flat in Belfast.

Overall however....I don't see those figures being so dire as to completely put people off BTL.

£600 each - London is double that.

I'm surmising that generally Belfast income to rent ratios of early career workers is a lot better than London. Belfast still having big city type jobs (for the area).  Also in terms of mortgages the ratio of 4xearnings+ mortgages in london /SE masssively higher than shires /north.  That you have not seen any major falls yet probably related to the above.

At daughter's place she's about the only one in her cohort that is having to rent, pretty much all the others are living at home. London acting like a closed market now for new starters, you either have parents living there and have access to the highest paid jobs in the country or you don't - at least for companies not running remote working / very light office engagement - not sure whether there are many of those with anyway at the entry grades.

 

 

[With a crooked smile]

6 minutes ago, Frank Hovis said:

 

Somebody I know takes lodgers referred to him by the main NHS hospital in Cornwall, Treliske.  NHS staff relocating and wanting a cheap place to live.

As they know he could just complain to the NHS if they give him a problem lodger he is effectively receiving pre-vetted lodgers and has never had a problem despite having two or three lodgers most of the time and having done this for over five years.  It's not a big house by any means, the kitchen and bathroom are shared, but he doesn't seem to mind.  He is "on the spectrum", though highly intelligent, and that may have something to do with it. 

Someone I knew in Plymouth wanted to rent her house out and I said how successful this had been so try contacting the Plymouth hospital, Derrifiord, to see if they opearted a similar scheme.  They didn't which seemed a missed opportunity for them.

Flat I rent out with a mortgage is residential but I was asked if I would do short term rentals to NHS visa hunters (there's agencies that specialise in onshoring). I declined but it was more than standard resi rates.

[Frank Hovis]

9 minutes ago, With a crooked smile said:

Flat I rent out with a mortgage is residential but I was asked if I would do short term rentals to NHS visa hunters (there's agencies that specialise in onshoring). I declined but it was more than standard resi rates.

 

In Cornwall it isn't visa hunters, he's never mentioned any foreigners, but Brits moving around the country for work as I used to do.

[Wight Flight]

1 hour ago, Frank Hovis said:

Someone I knew in Plymouth wanted to rent her house out and I said how successful this had been so try contacting the Plymouth hospital, Derrifiord, to see if they opearted a similar scheme.  They didn't which seemed a missed opportunity for them.

We had a similar scheme but the lady that ran it couldn't find anywhere to rent herself so moved to the mainland.

i don't know if she was replaced.

[sleepwello'nights]

Have you stopped to consider what the consequences of private lanlords leaving the sector will turn out.

You might get large companies acquiring numbers of properties to rent and they may turn out to be satisfactory landlords. However I expect most of the rental sector will be managed by Housing Associations.

I don't know if any of you saw the campaign by ITV News abouit the poor living conditions many renters suffered. Houses full of mould caused by poor maintenance to the exterior of the building etc. All of the properties selected were owned and maintained by Housing Associations.

Despite the plethora of tales you post about the bad behaviour of private landlords there are just as many about tenants who behave badly.  A few of you have posted about your experiences with private landlords that were satisfactory. As with most ancedotal experiences the ones that are spoken about most frequently are the ones about bad experiences. 

I've had a number of rental properties and a number of tenants. The vast majority paid their rent on time and kept the houses in good condition. Their tenancies never made interesting stories. The handful of tenants who didn't look after the property make much more interesting stories.

Be careful what you wish for.

[Wight Flight]

29 minutes ago, sleepwello'nights said:

Have you stopped to consider what the consequences of private lanlords leaving the sector will turn out.

You might get large companies acquiring numbers of properties to rent and they may turn out to be satisfactory landlords. However I expect most of the rental sector will be managed by Housing Associations.

I don't know if any of you saw the campaign by ITV News abouit the poor living conditions many renters suffered. Houses full of mould caused by poor maintenance to the exterior of the building etc. All of the properties selected were owned and maintained by Housing Associations.

Despite the plethora of tales you post about the bad behaviour of private landlords there are just as many about tenants who behave badly.  A few of you have posted about your experiences with private landlords that were satisfactory. As with most ancedotal experiences the ones that are spoken about most frequently are the ones about bad experiences. 

I've had a number of rental properties and a number of tenants. The vast majority paid their rent on time and kept the houses in good condition. Their tenancies never made interesting stories. The handful of tenants who didn't look after the property make much more interesting stories.

Be careful what you wish for.

i agree. I don't hate landlords per se, just the system that allowed them to outbid a renter using the renters income to do so.

However they can go bust and i won't lose any sleep over any of them. They call themselves businessmen. That's business.

[Option5]

I've never had a bad landlord, but then again I'm in the higher priced market. I did have to deal with a bad one for a vulnerable friend but the landlord (actually land lady) backed down very quickly when she realised I would bankroll my friend it it went to court. 

[Frank Hovis]

33 minutes ago, sleepwello'nights said:

I don't know if any of you saw the campaign by ITV News abouit the poor living conditions many renters suffered. Houses full of mould caused by poor maintenance to the exterior of the building etc. All of the properties selected were owned and maintained by Housing Associations.

 

Some are excellent, some are terrible.

If you widen it to social housing in general then the worst landlords are usually Councils and National Housing Associations.

HAs focussed upon a limited geographical reach usually provide a very good service.

The reasons for this is that Councils usually divert money away from major housing repairs (this was the drive for the new breed of transfer HAs in the 90s, council housing stock was fundamentally deteriorating with only patch repairs being done), and for national HAs that they have houses everywhere but not housing officers and maintenance staff so that if you have a problem and live a couple of hundred miles from the nearest maintenance depot then you have some wait for any fixes.

This conditions my reading of any story where a tenant has a damp and mould filled house: if it's a Council or National HA then the tenant is probably in the right, if it's a local or regional HA then the tenant is probably in the wrong.

The reports of problems in the local press for these is usually 90% Sanctuary (a national HA which either has a lot of houses in Cornwall or maintains what they have very poorly) or Cornwall Council.  And with these I'm believing the tenant.

[Kendo]

42 minutes ago, Option5 said:

I've never had a bad landlord, but then again I'm in the higher priced market. I did have to deal with a bad one for a vulnerable friend but the landlord (actually land lady) backed down very quickly when she realised I would bankroll my friend it it went to court. 

Mostly I’ve been a lodger with the owner being around my age and easy-going but I did rent once and while the landlord was fine during the tenancy, he and/or the letting agency tried to withhold most of my deposit when I left. Absolute piss-take. It was down to the very small outside garden area not being stripped back to basics as it was when I moved in. It wasn’t untidy but I had let things grow out a bit and they wanted £1000+ to tend to it (and I reckon jet-wash the dirty patio - but that was not my responsibility as they didn’t give me a jet-washer to do it). I’d also left the property (oven, washing machine, fridge) in a better state than I found it. Anyway, my savings at the time were very healthy so I told the agency I’d taken legal advice (hadn’t obviously) and had been advised to challenge through the deposit system channels. After one attempt by the agency/landlord to go 50:50, which I refused, I began dispute proceedings and they immediately backed down. You just can’t let yourself be bullied - although I’m sure many don’t know their rights or feel they can afford to challenge.

[spygirl]

6 hours ago, sleepwello'nights said:

Have you stopped to consider what the consequences of private lanlords leaving the sector will turn out.

You might get large companies acquiring numbers of properties to rent and they may turn out to be satisfactory landlords. However I expect most of the rental sector will be managed by Housing Associations.

I don't know if any of you saw the campaign by ITV News abouit the poor living conditions many renters suffered. Houses full of mould caused by poor maintenance to the exterior of the building etc. All of the properties selected were owned and maintained by Housing Associations.

Despite the plethora of tales you post about the bad behaviour of private landlords there are just as many about tenants who behave badly.  A few of you have posted about your experiences with private landlords that were satisfactory. As with most ancedotal experiences the ones that are spoken about most frequently are the ones about bad experiences. 

I've had a number of rental properties and a number of tenants. The vast majority paid their rent on time and kept the houses in good condition. Their tenancies never made interesting stories. The handful of tenants who didn't look after the property make much more interesting stories.

Be careful what you wish for.

You won't get 'large companies' buying up 2 / 3br houses here there n everywhere.

This comes up all the time.

Large private orgs are interested in large,built to order blocks.

As rates normalise the attraction of leveraging up n buying property will wane.

Theres still a space for for corp LLing as a major life hedge, for annuities.

This has popped up-

https://www.property118.com/lha-is-not-enough-to-pay-rocketing-rents/

Low-income renters in England who rely on benefits are finding it increasingly difficult to secure housing due to skyrocketing private rents that far exceed local housing allowance rates (LHA).

These rates, which determine the maximum amount of financial help tenants can receive through universal credit or legacy housing benefits, have remained stagnant since 2020.

Originally, LHA was designed to cover the lowest 30% of market rents.

However, recent findings from the Chartered Institute of Housing (CIH) and Shelter reveal that this is no longer the case for a typical two-bedroom rental property in England.

In fact, less than 20% of private rentals fall within LHA rates, leaving renters to grapple with an average deficit of £151 per month.

Because people on benefits were never in the prs ffs.

Its only  the btl fuckwits have poured into the smaller cheaper housing, outborrowing ftb.  This is an issue. Or was.

The problem with btl is theyve leveraged up to out bid ftbs for 20y. This has been supported by zirp n the tax system

No more.

 

Edited June 18, 2023 by spygirl