Anybody got any experiance with letting a property? We're just looking at it as a medium term investment- 10 years or so, and have had advice from mortgage lenders etc. Just wondered if any of you lot had any 'hands on' experiance and top- tips.

Thanks in anticipation..

Hi there,

I have 4 properties I own and let out. 2 cottages and 2 semi detached houses.

Not sure what you know but the basics is you need between 10-20% deposit if you can raise this then you can get a Buy to Let mortgage this will avoid using your own income to support it. The Valuation report must have on it what the expected monthly income is ( they generally put it up a bit) as long as it covers the mortgage payment then that is enough to get the mortgage and of course a clean credit rating. The mortgage is generally interest only so it obviously cheaper but you make money out the capital growth.  You will require letting household insurance .

I advice using a letting company the charge between 12.-20% but can get that much extra they cover their own costs. I have conveyancing qualifications and experienced in drawing up contracts but it suits me to let someone else deal with the people.

You need a gas cert, and a safety check but again the company will do it all for a very small fee.

I insist on monthly checks on all properties.

WHen buying properties to let out or buying proporties in general I always look at not only capital growth but is the properly the type that you can add value in some way incase the market levels off.

I buy properties up to a certain amount for example I would rather own 4 x £100K properties that 1 £400K property. That way if one is emptly for one month you only have to pay 1/4 of your investment , if you only have one huge property then if it is empty for one month you have a big payment to make ;-)

I would never buy in a slumy area as that is the kind of tenants you get and also when you come to sell it the capital growth will be so much smaller.

People think buying property is easy but I think you have to have an eye for things and be able to find a good deal. If you are in doubt seek the help of someone who knows their stuff.

You can raise the deposit by remortgaging your own out and this amount is often paid by interest only as it is only a movement of money and doesn't actually affect when your mortgage life.

That is off the top of my head but fire away any questions.

One of my working partners has 20 properties now. He started off 15 years ago as a bank manager got out when they stopped the personal banking and got into conveyancing and investment. 

Hi Bunty,

All I can add ATM to Blue's excellent advice that do your research for best areas (easily accessible to your own location ideally, even if an agent is caring for them).  The uptake on BTL properties has gone through the roof in the last few years (obviously certain areas of the country more than others) because it's seen as a good way of supplementing future pension etc.  But obviously there's no point in targeting a niche clientelle in an area with an abundance of similar competition and lots of empty properties around.

HTH, Teri

It is illegal for me to give you financial advise but here is something you may wish to discuss with your accoutant ;)  From April next year property can be added to your Self Invested Pension Plan with consequent tax benefits.  All the rules have not been published yet but it would appear if you already own property, to take advantage of this, you would have to sell your property to your SIPS which will have to pay stamp duty on the purchase!  When you consider that selling a second property incurs Capital Gains Tax of 40% it may well be worth waiting until after that date and buying for your pension directly as after a certain age (50 something) I don't think you are tax penalised if you cash it in but the whole idea has to be looked at carefully as you will have to pay management fees, you can't run your own SIPS :rolleyes:  In short see an accountant experienced in this kind of stuff :)

Good point on the CGT Isabel. I know a few people who have had very hefty tax bills when they have come to sell buy to let property. It can be a really nasty shock and something that you need to consider at the point of buying the property, not when you suddenly realise that it has gone up rather a lot in value or when you sell. Trust me my FIL is currently trying to dig himself out of that one. Wasnt an issue when he was younger and in good health but is causing him a good deal of worry now. 

Yes it is a shocker!  Tax hurts but the government does need it to run the country :) I think you just have to see the positive side which is you get to keep 60% percent of the profit which after recent increases in property values is still a better return for your money than anything else I can think of :)

LOL - and of course it actually works out at less than 40% after taper relief and allowances (depending on when the property was bought) :)

Daisy

Well quite.  And you can deduct money spent on improvements further reducing the "profit" to be taxed.

Oh yes but it is still nice to give away as little as possible, especially when you have worked hard for it! He is also at an age where he has suddenly realised how much death duty his children will be liable for, not that he is particually wealthy, just that he has saved hard and made some good investments over the yeard :) 

But there are ways around paying, at least some, inheritance tax, as long as you plan ahead :)

Daisy

Thats exactly what he is doing. I just think that for a lot of 'ordinary' people it comes as a bit of a shock, because they do not consider themselves to be well off, indeed they only need to have a nice house in the south east. Certainlymy parents have inherited from their parents in their mid 70s and suddenly have more money than they ever dreamed of but after a lifetime of being frugal very little idea of what to do with it and a dreadful fear of being a burden because of the level of nursing home fees.

We didn't 'buy to let' but were able to purchase our new house without having to sell the old.  BE VERY CAREFUL!  Our tenant decided the house was hers in everything but name and started knocking walls out!

Talk to as many estate agents as you possibly can in the area you're thinking of purchasing properties and find out what the letting market is like, certain areas in the country have a glut of rentable properties (hard to believe I know!).  A landlord friend of mine discovered after years of easily renting properties to students that due to massive development locally (much of which was bought for buy to let) that her properties became way too much trouble and sold up completely.  A family friend bought a very expensive waterside apartment as buy to let for the yuppy market, put it in the hands of agents who rented it out to a tenant with good company references. 6 months on it had been used as a brothel/drug den - agents refused to help, tenants threatening landlord etc.  The only time ever that the family friend was glad her daughter married the local heavy as he managed to put the fear of *** in them and cleared out quick time.  Research, research, research and good luck!