To want to buy a second property

The time when buy to let rental made financial sense has passed. Please do not invest in buy to let. I am selling (and taking tenants to court) - its very hard to make any money as a landlord at the moment.

The tutoring idea sounds like a good one. You can find the going rate on tutoring websites.

And finding a well paid side hustle eg tutoring is a really good idea!

You’d be much better off putting more into your pension or an ISA and investing it from there in a basic low cost ETF. Do not buy a second home in your position. Even just buying government gilts would give you a 5 percent return on your money and would be better than a second home.

Could your DH earn more through promotions? If he is top of the pay scale, he’ll be on 50k but with TLR or management points it’ll be nearer 60k. A deputy can earn anything from 60k plus depending on school size, and a head even more. Executive heads can earn six figures. If his earning was increased, he could increase pension contributions and maybe even over pay. I’d be focusing on one or both of you improving earning potential and then financial security resulting from this. Teaching isn’t the most lucrative career ever but it certainly isn’t badly paid if you climb the ladder!

Completely agree with all those saying consider moving. You have very portable jobs and you are in the most expensive part of the country. Even if you don’t do it now, maybe when your children are out of education. This could considerably ease the financial pressures in retirement. In the meantime I would chuck extra into pensions and look into possible investments, the buy to let idea seems really precarious.

Of interest how much is your house worth? Given that you are teachers could you sell up, move to a cheaper area to be mortgage free and look into the best ways to make additional contributions to the teachers pension?

Do you still live in the SE?

Teachers are needed in all parts of the UK so would you consider relocating to a much cheaper area? (e.g. NE England)

It could potentially improve your financial position a lot by moving to somewhere with cheaper housing

I don't think that's a good idea, OP. I have a BTL and am very aware that we're going to be increasingly penalised as time goes on. Also the capital gains tax will take a massive chunk of what I thought was going to be our pension. You have security, and that's the most valuable thing. I do know somebody who was an ex estate agent, and when she retired made money by moving to a very up and coming area and then downsizing after a few years to cash in on her gains. I think that's always a possibility in the SE.

I have looked at a possible rental too so not totally anti, however with all of your responsibilities and two stressful jobs I wouldn't do it.

You said you live in the south. Could you consider a move? Sell your (assuming) valuable house, pay off the mortgage and buy outright elsewhere. Perhaps even gaining a larger property more suitable for your DC’s.

You have the advantage of both of you being able to teach anywhere (in England is more straightforward) and with a shortage of teachers, moving jobs shouldn't be a blocker.
Hope it turns out for you @TheArts

This sounds like madness

You need a different side hustle.

What about private tutoring, eg for 11 plus??

I've x 2 rentals but put a good deposit down so have the benefit of good mortgage rates. It is up and down though and some years I've barely made any profit via the rent. The financial success has been the increase in house prices. I'm in it now having purchased many years ago but I'd think twice as a new landlord.

I agree. Buying a second property on a low income is a bonkers idea. Could you do some tutoring in the evening or weekends to boost your income when your DH can do the childcare.

I have seriously thought of switching my holiday let to a tenancy but each time it's a no

The arguments against now are just too strong for a small landlord even though rental prices are soaring.

I've just seen the problems a friend of mine has with trying to evict a non paying tenant who has caused damage to the house through deliberate acts. Her legal bills are horrific. And this is before tenants rights are further strengthened.

This. We are LL’s and I wouldn’t recommend it for anyone looking to just have one property, it’s could end up disastrous especially with the new legislation Labour are bringing in. Most small LL’s are getting out.

This isn't a great idea for all the reasons already stated. It would be better to increase your income and then savings. Tutoring perhaps? Are you getting all your benefit entitlements for your children? Can you top up your pension? That's probably a better way to go to ensure your future financial security.

I became an accidental landlord after the 2008 crash

Long story not that different in some ways to you

BUT as soon as the tenants moved out we sold up, various reasons BUT if the rented house 'went down' then it could take my wife & I with it financially.

If you can afford not getting any rent or have a portfolio of property it might work but it could bankrupt you

1. Your very unlikely to get a mortgage at your age
2. You need at least 10-15% deposit for the property
3. They will assess your personal costs as part of a BTL mortgages.
4. You may struggle to pass the stress tests for a mortgage with a 90% mortgages

1. Tenants may not pay rent - you now have 2 mortgages to pay
2. I make about £5 a month from my rental after
3. Most money goes to the bank interest and I've had a extra electrics bill of £250, Gas issue £270, Tax on rent £1200. Any more issues come out of my pocket.
4. If I sell, I have to give the government 28% of my profits for CGT

I hear you, OP, it sounds like you have a lot on your plate and the worry about the future must be weighing on your mind.

I agree with others that your property in the SE is a real asset. I appreciate what @NDandMe is saying about moving SEN children: that is a real consideration. But maybe it's something you could consider when the children are no longer in education. You could release money from your existing property and perhaps buy a BTL outright at that stage. There are spots in the SW like Gloucester and Chepstow where property is much cheaper and you would have access to lovely countryside (if that is your thing).

It is unlikely a second property will generate enough income to pay for itself and you cannot rely on longer term appreciation as a pension. You would be better buying a family home more suited to your needs. Can you get financial advice via a union?

Please don’t do this.

Non paying tenants take upwards of a year to evict via courts, and for that whole time you’d have to cover the mortgage without income.

You’ll also have the associated repair costs etc.

And that’s without considering tax implications of a second home etc.

Unless you can buy outright or afford to cover the mortgage with your own income or savings, you risk destroying your credit rating by defaulting on the mortgage if you have bad tenants.

You also need a minimum 25% deposit for any BTL property as another consideration.

I say this gently, you aren't mad but you are poorly informed about the idea of a rental in so many ways that I would make a decent bet that if you pursue this you will end up in a worse position.

For starters, yous need to raise capital for a second property, lead8ng to a higher existing mortgage assuming you borrow agaonst your exosting home, then getting a second mortgage at your ages with reduced hours and dependents, the general market at the moment and instability of mortgage rates mean you can't guarantee making the monthly payment each month. A buy to let will have a higher interest rate anyway, you'll be borrowing a huge sum with a low deposit, and if you aren't doing interest only you'll find things very tight, if you even break even.

It's a terrible idea.

Speak to a financial advisor.

There are sadly no shortcuts.

Moving with SEN children isn't a simple task, especially if they have EHCPs. Their dc could be without a school place for months before suitable placement is made available. Not to mention being on the waiting lists all over again for any council funded or tertiary services. It could put their children back massively in their social and educational development. Not to mention the MH of the parents as they navigate the new landscape without any of their own network to tap into for support.

Hi OP, what jumps out at me is that you live in the SE. If you are both teachers you can work anywhere - why not relocate to somewhere with very cheap housing but decent quality of life?

We have pension-less friends who moved to Hexham in Northumberland - lovely place, good schools that you could teach at, cheap houses. Once you have jobs there and a much cheaper 3 bed house, then you can decide what to do with the remaining equity in your current (expensive) house - re-invest in a BTL that you can keep an eye on, or just a straightforward conservative investment portfolio.

Wish you the best of luck - it's awful to feel trapped but I feel like living in the SE is a big part of your struggle.

I'm a bit confused - where will you get money to buy a second property? I don't know if you'd even qualify for a second mortgage, plus you'd have to find money for deposits + fees. Presuming you have that capital, wouldn't it be better in your pension?

I would invest as much as you can. To have rental you should ideally have a cash cushion to cover maintenance or periods of not getting rent. You could (maybe) consider it if you do have more saved up to cover emergencies related to the rental. I would probably just save and invest as much as you can. You already have wealth in your house, having wealth in investments would make you more diverse.