...to consider a buy to let

[owlborn]

So, very recently DH and I came into some money. It hasn't made us millionaires, but it has enabled us to become mortgage free an an exceedingly nice house in our mid thirties/early forties and left us some money over.

The amount we have is enough to put down a 50% deposit on a reasonable flat in an OK part of our home town. The property market here is solid but not London. There is a university and a thriving rental market. We think the rent would more than cover the deposit and a bit more from our research.

The idea would be that we would get a buy to let mortgage in my name. The flat would solely be in my name and I would look after it and deal with tenants etc. This would hopefully give me a small amount of income and some security while I am a SAHM (not pregnant yet, but hoping). And in the long run it would provide investment/pension income.

I keep thinking about it but I worry that this isn't an ethical choice. I hear a lot about BTL landlords and landlords in general impacting on the housing market negatively and making it hard for people to find homes. Can one be an ethical landlord? What should I be considering?

(Practical advice also appreciated, even if it's that we don't have enough equity or DH will need to get the mortgage or have his name on it as he has a fairly decent income)

Lou, I've answered that a few posts up thread, although I admit I made a fist of my first attempt, so maybe I'll post a more detailed and hopefully better account later.

But for now...

I don't see anybody campaigning for the private rental market to be banned, and anyone who did would surely be an idiot. However, there is a serious issue with the sheer volume of BTL, which is such that it effectively monopolises the available housing supply and forces more people to rent that is necessary. I am one of them - I could buy outright but I currently feel forced to rent because house prices in my area represent such poor value for money. One of the reasons for this is that people borrowing to let can leverage up greater amounts of money than I have and therefore push prices out of what I consider to be a reasonable range.

Most people on the "anti BTL" side of the argument only want the private rental sector to be reined in to the extent that is it small enough that it no longer monopolises the available housing stock. So it would never be a case that BTL simply ceased to exist.

As such, there will always be houses available for the students, 17 year-olds, relocators and economically destitute.

Its the monopolisation that I consider to be unethical, I'm happy to expand on that if requested. I have to go now but back in an hour or so.

I've pointed this out again and again. It is not buy to let landlords who force up prices, it is buyers who have been given large sums, usually by their parents, to use as deposits. Buy to let is simply a type of mortgage which enables people who need mortgages to buy properties to let out, thus expanding the rental market. The argument against them is based on envy, and is pretty dumb, because it doesn't target people who buy for cash to rent out.

I cannot help correlating in my mind the totally impractical viewpoints against btl with the attitude that most people simply stay at home with their parents before moving into subsidised accommodation with a ready made family, either rented or bought. If do you actually go out into the real world, force yourself to leave the security of the family nest, you realise that being economically active means a certain amount of competition in whatever you do.

Personally, I don't fancy being in a 3 year queue for a housing association flat each and every time I relocate with work. Neither do I fancy spending £2000 a month on an over-priced executive short term let.

blue42 I hardly think what I've read from you qualifies you to speak as someone possessing of any great knowledge which others should follow. You seem to be of the "its right because I say it is" persuasion. If you have the money currently to buy outright in cash then you are a bit of an idiot, and also a very fortunate one who has never had their buying power curtailed by what mortgage they can take out or how much they earn in their job.

TheChandler thanks for your assessment of my intelligence and historical financial position. Ironic that you accuse me of being of the "it's right because I say it is" persuasion and then calling me an idiot based on my investment decisions and history which, oddly enough, you know nothing about.

So I'll take your insult as something of a compliment, and wave right back 'atcha - cheers

Its not an assessment of your intelligence blue42, its an assessment of what is available to me to judge - your rather obvious lack of formal relevant experience, successful record in investment and quite frankly silly remarks that for some reason you seem to think others should copy.

There are very good reasons that people pay for high quality financial and legal advice.

Never mind this: wave right back 'atcha.

If you are going to do it, and you hope to have DC in the future - do it now.

We have a BTL that was (as with another poster) a flat that I lived in before we combined our households. We hope we are ethical (though we've also had tenants move in extra people, sigh). We certainly are obliging and try very hard to keep the property in good nick for the tenants, and of course for ourselves (and, cough, recently had to call an electrician to replace 9 light bulbs due to the current and previous tenants being too idle to do it themselves - we thought it might be a central fault with them all being blown).

We wanted to remortgage and now we have DCs and the regulations are tighter they want to make sure that your income is high enough without the rent. They seem to be assuming that we'll have nursery costs for the whole period of the mortgage and are getting stroppy about it - younger DC is 1 and if they'd asked us we'd be able to tell them there WILL be no more nursery costs - after that DC goes to school in 3 years 3 months' time. So no, not for the whole period of the mortgage.

OK, but you seem to have forgotten the people selling the houses.

You say it is the fault of the btl landlords 'leveraging' up prices, but the home owners are also part of this equation. Are the current owners of those houses you deem to be poor value for money just greedy fuckers who sell to the highest bidder without giving thought to the next purchaser (who, in your case, thinks their home is beneath notice anyway)?

In order for houses to be 'worth it' for you, affordable for others, must current owners consider the next poor sod and do themselves out of money? Cos that isn't going to fly, is it? How will they afford the next house?

House prices will always be silly now. Too many people fixated on ownership, too few willing to rent long term without feeling hard done by. Houses have become a 'precious commodity' rather than a home. Add to that too many Gordon Geckos moving into Letting and you have a recipe for the current mess.

It isn't the btl landlord who needs curtailing, the Lettings industry needs an overhaul.

too few willing to rent long term without feeling hard done by

As a BTL landlord we'd love, love, love to have long term settled tenants who wanted to stay there, feel like it was theirs, enjoy the garden and choose paint colours (we're happy to get it painted!). Oh, and because they felt it was like theirs, tell us when things need mended (see above re: light bulbs).

The flat is big enough for a small family with 1 or even 2 small DCs and as I say has a garden but we cannot get it marketed to families, even if we say we're willing to reduce the rent for a family, we are not sure if it's the area or it's that families don't want to rent, only young single professionals whose mummies changed their light bulbs.

TheChandler your posts are increasingly bizarre.

You admit that you're going on only the information that is there for you to judge. Somehow you seem to have extrapolated from that that I have no history of successful investing. I'm intrigued as to how you managed to come to that conclusion based on what I've posted here - did you think the fairy godmother brought me the money I could by a house with?

I agree with you that there is a reason people pay for high quality financial and legal advice. But the last I looked this was a discussion forum for people to voice their opinions. I haven't seen any other posters putting caveats on their opinions, so why you think mine should be subject to such scrutiny is a mystery to me. Certainly I have no "relevant formal experience" - would you care to point out exactly where I inferred that I did?

I also don't recall posting anywhere that I think other people should "copy" my silly remarks (again, bizarre - do you mean my opinions?).

So perhaps, instead of flinging insults around, you'd care to specify exactly what it is that you disagree with?

blue42 I think you know perfectly well that its not worth expending any time on replying to you.

TheChandler

Right. So your input on this thread has been to come out, insult me, make judgements about things even you admit you have no information on, and then refuse to engage when asked to actually debate the subject.

Well played, well played indeed.

I would in your situation.

No blue42, sometimes its more important to do things in real life, than spar with people on the internet (or follow their dubious advice).

TheChandler shame that didn't occur to you several insults and a load of irrelevant bullshit ago.

Never mind, you have a lovely day.

YANBU - buy your BTL. I see the left wing loonies are out in force on here. Completely bonkers to suggest btl is unethical but why should that stop them. They would obviously prefer people to live in the gutter than have houses available to rent.

LazyLouLou

WRT people selling houses, yes they're always going to get as much as they can for them, and I wouldn't expect them to do anything different. But we have a very distorted housing market - all I would like to see is a market free of interference and allowed to do its own thing.

I agree that it's not just the BTL LL at fault - but that's the context of this thread so that's where I'm coming from in my responses. I do still feel it's unethical, but as I said in my first post on the thread, I can see it from both sides.

If you decide to go through with it, you might consider starting a new thread OP about what types of properties and tenants to target. In my experience it can make all the difference to a good experience as a landlord and a really awful one! Good luck OP!

I see the left wing loonies are out in force on here

It's more and more becoming the Peoples Republic of Mumsnet!

Nothing wrong with being a landlord, we just need fairer taxes on the profits.

As a SAHM I would rather have the security of £50k readily realisable assets and cash in my name than have an equivalent amount tied up in a BTL with a further £50k mortgage obligation in my name. BTL looks rather like golden handcuffs to me with added wife work in admin.

My mum has a BTL flat in a student town. One that has been discussed on here before. The rents on flats are vastly cheaper than halls. The students get a pretty good deal.

Would buying a property and renting it out as a holiday home perhaps seem more ethical?

Honestly, I do think btl is unethical. That said, you can be a good landlord, if you put people before maximising profit. Charge a genuinely reasonable rent, don't say no to pets or children, let tenants decorate, don't use rip off agencies, remember that this is someone's home not just your investment, fix things that need fixing as fast as you would want them fixed if it were your home, don't raise the rent just because you can or because a certain amount of time has passed, don't exclude people claiming benefits, don't be hard to contact, etc. If you can't be a truly good landlord, don't be a landlord.

Why not if you are a responsible landlord. A lot of people don't want to buy and prefer to rent at least for a while.

Just practical advice:
We have two rental properties in a university town; one let to students, the other to professionals.

The student let has never been a problem. It's let through the Student Union's own letting agency on a non-managed basis, i.e. they find the tenants, sort out the contracts and collect the rent; we look after the place. Fees are reasonable, their contracts and fair and they don't try to rip off the tenants. The property is let 10 months a year, so you get a couple of months free for redecoration and repairs, if need be. Income works out about the same as letting the whole house on a 12 month basis. We've had occasional minor damage, but nothing that couldn't be resolved with a bit of bickering, and no non-payment.

The other house was previously our home, an expensively refurbished place close to the town centre that I thought was too good to rent to students, so we let it privately. It has been an absolute disaster - 6 tenants in the 1st 8 years. Two tenants disappeared owing us money, another was constantly in arrears and a fourth did so much damage to the place that deposit didn't cover half the repair costs. I also had two letting agencies (absolute scum) boast to me that they could maximise my return by ensuring the tenants never got their deposits back (they see it as a sort of end-of-let bonus, a 13th pay check).

Final point - 50% equity seems to me to about break-even point for BTL at the moment. Not saying you won't make money, but I doubt you'll get rich.

Lyingly, I think btl is unethical, hth