Active discussions

Meet the Other Phone. Only the apps you allow.

Meet the Other Phone.
Only the apps you allow.

Buy now

Please or to access all these features

Talk
Investments

Discuss investments with other users on our Investment forum. For more advice read our tips for saving for your child's future.

Original poster

Buy to let - where in the U.K. to buy?

41 replies

BananaSpud · 16/03/2021 16:46

I have 50k deposit that I intend to use to purchase a buy to let property in the U.K.

I have ties to both Manchester and Edinburgh so these feel like a good starting place but I am open to other areas.

If you were looking to purchase a BTL, where would you consider?

Thanks

OP posts:
Redhound · 16/03/2021 22:48

I would always buy locally so I can manage it myself after previous bad experiences with an agent!

StylishMummy · 16/03/2021 23:19

My family members own a successful rental business and they're all in Glasgow, cheap houses but rent is pretty good, average a 10-13% yield. They're strict on criteria for lettings and thoroughly vet tenants to avoid rent issues or the houses getting trashed. It's happened once before and costs £1000s to put right. We're in the Midlands

wanderedlonelyasacloud · 16/03/2021 23:21

I was under the impression that you need 25% deposit for a BTL so somewhere you can get something for £200k.

Are you looking for a house or flat? Long term let or something that could be short term like airbnb?

bertieb7 · 16/03/2021 23:41

I have a buy to let in Edinburgh which is managed as I don't live there and it has rarely been empty in the 6 years I have owned it there is such a demand for rental property. I am sure you would be able to find a nice 2 bed for under £200k. My yield is around 9% but property prices and rents have gone up in the area since I bought (Newhaven). I wouldn't aim for air bnb in Scotland as they have been threatening new legislation cracking down on them for years and it's a bit of an uncertain strategy.

Original poster
BananaSpud · 17/03/2021 06:25

@Redhound

I would always buy locally so I can manage it myself after previous bad experiences with an agent!
Thanks for your input. We don't live in the U.K. currently but we do have family that would be able to manage the property in Edinburgh. We would have to hire an agency if we bought elsewhere. This does make me lean slightly more towards Edinburgh even though I think it's more expensive to buy there.
OP posts:
Original poster
BananaSpud · 17/03/2021 06:30

@wanderedlonelyasacloud

I was under the impression that you need 25% deposit for a BTL so somewhere you can get something for £200k.

Are you looking for a house or flat? Long term let or something that could be short term like airbnb?

Yes, that's correct. I think 200k max should buy something in both areas. Ideally I'd rent it out long term. Air BnB would be an option but not my first choice.

I have family that live and have a rental property business in Edinburgh and they've already indicated they'd be willing to manage the property if I bought there.

OP posts:
Original poster
BananaSpud · 17/03/2021 10:16

@bertieb7

I have a buy to let in Edinburgh which is managed as I don't live there and it has rarely been empty in the 6 years I have owned it there is such a demand for rental property. I am sure you would be able to find a nice 2 bed for under £200k. My yield is around 9% but property prices and rents have gone up in the area since I bought (Newhaven). I wouldn't aim for air bnb in Scotland as they have been threatening new legislation cracking down on them for years and it's a bit of an uncertain strategy.
This is really helpful, thank you. How do you find having it managed by an outside company? I have family in Edinburgh that would be willing to manage on my behalf (which is why I may be leaning towards purchasing here) but I'd need to use a management company if I purchased elsewhere.
OP posts:
bertieb7 · 17/03/2021 12:17

@BananaSpud I love the management company I use, and to be honest, although it is an extra expense I would probably have it fully managed even if I lived there as being a good landlord is a lot of work - I don't have the time to do it well and don't think I would enjoy it. I really don't think you should pick based on an offer to manage it as it isn't a huge cost and you never know what might happen in the future- they might want to charge or might exit the business. That being said, Edinburgh is a great place to have a buy to let in my experience. I have been tempted by glasgow as the property prices are lower but don't know the market and best value areas as well as I know Edinburgh.

maggiethecat · 22/03/2021 16:14

@BananaSpud
I have been disappointed by management companies in the past and eventually opted for self management but as pps have said this is not for everyone for various reasons.

With my Edinburgh property I used a well known company which did a reasonable job but tbh the flat is in a well run new build development and really didn't require much management.

I would say that it depends on the type of property you get - if it is an older type, requiring a lot of attention an agent might be useful in this situation because of the effort/time required.

If newer property, you may get away with family doing it. One thing I would highly recommend is a heating/plumbing service contract with someone like British Gas - annual fee which you can pay monthly and covers your gas certificate and you can have a contract for unlimited calls out.

Bard6817 · 22/03/2021 19:48

OK - this is sage advice I received from a real property developer...

Buy in a location you like - because if you get more than one BTL - you are going to be visiting it, probably more than you think.

Anyone who does BTL with multiple properties, ends up setting up a property management company too... So don't think its a buy it and leave it to the agent situation..

Find someone who does this already, that you know & trust... There are a LOT of things that aren't published on the internet, in how to make this really work for you... The best estate agents, lawyers, accountants and mortgage brokers are referred and if you are vouched for will show you how to arrange this in a manner where you ultimately can recoup your deposit.

I once got involved with an existing building, in certain zone, with a LLP, which allowed me to get a tax rebate equivalent to my deposit and after 5 years, I got my full investment including the deposit back, as well as my share of the profits from the property involved. Tax laws change and this one was identified by mr HMRC as not being in the spirit of what investments they were hoping for, but these types of situations do still arise given the right incentives in infrastructure are created by (a) govts looking to build their way out of bad situations and (b) tories. if anyone says anything about parties other than tories, all I will say is, we get more loopholes under labour, so I kinda miss those guys...

Anyway... Get talking to your inner circle and find the right contacts... Otherwise, the costs, the wrong agent, the awful tenant, the poor lawyer, or a useless broker, is going to make this much less profitable for you, assuming you can make a profit, given you are doing it leveraged.

Good luck...

Skinnytailedsquirrel · 19/04/2021 23:52

@bertieb7 How are you calculating your yield as 9% sounds unbelievably high?

Bard6817 · 20/04/2021 07:38

@bertieb7 Good point - i am aware of yields in excess of 9% but only after years of rent increases. One point my dev friend made was that high rents result in rent’er turnover, he prefers lower rents by a few hundred pounds, because they stay longer and take far more care of the property because they get a good deal. It’s something i heard decades ago but still true today.

Skinnytailedsquirrel · 20/04/2021 09:27

Mmm so many people don't know how to calculate yield that it gives a false (dangerous) impression.

In UK most yields are around 3% (maximum) and even that often doesn't include all the expenses that landlords forget about.

Mabelene · 20/04/2021 09:36

We have 3 BTL flats, had them for 3-4 years. They’re near Glasgow and yield 8% net with virtually no void periods, the last time we changed tenant one moved out on the Thursday and the new one moved in on the Friday. We don’t have any mortgages which helps, and they are all managed by the same letting agent

Bard6817 · 20/04/2021 09:45

@Mabelene Thats phenomal, well done. Getting 8% net, after letting agency fees, maintenance, and so on, is simply brilliant business. Well done.

Mabelene · 20/04/2021 09:56

Thanks, we were lucky that we bought at the right time, took a risk on an auction property etc. We’re abroad and haven’t seen any of them, but we know the area and still have family there. I had pretty strict criteria of what we would and wouldn’t consider

Pyewackect · 20/04/2021 09:57

Anywhere on the south or west coast.

murbblurb · 20/04/2021 10:01

Scottish rental laws are different - section 21 has already gone there.

My real not-London yield after all expenses is about 3.5% . Still considerably higher than anything outside the stock market.

Skinnytailedsquirrel · 20/04/2021 10:22

I think some of you are confusing capital appreciation with yield.

Yield = annual rental income for that property. Then, divide this by the property value. Finally, multiply the figure by 100 to get the percentage.

So, if your annual rental income was £12,000, and the property was valued at £200,000, your rental yield would be six per cent.

Otherwise I'd be saying that I was receiving 2.356.30% on some of my dividends from shares.

Mabelene · 20/04/2021 10:25

My figures are yield not capital appreciation. The capital appreciation is much higher

murbblurb · 20/04/2021 12:25

If you calculate yield on just income you will indeed get a higher figure. But daft though, like assuming your gross salary is all there to be spent.

Mabelene · 20/04/2021 16:45

Again, my figures are net of running costs

stalachtiteorstalagmite · 20/04/2021 17:03

If you buy somewhere to Airbnb in Edinburgh you'll probably be able to make enough during the Festival to pay the mortgage for the whole year.

murbblurb · 20/04/2021 22:00

I'm impressed. But the super cheap ex auction place isn't for me.

Mabelene · 20/04/2021 22:47

Horses for courses