Help me with these figures and whether they make sense in the current climate

[soupyspoon]

A property for 100k or 110k - these are 1 bed flats

Rented out for 700 to 750pcm - these are the ones with tenants in situ

Service charges very varying, some are around 2k a year, some are only about 800 a year, ground rent very low

A mortgage free property that we own, ball park figure around 300k

Could borrow around 80k for about 600pcm over 15 years
Could borrow around 80k for about 820pcm over 10 years
Could borrow around 110k for about 820pcm over 15 years
Could borrow around 110k for about 1200pcm over 10 years

The figures of borrowing the 80k are based on a mortgage of 80k on a property of 110k
The figures of borrowing 110k are based on a mortgage of 110k on a property of 300k (our property which could be remortaged)

I used a 5 year fixed of about 4.1%.

Does it make any sense to buy a small flat to let out or to buy it to keep as an investment/for the kids. Even if prices increased over the 15 years and went up 20% thats only about 20-22k. We would pay that in interest Im assuming/charges/taxes? It wouldnt make any money as such would it?

Am I missing something?

You need to add all costs apart from a (buy to let) mortgage to work this out. Eg letting agent, landlord responsibilities such as energy and gas safety certificates, buildings insurance, then an amount for maintenance. Add income tax on rental income profit.

I don’t know why you’d do this tbh. Am too tired for the maths but it looks like a lot of hassle for little to no return.

Yes it seems that way

Buidlings insurances is included in the service charges.

How is profit worked out, say the mortgage was 820pcm but the rent only 700, is there tax to pay on that? This would be repayment not interest only.

What about CGT if it gets sold after 20 years or so, how is that calculated?

This feels like a job for ChatGPT

I never remember about AI, so I have fed it in. Its a long answer and I havent got the brain power to read the answer!!! So I'll look tomorrow morning and see what its telling me!

I also forgot about stamp duty I wonder if it will notice

All the information you are asking about is available from more trustworthy sources online.

You should use them.

www.riftrefunds.co.uk/blogs/what-is-rental-income/

Seems like it would be a lot easier to just save £20k in 15 years.

You don’t get to deduct your capital repayment part. How much interest you can deduct from your ‘profit’ depends what your marginal rate of tax is (after including the full rental income minus allowable costs but not interest).