Buy to let advice not for profit

[Idefix]

Thinking of doing a buy to let for the first time. We currently live abroad and plan to do so till 2018. We sold our previous property in uk a couple of years ago. Now decided where we will be rebasing and wondering whether a buy to let (that we would eventually move to) would be do able (seeing financial advisor in a couple of weeks and don't want to look like a complete numpty) in our circumstances.
From initial research we would not make a huge profit, about £800 a year but would be back on property ladder, in theory property might increase in value. WWYD? Friends are saying its better to be back on the ladder, but we are v financially naive.

Its not a terrible idea, BUT it could go really wrong, so ou need to be really careful.

First, choose the right house - location, price, rentability, fairly maintenance free, hopefully in an up and coming area for added capital growth. These criteria may not match with the sort of house you personally want to live in.

You need to be absolutely sure what rent you can get. Dont just ask the agent selling you the house. Letting individual rooms is usually a better income, but is very hard work. So a small family house is generally better.

You would need to fix the mortgage rate until 2018, so you know exactly what thats going to cost you.

Then there's the rest of the costs: insurance (£200pa), management fees (10% of rent + VAT), gas safety (£100pa), maintenance (est 10% rent).

Certainly not for the faint hearted and you would need perosnal income to see you through probable tough months when its empty, or tenants dont pay, or the boiler breaks...

Check your tax liability. You would have to file a return in UK even if with any other UK income you fall within the 0% allowance and you may be liable for tax on the property as an asset where you currently live. It also may not be as easy to get a non resident mortgage as it once was.

remember the other insurances: legal expenses, malicious damage, rent guarantee, landlord emergency cover as you can't be there to fix things.

tax - if you make enough profit.

not necessarily a bad idea but make sure you cover everything.

LIZS We are liable for uk tax as we are exempt fro host country tax system (DH affiliated with mod). Financial advisor man says there will be no issue with a mortgage, but won't have as wide an option.
We are looking in an area where my bil will be able do general maintenance but will be using a local agency to manage the letting.
The area has a steady amount of letting, but is quite mixed with homeowners too.
A big motivator for us was that we returned to the uk three years ago with a view to staying put, but having lived abroad for three years we had no credit rating to speak of and found it very hard to find a mortgage. In the end we scarpered back to here before moving would effect dc education.
I think the pros out way the negs, Specialsubject are those all separate insurances to landlord insurance? It is these hidden cost that we worry about.
We would be able to fund rent less months, although clearly not the aim of plan.
Thank you all for the food for thought.

malicious damage is included in some landlord's policies - note not those from Direct Line and other big names. Most tenants would not dream of wrecking a place; but if you get one that does they can cost you a shedload of money, and because they are legally in the house normal cover won't work.

you need the legal expenses cover in case you get a tenant that won't pay and/or won't leave after proper notice; it takes four months, bailiffs and court time to get them out.

rent guarantee is if the tenant stops paying.

and unless your brother-in-law never goes more than a few hours from the place, is never ill and is never on holiday you need some kind of maintenance cover. While tenants don't get a 'this-instant' fix (same as home owners) you can't make them wait for 2 weeks until the fix it man gets home.

BTW all income arising in the UK is liable to UK tax for everyone, subject to the usual allowances.

Passthecake30 how do you know my bil!?
Although the two week wait sounds about right too. We have only heard a horror stories from others in our position of the "returned overseas to find the house uninhabitable" variety.
I feel a big goggle coming on tomorrow to gather more facts. Thank you for the heads up.