How do we go about this?!

[Pomeranio9834]

We have a plan... but no idea about how much it will cost, the logistics, the ins and outs etc. Completely clueless.

DP has a flat - bought for £97,000. Approx. £82,000 left on the mortgage. Currently being renovated. Plan was to put it on the market however it in looking increasingly likely that due to the current property market it will not sell for anywhere near what he bought it for.

I rent a flat.

The flat below the one I rent is up for sale. It is in a lovely, ideal area but it is an absolute hole. Look like somebody died in it. On the market for £80,000 but it's been up for so long (And I've never seen any viewings) that we think we might be able to get it to £70,000.

What we think is the most sensible thing to do Is to rent his flat out, and buy the place downstairs.

However, without the equity from his flat we only have £10,000 savings. Some of which needs to go into renovating his flat (mostly just cosmetic stuff), plus deposit, solicitor fees and making downstairs habitable.

Once we aren't both paying two lots of rent/mortgage/council tax/gas and electricity we should have plenty of spare income however... but the downstairs flat isn't even habitable (imo).

Can these be done? How do we do it? What does it all mean if I will be a first time buyer but he will then have two mortgages?!

I really need to go and speak to a what... mortgage advisor I guess? But at the moment it seems pointless until DPs flat is renovated and I'm closer to the end of my lease.

Any help woukd be appreciated

Could you not move into dp flat while you are renovating the new flat you buy? That means you have more time to renovate. 10 k deposit on an 70 k flat should be fine

Wow. Why hadnt I thought of that........ duh

I mean, I don't really want to because it's ages away from my work and it's not in a very nice area snob and it's bloody freezing all the time but that could work as a last resort

Plus ideally, I want to move straight from this flat into downstairs so I can literally just carry my stuff downstairs and put it away but thats not mandatoey obviously just very convienient

Ha ha. But how much would you free up each month to put towards the renovation if you moved out...? I very much doubt you will make any profit renting out your oh flat with a big mortgage on it. And even if you sell it sounds like you may walk away with nothing?

Does he know all the responsibilities of being a landlord.
What would happen if the tenant stopped paying the rent/trashed the place.
Are you keeping it on the assumption that property prices might increase rather than continue to decrease further

We would probably be looking st around £1200 saved after you factor in paying for the mortgage downstairs to put towards renovations.

DP is a tradesman so can do lots of things himself.

I think we are thinking of doing it through a letting agent... which would negate the very small profit we would make on renting it out (around £75) but take the pressure off a bit.

This is all assuming property prices rise again as well yes, they're the lowest they have been for as long as most people can remember around here so can't see it Gerri g much worse but that is also a possibility

i would say go for it but i would put in an offer of 60k first for negotiation and then go up in 5s until 70k but no higher.

What do you mean by £75 profit? He'd need a buy to let mortgage or his bank to agree to letting the place out. He'd need landlord insurance, boiler inspections + pay the usual service charge etc. You'd need a buffer in case things break or tenant stops paying. Also look into taxes on rented flats - they are changing to discourage landlords and make it very difficult to turn a profit.

So look at the finances - if you were to subsidise the rental flat with the rent not covering expenses, it could be easier to just cut your loses now and get something nice together.

Have you looked into the tax changes that are coming in for landlords? Could negate the small profit you think you are going to make. DP and I looked into something similar but he is a tax accountant and decided that by 2020 it would actually be costing us to rent out a second property.

In addition to the above you need to consider higher stamp duty on a second property.
While it sounds like a great plan in theory, it’s looking like the finances might not stack up for you. Is it possible for you both to live in DPs flat and work on paying the mortgage down for a bit?

I think it sound doable? If you can get the mortgage numbers you need.
The economy version would be to buy downstairs, move into your DP's Flat (while weeping at the wasted move!) do the new place up and then decide what to do with DP's Flat. If you are a fan you could potentially buy the new place alone, to avoid stamp duty hell?
Put 4K in a LISA today, and the government will put in another 1k for you next week at the end of the tax year which you can use towards buying your first house!

Fan??? FTB!