Buy House or Flat to let out

[Mollyeyes]

Hello
Do you think it’s best to buy a house or a flat to rent out? If flat will 2 bed or 1 bed be easier to rent out? Thank you

Only do this if you can afford to meet the mortgage payments should the tenant stop paying and afford to repair a property if left in a bad way! It takes a long time to remove a tenant that is not paying - especially in current times.

And if it's between a flat or a house, make sure you factor in service charges and ground rents into your maths... re 1 or 2 bed and house or flat well that depends on the market where you are... how much is difference to buy vs how much difference can you let it for

Depends on location.

Most people want more space and a garden in current times. Flats have been awful for those in isolation.

Also depends on the tenants you intend to attract, high end would mean the bills are paid, Lower end receive benefits so there’s some cushion. Middle could lose their jobs once furlough has ended.

I wouldn’t even consider it until Brexit is fully understood.

@Mollyeyes I don’t know which area you’re looking in but I found a property in my budget in E Miss that was already set up as a House of Multiple Occupancy. Little more complex initially but much lower risk (even if a couple of the rooms are empty for a short while I still have income from the others). Could be worth investigating.

E. Mids 🤦‍♀️

Do you actually live in the East Midlands or close by? You will need to be able to visit the property regularly and easily to sort out tenancies and problems that occur.
I'm a landlord (not of HMO's) but imagine that they are probably high maintenance in general in terms of repairs and legal requirements.
Are you good at DIY and general repairs? If not, you could be forever paying out for workmen to do repairs.
Do you already own your own home? It's unlikely that you'll get a buy to let mortgage without already being a home owner.
You also need to look into the tax implications taking your own circumstances fully into account. Contrary to popular belief on Mumsnet, there actually isn't much profit to be made in letting out a property if your personal tax allowance is already taken up by your job. (There have been big changes to the tax relief system phased in over recent years).
You also need to consider that property prices will most likely fall at least in the short to medium term once the stamp duty holiday finishes and the costs of the pandemic need to be recouped by the government. Although the price of the property will probably increase over the longer term, (and it doesn't rise much at al in some areas) I imagine the gov will look to raise capital gains allowances even more in their favour to pay for the pandemic and Brexit too.
Consider carefully, as you also need a very plump financial cushion in the event that you have tenants who stop paying the rent.

Things like repairs (not improvements) and service charges etc can
be set against tax . It is a legal and financial complicated matter with
rules and regs changing daily and like others I would advise against doing it with a mortgage .
The govt is set to make it like La housing eg difficult to get tenants out zero deposit etc so many smaller lls will be squeezed out of it.
You need above all to find out the type of tenant available for your
property. A small house will attract a family who will stay longer.
All depends on the local area

How much have you read up on being a landlord? Obviously there are lots of websites devoted to it which are much more specialised than MN.

You need to appreciate the tax implications when buying, getting income and when selling. You need to understand your legal obligations and appreciate how important it is to fully meet these and run professionally rather than amateurishly. You need to ensure you can cover any voids and the cost of redecorating (and possibly worse) between tenants and have plenty put aside for these things.....you just cannot tell tenants that you cannot afford to replace the boiler or whatever....if they pay rent you must provide the service they pay for.

Do you need a mortgage? If you do, especially of any higher LTV, it’s very hard to make money these days with all the extra regulations and costs. Realise the government will probably make tax more punitive and regulations tighter and more costly too. Lots of 1-property landlords have sold up in the last couple of years and are continuingto do so.

The key is to read loads. Read all the websites and thoroughly research your local area. Each area is a bit different and MN cannot give you a standard answer that applies to everywhere.

Whilst there are all these costs and tax and management issues to think about I do think bricks and mortar are a good investment both long term and short term (as long as cash flow available for the down times). You can use an accountant to deal with your taxes and pay a management agent to manage the properties for issues and regular items like gas certs etc. btl mortgages are very competitive so whilst they are not able to be offset against profit for income tax they can come in pretty low...

How much research have you done into becoming a landlord?

I've been getting progressively more angsty messages from the BTL brigade who own in my block of flats over the course of the year.

It certainly isn't the surefire pension income they expected. Maybe they were naive but they don't seem to have the resources to cover voids (3 months + in some cases) or a willingness to negotiate down rents.

And yes, the service charges still have to be paid along with all the additional costs associated with fire safety emerging post Grenfell.

Thank you everyone with your valuable comments and advise. I am looking somewhere in London or surrounding London areas. We will happily do any maintenance and visits to the property. Flats do have service charges and ground rents however houses don’t. Looking to invest in long term with very small mortgage. Like to know which is better and whether 1 or 2 bed flat more easier to rent out. Thank you

But there’s no straightforward answer to this. It depends on the area and your target customer and budget. Go onto one of the landlord websites and ask about very specific areas for more help, ask local estate agents, track local markets on RightMove.

Rents are falling in London as people are moving out due to working from home. A 2 bed property would be easier to let out to a family or a couple/single person who want an office, and a 1 bed might be better for a working couple or single person who are/is unemployed or employed out of the house.

The government is hammering landlords for every penny they can get out of them. It's difficult to get non-paying tenants out so you'd be best to wait until you can find a tenant with an employed, home-owning guarantor who will sign a deed of guarantor. There is a lot more paperwork these days and you can be heavily penalised for non-compliance. If you let via an estate agent, YOU are still responsible for meeting any legal requirements, including securing the deposit in a scheme.

Calculate your yield - there are websites that'll do this for you. Work on 75% occupancy as a rough guide as this includes repairs.

If you intend to increase your portfolio it might be an idea to consider starting a ltd co, for tax reasons. Seek professional advice.

I'm a landlord and due to all the government's clobbering etc over the last few years, I've decided to invest elsewhere. Being a landlord is, considered by many landlords, to not be worth the stress. Most of the landlords I know are selling up as properties become empty. This does mean, however, that rents are going up. I let a property 18 months ago. The tenant has just moved out and the going rent is 20% more than I was asking 18 months ago. I'd like to charge the lower rent, but due to tax changes I will have to put the rent up to cover this.