Any property buffs or landlords around? I have lots of random questions............

[sweetheart]

Am looking into a project at the moment and would be grateful for anyone with lots of experience in buying / selling / renting houses.

First off:-

How much contingency should you leave for solicitors fees, land reg fee etc etc when buying a:-
1 Bed - approx £135,000
2 bed - approx £195,000
3 bed - approx £300,000
4 bed - approx £400,000

also anyone with a portfolio of houses - which size rents the best?

If you buy a 100k cash and it is worth 65k next year then what.In a fixed rate bond or in the bank you will get 7% interst atm.That is a loss whtaever way you look at it.The time to buy property for investment purposes is when you see the first price rise.Buy to let did contribute to silly prices as property was valued on its potential return.For example some dreadful houses which could be let to students at £400 per room would gross 1600 a month and this figure was used when calculating the houses value.This pushed prices up unrealistically .I have just bought a house as a family home from a buy to let landlord who couldn't let it in Brighton which has a huge student population.He has 8 other houses all up for sale only 3 occupied.I bought it at 30% what he could have got last year and 10% off what he paid and he thinks he is lucky.Def consult an adviser.

Oh let him/her buy, a fool and their money and all that.

There are new rules to do with multiple occupancy houses which can be quite limiting. I let out a five-bed house to families -- there's some law or tax (I can't remember what it is as we made this decision some time ago) which makes letting a bigger house to sharers a more difficult option.

What is your prime reason for investing? Is it the long term capital gain or the rental income?

I would try to buy a house that could be let to families as sharers as a general rule do not take care of a property in the same way. Even nurses and people with quite high incomes are no exception! That would mean a two or three bed house. I would let it part furnished ie white goods only. Or you WILL be plagued by calls about the tv table being broken etc. Unless you are going very high end a small garden, or it will be overgrown very quickly. The corporate market had become (until the crunch) very demanding: designer bathrooms, everything new, nothing tired etc. We started in the corporate market but without major refurbishment couldn't carry on in it. The bottom may be dropping out of it now anyway.

I would also advise, if you are not dependent on the rental income, marketing it and accepting offers at below the market rate in order to attract a reliable and trustworthy tenant. This would be your prime aim.

Never forget how expensive a void is. Better to drop the rent by 100 a month than sit on it for three months until somebody meets your price. IF they are the right tenants.

Also, so long as you don't need a mortgage, fine. But I would get one. You can defray the mortgage payments against tax on the income received.

I don't understand the morally wrong argument at all. Unless you are a communist. I don't really get why that is wrong. It would be wrong to be a bad landlord but it's not wrong to be a landlord full stop.

I agree with Zazette that you should read up on it a great deal first because - and I'm not trying to be mean - some of your questions seem a bit naive. If you still think it is a good idea then buy somewhere small - there are bargains to be had and you might get lucky - and be prepared for a very steep learning curve.

Most of what's been written before the last two weeks will be hardly applicable.

bleurgh the latest trend for investing in property as a pension has priced most 20/29 year olds out of the property market completely.
With very few housing association properties available it has pushed young people/couples into either borrowing too much 4/5 x salaries or joint incomes meaning the woman cannot afford to give up work if and when they start a family or if anything goes wrong they get further into debt for basic repairs etc because the mortgage is so high.
Now you obviously are a landlord and I don't know how that came about but if you were going around outbidding people on traditionally first time buyer properties I would suggest that is morally wrong, people need a roof over their heads, it's like me buying up all the bread and then sprucing up the packaging and selling it back to you at a premium or renting you a slice at a time knowing you'd rather have the whole loaf but never will have it because I've got it all.
Of course it's a free market, oh expect that BTL's aren't taxed as business' but they will be and lots of amature investors are in for a shock.

katie don't you think BTL are going to het their arses taxed off now the govt coffers are short all that stamp duty so someone has to pay

Lots of BTL landlords have a poor grasp of their responsibilities to their tenants, both legal and moral.

With this recession, and unemployment rising, more sob stories will emerge. Another "Cathy come home" or the exposure of a Rachman-type, would be enough to swing public opinion against landlords. I've noticed that the people who used boast about their exploits at dinner tables have already stopped mentioning it won't belong before they are ashamed to admit their role.

I know that BLT's are going to get taxed to the hilt and people will be desperate to get out of that business but will be stuck.
People will be abandoning properties soon mark my words.

I think a lot of buy to let people over-stretched themselves because they didn't have a lot of excess cash to start with. They will be ordinary people who will hurt as much if not more as many others. I detect Schadenfreude. They may have jumped on a bandwagon but they were encouraged to do so with a poor understanding of what could happen.

I am a landlord and a very good one. I don't boast of it at dinner tables and I didn't outbid any young families or single mothers or whatever you like. That's an excess of prejudice.

Being a landlord is not a bad thing, and buying a property to improve and let it out is not a bad thing. If you do them badly then that's a different thing.

It isn't a case of actively outbudding a young couple it is the fact that BTL caused artifcially high prices on houses that otherwise would have been cheaper for 'regular' buyers.If you can get 1k a month in rent for a property set the value

I was responding to Katie DD who said that.

The people buying the properties were not by any means all "loads of money" types. They were often trying to get themselves some security and a pension. The only two BTL people I knew were not rich..wealthy..affluent or even well off. With one the rent didn't cover the mortgage. They were trying to plan for the future. I profoundly hope they have not been stuffed out of sight.

TBH i'm sure all of them weren't but even the baby boomers who used equity from their own houses to artifically inflate house prices and push them out of the reach of families, single mums etc etc are to blame whether they like it or not.
Property is shelter, not a pension and those who stretched were just plain greedy.
I know a few flippers and btl people who are frankly toast.

KatieDD - could you tell me what it is ethically OK to invest in ? You may like to know that many traditional pension and investment funds invest extensively in residential property as well as industries that exploit third world labour and economies, pollute and of course contribute towards our current financial chaos.

Incidentally, according to the Nat Housing and Planning Advice Unit, BTL has only increased prices by 7% over the past five years...

KatieDD - could you tell me what it is ethically OK to invest in ? You may like to know that many traditional pension and investment funds invest extensively in residential property as well as industries that exploit third world labour and economies, pollute and of course contribute towards our current financial chaos.

Incidentally, according to the Nat Housing and Planning Advice Unit, BTL has only increased prices by 7% over the past five years...

How lovely for you, I hope you enjoy that feeling.

Where do you think the equity came from? It came from the massive rise in house prices which certainly began before BTL. There must be some truth in what you are saying but it's not the whole story. Perhaps you have a bitter experience of your own which colours your view.

People of all kinds are hurt by this. "Plain greedy" is very harsh. You can't sit in judgment on everyone who tried to improve their income.

I hope you're not badly affected by what's happening at the moment. Actually if you are seeking to buy a house this could be good for you. It's terrible for some people but for first time buyers, not as bad.

Don't forget a lot of people will profit very heavily from this crisis, and will be boasting about it at dinner tables within a year. It's not the comeuppance some may hope for.

And it could happen to you -- you could buy a cheap house now, possibly repossessed from someone else's tragedy, and see the value rise unbelievably.

Will you feel ashamed?

What feeling ???

Free market conditions at the end of the day mean that there are always winners and losers in every market. However recently the fact that BTL's have used interest loses against taxable income which no other business is allowed, the fact that they can wriggle out of capital gains tax by pretending to live in the house for 6 months has all meant an unlevel playing field.
I agree there are plenty of unethical investments you don't have to look hard for them, doesn't make it right though.

Blimey - i only meant to ask a few questions, didn't mean to start a debate!

Yes I am naive - about the whole thing. Property is something I have always been interested in and I am fortunate enough to be in a position at work where I can suggest business proposals and investment ideas.

This idea has only been discussed for the first time today and whilst doing other research I though MN would be a good place to speak to people who may have actually done what we might be thinking of doing - I have to get a business plan together first and see if it's worth while.

I have to say I do think Katie that your views are a little primative and that most enterprises come from a lack of something or a need for something which can often be of detriment to a 3rd party. Thats life I'm affraid.

Which other businesses have been unable to useinterest on loans against tax - they have very bad accountants if they don't.

And I don't think a well-managed, fairly priced rental flat is unethical. Plenty of landlords subsidise rents and renting is almost always cheaper than buying regardless of market conditions.

You just seemed to relish the "toast" bit. Perhaps I over-presumed.

The mortgage and mortgage interests are costs. They are defrayed against tax.

I don't know about the wriggling bit. Maybe people have done that, but then you should be pleased they are finally using their shelter. And you can only do that with one property at a time. It would exclude multiple property landlords (who I would guess are the ones you see as the big bad guys).

Yes you are right the need for shelter is pretty primative www.shelter.org.uk/give_money/shelter_charity?appeal=0810902
Bloody shame when a 9 year old has her first proper home though isn't it.

If landlords are subsidising their tenants that's a poor business plan in my opinion.

And yes I apologise other business' can claim the interest, my mistake.

Lots of people actually want to rent as opposed to buy. People on temp contracts, young sharers who don't want to live with parents, students, recent graduates who haven't decided where to live, couples who don't want the commitment of a joint mortgage but want to live together. If you move to a new town for work, there is little point in going to the council and putting your name on the housing list. You have to rent privately. There is a lack of social housing for people who want to rent or for people who will never be able to afford to buy (because they don't work or work for very low wages, not because of capitalist landlords boosting the prices). BTL has undoubtedly pushed up the price of traditional starter homes but so has divorce so a family now has 2 homes instead of 1 and the way people point and laugh at anyone over the age of 17 who "still lives at home". BTL investors are filling the void left by the lack of investment in social housing after the right to buy was introduced. The artificial boost in prices has not been good for people who are trying to get on the ladder but the availability of good quality privately rented property is a good thing for those who want/need to rent.