Buying a house to let out?

anything I don't mind · 4 Mar 2015 at 17:03

I am currently renting at £750 a month in romford. I wondering what advice people may have on my current situation.

My dad is going through a nasty divorce and may come away with just half the equity in his house about £6k. If i had 7k-10k deposit at this point in time i could get a first time buyer mortgage up to about £180k. I could not afford to buy anywhere in London and with a larger house 3 bedroom for example i could rent more rooms out than if i just bought a one bed flat in london area. With the idea that i get the mortgage and my dad lives in it and pays the mortgage and also gets in some lodgers to pay for the mortgage. The issue is that he lives/works in Southampton. I have been looking at prices and its a lot better than near me, obviously. I can get a 2-3 bedroom semi detached house for £160k-180. The mortgage payment would come up to £900 per month i think. Do you think this sounds like a win win for me with minimal risk and should I definitely go for it? I guess the biggest risk is that my dad loses his job and i have to pay for my rent and mortgage and if we don't have any lodgers as well, obvious risk of not being able to afford both houses and being forced to move down to southampton and commute up to london every day. I work with a guy who does it everyday, so not impossible.

LordSplodge · 4 Mar 2015 at 17:18

anything I don't mind said:
I am currently renting at £750 a month in romford. I wondering what advice people may have on my current situation.

I think you Southerners have the rough end of the stick.

neil_g · 4 Mar 2015 at 17:18

southampton central to waterloo is definitely commutable. should be about 1:30 depending on the service you hop on. monthly season tickets start at £420 and annual start at £4400 (depending on destination zone).

re-renting, the popular student accommodation are just north of the station. personally i wouldnt like to live in with them in that area.

you could aim closer to the hospital (shirley area?) for student nurses/hospital staff but you start getting a reasonable walk from the station.

ron3003 · 4 Mar 2015 at 17:21

Nasty divorce? Don't expect either party to emerge with any equity as it'll be sponged up by their legal teams arguing over trivialities.

anything I don't mind · 4 Mar 2015 at 17:23

My initial idea was to get a 3 bedroom close to the university so that if it came to it i could still find student tenants, if my dad moved out or passed away. As he is soon to enter retirement.

I am currently paying £240 a month in train fair.

The goal i guess is to own several properties and start renting them out as people do.

ron3003 said:
Nasty divorce? Don't expect either party to emerge with any equity as it'll be sponged up by their legal teams arguing over trivialities.

It is a long story which i won't go over completely. He went to a lawyer and they said that he will struggle to find any interested because there is no money there. The house has next to no equity in it and my dad is already in debt reconciliation until november and can't sell the house until thats paid for or he loses the whole thing.

Gixer · 4 Mar 2015 at 17:26

That's a crazy coincidence. I went to view a house in Woolston recently that was being sold due to a messy break up. With regards to your other idea if you intend to buy to let then you will need a massive deposit and you'll be hit with higher interest rates. I have also read that before buying to let it is preferred that you also own your own property. In short it'd do you wisely to buy the house as you were going to live in it and not mention anything about renting out anything to anyone. I don't have an all out in depth knowledge on what you're looking to do though and what I've said is only based on what I've read when looking into things myself so don't count it all as 100% correct.

NooBish AbbZ · 4 Mar 2015 at 17:28

Interested in this. Considering looking into doing this my self in the future.

s-p · 4 Mar 2015 at 17:29

Gixer said:
In short it'd do you wisely to buy the house as you were going to live in it and not mention anything about renting out anything to anyone.

So recommending fraud?

anything I don't mind · 4 Mar 2015 at 17:31

I wouldn't buy to let or i couldn't get the first time buyer mortgage. For all record purposes that would be my main house and my dad paying the mortgage or having tenants would be done off the books. I spoke to the guy at work and he does not think that is technically illegal. Whether i want to rent another place in london has nothing to do with my main premises based in southampton. Well that is the idea.

He also said that you can get a tax free allowance if you let out rooms and make more than your mortgage up to £6k i think he said.

s-p · 4 Mar 2015 at 17:44

anything I don't mind said:
I wouldn't buy to let or i couldn't get the first time buyer mortgage. For all record purposes that would be my main house and my dad paying the mortgage or having tenants would be done off the books. I spoke to the guy at work and he does not think that is technically illegal. Whether i want to rent another place in london has nothing to do with my main premises based in southampton. Well that is the idea.

He also said that you can get a tax free allowance if you let out rooms and make more than your mortgage up to £6k i think he said.

Check the terms of any mortgage contract and see what it says.

Which property would you declare to the council as your primary residence?

You can receive income free of tax for renting out a room up to a given threshold: https://www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme.

Gixer · 4 Mar 2015 at 17:45

I guess as long as you're on the electoral role at the address in Southampton and have it as your main postal address then as long as you are careful you don't get yourself into tax issues, which it looks like you've been looking into, you'll be OK. I still wouldn't mention my intentions to anyone you will be obtaining a mortgage from though as they may see it as you would be dependent on that income. Your one downfall may come when you have to list your monthly outgoings and if you are renting somewhere else that, I assume, would have to be classed as a monthly outgoing.

It might pay to go and talk to a mortgage provider to see how much they'd be willing to loan you based on your financial circumstances. It may be that you have to end up declaring you'll be renting a room to get the figures to work. In your head it all works but mortgage providers are simply looking at how much of a risk you are and base things on that.

delta0 · 4 Mar 2015 at 18:26

Don't you need a bigger deposit to get a BTL mortgage? 75% LTV

Jono8 · 4 Mar 2015 at 18:27

Gixer said:
That's a crazy coincidence. I went to view a house in Woolston recently that was being sold due to a messy break up. With regards to your other idea if you intend to buy to let then you will need a massive deposit and you'll be hit with higher interest rates. I have also read that before buying to let it is preferred that you also own your own property. In short it'd do you wisely to buy the house as you were going to live in it and not mention anything about renting out anything to anyone. I don't have an all out in depth knowledge on what you're looking to do though and what I've said is only based on what I've read when looking into things myself so don't count it all as 100% correct.

This is why you have to be careful about advice from internet forums.

Arsonist · 4 Mar 2015 at 18:28

Just want to throw this idea out there. Bat it back if it makes no sense.
Would your dad consider commuting to work if it was mutually beneficial? Would there be any chance to buy a house somewhere between Southampton and where you live? Somewhere like Basingstoke, which is relatively affordable and offers excellent and quick travel options to both S/h and London, great for commuting. Both live in the house, and perhaps rent the third room out?

That's probably be what I would do.

anything I don't mind · 4 Mar 2015 at 18:30

Arsonist said:
Just want to throw this idea out there. Bat it back if it makes no sense.
Would your dad consider commuting to work if it was mutually beneficial? Would there be any chance to buy a house somewhere between Southampton and where you live? Somewhere like Basingstoke, which is relatively affordable and offers excellent and quick travel options to both S/h and London, great for commuting. Both live in the house, and perhaps rent the third room out?

That's probably be what I would do.

I have considered this. I looked in basing stoke and other areas and that is an option. But a) my dad wouldn't want to drive that far and b) i wouldn't want to live with my dad or lodgers, if i can avoid it. For as long as my dad has a job ideally he would pay for the mortgage or get lodgers to pay for it. Myself, with not much deposit down in the first place and not having to pay for the mortgage i would just carry on renting. If i had to, say my dad lost his job or couldn't pay the mortgage, moving in to the house would be an option but not something i would like to do.

It sounds like a waste of money renting but i am paying for my own space and a cheaper/easier commute to work. Eventually once equity is build up in the house then i may be in a better position to buy another house for myself in london rather than renting, well that is the idea.

Arsonist · 4 Mar 2015 at 18:38

Ah OK fair enough. Know where you're coming from not wanting to live with parents. I do contract work and one is up in a few months - looking at maybe having to move back in with them down south until I find a new job

zegna · 4 Mar 2015 at 18:40

1. Learn how to construct sentences, that was painful to read.

2. You need 25-40% deposit to get a BTL Mortgage.

anything I don't mind · 4 Mar 2015 at 18:44

zegna said:
1. Learn how to construct sentences, that was painful to read.

2. You need 25-40% deposit to get a BTL Mortgage.

Sorry, I was trying to cram in all the info in to a short paragraph and not explain too much. As was at work and busy at the time.