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HomesickAlready 26.12.2019 15:27

Buying house in UK to rent out
 
For the last couple of years Iíve been thinking about ways to invest my savings. Looking at a lot of different options, but never settled on anything. However, I really liked the idea of buying a property and renting it out.

While talking to my parents about this over Christmas, they mentioned that thereís a house a few doors down that will soon come on the market. An old lady lived there but she passed away recently. The house could do with some work, but it sounds like it wonít be too expensive as itís quite small. Iíd expect in the region of £170,000.

Due to my parents close proximity, and the fact itís a great area, Iím really tempted to get a buy-to-let mortgage and give it a go. My parents think itís a great idea and have already volunteered to do the decorating and gardening etc.

I have enough for a solid deposit, but Iím a bit put off by the complexity of it all, with me being in Switzerland. Buying a property in a country youíre not a resident in seems problematic. Then thereís the Brexit effect as well as tax complications etc.

I spoke to the banks Iím currently with in the UK and none were interested in providing a mortgage for a non-resident. So Iíd have to go with a specialist broker.

So Iím wondering if anyone has experience buying a house in the UK to rent out, while residing in Switzerland?

Guest 26.12.2019 16:06

Re: Buying house in UK to rent out
 
I don't see a profit that weighs up to the hassle of doing it like this. Also do not underestimate maintenance costs if you have to call a company for every broken switch or heater problem.

Blueangel 26.12.2019 19:28

Re: Buying house in UK to rent out
 
Buy to let mortgages are changing at the moment, so that's not a route I'd currently look to go down...
https://www.moneysavingexpert.com/mo...-let-mortgage/

If you're a British citizen (passport holder), there should be few blocks to you buying an investment property in your home country.
Quote:

Originally Posted by HomesickAlready
Due to my parents close proximity, and the fact itís a great area, Iím really tempted to get a buy-to-let mortgage and give it a go. My parents think itís a great idea and have already volunteered to do the decorating and gardening etc.

Take your parents' volunteering with a huge pinch of salt. Redecorating a full house takes time and a hell of a lot of effort. You're probably looking at a week just to strip wallpaper and get all surfaces ready to be decorated.

What you think of as being 'a great area', may not be a key area for the rental market. Know your target market and what facilities they need close by. Check what other rentals are currently available and how long they stay on the market. Zoopla is good for this, but you need to do a few months worth of regular research to get a real feel for the market.

As for the tax implications, as long as you don't earn enough rent to meet the minimum income tax bracket in the UK, you can get a UK tax exemption form and just declare the income on your Swiss tax forms.

Don't underestimate the time, involvement and commitment involved in doing a full refurb.

We decided our UK house (which we already owned but which needed work because we'd lived in another part of the UK for 2yrs prior to moving to Switzerland) was ripe for refurb and letting out. The deciding factors were it's excellent transport connections, having 5 OFSTED 'Excellent' schools within 1 mile radius, shops within 300ms, town centre 1.5miles away and being 20mins walk from a large hospital. Both sets of tenants we've had work at the hospital.

My research found that there was a huge gap in the local market for rentals that allow pets, so throughout the refurb we followed the guidelines in the 'Lets for Pets' handbook which is available for free from here https://www.letswithpets.org.uk/ Both sets of tenants have/had dogs, hence no wood panel floors and top quality vinyl flooring instead in kitchen, conservatory and bathroom.

We did a full refurb on a 2 bed semi, resisting the temptation to convert it into a 3 bed. OH set the budget at £40k with a £15 contingency. I brought the refurb in at £36.5k including my repeated flights back and forth, and quite a number of car hires whilst I project managed it. Because I didn't anyone close by who could project manage, I spent about 3mths on site in total with only a bed, camping table, office chair and microwave. Luckily, you'd have your parents close by. ;)

Ours was my first full refurb project. It was exasperating and exhausting, but I'd definitely do it again. It's an addictive process, and you learn a lot from the mistakes you make along the way. Best bits - stripping wallpaper (strangely love it!), ripping up old carpets, huge learning curve. Worst bit - letting go in the hope that your tenants will look after your investment for you. We've been really lucky with our tenants so far, thanks to an excellent rental agency, and the longest time the house was without tenants was 38 hours. Yes...you read that right! It went on Rightmove at midnight on Friday, and by 14:00 on the Sunday, we had a signed contract and deposit paid.

Good luck and be sure to make the right decision for you.

Guest 26.12.2019 20:43

Re: Buying house in UK to rent out
 
So how was your account credited on a Sunday i wonder ?


The deposit might have been advised, but it certainly wasn't in your account physically before Monday morning !

fatmanfilms 26.12.2019 21:20

Re: Buying house in UK to rent out
 
Quote:

So how was your account credited on a Sunday i wonder ?


The deposit might have been advised, but it certainly wasn't in your account physically before Monday morning !
UK faster payments work on Sundays, once the money is there it's there, nothing provisional about it.

Blueangel 26.12.2019 22:48

Re: Buying house in UK to rent out
 
Quote:

So how was your account credited on a Sunday i wonder ?


The deposit might have been advised, but it certainly wasn't in your account physically before Monday morning !
It went into a tenancy deposit scheme via the rental agency account, not my personal account.

Jim2007 26.12.2019 23:01

Re: Buying house in UK to rent out
 
Quote:

Originally Posted by HomesickAlready (Post 3132599)
For the last couple of years Iíve been thinking about ways to invest my savings. Looking at a lot of different options, but never settled on anything. However, I really liked the idea of buying a property and renting it out.

While talking to my parents about this over Christmas, they mentioned that thereís a house a few doors down that will soon come on the market. An old lady lived there but she passed away recently. The house could do with some work, but it sounds like it wonít be too expensive as itís quite small. Iíd expect in the region of £170,000.

Due to my parents close proximity, and the fact itís a great area, Iím really tempted to get a buy-to-let mortgage and give it a go. My parents think itís a great idea and have already volunteered to do the decorating and gardening etc.

I have enough for a solid deposit, but Iím a bit put off by the complexity of it all, with me being in Switzerland. Buying a property in a country youíre not a resident in seems problematic. Then thereís the Brexit effect as well as tax complications etc.

I spoke to the banks Iím currently with in the UK and none were interested in providing a mortgage for a non-resident. So Iíd have to go with a specialist broker.

So Iím wondering if anyone has experience buying a house in the UK to rent out, while residing in Switzerland?

This all sounds like some random thoughts rather than a plan. Lets suppose for a moment that the property market closes the day after you buy and you are forced to own it for the foreseeable future, how would that impact your future?

- Would be happy to be stuck with it
- Would you be able to live there
- What is the jobs market like etc.
- Would the income from it be worth while
- Do you intend to live somewhere else and might need the capital you sunk into it to buy somewhere else?
- What happens when your parents pass on, would you still be happy to own it

Buying a house is not something you can quickly back out off if you decide it was a mistake. So I would not just jump at the current opportunity just because it the first one you have seen.

HomesickAlready 27.12.2019 02:46

Re: Buying house in UK to rent out
 
Quote:

Originally Posted by Blueangel (Post 3132629)
Buy to let mortgages are changing at the moment, so that's not a route I'd currently look to go down...
https://www.moneysavingexpert.com/mo...-let-mortgage/

If you're a British citizen (passport holder), there should be few blocks to you buying an investment property in your home country.
Take your parents' volunteering with a huge pinch of salt. Redecorating a full house takes time and a hell of a lot of effort. You're probably looking at a week just to strip wallpaper and get all surfaces ready to be decorated.

What you think of as being 'a great area', may not be a key area for the rental market. Know your target market and what facilities they need close by. Check what other rentals are currently available and how long they stay on the market. Zoopla is good for this, but you need to do a few months worth of regular research to get a real feel for the market.

As for the tax implications, as long as you don't earn enough rent to meet the minimum income tax bracket in the UK, you can get a UK tax exemption form and just declare the income on your Swiss tax forms.

Don't underestimate the time, involvement and commitment involved in doing a full refurb.

We decided our UK house (which we already owned but which needed work because we'd lived in another part of the UK for 2yrs prior to moving to Switzerland) was ripe for refurb and letting out. The deciding factors were it's excellent transport connections, having 5 OFSTED 'Excellent' schools within 1 mile radius, shops within 300ms, town centre 1.5miles away and being 20mins walk from a large hospital. Both sets of tenants we've had work at the hospital.

My research found that there was a huge gap in the local market for rentals that allow pets, so throughout the refurb we followed the guidelines in the 'Lets for Pets' handbook which is available for free from here https://www.letswithpets.org.uk/ Both sets of tenants have/had dogs, hence no wood panel floors and top quality vinyl flooring instead in kitchen, conservatory and bathroom.

We did a full refurb on a 2 bed semi, resisting the temptation to convert it into a 3 bed. OH set the budget at £40k with a £15 contingency. I brought the refurb in at £36.5k including my repeated flights back and forth, and quite a number of car hires whilst I project managed it. Because I didn't anyone close by who could project manage, I spent about 3mths on site in total with only a bed, camping table, office chair and microwave. Luckily, you'd have your parents close by. ;)

Ours was my first full refurb project. It was exasperating and exhausting, but I'd definitely do it again. It's an addictive process, and you learn a lot from the mistakes you make along the way. Best bits - stripping wallpaper (strangely love it!), ripping up old carpets, huge learning curve. Worst bit - letting go in the hope that your tenants will look after your investment for you. We've been really lucky with our tenants so far, thanks to an excellent rental agency, and the longest time the house was without tenants was 38 hours. Yes...you read that right! It went on Rightmove at midnight on Friday, and by 14:00 on the Sunday, we had a signed contract and deposit paid.

Good luck and be sure to make the right decision for you.

Some really great points here, so thanks for that. I'll try to address them.

In terms of my parentsí input, they're both newly retired so they have been looking for projects to occupy themselves. Although I completely agree that I can't exactly rely on them to do the majority of the work. But my mum's idea of a holiday is visiting my uncle's house for a week and completely redesigning their garden the entire time. She's weird.

I also have a few other relatives locally including an electrician and a chippy who has a lot of experience with fitting custom kitchens and the like. Both said theyíd help me out as a favour.

For the area, it is known to be quite desirable, but certainly not as appealing as your place by the sound of things (5 schools with excellent Ofsted ratings within 1mile :eek:). In my case there are plenty ranked as good within 1km, with a couple just 400m away. This is the street I grew up on, so I know the area quite well and I can certainly investigate the criteria you mentioned. There's a university (consistently rated as top 10) just 800m away and the town centre is less than 1km away too. A lot of our neighbours are either studying or working at the university.

From a research perspective, I am certainly at the start of the process. I don't know all the facts. But I'm also not planning on jumping into this immediately.

With the taxes, I donít expect Iíll get past the UK threshold either. I will investigate the exemption you mentioned.

Your project really sounds like quite a success. It was a great idea to target pet owners. From my perspective a young family (student/lecturer) would likely be my mark.

HomesickAlready 27.12.2019 03:05

Re: Buying house in UK to rent out
 
Quote:

Originally Posted by Jim2007 (Post 3132668)
This all sounds like some random thoughts rather than a plan. Lets suppose for a moment that the property market closes the day after you buy and you are forced to own it for the foreseeable future, how would that impact your future?

- Would be happy to be stuck with it
- Would you be able to live there
- What is the jobs market like etc.
- Would the income from it be worth while
- Do you intend to live somewhere else and might need the capital you sunk into it to buy somewhere else?
- What happens when your parents pass on, would you still be happy to own it

Buying a house is not something you can quickly back out off if you decide it was a mistake. So I would not just jump at the current opportunity just because it the first one you have seen.

That's exactly what it is. I never claimed to have a solid plan just yet.

Due to being single in Switzerland I could happily pay off the mortgage myself and still be able to save some money just from my salary. I have no debts. I'm currently renting well within my means and don't see that changing anytime soon.

I certainly could live there, although I never pictured myself living on the same road I grew up on.

I would certainly have no problem finding work there. The job market on the whole seems good, and there's 3 major cities close by too.

If my parents pass on then it may be time to reconsider. But I think that's not something that's going to happen in the next 15 years or so.

doropfiz 27.12.2019 06:00

Re: Buying house in UK to rent out
 
I knew someone who had a house to rent out, much as you describe. He intended to seek out graduate students or young professionals as tenants.

Then he investiaged the laws on health and safety. He learned that if he were to rent out the entire house, it would fall under a different set of regulations than if he rented out only individual rooms (with shared use of kitchen and bathroom). He calculated the costs of the renovations that would be needed to upgrade to fulfil those extra regulations, and set that against the difference in rental income from individual rooms as opposed to the whole house. He also included the differences between "furnished" and "unfurnished".

In the end, the solution which yielded the most nett income was to retain a room designated as being for his own use, to move his personal basic stock of furniture (bed, desk and wardrobe) into that, to lock the door, and to rent out the remaining rooms individually.

I don't know the details, nor which differences in regulations applied, nor what the building modifications would have involved. I set it out here merely as something perhaps worth your investigating, as you make your calculations.

magyir 27.12.2019 10:11

Re: Buying house in UK to rent out
 
First the numbers (what success looks like to you): what yield are you looking for? Yields in markets like London are really low due to cost of properties vs. income less deductions.

I’ve recently stopped BTLing after 20 full years with two tenants staying 10 and 7 years respectively. I’m currently renovating to get the property ready for sale.

In that time I‘ve paid tens of thousands in fees and repairs. From a non-capital gain perspective my Agent has had a better yield than I have. And I’ve been part of the non-resident Landlord”s scheme from day one, and mostly under the tax-free threshold. I still had to file tax returns for the first 7 years in the UK as well as CH. And be liable for the wealth tax here.

I remained with my original non-BTL financing and just informed them when my situation changed. My financing was always around the level of inflation. You seem set to pay a premium from the outset.

The main reason I”m not continuing is my health situation, and a feeling I”m looking for an investment vehicle less subject to currency devaluation, increased regulatory attention and where on the P&L I”m doing better than my agent as I approach retirement/potential partial disability due to a recurrent illness.

I got into BTL as an accidental Landlord as I moved here within a year of buying the property new. You’re consciously considering it as a BTL from the outset which is different.

If you told us you eventually plan to move Into this property later in life that would be something. Property Investors today in the UK are moving into care homes, assisted retirement living facilities and commercial property opportunities as an alternative to BTL as the tax deductions are better. However as you grew up on this street, the future may provide there.

You may consider other asset classes to be more manageable as your “fourth pillar”, assuming that’s your investment timeline.

In the end all investments have advantages & disadvantages. Are you sure you’ve exhausted all other considerations for your capital in terms of growth potential, risk profile, coupon/dividend, portability, currency, tax treatment, regulation, and leverage/financing?

I”m not a financial advisor. My BTL experience may not be a reliable indicator of the future. Good luck whatever you choose. Fortune favours the brave :)

Enohzee 27.12.2019 15:48

Re: Buying house in UK to rent out
 
I'm not personally interested in BTL (or owning any property at this point in my life), but one thing to consider....

If you want to be a BTL investor you should treat it as a business decision and seek to get the best return you can on your capital.

This property that you found on the street where you grew up... is it likely to give you the best return you can find in the UK (or outside the UK for that matter)? Does the fact you grew up nearby add more value for you? Does having family nearby who can fix stuff / help out add more value for you?

If it were me I would be very careful with that third point, firstly because maintaining a property is a lot of work and I don't know many people who would be willing to do that for free, and secondly it could cause tension in the family which is always good to avoid.

Just my 2 cents :)

Blueangel 27.12.2019 15:57

Re: Buying house in UK to rent out
 
Quote:

Originally Posted by HomesickAlready
But my mum's idea of a holiday is visiting my uncle's house for a week and completely redesigning their garden the entire time. She's weird.

Guilty. It's a curse. :msnblush: I visualise moving walls, plug sockets, staircases, etc.

Quote:

Originally Posted by HomesickAlready
I also have a few other relatives locally including an electrician and a chippy who has a lot of experience with fitting custom kitchens and the like.

Win win!
If you get to the point of viewing the property, try to take them with you for a 'walkaround'. Your joiner will spot damp in floor boards and might be able to guess if joists are affected, which could mean walking away from the project due to the cost of replacement.

Quote:

Originally Posted by HomesickAlready
From my perspective a young family (student/lecturer) would likely be my mark.

Target market sorted right there! Quite a few of my neighbours are hspital workers so I knew that was a viable market to aim for. Don't exclude the prospect of someone unrelated to the uni though. Also, if it's primarily a family, long stay residential area, resist the option of splitting it into student living. If a group of student friends want it, they'll work around each other to use the place as a family would.

My first tenants were a mum who's a mental health nurse at the hospital, and her young daughter. Second group are 3 friends who've lived together for years and include a op. theatre nurse, hotel assistant manager and her engineer partner. People create their own version of a family unit now, and that unit often includes a pet.

When I first suggested a pets allowed let to my agent, they were reluctant, but I gave them my research material and they put 'All pets allowed' as the top line of the rental ad. Luckily, I had my OH's brother as reference for my plans, and he's had 8-10 lets for about 20yrs now. All the pet friendly adaptatons matched with cost effective things that he's learned over the years, particularly when it comes to replacement / repair costs when you're turning a let round between tenants. Replacing quality vinyl flooring is incredibly fast and easy compared to tiles or wood flooring, and the cost is really low if you buy in the sales of direct from suppliers. So, the money I saved on flooring was reallocated into heavy duty V Board tanalised fencing instead of the usual waney lap type, which makes the garden more secure for tenants and pets.

As for yield, we were aiming for 7.6-8.5% in the first 12mths, but thanks to having no repair costs, managed to secure a 9.4% yield. We've had repairs totalling £260 over the last 6mths, so that yield will be down on the previous year.

Blueangel 27.12.2019 16:38

Re: Buying house in UK to rent out
 
Quote:

Originally Posted by Enohzee (Post 3132728)
Does the fact you grew up nearby add more value for you? Does having family nearby who can fix stuff / help out add more value for you?

Just want to quickly address this with regards to future maintenance.
Our rental agent has an odd job guy who does a lot of the niggly little repairs that come up along the way during a tenancy. I employed him to help out with some of the 3rd fix work and used the chance to get him accustomed to the house and it's quirks. He's a great bloke (decent bit of totty too :D) who's done 4 full refurbs himself to work his way up the property ladder, alongside working on other peoples' refurbs. Even with his considerable experience, it was me who introduced him to https://www.draughtex.co.uk/ It's a great relief to actually know the person who will be addressing any daft little issues along the way whilst you're absent.

Cherub 27.12.2019 17:10

Re: Buying house in UK to rent out
 
I've been letting a small flat in Scotland out fully managed by an agent for about 8 years now, however when the current tenant decides to leave I might just put it on the market. It's cost me more money in fees and maintenance over the years than I've made and is getting to the stage it will need a refurb and I'm not there to oversee anything (as for tenants I had one idiot who didn't know how to turn the radiators up and a heating engineer had to be instructed to go out, the costs for stupidity all mount up). Thankfully I own the flat outright.

I still have my house in Scotland, it's classified as a holiday home at the moment despite the fact I can neither sell nor let due to subsidence issues at the gated development it's on (my MSP is fighting the council over the fact I'm paying full council tax despite only being there for 4 short visits as year because I have to under my insurance terms). Hopefully I'll be able to let next year, but there is a court case with The Coal Authority suing the developer for negligence to look forward to in January first. I have the letting agent on standby.

I honestly would not advise anyone to let out without using an agent, you need the help of someone who understands the law as at the moment it is weighted in favour of tenants in the UK and it makes life difficult for landlords.

omtatsat 27.12.2019 18:02

Re: Buying house in UK to rent out
 
Quote:

Originally Posted by HomesickAlready (Post 3132599)
For the last couple of years Iíve been thinking about ways to invest my savings. Looking at a lot of different options, but never settled on anything. However, I really liked the idea of buying a property and renting it out.

While talking to my parents about this over Christmas, they mentioned that thereís a house a few doors down that will soon come on the market. An old lady lived there but she passed away recently. The house could do with some work, but it sounds like it wonít be too expensive as itís quite small. Iíd expect in the region of £170,000.

Due to my parents close proximity, and the fact itís a great area, Iím really tempted to get a buy-to-let mortgage and give it a go. My parents think itís a great idea and have already volunteered to do the decorating and gardening etc.

I have enough for a solid deposit, but Iím a bit put off by the complexity of it all, with me being in Switzerland. Buying a property in a country youíre not a resident in seems problematic. Then thereís the Brexit effect as well as tax complications etc.

I spoke to the banks Iím currently with in the UK and none were interested in providing a mortgage for a non-resident. So Iíd have to go with a specialist broker.

So Iím wondering if anyone has experience buying a house in the UK to rent out, while residing in Switzerland?

Put the property in the name of your parents. Problem solved.

fatmanfilms 27.12.2019 19:31

Re: Buying house in UK to rent out
 
Quote:

Originally Posted by omtatsat (Post 3132745)
Put the property in the name of your parents. Problem solved.

That could create a problem at their death, CGT @ 40% could be payable, even higher if Labour ever get in. The OP will also loose his UK tax allowance of 12k.

Guest 27.12.2019 19:41

Re: Buying house in UK to rent out
 
UK tax allowance of GBP 12k??????


That's what i spend on booze per month !

fatmanfilms 27.12.2019 19:44

Re: Buying house in UK to rent out
 
Quote:

UK tax allowance of GBP 12k??????


That's what i spend on booze per month !
For 19/20 it goes uptown £12500 therefore there is no tax on any income taxable in the UK unto that sum. There was talk in not allowing this to non residents but that change never went ahead.

HIAO 27.12.2019 20:56

Re: Buying house in UK to rent out
 
I rent out 3 houses in the UK, 2 of them for more than 13 years. They generate cash and have doubled in value. 2 are mortgage free, which friends tell me makes no sense.

One is in the centre of a catchment area of a school with an Ofsted rating of outstanding. A couple of times a year, I turn down offers from families who don't want to live there. They want to rent the house, leave it empty, so they can claim an address near the school of their choice. No thanks!

It's worth remembering that you can carry forward losses made in one tax year (for example, the year that you buy and make repairs to the house) and off set these against taxable income made in future years.

It's also worth asking yourself what will happen when a tenant stops paying their rent or leaves your house damaged. Be ready for the cost and strain.

I've been a landlord for 13 years and take personal care to resolve issues in 24 hours, provide tenants with immaculately cleaned and maintained homes. I've never increased a tenants' rent, or unreasonably withheld a deposit.

The wind of change is blowing and the shifting narrative is that private landlords are part of the housing problem. I expect more new laws that make it less attractive to be a private landlord in the future, which is also bad news, for tenants.


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