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Buying to let in UK - good idea?


Chrissie
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Has anyone bought a property specifically for letting in the UK, AFTER they'd moved to France and become a French resident for tax purposes?  Any general thoughts on the process?

I just feel my few "safe" investments are scarcely keeping up with things, while I'm missing out on the capital gains possible in the crazy UK property market. 

From recent threads I realise that income tax has to be paid on rental income and that although no capital gains tax would currently apply on selling the property, this is going to change in the near term.  Also that a proper registered agent who would charge appropriately high management fees would be an essential, but still.......it seems like a good way to stash ones cash to preserve basic buying power for the future.

I know this is not something to be jumped into lightly and so I would welcome any ideas, especially from anyone who has gone this route or who has considered and rejected it.

Chrissie (81)

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If you need a mortgage you may have problems obtaining a buy to let mortgage from a british building society while you are living in France. We are currently trying to change our (very small ) mortgage on our house in uk which is let out. Our present lender agreed to the let when we moved here but now we are trying to get a cheaper deal the other BSs are insisting on a buy to let mortgage. And are refusing because we aren't uk residents. Pat.

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Yes, I agree with your Patf. I used to do a lot of BTL mortgages in the UK. Personally I think the market is flooded in the UK with them, also the thoughts are that the bubble is going to burst on the property market due to the increase in rates. BTL to lets are OK as long ar you have somebody renting!! We used to let people borrow 75% as long as the rental income multiples added up, over 75% but up to 85% there was a borrowers income level.

aj

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Yes aj dr is quite correct there there are now serious concerns that the bubble is about to burst in UK BTL market.  There are also very few places left to purchase in UK where rents achieve the mortgage payments.  Unless of course you have a very low loan to value ratio.  Also, if you put all your eggs into one basket, it is of higher risk.  For example, should you have a number of properties you are spreading your risk in the event of one becoming void.

Sometimes I drive down streets where one house after the other has a 'to let' board outside, which may have a knock on effect upon the capital growth of the investment. 

Tenants have done many runners from properties which I own.   If I counted up the amount of pounds I have been 'done' for I could turn grey over night.   The last one had punched holes through doors and stud walling and I paid nearly £400 to have it cleaned.

I would rather bet horses myself..... it is more fun.

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I was actually thinking of buying outright, no mortgage.  Assume the worst in that case is that you have no tenants, no income and a need to insure and maintain the property.  When you say the UK BTL market is about to burst, do you mean that actual house/flat prices are over-inflated or that there is a shortage of people willing to rent rather than buy their own?

Chrissie (81)

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When 'they' say the BTL market is about to burst 'they' mean interest rates have risen, property prices have increased which means that incomings are short of outgoings.  In addition to this should a tenant do a runner with a couple of months rent and the house in a poor state of repair, things could go belly up for you and, there are many investors who have entered into the market with little or no financial back up.  However, you are in a fortunate position that you can purchase outright which, will lower your risk. However, dont forget you will have an increased tax liability although I dont know what your stand will be if you live in France.
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If you use a good agent, and have some luck in finding longterm tenants, I think it's worth doing. Up to now, with us, it has been financially worth it. Rent on uk properties is taxed in the uk. Either you do a selfemployed tax return or the agent deducts it and submits it to the IR. Consider choosing a house that you wouldn't mind living in if you had to return to live in the uk. Pat.
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[quote user="avinalarf"]

There's no doubt that rental returns are way below the interest you would earn on money in the bank.  Whether house prices will go up or down?  No-one knows.

[/quote]

Well, long term, house prices always go up!

On renting your house in the UK, are things like rates, mortgage, insurance etc tax detuctable?

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