My dad brought up that he'd like to help me get on the housing ladder.
He knows about my shorter term plans to travel and contract work but still thinks its a good idea to start buying a house, whether or not I plan to live in it long term.
His suggestion is that he helps with a large chunk for a deposit on a two or three bedroom house, and I pay a smaller chunk of deposit and take out a mortgage for the rest.
The plan would then be to rent out the spare bedrooms, and mine as well if I'm away for periods of more than a month or so. My dad would receive a % of any rent I took from tenants and % if the house was sold.
This sounds like a solid idea to me as long as the outcome is either substantially reduced housing costs or rental income.
I'm new to this, and hear a lot about the ridiculous price of uk housing, so I wonder if I'm missing anything obvious?
What sums do I need to do to figure out if this works, other than just (mortgage payments + bills + rates + repair costs) against probable rental income?
UK property question
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George the original one
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Re: UK property question
If you let a management company handle all the rental details, then they'll want a cut.
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CelticTiger
- Posts: 71
- Joined: Thu Oct 21, 2010 12:04 pm
Re: UK property question
I know Bristol prices are different from up north but zoopla.co.uk and rightmove.co.uk will be your friends for research. I head it is expensive down there.
It depends how many bedrooms you want to rent out.
Check out the rent a room scheme https://www.gov.uk/rent-room-in-your-ho ... oom-scheme
£4250 tax free may be enough for you. My brother did this for a few years, and doubled his money on the house up in Aberdeen. No need for an accountant or management company. His room mates were mostly international students (the type that study not party)
Also http://www.thisismoney.co.uk/money/savi ... s-out.html
you must have heard about the first time buyer ISA. That's free money for the taking. 3k if you put the full amount in.
It sounds as though you may want multiple tenants which is more of a standard buy to let scenario
It depends how many bedrooms you want to rent out.
Check out the rent a room scheme https://www.gov.uk/rent-room-in-your-ho ... oom-scheme
£4250 tax free may be enough for you. My brother did this for a few years, and doubled his money on the house up in Aberdeen. No need for an accountant or management company. His room mates were mostly international students (the type that study not party)
Also http://www.thisismoney.co.uk/money/savi ... s-out.html
you must have heard about the first time buyer ISA. That's free money for the taking. 3k if you put the full amount in.
It sounds as though you may want multiple tenants which is more of a standard buy to let scenario
Re: UK property question
I actually did this with my property and it ends up working out that you get free accommodation with the current environment.
As for bristol I know someone there and the amount that you can rent a room out for is above the rent a room limits so you will end up paying tax most likely.
That said if you get a 3 bed room place you can rent out both if the spare rooms and probably cover most of your costs if not all. The benefits of the 3 room houses is that as the owner you can rent out 2 rooms with you in the 3rd without having to worry about getting and HMO licence. Any more then you would need to (but they can get high returns so arguably can be worth it).
I basically went down the path of buy a house rent out spare rooms and it managed to speed up the time to FI, do the sums and figure it out but in general in the UK just now if you can own the house and rent out the spare rooms it is better than renting by quite a lot.
As for bristol I know someone there and the amount that you can rent a room out for is above the rent a room limits so you will end up paying tax most likely.
That said if you get a 3 bed room place you can rent out both if the spare rooms and probably cover most of your costs if not all. The benefits of the 3 room houses is that as the owner you can rent out 2 rooms with you in the 3rd without having to worry about getting and HMO licence. Any more then you would need to (but they can get high returns so arguably can be worth it).
I basically went down the path of buy a house rent out spare rooms and it managed to speed up the time to FI, do the sums and figure it out but in general in the UK just now if you can own the house and rent out the spare rooms it is better than renting by quite a lot.
Re: UK property question
It can be a good idea - I have a friend who has done this and is netting ~ £1000 profit per month (though its a large high spec house and she is letting to professionals.)
Just remember to factor in void periods and higher maintenance - more footfall, wear and tear, breakages etc.
Just remember to factor in void periods and higher maintenance - more footfall, wear and tear, breakages etc.
Re: UK property question
I'm not pessimistic about UK house prices (I'm an owner), but house prices don't always go up.
I would clarify your Dad's expectations of whether his share of the proceeds when the house sells is based on his original contribution, or market value).
My wife has relatives who ended up in a similar situation, but the people who fronted up a large chunk of the deposit are due back the larger of their full contribution or a proportional share of any increased value.
I would clarify your Dad's expectations of whether his share of the proceeds when the house sells is based on his original contribution, or market value).
My wife has relatives who ended up in a similar situation, but the people who fronted up a large chunk of the deposit are due back the larger of their full contribution or a proportional share of any increased value.