Updating post from Reddit.
My husband is currently in the military but we're looking to buy with the potential to rent it out until he leaves when we would ideally move in ourselves. This is just the start of a very long thought process but I know that requiring the property to live in is one of the reasons you can give tenants notice to leave, how straight forward is this in reality? We'd have a good years notice before we'd like to move in when it comes to it, potentially longer if needed, I know problematic tenants could draw it out for a lengthly time but I'm wondering if anyone has any actual experience in this sort of thing?
Alternative would be offering shorter term lets if the above is a stupid idea
> equiring the property to live in is one of the reasons you can give tenants notice to leave
It is, but as you say it can still take a considerable amount of time to evict.
You can evict because you want to move back into the property today and under the new regulations you can as well - however you will be prevented from renting it out again for (i think) 2 years.
Thankyou for the reply, I wasn't sure if it was still covered under new legislation
Tax rules have destroyed this probably. This would only make sense if 1. your husband will never be promoted to a level where he earns over £50,000 (including the rent) and 2. you don't use a mortgage. Remember now landlords are taxed on mortgage interest if they are higher earners. BTL usually only works well in a LTD company which means you can't really move into it.
Thanks for the reply, and good point regarding tax
Buying rental property isn’t a bad idea for someone in the army (it’s actually a great idea). But to make it work and profitable you are best to self manage and use a Ltd company while aggressively paying down the mortgage. You could then look at selling the Ltd company or refinance to buy your own property. Works much better. BTL is much more complex than it was in the past and the industry has to professionalise to survive
Quick question that's fundamental.
How are you buying, cash or mortgage?
Mortgage. We've looked into eligibility and have enough of a deposit and potential rental income to get what we need for the properties we're looking at at the moment, bur obviously don't want to sink a large deposit into a home that would be a logistical nightmare to move into down the line
Rental income isn’t necessarily taken into account for BTL mortgages. Go to a reputable BTL broker.
Secondly, take legal advice (not from an agent) about LL and T rights. The process will be the same: issue a lawful notice to quit, which will give T ample time to find somewhere else; apply to the court for an order of possession if T doesn’t leave; apply for bailiffs if necessary. Hitches include T arguing your paperwork wasn’t in order, or they have a financial adjustment plan in place, but these are not the only ones you may encounter during repossession.
T selection is vital: Right to Rent, guarantors, ensuring your house isn’t used as a grow house, brothel, or for people trafficking; regular inspections for overcrowding, unlawful sub-letting or STLs, pet damage, mould due to poor ventilation & underheating, hoarding, unsocial behaviours.
You’d rely on agents, who can be awful, and are unregulated.
It’s not for the naive or amateurs.
I’d invest in an S&P 500 tracker given the choice, in an ISA wrapper.
You would need a BTL mortgage. Get a good broker.
The logistical nightmare can be mitigated, at least to some extent. Optimise for tenant quality rather than rental income. Make sure you get the best possible tenants through vetting them yourself and through the most thorough tenant verification company you can find. They will charge you a bit more but it is well worth it.
Meet with the prospective tenants, talk to them about what they do and try to assess what kind of people they are.
In addition, ask for a good guarantor. Dodgy people will not be able to get one and when you have a guarantor, the guarantor will probably make sure the tenants comply with the contract since they are also responsible.
In addition, be a good landlord and maintain a good relationship with the tenants so that they are not motivated to make things difficult for you.
As others have said — do not trust agents.
One last point — make a plan B. Make sure that if you need to wait out the eviction process, your life is still livable.
I have rented for 20 years and have never had a bad tenant. They all left when they were supposed to, they all paid their rent on time and never caused me any trouble. For this I had to make the effort and usually did not accept the first or highest offer I got. I always chose the best tenant I could.
Thanks for the advice, all very good points. We have a friend who has done the same thing already and has had the same good family for the whole 6 years, he lets it out for less than market value but enough to cover the mortgage for exactly those points, they're happy, he's happy, everyone's happy. Afaik we can stay in military housing for a bit after he leaves anyway at market rate, our neighbours have done that for the last 9 months and I think we can stay up to 12 so potentially two years from giving notice to the tenants to leave if needed otherwise we'd have to look for plan B at that point
Just so you are aware, if you buy a home to live in for a while, the mainstream lenders are obliged to give someone in the Army posted away a "consent-to-let"—approval to rent out the property.
The environment for individual landlords is very challenging.
Understanding the legal requirements and the personal tax implications is not straightforward. Depending on age of the property and it's condition there is no guarantee you will be able to let it without significant work.
Above all, it can be quite a stressful and personal experience. Most people are fine, but occasionally when things go sideways it can really grind you down.
With the new legislation it could easily take 12months+ to get a property back if the tenant doesn't agree to leave. That assumes there have been no mistakes in compliances.