BTL - 2 x Flats or single 3 bed house
Discussion
I've currently got 2 x 3 beds BTL's both rented out, I can release £50k out of one as its fixed rate mortgage is up. Im flexible on area but Kettering/Corby seems an ok area, it's steady and I know it, a £150k house rents for about £725. I want to focus on income more so would it be advisable to buy 2 smaller flats or one house? I could spend up £180k, this would get you something like this which rents for £700 to £750pm:
http://www.rightmove.co.uk/property-for-sale/prope...
or
http://www.rightmove.co.uk/property-for-sale/prope...
Or I could go a bit further and get two like these, not sure what the rental income would be as I don't know the area. I've never purchased flats, I understand the lease issues and have allowed £100 pm for Service charge and ground rents.
http://www.rightmove.co.uk/property-for-sale/prope...
http://www.rightmove.co.uk/property-for-sale/prope...
I'd appreciate any ideas, I'm prepared to travel unto 100 miles from Bedfordshire where I'm based. Thanks
http://www.rightmove.co.uk/property-for-sale/prope...
or
http://www.rightmove.co.uk/property-for-sale/prope...
Or I could go a bit further and get two like these, not sure what the rental income would be as I don't know the area. I've never purchased flats, I understand the lease issues and have allowed £100 pm for Service charge and ground rents.
http://www.rightmove.co.uk/property-for-sale/prope...
http://www.rightmove.co.uk/property-for-sale/prope...
I'd appreciate any ideas, I'm prepared to travel unto 100 miles from Bedfordshire where I'm based. Thanks
kurt535 said:
If you can, keep to freehold houses unless the flats you buy also give you a freehold share. A lease is merely a depreciating asset. If flat is freehold, then the newer the flat the better too - less issues with roof renewals, etc.
Not really true, and certainly highly dependent on the terms of the lease.Leases need renewing, it costs cash to renew - caveat you are on a 999 year but these are in the minority.
Otherwise, they have erosion and reach a point in your ownership where you have to pay money to increase the lease or see the price of the flat decrease sometimes quite dramatically.
The other snare with flats is ground rent. It too can get messy with some lenders refusing to lend if they perceive the terms of the GR is too onerous. I know Nationwide took a stance on this recently. Do you really want this possible future issue hanging over you?
Buying freehold is far less grief.
Otherwise, they have erosion and reach a point in your ownership where you have to pay money to increase the lease or see the price of the flat decrease sometimes quite dramatically.
The other snare with flats is ground rent. It too can get messy with some lenders refusing to lend if they perceive the terms of the GR is too onerous. I know Nationwide took a stance on this recently. Do you really want this possible future issue hanging over you?
Buying freehold is far less grief.
kurt535 said:
Leases need renewing, it costs cash to renew - caveat you are on a 999 year but these are in the minority.
Otherwise, they have erosion and reach a point in your ownership where you have to pay money to increase the lease or see the price of the flat decrease sometimes quite dramatically.
The other snare with flats is ground rent. It too can get messy with some lenders refusing to lend if they perceive the terms of the GR is too onerous. I know Nationwide took a stance on this recently. Do you really want this possible future issue hanging over you?
Buying freehold is far less grief.
I can’t disagree with some of the points you've made, but not all, and neither does it support your previous claim!Otherwise, they have erosion and reach a point in your ownership where you have to pay money to increase the lease or see the price of the flat decrease sometimes quite dramatically.
The other snare with flats is ground rent. It too can get messy with some lenders refusing to lend if they perceive the terms of the GR is too onerous. I know Nationwide took a stance on this recently. Do you really want this possible future issue hanging over you?
Buying freehold is far less grief.
sidicks said:
kurt535 said:
Leases need renewing, it costs cash to renew - caveat you are on a 999 year but these are in the minority.
Otherwise, they have erosion and reach a point in your ownership where you have to pay money to increase the lease or see the price of the flat decrease sometimes quite dramatically.
The other snare with flats is ground rent. It too can get messy with some lenders refusing to lend if they perceive the terms of the GR is too onerous. I know Nationwide took a stance on this recently. Do you really want this possible future issue hanging over you?
Buying freehold is far less grief.
I can’t disagree with some of the points you've made, but not all, and neither does it support your previous claim!Otherwise, they have erosion and reach a point in your ownership where you have to pay money to increase the lease or see the price of the flat decrease sometimes quite dramatically.
The other snare with flats is ground rent. It too can get messy with some lenders refusing to lend if they perceive the terms of the GR is too onerous. I know Nationwide took a stance on this recently. Do you really want this possible future issue hanging over you?
Buying freehold is far less grief.
EDIT: Here you go, maybe useful in your decision making:
Nationwide announces position on onerous ground rents
Nationwide announced recently that it will not lend on new build residential leasehold properties if the amount of ground rent is more than 0.1% of the purchase price.
This change has been introduced by Nationwide in part to protect the marketability of the property from what Nationwide describes as “unreasonable multipliers”, such as ground rents doubling every five, ten or 15 years.
As many of our readers will be aware, ground rents are annual rental payments made to the freeholder under a long lease of a house or flat. The amount payable can range from practically nothing (a “peppercorn” rent) to a significantly greater sum. Last year, we blogged about the dangers of a ground rent which doubled every 10 years in the lease of a flat, which theoretically resulted in the annual ground rent ending up as millions of pounds.
Nationwide’s announcement brings welcome transparency to the type of ground rents that lenders will consider to be onerous. This is helpful for occupiers, but also for developers, many of whom will factor future ground rent income into their viability assessments when planning developments.
Nationwide’s view is that escalating ground rents should be index linked, such as to the Retail Prices Index (RPI). Index linked increases are seen as fairer than a doubling or other fixed % uplift ground rent, but they are no less complex, and bring their own issues.
Future rent payable is uncertain (and could end up being more than 0.1% of the value of the property). Careful attention must be paid to the way in which the provisions are drafted, otherwise the unwary can fall into traps (such as compounding RPI increases). And of course the provisions must cater for future changes in the way in which the RPI is calculated, or even if it is abolished (less likely for a 10 year lease, much more likely for a 999 year lease!)
Whatever the merits of increasing ground rents, as the doubling ground rent scenario demonstrates, any increase in rent should be drafted in a way that is clear and transparent, so that it can be more easily understood by both leaseholders and landlords.
Edited by kurt535 on Thursday 4th January 20:00
kurt535 said:
Its not a claim;
It really is!kurt535 said:
its 10 years in the property market having learnt off people with incredible portfolios who advised me from the very outset not to buy flats on leases and the reasons why.
The value of a lease is not solely to do with the outstanding term!kurt535 said:
End of the day, people have a choice. if you choose to purchase a lease, by default something you never own outright and are happy dealing with challenging GR's, thats your choice. But not mine.
Of course being aware of any GR conditions is fundamentally important. That was never in dispute!kurt535 said:
EDIT: Here you go, maybe useful in your decision making:
Nationwide announces position on onerous ground rents
Nationwide announced recently that it will not lend on new build residential leasehold properties if the amount of ground rent is more than 0.1% of the purchase price.
This change has been introduced by Nationwide in part to protect the marketability of the property from what Nationwide describes as “unreasonable multipliers”, such as ground rents doubling every five, ten or 15 years.
As many of our readers will be aware, ground rents are annual rental payments made to the freeholder under a long lease of a house or flat. The amount payable can range from practically nothing (a “peppercorn” rent) to a significantly greater sum. Last year, we blogged about the dangers of a ground rent which doubled every 10 years in the lease of a flat, which theoretically resulted in the annual ground rent ending up as millions of pounds.
Nationwide’s announcement brings welcome transparency to the type of ground rents that lenders will consider to be onerous. This is helpful for occupiers, but also for developers, many of whom will factor future ground rent income into their viability assessments when planning developments.
Nationwide’s view is that escalating ground rents should be index linked, such as to the Retail Prices Index (RPI). Index linked increases are seen as fairer than a doubling or other fixed % uplift ground rent, but they are no less complex, and bring their own issues.
Future rent payable is uncertain (and could end up being more than 0.1% of the value of the property). Careful attention must be paid to the way in which the provisions are drafted, otherwise the unwary can fall into traps (such as compounding RPI increases). And of course the provisions must cater for future changes in the way in which the RPI is calculated, or even if it is abolished (less likely for a 10 year lease, much more likely for a 999 year lease!)
Whatever the merits of increasing ground rents, as the doubling ground rent scenario demonstrates, any increase in rent should be drafted in a way that is clear and transparent, so that it can be more easily understood by both leaseholders and landlords.
Once again, nothing to disagree with here, just that it doesn't support your claim!Nationwide announces position on onerous ground rents
Nationwide announced recently that it will not lend on new build residential leasehold properties if the amount of ground rent is more than 0.1% of the purchase price.
This change has been introduced by Nationwide in part to protect the marketability of the property from what Nationwide describes as “unreasonable multipliers”, such as ground rents doubling every five, ten or 15 years.
As many of our readers will be aware, ground rents are annual rental payments made to the freeholder under a long lease of a house or flat. The amount payable can range from practically nothing (a “peppercorn” rent) to a significantly greater sum. Last year, we blogged about the dangers of a ground rent which doubled every 10 years in the lease of a flat, which theoretically resulted in the annual ground rent ending up as millions of pounds.
Nationwide’s announcement brings welcome transparency to the type of ground rents that lenders will consider to be onerous. This is helpful for occupiers, but also for developers, many of whom will factor future ground rent income into their viability assessments when planning developments.
Nationwide’s view is that escalating ground rents should be index linked, such as to the Retail Prices Index (RPI). Index linked increases are seen as fairer than a doubling or other fixed % uplift ground rent, but they are no less complex, and bring their own issues.
Future rent payable is uncertain (and could end up being more than 0.1% of the value of the property). Careful attention must be paid to the way in which the provisions are drafted, otherwise the unwary can fall into traps (such as compounding RPI increases). And of course the provisions must cater for future changes in the way in which the RPI is calculated, or even if it is abolished (less likely for a 10 year lease, much more likely for a 999 year lease!)
Whatever the merits of increasing ground rents, as the doubling ground rent scenario demonstrates, any increase in rent should be drafted in a way that is clear and transparent, so that it can be more easily understood by both leaseholders and landlords.
kurt535 said:
Um, Lampshade,
Still at it wth the stupid insults? How ignorant you must be.kurt535 said:
This thread is a request for feedback from a forum member regarding a flat vs house purchase. You haven't offered much insight to help them from what i can see. Shall we agree you don't derail yet another thread for your own limelight?
I think that you giving them misleading advice that a "lease is a depreciating asset" is hardly offering much help. Indeed quite the opposite, it's highly misleading / wrong. As I already explained, the other comments you've made - about ground rent etc - are indeed helpful.Shall we agree you don't post nonsense (and then derail the thread with insults when your nonsense is pointed out to you), to ensure the OP actually gets useful advice?
sidicks said:
kurt535 said:
Um, Lampshade,
Still at it wth the stupid insults? How ignorant you really are.kurt535 said:
This thread is a request for feedback from a forum member regarding a flat vs house purchase. You haven't offered much insight to help them from what i can see. Shall we agree you don't derail yet another thread for your own limelight?
I think that you giving them misleading advice that a "lease is a depreciating asset" is hardly offering much help. Indeed quite the opposite. As I already explained, the other comments you've made - about ground rent etc - are indeed helpful.How about we agree you don't post nonsense (and then derail the thread with insults when your nonsense is pointed out to you), then no-one has to correct your nonsense, to ensure the OP actually gets useful advice.
You bring nothing of interest or support to the forum member. You have car crash after car crash on here falling out with people. On that note, I have a life to lead elsewhere rather than wasting time keeping you from feeling lonely.
Good luck OP on your choices, go careful!
sidicks said:
How about we agree you don't post nonsense (and then derail the thread with insults when your nonsense is pointed out to you), then no-one has to correct your nonsense, to ensure the OP actually gets useful advice.
FFS Sidicks. Do you get into a petty squabble on every thread you join? OP - make your own mind up about houses vs flats, but the advice to be wary of leaseholds is a good one based on my own experience. Where possible, stick with areas and properties you know.
kurt535 said:
Lampshade,
kurt535 said:
You bring nothing of interest or support to the forum member.
Except correcting your false claims?kurt535 said:
You have car crash after car crash on here falling out with people. On that note, I have a life to lead elsewhere rather than wasting time keeping you from feeling lonely.
The car crash appears to be your repeated claims which are demonstrably false, which make no sense, which you can't support and where you end up resorting to ignorant insults when this is pointed out to you!I'm enjoying watching the footie with my wife and commenting on the forum - no loneliness needed.
kurt535 said:
Good luck OP on your choices, go careful!
Indeed. Leasehold or Freehold, just be aware of the differences and the pros and cons.Edited by sidicks on Friday 5th January 07:14
Quite a lot of reading that! Anyway, I wasn't overly keen on flats but thought I might try as it will potentially give me two. Looking at the rents further north they are sub £500 pm so I'm going to stick with looking at 3 beds around Kettering/Corby area, some nice property for a reasonable price.
I had told myself not to buy now, but as the opportunity has come up now I'm remortgaging I might as well take it with IR so low.
If I release £50k now and I don't find anything to buy can hold onto the money or is there a time limit that I need to buy another property. I'm meeting a broker next week, I'll see what he says. I'll hopefully be in a good position as I can take a tenanted house.
I had told myself not to buy now, but as the opportunity has come up now I'm remortgaging I might as well take it with IR so low.
If I release £50k now and I don't find anything to buy can hold onto the money or is there a time limit that I need to buy another property. I'm meeting a broker next week, I'll see what he says. I'll hopefully be in a good position as I can take a tenanted house.
Casa1862 said:
Quite a lot of reading that! Anyway, I wasn't overly keen on flats but thought I might try as it will potentially give me two. Looking at the rents further north they are sub £500 pm so I'm going to stick with looking at 3 beds around Kettering/Corby area, some nice property for a reasonable price.
I had told myself not to buy now, but as the opportunity has come up now I'm remortgaging I might as well take it with IR so low.
If I release £50k now and I don't find anything to buy can hold onto the money or is there a time limit that I need to buy another property.
A time limit for what reason?I had told myself not to buy now, but as the opportunity has come up now I'm remortgaging I might as well take it with IR so low.
If I release £50k now and I don't find anything to buy can hold onto the money or is there a time limit that I need to buy another property.
Casa1862 said:
Im releasing £50k equity to finance another btl, ill use the £50k as a deposit, do I have a certain time to purchase that property? I.e. Within one year of them giving me the additional funds.
Oh I see, I guess that depends on the details of your agreement with the lender. I imagine that there is no explicit requirement i.e. they can't force you to buy a property if you can't find an appropriate one! Do they even know what you are planning to do with the funds that are released?Edited by sidicks on Thursday 4th January 21:46
CharlesdeGaulle said:
FFS Sidicks. Do you get into a petty squabble on every thread you join?
Petty squabble or correcting fundamentally incorrect information? CharlesdeGaulle said:
OP - make your own mind up about houses vs flats, but the advice to be wary of leaseholds is a good one based on my own experience. Where possible, stick with areas and properties you know.
Good advice, as outlined previously.Gassing Station | Finance | Top of Page | What's New | My Stuff