Advice on two houses

OUTOFSYNC

I think I'm going to try to get a house this year.

Currently I am interested in two properties.

(1) 2 bed end of terrace. Could live in as is - but needs work (bathroom/kitchen needs to be upgraded, redecorated). Mortgage repayments 600ish.

(2) Larger house - currently divided into two flats. Slightly better nick. Needs redecorating. Mortgage repayments 700 to 800 a month. Could rent one flat out for a couple of years (4000 to 5000 a year income?).

I am currently paying 1000K rent.

Duckjob

What's the question ?

If the question is whether it would be a good decision financially to jump in and buy now, it's impossible to tell without knowing the details of
1) what the pricing on the houses are,
2) how long they've been on sale at those prices (ie. how realistic are not are the prices being asked)
3) Location etc
4) Your situation, how secure your job is, what size of a mortgage you would be taking out etc etc.

btw comparing monthly payment of rent vs monthly payment on a mortgage is meanlingless - only EAs will try to encourage you to do that because it masks the actual figures that matter.

OUTOFSYNC

Thanks for that

I've kind of decided I will buy -

1. Houses are 100 to 150k

2. Recently come on sale - last couple of weeks

3. Location is fine - close to city centre and I can walk to work. The bigger house would be inner city - not the best (eg portobello) but certainly not the worst.

4. Job secure - mortgage would be between 1.8 x salary ( smaller house ) to 2.3x salary over 20 years.

I've no doubt there'll be better places for same prices next couple of years but need to get my cost of living down now - 700 month rent/ mortgage max ideally.

D3PO

again what is the question .

your just posting random stuff and yu havent asked a question.

The_Conductor

You seem to be focusing solely on the mortgage outgoings- these are only one of the costs of ownership of property. Rents are still falling- while property tax/water rates etc etc are going up. Focusing solely on mortgage costs (and indeed mortgage costs at abnormally low rates) is a false economy- you are not looking at the full picture. It may take several years for interest rates to 'normalise' but it will happen eventually- and normalisation of interest rates is accepted to be an ECB overnight rate of between 4 and 5% with retail rates approx. 1.5% above this- aka a mortgage interest rate in the region of 6%. It could be years before we hit this level- but that is what is considered to be 'normal'.

Also I'd emphasise what D3PO is saying- are you actually asking a question- and if so- what might that be?

OUTOFSYNC

Thanks for the replies - apologies If there is no clear question. The responses so far have been useful.

I guess I am trying to decide between the two properties and looking for opinions.

The hassle of renting out could be off set by eventually having a bigger house and even lower monthly outgoings (initially). I don't know enough (tax implications) yet to be comfortable with this - but could be an okay plan.

El Weirdo

OUTOFSYNC wrote: »

Thanks for the replies - apologies If there is no clear question. The responses so far have been useful.

I guess I am trying to decide between the two properties and looking for opinions.

The hassle of renting out could be off set by eventually having a bigger house and even lower monthly outgoings (initially). I don't know enough (tax implications) yet to be comfortable with this - but could be an okay plan.

Well if you buy the bigger property, I'm guessing you will have the NPPR tax on the other flat, the household charge for the two properties, tax on whatever income you receive for the other flat and (as you are renting the flat out) I presume this may affect whatever mortgage you take out on that particular property as it will, in effect, be a buy-to-rent - someone else may be able to clarify this, though.

Ray Palmer

When you do your sums and if you find for the same price as the other property you will have a bigger house then go for it. Being LL isn't easy but living in the property will eliminate a lot of issues. Some tenants also don't like the idea of living in a place the LL is.

I personally wouldn't let any tenant know you are the owner and say you are the LL representative. It will just be easier with conversations. Trust me on that.

There are a number of tax benifits that you can avail of by having it rented. Rent it out and then upgrade the property and you will pay less for the work. Once the rented flat is done up move into that and do the same with the part you were living in. Make sure you get an accountant to verify you comply with the legal details to do this.

Don't foreget you are providing a service and treat people how you would like to be treated. Don't let things slide either.

Any upgrades should be considered in the context of bringing the two flats together. the 2nd floor may be best to live in as you can expand into the attic space and keep a tenant helping fund the conversion. Get a full survey done and not just a standard one. A garge extension with a roof terrace on top is a very good way to get extra space and possibly an additional room at a later date.

If you learn some basic skills and you will be surprised at how much you can do yourself.

borderlinemeath

Hypothetically, just as it's on this thread, if the house is being sold as one house even though divided internally, will the owner - if living in one half - have to pay the NPPR and additional property tax?

Ray Palmer

borderlinemeath wrote: »

Hypothetically, just as it's on this thread, if the house is being sold as one house even though divided internally, will the owner - if living in one half - have to pay the NPPR and additional property tax?

They are dependedent on household not property. Two dwelling means two households. Right now they aren't a huge amount but they will be increased over the years. That does however allow you to claim tax benifits on one household as I suggested. After a period of time you can then just return it to one property.
It really isn't a bad idea if you want to do it but not for everybody. You have rules to follow and you need to make sure you stick to them.