Buying To Let Vs Savings Account

[BettyNoir]

My husband and I have separated and I am shortly going to receive £66,000 from the sale of our house. I don't need to buy a new house because I am moving in with my new partner. My partner thinks I should use my money as a deposit towards an £80-90,000 house, take a mortgage out and rent the property as an extra form of income. To be honest I'd rather just find a high interest savings account and put the money there, but my partner insists property is a better investment. I've never fancied the hassle of being a landlord, with all the legal and financial obligations that go with it, plus the worry about bad tenants etc. from a financial standpoint, what would be the better thing to do with the money?

[rockyracoon]

Personally, i'd do the buy to let, but then I live in an area that has been largely recession proof as far as house prices are concerned. One thing's for certain, it won't earn bugger all in a savings account.

[shoota]

Maximum holding of Premium Bonds for each of two names should see a good return.
(Just make sure the second person is trustworthy.....)

[boxtops]

Personally, I'd find a long term savings account which offers you access at relatively short notice, for the time being. You are right that being a landlord can offer you some hassle - I've done that. If you don't get a tenant, it can be a millstone, and you still have to pay buildings maintenance and insurance.

Bring practical about it (and I don't want to sound pessimistic!), you and your new partner are a new couple, if it were me I'd want some financial security behind me - just in case. If you had a house and you let it, then needed the money, you might not be able to access the money for months.

You can put £5640 in a cash ISA before 5 April, the same amount (or more if it goes up) in a new ISA in 2014-15, so that'll give you tax free interest - then look for a longer term investment for the remaining £50K. That's what I'd do.

[boxtops]

... and PS, it's your money, not your partner's - you do what you want with it.

[jomifl]

I have several aquaintances who have lost out on renting out properties but that is probably because they tried to do it themselves. If you decide to go for 'buy to let' It might be a good idea to rent it through a reputable and recommended property magagement company who are familiar with the possible problems. Do a detailed realistic financial projection. Perhaps you can find an internet forum where you can benefit from other people's experiences.

[Brinjal]

I have a couple of rental properties and believe me they can be a hassle. Luckily at the moment I have good tenants but I have had some nightmares and also maintenance and unexpected repairs can quickly eat up any income you may get off it.

[ToraToraTora]

BTL is a lot of agro if you run it yourself, if you have a managing agent the agro varies on what you are prepared to pay to guarentee rent and for the service they offer ultimately it's PITA. Personally I'd do what boxy says for 10k and put 30k in premium bonds. Then look for the best saving account you can find for the rest. Interest is jack at the moment so PBs are out performing them easily with the max bond rate. You could also consider adding it to any pension you have as AVC, with means you can gross out the tax.

[Canary42]

You could try Zopa for reasonable interest rates. Needs a 3 or 5 years commitment, although early buy out is theoretically possible I've no experience of whether it works.


www.zopa.com

[BRIGHT SPARK]

Interest rates will rise and the help to buy scheme will come to an end soon resulting in lower values.I would invest elsewhere for a few years.

[tamborine]

Saving accounts will never equal the return on rentals. My tenants mostly leave me with a 'clearing' bill that can be recovered via their deposit. Ime avoid young DSS mums.