Looking to rent out the house - Advice / experiences
Discussion
I'm looking at renting out my house at the moment and buying the remaining share of the wife's house from her brother.
Now, mortgage issues aside (Scotal is on the case) what advice would you offer to somebody who has never done this before?
How much work is involved in renting it out?
Do you let the agent manage the house or do you self manage? (My work takes me abroad quite a lot and I wouldn't want to leave this in the hands of my OH, so I'm thinking agents at the moment)
What hints and tips would you share?
The plan is that we live in the other house for about 3/4 years and then sell both and move to out 'forever home' as the OH likes to think of it! So I'm not thinking of moving back in, I'm not emotionally attached to the place, I just want somebody else to pay the mortgage basically. I'm doubting that I'm going to make a great deal of money from it, I'd just like to build up the equity.
When it comes to selling the house, will I be liable to income tax on it? What's the current rate on that?
Sorry for all the questions, but I'm trying to work out if the risk is actually worth it at the moment or I should cash it in and have a smaller mortgage and invest the savings elsewhere.
Now, mortgage issues aside (Scotal is on the case) what advice would you offer to somebody who has never done this before?
How much work is involved in renting it out?
Do you let the agent manage the house or do you self manage? (My work takes me abroad quite a lot and I wouldn't want to leave this in the hands of my OH, so I'm thinking agents at the moment)
What hints and tips would you share?
The plan is that we live in the other house for about 3/4 years and then sell both and move to out 'forever home' as the OH likes to think of it! So I'm not thinking of moving back in, I'm not emotionally attached to the place, I just want somebody else to pay the mortgage basically. I'm doubting that I'm going to make a great deal of money from it, I'd just like to build up the equity.
When it comes to selling the house, will I be liable to income tax on it? What's the current rate on that?
Sorry for all the questions, but I'm trying to work out if the risk is actually worth it at the moment or I should cash it in and have a smaller mortgage and invest the savings elsewhere.
ou will need to inform your mortgage company that you intend to rent the property out, and would suggest before you contact them, you read a posting made recently by PH poster Welshbeaf on how his mortgage company dealt with that same issue.
You will need to arrange building insurance with the provision that they know you are renting the property out.
I do not bother with contents insurance, since due to fire safety regulations and let All my properties unfurnished, and would advise you to do the same. Unfurnished also saves on public liability and if things break you are not having to either repair or replace the same.
If you are already submitting a Self Assessment Return to HMR&C, then there is no need to inform them of you letting the property, just request a tax return for UK Land & Property.
I tend not use agents to either find tenants or to manage the properties, preferring to do the same myself, might not be possible in your case, so unless you have a trusted relative or friend, then it will have to be a letting agent.
Another good reason for letting unfurnished is that whilst the property is empty, the Council will not charge you Council Tax for the first 6 months of being empty.
It is not easier to let furnished, I have found quite the opposite, and in the early days of letting became a big pain of moving furniture in and out of the property, where one set of tenants wanted furniture the next set of tenants did not.
Any gas appliances, fire, cooker and central heating boiler will require an annual Landlords Gas Safety Check/Certificate presented by a Corgi engineer. The main Electrics need no checks certificate, but you should never the less be satisfied in your own mind that there are no risks etc. Any electrical appliances only need checking by a competent person, so you can do the same.
Prior to renting out the property you will also require an Energy Performance Certificate, with any potential tenant, at the time of viewing the property having the right to request sight of the certificate, with there being a fine for the landlord if the landlord has not had the check/inspection carried out.
This link explains more;
http://www.direct.gov.uk/en/HomeAndCommunity/Buyin...
As for the rest of the property, including garden just check for “health & safety” risks, low branches, carpets on stairs loose etc.
I do not have a separate bank account, just put the monies into my one personal bank account, ensuring that I make plenty of cross references to differentiate between rental income and other personal credits & debits.
You will of course rent the premises exclusive of All service charges, water, gas, electrics, TV License, Council Tax etc. etc., and you will of course notify these suppliers of the name of the new occupier/s, the date they took up residence and the metre
Then once you have the rent and the Deposit, the latter which I ask for 1 ½ months rent as a Deposit, you will then under the legislation register the Deposit under one of the Deposit Bond Scheme.
I hold all Tenancy Agreements, Tenants Application Form, Inventory Form, Deed of Guarantee, Notice 21 & Notice 8 etc.etc
You will need to arrange building insurance with the provision that they know you are renting the property out.
I do not bother with contents insurance, since due to fire safety regulations and let All my properties unfurnished, and would advise you to do the same. Unfurnished also saves on public liability and if things break you are not having to either repair or replace the same.
If you are already submitting a Self Assessment Return to HMR&C, then there is no need to inform them of you letting the property, just request a tax return for UK Land & Property.
I tend not use agents to either find tenants or to manage the properties, preferring to do the same myself, might not be possible in your case, so unless you have a trusted relative or friend, then it will have to be a letting agent.
Another good reason for letting unfurnished is that whilst the property is empty, the Council will not charge you Council Tax for the first 6 months of being empty.
It is not easier to let furnished, I have found quite the opposite, and in the early days of letting became a big pain of moving furniture in and out of the property, where one set of tenants wanted furniture the next set of tenants did not.
Any gas appliances, fire, cooker and central heating boiler will require an annual Landlords Gas Safety Check/Certificate presented by a Corgi engineer. The main Electrics need no checks certificate, but you should never the less be satisfied in your own mind that there are no risks etc. Any electrical appliances only need checking by a competent person, so you can do the same.
Prior to renting out the property you will also require an Energy Performance Certificate, with any potential tenant, at the time of viewing the property having the right to request sight of the certificate, with there being a fine for the landlord if the landlord has not had the check/inspection carried out.
This link explains more;
http://www.direct.gov.uk/en/HomeAndCommunity/Buyin...
As for the rest of the property, including garden just check for “health & safety” risks, low branches, carpets on stairs loose etc.
I do not have a separate bank account, just put the monies into my one personal bank account, ensuring that I make plenty of cross references to differentiate between rental income and other personal credits & debits.
You will of course rent the premises exclusive of All service charges, water, gas, electrics, TV License, Council Tax etc. etc., and you will of course notify these suppliers of the name of the new occupier/s, the date they took up residence and the metre
Then once you have the rent and the Deposit, the latter which I ask for 1 ½ months rent as a Deposit, you will then under the legislation register the Deposit under one of the Deposit Bond Scheme.
I hold all Tenancy Agreements, Tenants Application Form, Inventory Form, Deed of Guarantee, Notice 21 & Notice 8 etc.etc
Thanks for that Wings, lots of info to take on board there. It's interesting what you say about leaving it unfurnished, as that could cause some issues for us in the short term, but nothing we can;t get around.
Also, do you include the white good in the kitchen? Washer, dryer, dish washer, fridge, freezer and oven in an unfurnished house? I'm assuming you do?
Does anybody have any details of a 3rd party management service I could look into? I won't be able to manage it myself as I'm out of the country quite a bit and don't need the hassle when away.
Also, do you include the white good in the kitchen? Washer, dryer, dish washer, fridge, freezer and oven in an unfurnished house? I'm assuming you do?
Does anybody have any details of a 3rd party management service I could look into? I won't be able to manage it myself as I'm out of the country quite a bit and don't need the hassle when away.
you can rent the place out. if you sell it after 3 years of renting and haven't lived there in that time, you will have to pay capital gains.
the advantage in a fully managed property via an agent is they should act at the interim between you and the tenant. any issues they will resolve - with your consent. Some pay set a floor limit where below that, they will get the job done and let you know about it afterwards. Naturally, you pay for this "service".
the advantage in a fully managed property via an agent is they should act at the interim between you and the tenant. any issues they will resolve - with your consent. Some pay set a floor limit where below that, they will get the job done and let you know about it afterwards. Naturally, you pay for this "service".
Factor in whether you can afford to cover the mortgage if you are without tenants for a while (3-6 months), and decoration/repair costs. Tenants will want things fixing there and then - they don't like having to wait for pay day!
Sounds like you should be OK if you are paying the mortgage already, just don't get excited by the money you are making and blow it on a new car!
Sounds like you should be OK if you are paying the mortgage already, just don't get excited by the money you are making and blow it on a new car!
therealpigdog said:
Factor in whether you can afford to cover the mortgage if you are without tenants for a while (3-6 months), and decoration/repair costs. Tenants will want things fixing there and then - they don't like having to wait for pay day!
Sounds like you should be OK if you are paying the mortgage already, just don't get excited by the money you are making and blow it on a new car!
I should be ok with it, the plan being that I'd get an interest only mortgage and over pay to the same terms of a interest and capital mortgage. That way if I do have issues with the tenants I will be able to cover what is required of me. (I'm assuming I can do this as it's the way I currently pay my mortgage)Sounds like you should be OK if you are paying the mortgage already, just don't get excited by the money you are making and blow it on a new car!
Also, I'm going to be strict with the 'income' and have it in a stand alone account, so the 'profit' from renting it is used as a fund to fix stuff etc etc, it won't be paid into my normal current account as was mentioned earlier. If I did have it paid into my main account I'd struggle to save it!!
My daughter 3 years ago was moved by her company from Bristol to Warwick, and having a 3 bed semi detached house with garage, so made a decision to rent her Bristol home out. She rented it unfurnished, and only the house not the garage, which one/she stated on the Tenancy Agreement. The tenants who took up the tenancy are still in residence at the property, in that time my daughter has had to carry out 2 repairs, both boiler related. Possibly the reason why the tenants have remained in the property is possibly the convenient location to the motorway, but more importantly the rent is below the market rate.
I have been renting for some 15 years now, at first furnished properties, then unfurnished since I got fed up moving furnisher in and then furnisher out, the same applying to white goods. Apart from that, there were the safety & liability issues, and more importantly the more white goods, the more chances of break downs/repairs and call outs. Cookers, oven hobs are supplied, and if I do get a tenant who has not got a washing machine, fridge etc., then to retain the tenant I will supply the same, but as I said earlier the more white goods, the more call out.
There are both advantages and disadvantages in using Letting Agents, the disadvantages being they will try to screw you as well as your tenants, the advantages being it becomes more of a business transaction. If you are going to living nearby, and you have basic DIY skills then manage the property yourself.
I have been renting for some 15 years now, at first furnished properties, then unfurnished since I got fed up moving furnisher in and then furnisher out, the same applying to white goods. Apart from that, there were the safety & liability issues, and more importantly the more white goods, the more chances of break downs/repairs and call outs. Cookers, oven hobs are supplied, and if I do get a tenant who has not got a washing machine, fridge etc., then to retain the tenant I will supply the same, but as I said earlier the more white goods, the more call out.
There are both advantages and disadvantages in using Letting Agents, the disadvantages being they will try to screw you as well as your tenants, the advantages being it becomes more of a business transaction. If you are going to living nearby, and you have basic DIY skills then manage the property yourself.
Gassing Station | Homes, Gardens and DIY | Top of Page | What's New | My Stuff