Sell house or rent out?
Discussion
Hi Guys,
Hoping you can help with a bit of advice, not done anything like this before.
The mother in law lives alone up North, in her own house. She bought years ago and has a tiny amount of mortgage left to pay.
She owns another property outright in Wiltshire which she wants to move to.
She is basically wondering whether to sell the house up North, or rent it out, to generate income.
The house would need some work to realise any kind of rental income, probably £20k for a new kitchen and small extension to provide an eat in kitchen, as there is only 1 reception room.
I presume renting the house for as long as possible is best, on the basis that house prices over the long term should rise a little, and she will continue to generate income until that time too.
Anyone able to point me to anything that will help work out the best thing to do?
I don't even know what taxes/fees she may have to incur out of the rent?
Hoping you can help with a bit of advice, not done anything like this before.
The mother in law lives alone up North, in her own house. She bought years ago and has a tiny amount of mortgage left to pay.
She owns another property outright in Wiltshire which she wants to move to.
She is basically wondering whether to sell the house up North, or rent it out, to generate income.
The house would need some work to realise any kind of rental income, probably £20k for a new kitchen and small extension to provide an eat in kitchen, as there is only 1 reception room.
I presume renting the house for as long as possible is best, on the basis that house prices over the long term should rise a little, and she will continue to generate income until that time too.
Anyone able to point me to anything that will help work out the best thing to do?
I don't even know what taxes/fees she may have to incur out of the rent?
I can't really give advice but we moved into a bigger house about 18 months ago and, since the market was pretty stagnent with prices dropping, we decided to rent ours' out until things improve.
I think it depends upon whether your mum wants the cash or not now, or can wait until the market picks up, which it will at some stage.
I think it depends upon whether your mum wants the cash or not now, or can wait until the market picks up, which it will at some stage.
alolympic said:
She can wait to get the capital, as the rental income will potentially cover her living costs in Wiltshire.
Is there any tax on the income you get from rent?
Yes, whereas since it has been her primary residence for a while, you'll be exempt from Capital Gains Tax. Probably.Is there any tax on the income you get from rent?
You'll need to get a spreadsheet going.
Just read some stuff on http://www.direct.gov.uk (should have done that before posting -oops)
So,rental income as classed purely as income.
So, if my mother in law retired, and had no personal income from a job, the rental income from her property would be included as her income. If she did this, she may potentially pay a lower rate of tax, as some of it would be included within her personal tax free allowance etc?
I am starting to think that, unless she needs the capital from selling the house, or the market was going to slump further over the next 5-10 years, she would be better off renting than selling now.
So,rental income as classed purely as income.
So, if my mother in law retired, and had no personal income from a job, the rental income from her property would be included as her income. If she did this, she may potentially pay a lower rate of tax, as some of it would be included within her personal tax free allowance etc?
I am starting to think that, unless she needs the capital from selling the house, or the market was going to slump further over the next 5-10 years, she would be better off renting than selling now.
Renting out a house is a serious matter, with severe implications for the Landlord if they get it wrong, both financially and legally. It is a business.
If she's prepared for all work and grief that goes with it, then that's fine, but don't expect to sit back and receive an income indefinately. It can be quite stressfull, as there's always something that needs doing.
I've rented a few houses out in the past and I don't think I'd fancy doing it with a house a couple of hundred miles away, new build flat maybe, but not a house.
Have you checked the Yield, ie the value of the house now, plus the £20k expenditure against the rental income. It's only worth doing if there's a good return on the capital employed.
Good luck whatever you decide.
If she's prepared for all work and grief that goes with it, then that's fine, but don't expect to sit back and receive an income indefinately. It can be quite stressfull, as there's always something that needs doing.
I've rented a few houses out in the past and I don't think I'd fancy doing it with a house a couple of hundred miles away, new build flat maybe, but not a house.
Have you checked the Yield, ie the value of the house now, plus the £20k expenditure against the rental income. It's only worth doing if there's a good return on the capital employed.
Good luck whatever you decide.
JQ said:
Renting out a house is a serious matter, with severe implications for the Landlord if they get it wrong, both financially and legally. It is a business.
If she's prepared for all work and grief that goes with it, then that's fine, but don't expect to sit back and receive an income indefinately. It can be quite stressfull, as there's always something that needs doing.
I've rented a few houses out in the past and I don't think I'd fancy doing it with a house a couple of hundred miles away, new build flat maybe, but not a house.
Have you checked the Yield, ie the value of the house now, plus the £20k expenditure against the rental income. It's only worth doing if there's a good return on the capital employed.
Good luck whatever you decide.
As someone who's renting a house out some distance from my current residence I would second the above comments.If she's prepared for all work and grief that goes with it, then that's fine, but don't expect to sit back and receive an income indefinately. It can be quite stressfull, as there's always something that needs doing.
I've rented a few houses out in the past and I don't think I'd fancy doing it with a house a couple of hundred miles away, new build flat maybe, but not a house.
Have you checked the Yield, ie the value of the house now, plus the £20k expenditure against the rental income. It's only worth doing if there's a good return on the capital employed.
Good luck whatever you decide.
Is she happy with the idea of having to drive to Newcastle every time the slightest thing goes wrong or when the property needs inspected or to oversee tradespeople carrying out repairs.
Is she prepared for the high level of wear and tear her property will suffer at the hands of renters.
The hassle she may have if the tenant puts up a fight when she decides to take back the property to sell it in the future.
The second lot of refurbishment costs she will have to pay to make the property saleable after its had tenants in it.
If she thinks she can pay an agency 10% and all these issues go away I'm afraid she's wrong as in my and most peoples experience they are little more than a mailbox service relaying all the issues and complaints straight on to the landlord for them to resolve.
She also needs to factor in the ongoing costs - Landlords buildings insurance, gas safety inspections, Electrical Inspections where applicable, wear and tear on things like carpets, boiler, appliances, showers. In the first three months of my tenant being there I had to replace a shower, have an integrated washing machine repaired and an integrated dishwasher repaired this cost well over 500 pounds. I also pay for a British Gas Homecare type service in case the boiler or central heating pack up.
JQ said:
Renting out a house is a serious matter, with severe implications for the Landlord if they get it wrong, both financially and legally. It is a business.
If she's prepared for all work and grief that goes with it, then that's fine, but don't expect to sit back and receive an income indefinately. It can be quite stressfull, as there's always something that needs doing.
I've rented a few houses out in the past and I don't think I'd fancy doing it with a house a couple of hundred miles away, new build flat maybe, but not a house.
+1 agree
For every post you get like this, you will get others who say go ahead and rent the property out, but as a long standing landlord myself, through management and maintenance costs, I would never rent out a property that I could not manage myself. So in the OP’s MIL’s case, with the property being nearly 200 miles away, I would in her tender years of life, have a hassle free life and put the property up for sale.
Have you checked the Yield, ie the value of the house now, plus the £20k expenditure against the rental income. It's only worth doing if there's a good return on the capital employed.
Good luck whatever you decide.
If she's prepared for all work and grief that goes with it, then that's fine, but don't expect to sit back and receive an income indefinately. It can be quite stressfull, as there's always something that needs doing.
I've rented a few houses out in the past and I don't think I'd fancy doing it with a house a couple of hundred miles away, new build flat maybe, but not a house.
+1 agree
For every post you get like this, you will get others who say go ahead and rent the property out, but as a long standing landlord myself, through management and maintenance costs, I would never rent out a property that I could not manage myself. So in the OP’s MIL’s case, with the property being nearly 200 miles away, I would in her tender years of life, have a hassle free life and put the property up for sale.
Have you checked the Yield, ie the value of the house now, plus the £20k expenditure against the rental income. It's only worth doing if there's a good return on the capital employed.
Good luck whatever you decide.
Thanks for the advice guys.
Interesting to hear some advice from people who have done the rental thing.
I think a spreadsheet is in order, to try and unravel the financials.
The cost of the hassle to rent the house out will also be factored in somehow - difficult to put a value on, but important.
Selling and buying somewhere down South to rent out is a non starter. Costs incurred with moving, including stamp duty etc. mean that ain't worthwhile.
Interesting to hear some advice from people who have done the rental thing.
I think a spreadsheet is in order, to try and unravel the financials.
The cost of the hassle to rent the house out will also be factored in somehow - difficult to put a value on, but important.
Selling and buying somewhere down South to rent out is a non starter. Costs incurred with moving, including stamp duty etc. mean that ain't worthwhile.
mk1fan said:
alolympic said:
If she rented her home out, and lived in her other, when it came to sell the one she was renting, would she then have to pay Capital Gains tax?
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