[ADB]

Its all change in my life at the moment and I am considerring selling or renting out my house so I am after some (more..)advice.

I have a house that is half paid for (or at least I have a morgage for about half of what its valued at). I had an estate agent round who valued it for sale and rental. Its worth very little more than what I paid for it in 2003. I have never rented a house out before (nor rented a house myself) so it all seems a little daunting. The rent value is slightly more than what my current mortgage is (by £20), however I assume once I let the building society know there will be some premium to pay? The estage agent want 15% to manage it - however they just seem to be a middle man and any repair costs etc are my responsibility and 15% for answering phone calls and passing information to and fro seems a lot, plus it means its costing me at this point as the 15% means the rent I would receive won't cover the mortgage. There also seem to be various things that need to be done...
Anyway it just seems a bit of an ar$e and I like to keep things simple?
The other option is sell it, however the estate agent wasn't too enthusiastic about the type of house in the current market?

I'm just after some advice - maybe others who currently rent property out and how easy it is to manage, what stuff I need to do etc?

Cheers, Andy

 

[Girl Smiffy]

Hi

I seem to be picking up all your posts today

My hubbie and I rent out our old pads. Defo talk your mortgage company - some don't put the mortgage up - but any arrangement may expire with any tie in period on your current mortgage. After this, you may have to search out a Buy To Let mortgage.

I don't go through an agent either - as my tenants live near enough, and I have a trusted plumber/eletrician who does all the work for a fraction of what the estate agent's man charges.

And the agent is just a load of hassle that you don't need anyway. If anything goes wrong, they still call you up and annoy you. And if you are lucky enough to not have anything go wrong, then you are paying them for sitting around and doing nothing...

Make sure you get an inventory drawn up before your tenant moves in. And get a contract from WH Smith and hand write in any clauses you want. Get an employer reference from tenant, and do a credit check - there is website called Letsure or something that has lots of stuff for a DIY landlord.

Get the deposit and stick it in a landlord deposit account - there are 2 - both run by government appointed agencies. No fees to pay - they make money earning interest on the deposit.

And finally, tell the HMRC about your new income.

Gosh - engagement rings to start with and now renting All change for you

Good luck

 

[ADB]

Thanks for the reply (on both threads...).

I know several builders, decorators, plumbers etc so that won't be a problem, plus the house is near to my mums so if we move away I don't think my mum would mind too much dealing with the odd thing. Letsure was mentioned to me before, but its just an insurance company? I don't think they do credit checks on tennants? Its this kind of information I am after - I could do with a checklist or something (a new landlords pack?). I thought there were lots of regulations and forms that I needed to complete?

What happens with council tax, utility bills etc? Do I need any additional insurance policies etc?

Engaged, moving. Its all happening

Andy

 

[jensttrs]

Hi Andy

take a look at:
www.tenant-reference.co.uk

This allows you to vet potential tenants and now adays they look closely at that respectives income and existing debts to ensure that the property is affordable as well as them having a clean credit record.

As per the previous post above if you have a support network around you then it is much simplier and more profitable for you to manage the property yourself.

You will need to advise your existing mortage company as you will find that it is unlikely that they will be happy for you to stay on the same product you may be on (thus this could increase your mortgage costs - so take a look at this before making any decisions) and they take issues with the new tennants being relatives or friends.

In this current market the BTL mortgages have high arrangement/set up fees so again more potential costs to consider.

Good luck with it all :wink:

 

[ag]

Surely the income from the let, less any legitimate expenses is taxable income and in your case probably at 40%. Does this not mean that the income you receive is going to be far less than the mortgage obligation that you currently have? This could also impact on your purchase of any other property.

 

[jbell]

Surely the income from the let, less any legitimate expenses is taxable income and in your case probably at 40%. Does this not mean that the income you receive is going to be far less than the mortgage obligation that you currently have? This could also impact on your purchase of any other property.

You only pay tax on profit, the trick is to make as little as possible

 

[jbell]

I don't go through an agent either - as my tenants live near enough, and I have a trusted plumber/eletrician who does all the work for a fraction of what the estate agent's man charges.

And the agent is just a load of hassle that you don't need anyway. If anything goes wrong, they still call you up and annoy you. And if you are lucky enough to not have anything go wrong, then you are paying them for sitting around and doing nothing...

Make sure you get an inventory drawn up before your tenant moves in. And get a contract from WH Smith and hand write in any clauses you want. Get an employer reference from tenant, and do a credit check - there is website called Letsure or something that has lots of stuff for a DIY landlord.

Get the deposit and stick it in a landlord deposit account - there are 2 - both run by government appointed agencies. No fees to pay - they make money earning interest on the deposit.

And finally, tell the HMRC about your new income.

Seconded

 

[ag]

Surely the income from the let, less any legitimate expenses is taxable income and in your case probably at 40%. Does this not mean that the income you receive is going to be far less than the mortgage obligation that you currently have? This could also impact on your purchase of any other property.

You only pay tax on profit, the trick is to make as little as possible

But any monies used to repay the loan capital would count as profit. No?

 

[jbell]

Surely the income from the let, less any legitimate expenses is taxable income and in your case probably at 40%. Does this not mean that the income you receive is going to be far less than the mortgage obligation that you currently have? This could also impact on your purchase of any other property.

You only pay tax on profit, the trick is to make as little as possible

But any monies used to repay the loan capital would count as profit. No?

My accountant works it so I only pay the 40% on profit - this is worked out as rent minus mortgage minus running costs

 

[ag]

My accountant works it so I only pay the 40% on profit - this is worked out as rent minus mortgage minus running costs

If you don't mind me asking, is your mortgage repayment or interest only?

 

[Girl Smiffy]

You can only deduct the interest element of your mortgage payment from your income to get the profit figure (for tax purposes).

My mortgages are interest only - as you want to pay off your own home first. No income tax to pay on your own home. This is a long term plan.

However, I don't care too much about paying off rental property mortgage. In 20 years time, the rental property will be worth much more in comparison to the mortgage, and you could probably pay it off really quickly as inflation/salary increases over the years.

Feeling like its information overload? Check out the HMRC web page on rental property...

 

[Girl Smiffy]

And a few more things you need to do before you start renting.

- Get your boiler checked and a gas certificate issued. Cost less than a £100 to be done annually.
- Get a EPG certificate (shows how energy efficient a house is). Recent legal requirement, but only needs to be done as a one off. Cost about £50.
- You can get landlords insurance if you want. Covers you for different things dependent on the premium.
- I don't get it but do get emergency British Gas cover on different things from plumbing to electrics.
- All above are tax deductable...

Seems like a lot to consider and stressful to start with, but once set up its easy to keep going.

And don't leave your tax return until the 11th hour - like me And I'm a flipping accountant (don't work for the HMRC incase you were wondering)...