Hi Guys,
Just after some advice really.
I've had my flat up for sale for a year now, and had plenty of viewings, but no offers unfortunately - its obviously too expensive, but I cannot drop the price too much more due to what is remaining on my mortgage.
I really need to move within 6-9 months as we have a baby due in two weeks, and the flat is only 1 bedroom.
So, I was thinking of potentially renting it out in the mean time if it doesn't sell.
I imagine a few people on here rent properties out, so I'm just after some advice really.
- Is it worth the agro?
- I think I need to upgrade my fuse board (no RCDs currently), and get it certificated etc, I have smoke and carbon monoxide alarms. Boiler is serviced, but do I need to prove this?....anything else required?
- Can you go with a company who manages the rental income? Or aren't they worth it? My mortgage payment would be about the same as what the income from the rent would be - but I couldn't really afford too many missed payments!
- Do I have to change my current mortgage to a different type as I'd be renting?
- I've read the rent would be classed as an income? So taxable? As my wife won't be working, could she be the one receiving the payments, so wouldn't need to pay tax?
Any other advice?
Renting out, and having a new mortgage would really stretch me financially, so is a little worrying.
Thanks a lot
A few things I know:
- Most mortgage companies will provide permission to let without a change in terms, but you need to call and formally ask otherwise you're in breach of terms (unlikely to get caught). This is the case as long as you've had the mortgage for a reasonable time (ie not obviously scamming to avoid getting a buy to let mortgage)
- Rental income is fully taxable as regular income.
- Management companies in London charge between 8% (local independents) and 20% (foxtons) (inc vat) of monthly rental income for managing the property. There may also be fees on top of this like contract signing fee, renewal fee etc.
- Other deductions from your rental income will include maintenance costs, gas certificate costs, landlord insurance, unrented time.
I hope it works out for you.
EDIT: Also, 1 bed with a baby isn't a massive issue, I lived in a 2 bed but with my brother renting the second for the first year of having a kid. Even once we had a spare room my boy didnt move into it for ages. Its pretty nice to have your kid sleep in the same room as you and the Mrs, imo its just the recent social fashion to sleep separately at such a young age.
EDIT 2: I've also recently gone from having a high disposable income to almost none as we've opted for private schooling. The stress isnt nice, its much harder to enjoy life with the family when you cant do whatever you want. Id advise staying in your place until it sells for the price you need. Dont over exert if you dont have to. Have you considered cheaper areas to buy the new place? I moved south east to Falconwood near Eltham, love it and 20 mins to London Bridge, got a 5 bed in zone 4 for the price of a 2 bed in Blackheath (zone 3).
Hi addictweb,
Thanks for the reply, and pointers! They all make total sense.
I think Edit 1 is also correct - from birth, we still have a year to sell my flat really - I'm just getting anxious I think. I like the thought of having two properties, and in 20 years not having a mortgage on either, but then it will leave me pretty skint, and not maybe enjoy things as much?! More thought needed I think....
Thanks again :)
speak to your mortgage company - some may not allow it to be rented.
it can be difficult to get another mortgage when you already have one property - and a mortgage company may want to see it rented for 6 months+ before they will consider rental income.
Is it worth the agro? depends on your mortgage:rental ratio - if your barely breaking even could you afford a 3-6 month empty house? how about repainting/decorating in between tenants?
While it doesn't sound ideal, maybe taking a hit is a better option... £5k drop in selling price is better than finding £5k for a trashed property & loss of income meaning you get in debt over it & still have to keep the maintenance up to get a good price.
Find a good creative mortgage broker to help sell your property.. there are still ways to get around the old stamp duty paid or 5% deposit paid which is illegal.
Its a selling point if a first time buyer can buy the house with virtually no money down (your property is £100k you accept 90k they go for £100k mortgage, put down £10k & left with £90k mortgage - you give the £10k back to them. They get 100% mortgage). Not every mortgage broker will do that obviously, but some will - as its about getting the deal done.
Depending on your sale price - have you thought about contacting local council or housing associations? I know of people who have bought properties & then approached the local authorities for a quick flip.
The only issue beyond your mortgage provider is getting a good tenant to rent the place, most are but there have been a few who trashed the rented accommodation or even did dangerous structural alterations. Make sure you are insured for this sort of damage.
We're looking to rent our place out when we move to NZ, as a security. Only spoken to one estate agents but they said they charge 40% of the first month rent and then 10% after that.
I'm assuming when you rent a place that more things need to be up to snuff than selling...ie selling it's buyer beware, but renting, things like dodgy electrics need to be fixed.
One question I have...someone told me once if you get an electrician out to do a simple job, they could "condemn" the electrics in the property requiring you to have the whole lot re-wired. Is this true? For the most part the house is sound but I don't want to run the risk of calling a sparky out to look at a small bit of wiring only for him to turn around and say the whole house needs doing!
Quote from: zpyder on November 10, 2015, 18:50:32 PM
We're looking to rent our place out when we move to NZ, as a security. Only spoken to one estate agents but they said they charge 40% of the first month rent and then 10% after that.
I'm assuming when you rent a place that more things need to be up to snuff than selling...ie selling it's buyer beware, but renting, things like dodgy electrics need to be fixed.
One question I have...someone told me once if you get an electrician out to do a simple job, they could "condemn" the electrics in the property requiring you to have the whole lot re-wired. Is this true? For the most part the house is sound but I don't want to run the risk of calling a sparky out to look at a small bit of wiring only for him to turn around and say the whole house needs doing!
My personal opinion.... Sell. You dont want the headache of owning property while the other side of the world.
What if there is an issue you cant resolve being that far away? Jumping on a plane short notice is going to hit your wallet pretty hard.
We're in a situation where we're only paying the interest on the house mortage/loan, so if we rent out we would slowly be saving a few hundred each month. Our thoughts are that hopefully if something goes wrong, the rent account will cover the damage, and we'd be relying on either the estate agents maintenance people, or family friends (depending on the job).
If after a year or two we decide we want to stay in NZ, we'll sell up. But it'd be good to have the house as a fallback if we need to come back to the UK. Also we're hoping house prices in our area will go up in the next year or two as there're a few developments that should make Thetford slightly less depressing to live in...
Quote from: Eggtastico on November 10, 2015, 19:17:10 PM
Quote from: zpyder on November 10, 2015, 18:50:32 PM
We're looking to rent our place out when we move to NZ, as a security. Only spoken to one estate agents but they said they charge 40% of the first month rent and then 10% after that.
I'm assuming when you rent a place that more things need to be up to snuff than selling...ie selling it's buyer beware, but renting, things like dodgy electrics need to be fixed.
One question I have...someone told me once if you get an electrician out to do a simple job, they could "condemn" the electrics in the property requiring you to have the whole lot re-wired. Is this true? For the most part the house is sound but I don't want to run the risk of calling a sparky out to look at a small bit of wiring only for him to turn around and say the whole house needs doing!
My personal opinion.... Sell. You dont want the headache of owning property while the other side of the world.
What if there is an issue you cant resolve being that far away? Jumping on a plane short notice is going to hit your wallet pretty hard.
Egg is right, don't waste your time for 200 quid "profit" a month. Go to NZ and enjoy your life, without worrying about a flat 6000 miles away.
Quote from: zpyder on November 10, 2015, 20:27:08 PM
We're in a situation where we're only paying the interest on the house mortage/loan, so if we rent out we would slowly be saving a few hundred each month. Our thoughts are that hopefully if something goes wrong, the rent account will cover the damage, and we'd be relying on either the estate agents maintenance people, or family friends (depending on the job).
If after a year or two we decide we want to stay in NZ, we'll sell up. But it'd be good to have the house as a fallback if we need to come back to the UK. Also we're hoping house prices in our area will go up in the next year or two as there're a few developments that should make Thetford slightly less depressing to live in...
food for thought... My cousin lives in NZ & it cost her $2k NZD for a last minute emergency flight home.
Even more so if you are on an interest only mortgage + you will need permission from your mortgage provider to rent it out.
Mortgage provider is the bank of parents ;). My family came into inheritance a few years ago, figured rather than pay interest to a bank we could pay it to a family member. They get a good rate on their savings and we have a good deal on what we pay!
Also cone I to a little money more recently that means we don't need to sell immediately to afford the move, hence the idea of renting it out as a temporary backup. Food for thought though thanks.
ahh, I guess that makes it a bit easier.
Will family help with running the rental?
You need a landlord certificate by law & also an energy performance cert (if you don't have one from purchasing the property)
I would avoid a management company. How much effort do you think they can put in for their 10%? Lets say rental is £800 a month.
10% aint much. Unless they going to bump up by doing 'repairs' & your not around to check if what they say needs repairing.