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  • FIRST POST
    jimsmillions
    Renting a house I will inherit. Novice, costs breakdown
    • #1
    • 1st May 12, 11:12 PM
    Renting a house I will inherit. Novice, costs breakdown 1st May 12 at 11:12 PM
    Hi all

    At sometime in the not too distant future I will be the owner of my formal home for the obvious not too happy reasons. I am considering renting the property as I dont want to part with it at the moment. Its a standard terraced 2 bedroom house at the low end of the property ladder. All I know is property's of the same type in the exact area rent at about 550 pcm. I myself have never rented so from both sides have no idea about renting.

    In basic preferably from a landlord or someone experienced in renting can you tell me

    Rent myself or go agency, advice welcomed

    Who pays what bills or which are negotiable?

    Rough costs i.e. things like landlord insurance

    Last but of course not least rough monthly profit (Nothing owed on house)

    Any help apprecatied
Page 2
  • Contessa
    Do not underestimate the cost of repairs. They are beyond whatever you can imagine! Tenants are not of the same mindset as homeowners.

    I'm being comical here to make a point but start with the assumption that tenants expect to be living in hotel like conditions and have no tolerance for even the tiniest house quirks that homeowners don't think twice about and wouldn't even bother fixing.
    That window that has always needed a wee shove to open? Tenants will demand a carpenter immediately!

    Also assume they are like little children who have to have everything done for them. They can't do the simplest repairs themselves and probably you wouldn't want them to anyway.

    If you use an agency for maintenance, you will find yourself paying professional rates for incredibly simple tasks that you would do without thinking and would cost virtually nothing (e.g. 95 for me to replace a toilet ballcock recently because it was beneath the tenant's dignity or ability to do it himself.)
    Sometimes I wonder that they can bring themselves to change lightbulbs without ringing a bell and having a professional lightbulb fitter run round!

    I'm laughing about it of course because it's all part of the landlord's job but you do need to realise tenant mentality can be diametrically opposed to that of a homeowner and you are responsible for the resulting costs. Don't underestimate them.
    Originally posted by Eton Rifle
    E.R., I have a friend who would agree with you. Funnily enough it's not the major repairs but the minor, niggly ones which annoy him. I won't be surprised if he decides to sell up soon.
  • jimsmillions
    Do not underestimate the cost of repairs. They are beyond whatever you can imagine! Tenants are not of the same mindset as homeowners.

    I'm being comical here to make a point but start with the assumption that tenants expect to be living in hotel like conditions and have no tolerance for even the tiniest house quirks that homeowners don't think twice about and wouldn't even bother fixing.
    That window that has always needed a wee shove to open? Tenants will demand a carpenter immediately!

    Also assume they are like little children who have to have everything done for them. They can't do the simplest repairs themselves and probably you wouldn't want them to anyway.

    If you use an agency for maintenance, you will find yourself paying professional rates for incredibly simple tasks that you would do without thinking and would cost virtually nothing (e.g. 95 for me to replace a toilet ballcock recently because it was beneath the tenant's dignity or ability to do it himself.)
    Sometimes I wonder that they can bring themselves to change lightbulbs without ringing a bell and having a professional lightbulb fitter run round!

    I'm laughing about it of course because it's all part of the landlord's job but you do need to realise tenant mentality can be diametrically opposed to that of a homeowner and you are responsible for the resulting costs. Don't underestimate them.
    Originally posted by Eton Rifle
    Thanks for the food for thought. I know someone that runs their own DIY firm and has done various types of work for me at low prices. Pretty sure he would run it for a small annual fee plus the cost of jobs.

    Once things are settled think I will go get some professional advice. Who would be good to go to? A financial advisor or someone else?
  • dimbo61
    Like I said good accountant as you would be come self employed and have to do a Tax return so you may as well employ a professional.
    Join a landlords assocation for advice and help with tenancy agreements, other forms etc.
    Check you are doing verything right, smoke alarms, gas safety certificate, CO2 alarm, electrics checked and certificate ( lasts 5 years) LL insurance, shut off the loft area as property become a 3 storey property ( more problems than its worth)
    Do you rent furnished or unfurnished , type of tenants etc
  • dimbo61
    PS take out an Interest Only BTL mortgage ( most BTL mortgages are IO!)
  • Werdnal
    Like I said good accountant as you would be come self employed and have to do a Tax return so you may as well employ a professional.
    Join a landlords assocation for advice and help with tenancy agreements, other forms etc.
    Check you are doing verything right, smoke alarms, gas safety certificate, CO2 alarm, electrics checked and certificate ( lasts 5 years) LL insurance, shut off the loft area as property become a 3 storey property ( more problems than its worth)
    Do you rent furnished or unfurnished , type of tenants etc
    Originally posted by dimbo61

    Self assessment Tax return on one single property is easy - no need for professional if you keep adequate records, a simple list of incoming and outgoings, plus receipts incase HMRC ever do a ramdom check. Can even be done online very easily and there is plenty of guidance on the HMRC website.

    Although a good investment, smoke alarms are only compulsory in HMO's and CO alarms (CO2 is carbon dioxide!) are not compulsory at all - they only work if tenant can be bothered to change the battery anyway!

    You cannot just "shut off" the loft area - unless it is specifically excluded in writing on the tenancy agreement, then tenant has a right to use it. The 3 storeys only becomes an issue if the third storey is "inhabitable", ie can be used as living space. Using loft for storage is not a problem.
    Last edited by Werdnal; 04-05-2012 at 8:41 PM.
  • jimsmillions
    Thanks again for all the advice. I already am self employed and do a basic tax return so guess I could lump it all in together.

    Why would I take out a BTL mortgage when nothing is owed on the house?

    Will start to look into the other stuff soon
  • Catblue
    Don't underestimate the emotional side of things either. Might be hard to see other people in your parents' house, particularly if they do not take great care of the place.

    I know someone who rented out his late mother's house - he ended up dreading going to the house for inspections/routine maintenance etc. Not that the tenants had trashed the place or anything, it was just a constant reminder of the loss of his mum. And he felt a bit uncomfortable about having to view his mum's home in financial terms of profit and loss.

    He sold it, bought another just a few streets away and rents that one out. He is a lot happier with things that way.
  • marliepanda

    If you use an agency for maintenance, you will find yourself paying professional rates for incredibly simple tasks that you would do without thinking and would cost virtually nothing (e.g. 95 for me to replace a toilet ballcock recently because it was beneath the tenant's dignity or ability to do it himself.)
    Sometimes I wonder that they can bring themselves to change lightbulbs without ringing a bell and having a professional lightbulb fitter run round!

    I'm laughing about it of course because it's all part of the landlord's job but you do need to realise tenant mentality can be diametrically opposed to that of a homeowner and you are responsible for the resulting costs. Don't underestimate them.
    Originally posted by Eton Rifle
    I used to do it all myself. Then my LL put my rent up, and then put it on the market a month later.

    Suddenly my ability to fix things has gone...
  • Werdnal
    Thanks again for all the advice. I already am self employed and do a basic tax return so guess I could lump it all in together.
    Originally posted by jimsmillions

    If you are declaring rental income, there is a specific part of the Self assessment for "Income from Property", so if you do paper returns, make sure you get that part, and if online, look for the correct section.
  • G_M
    Why would I take out a BTL mortgage when nothing is owed on the house?
    Originally posted by jimsmillions
    Because the mortgage interest payments are tax deductable.

    You'll need to do your own calculations to decide whether the tax savings compensate for the mortgage costs....
  • marliepanda
    I do it all myself to stop the landlord coming round.

    I've played that game before. Give them an inch and they take a mile, round my way.

    I find it's best not to remind them of your existence.
    Originally posted by Eton Rifle
    Ive never even met my LL! All goes through an Agent and they dont ever come round for repairs, just the same handyman.

    I havent gone took the mick to be honest, just consistent problems with the thermostat on the washing machine which I couldnt do myself and an electrical fault which would have burnt the place down anyway if not sorted :P But I feel a lot less guilty about calling them out now :P
  • ViolaLass
    Because the mortgage interest payments are tax deductable.

    You'll need to do your own calculations to decide whether the tax savings compensate for the mortgage costs....
    Originally posted by G_M
    Surely it's cheapest not to borrow at all if borrowing is not needed.
  • 00ec25
    Surely it's cheapest not to borrow at all if borrowing is not needed.
    Originally posted by ViolaLass
    agreed,
    do not let the tax tail wag the dog

    the amount you save in paying less tax is always wiped out by the amount of interest paid on the loan, unless you can invest the borrowed money at a better interest rate than you are paying on the loan ... but then factor in any capital repayments to clear the debt!
    I am not being paid to type so will not correct typos unless it reads double dutch
  • dimbo61
    The OP is paying interest on his mortgage for his home!
    Now if he can borrow say 75K IO mortgage for the rental property and use that to pay off his home mortgage.
    Interest is tax deductable from profit he makes.
    I did not make up the rules.
    much rather pay for a good accountant than a poor leeting agent.
    I also tend to be OTT with smoke alarms, CO2 alarms ( 6 year old girl died from CO2 poisoning in a tent ) fire doors ( hence only 2 storey) gas safety certificate, electric safety certificate PAT testing.
    Do you want to stand up in court and explain why you did not bother?
    Please read Landlord& Buy-to-let magazine issue32 2012
  • Werdnal
    I also tend to be OTT with smoke alarms, CO2 alarms
    Originally posted by dimbo61
    As I said before - its CO - CO2 is carbon dioxide!

    And as I also said before, they only work if tenant changes batteries. How do you enforce this? If you supply them, do you go round every month and "press the button" to try them?

    I currently have a fully installed heat detecting sprinkler system in my flat, but when I had a battery smoke alarm, tenant chucked it out because he wanted to smoke in the flat (against AST clause ...) and it kept going off!
    Last edited by Werdnal; 07-05-2012 at 4:17 PM.
  • ViolaLass
    The OP is paying interest on his mortgage for his home!
    Now if he can borrow say 75K IO mortgage for the rental property and use that to pay off his home mortgage.
    Interest is tax deductable from profit he makes.
    I did not make up the rules.
    Originally posted by dimbo61
    As I understand it, the mortgage doesn't actually have to be on the let property for the interest to be tax deductable, in which case transferring the debt to a BTL mortgage, with the higher rates that involves, would be throwing money away.
    • Old Git
    • By Old Git 7th May 12, 5:34 PM
    • 3,925 Posts
    • 3,438 Thanks
    Old Git
    as I understand it the interest on a BTL is deductable only for the amount you payed for the property .If the property cost zero then I cant see any way a BTL mortgage would be tax deductable .
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