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    • Robomb
    • By Robomb 9th May 17, 9:51 PM
    • 4Posts
    • 0Thanks
    Robomb
    Renting out my one bed flat yay or nay?
    • #1
    • 9th May 17, 9:51 PM
    Renting out my one bed flat yay or nay? 9th May 17 at 9:51 PM
    I own a one bedroom flat in the suburbs of London. I bought it back in 2012 just before prices rocketed, I have lived in it ever since. I am now in the position where my boyfriend has asked me to live with him and so I am seriously considering renting my flat out to tenants. However there seem to be so many financial factors to consider that I feel a bit lost and am starting to wonder if it is a realistic move.

    I do not expect to make any profit from the rental, only hope that it pays for itself plus money aside for maintenance. Can anybody advise me if my calculations/expectations are accurate? Or if I am missing something?

    I currently have a repayment mortgage of £450 a month. I know the rental value to be £850 a month. I also pay approx £600 per annum in ground rent and buildings insurance. I intend to manage the property myself as I know how the property ‘works’ and have a some good handymen nearby. I am also going to try to find tenants myself (initially at least) through putting the word out to friends and family. However I would like a letting agent to take care of the contracts, deposit, admin, credit checks and money collection. In terms of the mortgage I am in the middle of a fixed 5 year term. I intend to call the bank and explain my situation, are they likely to increase my mortgage? Try to change it to a Buy to Let? How much more is this likely to be? How much tax will I have to pay on my additional gains from the rent? I recently went down to part time at work, so my current income is only £24,000. I am also aware that I will need landlords insurance and safety certs for the boiler. How much do these things cost on average? As a leaseholder do I need to tell the freeholder (management company) that I intend to rent the property?

    Can anyone advise me if they think this is too risky a move? Or give further advice?
Page 2
    • economic
    • By economic 10th May 17, 12:40 PM
    • 1,383 Posts
    • 619 Thanks
    economic
    Why bother responding in that case?
    Originally posted by Crashy Time
    to inform others who dont know about you. if people listened to you, they would be much worse off financially. no one wants to be a loser like you crashy.
    • Crashy Time
    • By Crashy Time 10th May 17, 12:45 PM
    • 4,040 Posts
    • 1,941 Thanks
    Crashy Time
    to inform others who dont know about you. if people listened to you, they would be much worse off financially. no one wants to be a loser like you crashy.
    Originally posted by economic

    So you would advise people to fill their boots with debt at 400-500k a pop for London new-builds in dodgy soulless areas then?
    • economic
    • By economic 10th May 17, 12:56 PM
    • 1,383 Posts
    • 619 Thanks
    economic
    So you would advise people to fill their boots with debt at 400-500k a pop for London new-builds in dodgy soulless areas then?
    Originally posted by Crashy Time
    i wouldnt no, and i said this before. but then you have said for years not to buy int this supposive bubble and people listened to you they would have lost out. simple fact. funny thing is you have lost out massively. hence you are what people would call a loser.
    • Crashy Time
    • By Crashy Time 10th May 17, 1:01 PM
    • 4,040 Posts
    • 1,941 Thanks
    Crashy Time
    i wouldnt no, and i said this before. but then you have said for years not to buy int this supposive bubble and people listened to you they would have lost out. simple fact. funny thing is you have lost out massively. hence you are what people would call a loser.
    Originally posted by economic

    You bought back into the London bubble at peak prices hoping/believing prices would keep going up didn`t you?
    • economic
    • By economic 10th May 17, 1:15 PM
    • 1,383 Posts
    • 619 Thanks
    economic
    You bought back into the London bubble at peak prices hoping/believing prices would keep going up didn`t you?
    Originally posted by Crashy Time
    nope, i told you already why i bought. why do you sound like a broken record?

    i bought because i dont want to waste money on rent. i have the money to buy. i am earning 4% income a year on my capital invested in my home. tax free. even if prices fall i would still be better off long term. i hate the idea of renting. i have other invesments as well and my LTV is 50%.
    • agrinnall
    • By agrinnall 10th May 17, 3:04 PM
    • 17,453 Posts
    • 13,086 Thanks
    agrinnall
    But you didn`t say that, you said sell it now and "bank the tax free profit". In response I said that tax on buyers could make this difficult.
    Originally posted by Crashy Time
    It's implied, it's tax free profit now because there is no tax to pay when selling ones main home, if the OP goes ahead with their plan profit may well be liable for CGT in the future. As I'm sure you know but ignore so that you can spout nonsense. The SDLT paid by a buyer has no impact on the profit made by the seller or on any CGT that the seller is or is not liable to pay.
    • Crashy Time
    • By Crashy Time 10th May 17, 3:24 PM
    • 4,040 Posts
    • 1,941 Thanks
    Crashy Time
    It's implied, it's tax free profit now because there is no tax to pay when selling ones main home, if the OP goes ahead with their plan profit may well be liable for CGT in the future. As I'm sure you know but ignore so that you can spout nonsense. The SDLT paid by a buyer has no impact on the profit made by the seller or on any CGT that the seller is or is not liable to pay.
    Originally posted by agrinnall

    It does if the tax makes them more cautious about buying, it could mean less, or even no profit for the seller.
    • Crashy Time
    • By Crashy Time 10th May 17, 3:26 PM
    • 4,040 Posts
    • 1,941 Thanks
    Crashy Time
    nope, i told you already why i bought. why do you sound like a broken record?

    i bought because i dont want to waste money on rent. i have the money to buy. i am earning 4% income a year on my capital invested in my home. tax free. even if prices fall i would still be better off long term. i hate the idea of renting. i have other invesments as well and my LTV is 50%.
    Originally posted by economic

    Safe to say that you have more at stake than me if the London property bubble pops though?
    • Robomb
    • By Robomb 17th May 17, 6:01 PM
    • 4 Posts
    • 0 Thanks
    Robomb
    I would imagine you would need freeholder subletting consent (check your lease) which might involve fees. Also you might get charged a higher rate by your mortgage company. Don't forget about rules regarding registering the deposit as penalties can be high otherwise. Most laws also favour tenants rather than landlords.
    Originally posted by boliston
    Thanks this is useful advice. I will contact my freeholder today. I just spoke to the bank and luckily they will grant me a consent to let for just a one off fee of £100 which is great, no mortgage increase. I will definitely register the tenants' deposit lawfully. Thanks again.
    • G_M
    • By G_M 17th May 17, 7:52 PM
    • 39,252 Posts
    • 44,603 Thanks
    G_M
    If you have not yet done so, please read the links I gave you in my post 10 above. It's not just the mortgage lender's consent you need to learn about/sort.

    I fear you may have been distracted by the 'online debate' (to be polite) in the intervening posts........
    • tweeet
    • By tweeet 17th May 17, 10:20 PM
    • 141 Posts
    • 21 Thanks
    tweeet
    I also bought a two bed house in 2012 (not Londinium tho) and am selling. Rented to friends for two years and if I hadn't got them out sharpish then the house would be in bits....agent looking after it or not...you get dirty lazy people in you're knackered. How much did you buy for in 2012 ? Let's guess £200k....its probably gone up £70k...sell it !!
    • Crashy Time
    • By Crashy Time 19th May 17, 1:39 PM
    • 4,040 Posts
    • 1,941 Thanks
    Crashy Time
    I also bought a two bed house in 2012 (not Londinium tho) and am selling. Rented to friends for two years and if I hadn't got them out sharpish then the house would be in bits....agent looking after it or not...you get dirty lazy people in you're knackered. How much did you buy for in 2012 ? Let's guess £200k....its probably gone up £70k...sell it !!
    Originally posted by tweeet

    Yep, sell it while you can....


    http://www.telegraph.co.uk/news/2017/05/18/stamp-duty-tax-raid-prompts-sharp-drop-buy-to-let-lending/
    • movilogo
    • By movilogo 19th May 17, 2:17 PM
    • 2,245 Posts
    • 1,507 Thanks
    movilogo
    If the property can generate positive cashflow (actual amount is immaterial), considering some insurance factor if things go wrong

    => let it

    If generating negative cashflow => don't let it

    PS: Make sure you understand how tax is calculated on rental income.
    Happiness is buying an item and then not checking its price after a month to discover it was reduced further.
    • Crashy Time
    • By Crashy Time 19th May 17, 6:57 PM
    • 4,040 Posts
    • 1,941 Thanks
    Crashy Time
    If the property can generate positive cashflow (actual amount is immaterial), considering some insurance factor if things go wrong

    => let it

    If generating negative cashflow => don't let it

    PS: Make sure you understand how tax is calculated on rental income.
    Originally posted by movilogo

    The problem is finding a buyer when loads of other BTL are running for the exits?
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