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    • stormbreaker
    • By stormbreaker 11th Oct 17, 7:09 PM
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    stormbreaker
    Pie in the sky!
    • #1
    • 11th Oct 17, 7:09 PM
    Pie in the sky! 11th Oct 17 at 7:09 PM
    My husband would quite like to move into the city and live for around a year to see what it's like.

    We are at present mortgage free

    In around a years time we will be in the fortunate position that we may be able to buy a small flat in town, either with a small mortgage if not mortgage free.

    We would rent out our house for the year whilst we lived in the flat in the city.

    Can anyone advise as to what the financial pit falls of doing this would be? I'm thinking we would be liable for various taxes? But truly clueless!
Page 1
    • Pixie5740
    • By Pixie5740 11th Oct 17, 7:15 PM
    • 11,196 Posts
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    Pixie5740
    • #2
    • 11th Oct 17, 7:15 PM
    • #2
    • 11th Oct 17, 7:15 PM
    The higher rate of SDLT when you purchase the new property and income tax on the rental income you will receive are the main two.

    If you only plan on moving for a year it would probably be cheaper just to rent somewhere.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • PField
    • By PField 11th Oct 17, 7:22 PM
    • 88 Posts
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    PField
    • #3
    • 11th Oct 17, 7:22 PM
    • #3
    • 11th Oct 17, 7:22 PM
    Sounds like you intend on keeping the house as well as buying a small city centre flat.
    If you make a profit on the rental , then you will pay tax on the profit. With no mortgage you will most certainly be making money if you chose to rent it out. No tax to pay if you keep it empty.
    There will be an extra 3 % stamp duty to pay on the flat but that's about it.
    • stormbreaker
    • By stormbreaker 11th Oct 17, 7:35 PM
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    stormbreaker
    • #4
    • 11th Oct 17, 7:35 PM
    • #4
    • 11th Oct 17, 7:35 PM
    Yes we would be keeping the house on?

    I think it highly unlikely that we would settle in the city.

    Although our home is within 12 miles of the city and the transport links are not too bad, we would like to experience the freedom of being able to walk home from social events in town and not concern ourselves with whether we should drive and struggle to park or hang around waiting on buses (taxis outwith the city are extortionate)

    We want to enjoy our 'freedom years' to the fullest before grandchildren come along
    • stormbreaker
    • By stormbreaker 11th Oct 17, 7:37 PM
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    stormbreaker
    • #5
    • 11th Oct 17, 7:37 PM
    • #5
    • 11th Oct 17, 7:37 PM

    If you only plan on moving for a year it would probably be cheaper just to rent somewhere.
    Originally posted by Pixie5740
    Rent can be expensive and I've often thought of it as paying someone else's mortgage?
    • Pixie5740
    • By Pixie5740 11th Oct 17, 8:06 PM
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    Pixie5740
    • #6
    • 11th Oct 17, 8:06 PM
    • #6
    • 11th Oct 17, 8:06 PM
    Rent can be expensive and I've often thought of it as paying someone else's mortgage?
    Originally posted by stormbreaker
    Why don't you go and research the cost of renting for a year versus buying for a year?
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • stormbreaker
    • By stormbreaker 11th Oct 17, 8:17 PM
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    stormbreaker
    • #7
    • 11th Oct 17, 8:17 PM
    • #7
    • 11th Oct 17, 8:17 PM
    Why don't you go and research the cost of renting for a year versus buying for a year?
    Originally posted by Pixie5740
    I will do thanks. We may also keep the flat on and rent out? It's all just a pipe dream at present with various ideas and options.
    • Scotbot
    • By Scotbot 11th Oct 17, 10:18 PM
    • 139 Posts
    • 97 Thanks
    Scotbot
    • #8
    • 11th Oct 17, 10:18 PM
    • #8
    • 11th Oct 17, 10:18 PM
    Rent can be expensive and I've often thought of it as paying someone else's mortgage?
    Originally posted by stormbreaker
    Will one years rent really be more than 3% SDLT, agents commission and legal fees?
    • Pixie5740
    • By Pixie5740 11th Oct 17, 10:30 PM
    • 11,196 Posts
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    Pixie5740
    • #9
    • 11th Oct 17, 10:30 PM
    • #9
    • 11th Oct 17, 10:30 PM
    I will do thanks. We may also keep the flat on and rent out? It's all just a pipe dream at present with various ideas and options.
    Originally posted by stormbreaker
    Yes but then again you might not. Once you've actually researched your options you might find that you could get better returns using other investment vehicles. The government is taking steps to make BTL less and less attractive.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • AnotherJoe
    • By AnotherJoe 11th Oct 17, 10:32 PM
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    AnotherJoe
    Yes we would be keeping the house on?

    I think it highly unlikely that we would settle in the city.

    Although our home is within 12 miles of the city and the transport links are not too bad, we would like to experience the freedom of being able to walk home from social events in town and not concern ourselves with whether we should drive and struggle to park or hang around waiting on buses (taxis outwith the city are extortionate)

    We want to enjoy our 'freedom years' to the fullest before grandchildren come along
    Originally posted by stormbreaker
    Even a taxi every night would be FAR cheaper than paying for a flat. And a taxi drive back at say 11pm would probably oniy take the same time as a walk. Try that for a couple of months, do the maths see how it works out.
    • AdrianC
    • By AdrianC 11th Oct 17, 10:38 PM
    • 15,675 Posts
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    AdrianC
    Although our home is within 12 miles of the city and the transport links are not too bad, we would like to experience the freedom of being able to walk home from social events in town and not concern ourselves with whether we should drive and struggle to park or hang around waiting on buses (taxis outwith the city are extortionate)
    Originally posted by stormbreaker
    Never mind buy-vs-rent, I'd be seriously thinking about rent-vs-hotel, at least for a short period until you decide whether this is really what you want to do.

    How often are you likely to be staying over?

    Considerations with owning...
    +3% SDLT.
    Council tax - some local authorities charge a premium.
    Service charge/sinking fund.
    If you let it, then legal obligations plus tax.
    When you sell it, agent fees plus potential CGT.
    • PField
    • By PField 11th Oct 17, 10:40 PM
    • 88 Posts
    • 66 Thanks
    PField
    Yes but then again you might not. Once you've actually researched your options you might find that you could get better returns using other investment vehicles. The government is taking steps to make BTL less and less attractive.
    Originally posted by Pixie5740
    Could just keep it empty if it too much hassle to rent out. It's a tangible physical asset not some investment by vehicle, though it can produce an income if needed.
    Plenty of people don't need to/ want to invest, but would like to own something physical with their money. And the bonus of not having to rely on taxis a and pay for hotels.


    I had similar dilemma on what to do with my old flat, decided to keep is at a pied a terre rather than rent it out after some advice on here. Place in outskirts and a flat in The city for weekends in town has had a bigger effect on our lifestyle and enjoyment than I had imagined.
    Last edited by PField; 11-10-2017 at 10:48 PM.
    • stormbreaker
    • By stormbreaker 12th Oct 17, 6:15 PM
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    stormbreaker
    Thanks for the replies. Lots of food for thought and investigation to be done! Although we have a year it won't be long in going in!

    We are fortunate to have other investments elsewhere being looked after by others who are better placed than us


    I had similar dilemma on what to do with my old flat, decided to keep is at a pied a terre rather than rent it out after some advice on here. Place in outskirts and a flat in The city for weekends in town has had a bigger effect on our lifestyle and enjoyment than I had imagined.
    Originally posted by PField
    I'm pleased to hear that you have done similar.
    • chappers
    • By chappers 12th Oct 17, 8:57 PM
    • 2,948 Posts
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    chappers
    Even a taxi every night would be FAR cheaper than paying for a flat. And a taxi drive back at say 11pm would probably oniy take the same time as a walk. Try that for a couple of months, do the maths see how it works out.
    Originally posted by AnotherJoe
    But it's not all about the money and the maths.
    having to think about taxis and getting home half cut is a hassle it's about actually living in the city about the spontaneity of just popping down the pub and then coming straight home again if you want because you actually don't feel like going out after all. it's about just popping out for something to eat , without it having to be planned in advance like a military campaign.
    I totally get where he is coming from. I lived the first 20 odd years of my life in the country, then the next 20 odd in the city, I have loved both and now its time to head back to the country again.
    there are attractions to both ways of life.
    • LilElvis
    • By LilElvis 12th Oct 17, 10:31 PM
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    LilElvis
    Another point worth considering is how you would feel moving from a family home to a small flat. You will have limited/no space to be by yourself, have guests to stay, to do hobbies. It can be really quite claustrophobic if you are used to living in a larger space.
    • stormbreaker
    • By stormbreaker 15th Oct 17, 9:51 AM
    • 2,140 Posts
    • 6,033 Thanks
    stormbreaker
    But it's not all about the money and the maths.
    having to think about taxis and getting home half cut is a hassle it's about actually living in the city about the spontaneity of just popping down the pub and then coming straight home again if you want because you actually don't feel like going out after all. it's about just popping out for something to eat , without it having to be planned in advance like a military campaign.
    Originally posted by chappers
    This is exactly it!

    There is so much on your doorstep in town.

    Even getting into town is an hour on the bus never mind the walk to the bus stop and the wait. Seems trivial but all adds up.

    However I did ask about the financial pit falls so pleased for any replies and suggestions
    • AnotherJoe
    • By AnotherJoe 15th Oct 17, 9:59 AM
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    AnotherJoe
    But it's not all about the money and the maths.
    having to think about taxis and getting home half cut is a hassle it's about actually living in the city about the spontaneity of just popping down the pub and then coming straight home again if you want because you actually don't feel like going out after all. it's about just popping out for something to eat , without it having to be planned in advance like a military campaign.
    I totally get where he is coming from. I lived the first 20 odd years of my life in the country, then the next 20 odd in the city, I have loved both and now its time to head back to the country again.
    there are attractions to both ways of life.
    Originally posted by chappers
    All that can be done with taxis and the occasional hotel night or three, even if its a trial period of acouple of months it avoids spending perhaps £30k to find out itís not all that .
    • Pixie5740
    • By Pixie5740 15th Oct 17, 10:23 AM
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    Pixie5740
    From the OP we've gone from wanting to live in the city for a year, letting the property out and now it will be a pied a terre? That makes me think that renting in the city for a year is still the best idea. If you can't decide what you want then renting for a year will give you the flexibility to decide if city life is for you and if a pied a terre would be worth the cost. You should also bear in mind that the right property for you to live in for a year might not be the best property to let out long term. Steaming in and buying somewhere only to discover that a pied a terre isn't for you or that the rental yield is pants would be a very expensive way of going about things.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • cjdavies
    • By cjdavies 15th Oct 17, 10:30 AM
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    cjdavies
    I would let future tenants it' only a year, as I don't think it's fair they pay fees again a year later. If they know before hand at least they are aware.

    Do you know how run a landlord business?
    • JP1978
    • By JP1978 15th Oct 17, 10:53 AM
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    JP1978
    Just a few comments from a casual observer.....

    1. Expect at least some damage to your house while its rented out - you need to factor in the cost for this - ranging from a redecoration of a room or two, to a full on refurbishment - floors, kitchen cupboards, doors, appliances, central heating - bad tenants know no bounds and will take you for all you have. I am not sure if there is any type of insurance that covers this but as this is your family home that you will return too, you may want to consider this.

    2. If buying the flat in town - consider that the value of the flat could go down, at best it will only gain a few hundred ££'s in value. No one knows which way Brexit will send house prices, especially in the short term.

    3. If you are planning on renting your house out, renters may expect in ASAP while if you are buying, you may have to wait the 2 to 3 months to move in, you could lose rental time while finding a tennant.

    4. You would need to consider tax implications (as already mentioned by others) and costs involved in renting the property out - landlords safety checks, certification and insurances.
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