Renting a house thats up for sale?

deepintrouble

Hi All,

I currently have a house which i own with my ex wife. We would both like to sell the property and move on with our lives. The house has been on the market now for 18 months and has had very little interest. The main problem is that we bought at the top of the market with a 100% mortgage and simply cannot afford to drop the price any lower than it is now. The only thing we have on our side is that we have a fixed rate deal until the end of 2010.

One option we have looked at is renting the house out to make some money back on the short term. While this is not ideal and will probably not even cover the mortgage payments, it will still give us a little more cash in our pockets for the time being.

My questions are as follows. How do i find tenants that are able/willing to move out if the house sells? What do i do about viewings? Am i better using a registered mangement company or going it alone?

Thanks in advance

James.

ginvzt

Sorry, but I think that top of the market was not 18 moths ago.
We are currently renting a house that is up for sale. It was up for sale when we signed the contract and I think it will stay this way unless owner wakes up and drops the price. Oh, also sorts out the house description as it is not true (i.e. we don't have economy 7 heating - it gas!!!!)

I understand you don't live in the house? It won't make you money if you bought it with 100% mortgage. You also have to ask your lender permision to rent it out.

BenL

You would have to hope that you find someone who is maybe onyl wanting a short term thing.

I have been at lunchtime to look at an apartment to rent that is also for sale.

If you rent it privately you may stand more chance of getting someone in and if your rent is below market rate they could be flexible.

If you go through an agency you will have a harder time and as a tenant I would not be happy if it was short term after forking out for their fees and credit checks.

Have you also looked into the setup costs for the rental?

Safety certificates, new insurance cover, your mortgage company allowing you?

Deposits have to be protected for the tenant and in October I unserstand more energy efficiency regulations for landlords are coming in.

I think you will have to take the hit and sell up for less than your mortgage tbh.

The market is going downhill, you may end up adding to the rental income to pay your mortgage on a depreciating asset.

This may not be an option though either due to penalties for paying back the fixed rate mortgage fees.

Sorry i can't be more help but a landlord has a lot of responsibility and it doesn't look to be that easy.

Premier_2

As you have a mortgage, check your mortgage loan terms as I doubt you'll be able to let the property under a standard residential mortgage; you'll need to ask permission from the lender to rent the property out or re-mortgage to a specialist BTL product.

Both options mean you'll almost definitely have to let under an assured shorthold tenancy agreement, meaning any tenants that you get could quite legally stay for a minimum of 6 months if they comply with the terms of the TA.

If you think you'll sell before this time, don't let.

moneysavinmonkey

Bear in mind also if you use an AST the minimum term is 6 months - worse case scenario could be a lot worse as you can not just throw tenants out on the street after 6 months there are all sorts of procedures to go through and if you get anything wrong it can take months and months to get the property back.. e.g can't issue section 21 as deposit not protected, wrong date on section 21, etc etc. etc.

deepintrouble

Hi,

I never said i bought it 18 months ago, it was purchased about 3 years ago. Its been up for sale for 18 months - sorry for not making that clear.

Whats a section 21?

James

Debt_Free_Chick

deepintrouble wrote: »

Whats a section 21?

It's a legal notice to the tenant that you require "repossession" of the property. Not that you want to live in it, but that you want it back i.e. to complete the sale.

To be honest, being a LL is a legal nightmare. You can't simply "let it out" - there are endless regulations and red-tape you have to comply with. So you'll either need to swot up AND join a LL's association, or pay an agent to manage all this stuff for you.

Why don't you simply move back in until it's sold? I assume you're renting, so if you moved back, you'd save on your rent.

I wonder if empty houses are more difficult to sell - they look soul-less, buyers can't imagine how the rooms would look with furniture in and some buyers would sense "desperate sellers" and make silly offers.

Worth considering moving back - but that really depends on your current situation.

ginvzt

deepintrouble wrote: »

Hi,

I never said i bought it 18 months ago, it was purchased about 3 years ago. Its been up for sale for 18 months - sorry for not making that clear.

Whats a section 21?

James

Sorry, but 3 years ago DEFINATELY was not the top of the market. The prices now are still about 8% higher than in 2005. Also, unless you took out interest only mortgage, you would have repaid some of the mortgage already. It might be worth looking at cuting your losses and selling the house. You have to do the calculations - how much do you think you would have to spend to be able to rent it, how much mortgage would cost you over the rental period and how much rent can you actually collect. With hosue prices falling (we agree with that, don't we?), it might be worth reducing the price and selling it quick (houses are selling - but the price must be right).

As to empty houses being more difficult to sell - I prefer them empty. At least you know the owner is not there and won't be delaying the process!!!! The ones we viewed with owners still iving there, all of them 'wanted' to move, so not sure if where would they go after sale.

deepintrouble

I dont really want to get into a debate about when the top of the market was, we could be here all night and its not really that important. As for moving back in, it wouldnt save me any money as I'm currently living rent free with my new partner. What we really want to do is sell my house and live in hers as its in a much better place for us both. My predicament is that i have a 100% mortgage and any equity that is in the house will be cancelled out by the early redemption penalty on the mortgage. Consequently i cant afford to drop the price much below what i bought it brand new for 3 years ago. I would happily take around what i paid for it just to get it sorted, just cant afford any more debt.

James.

franklee

Right well you didn't mention the early redemption penalty on the mortgage in the OP. How much longer are you tied in for? If you've been on the market for 18 months why weren't you concerned about the early redemption penalty back then? How much is at stake?

You mentioned the fixed rate deal ends in 2010? is that the length of the early redemption penalty? If so then I'd say you are OK to rent out, 2 years is a long time in the renting game. But this would work best IMO if the property was taken off the market for at least 18 months. Being up for rent and sale is off putting to many tenants IMO. If you said they can have up to two years that's far more attractive.

mrs-puff

If it's a small house aimed at a singles/couple's with no kids then you might be ok in getting away with short term letting.

If it's a house a family would move into then you may have a bit of bother renting it out while it's still up for sale. Apart from the hassle of allowing viewings, going through the more severe hassle of starting them at new schools, doctors, and generally settling them into a new home, only to be told that they have to move out 6 months on to do the same again ?

I think it depends who you're considering renting the house out to really. Families are generally more interested in long term rentals.