Whether to let my flat!

Mathew

Hi,

I currently live in a flat and have approx 90% loan to value.
I recently inherited 60K and want to use this to buy a larger house for me and my girlfriend to grow into and start a family.
My initial intention was to sell the flat and it has been on the market for 6 weeks with one viewing, no offers! It is fairly priced and I would be reluctant to reduce it further.
I'm now given thought to letting the place and can't decide on the following and hoped someone could help?.
I'm currently in the SVR having finished a fixed term a year ago, do I let the place for the short term without changing this? this is attractive as the repayment would 90% be covered by the rental fee and when it came to selling in 12-18 months I'd have no redemption fee.
However, I no little about mortgage companies and there view on this!
Having received basic advice regarding a remortgage and it would appear to involve drastically reducing the equity to make in 75% which would hinder any potential move.

andrewmp

You need to speak to your lender and ask for consent to let. If they allow it they often charge a fee. Some lenders will insist you move to a BTL product and you migth have problems with the LTV then.

CLAPTON

for your new purchase you will need a deposit and a mortgage... do you have sufficient deposit and income to get a sufficient mortgage

for your rental property can you afford to carry the costs if you have voids or bad tenants?

BitterAndTwisted

Becoming a professional landlord when you have no experience and little knowledge of all the legislation is NOT a route to be recommended.

Sell the flat and use any equity and the inheritance to buy another property. If you and your partner are not married you should also look into ensuring that any monies which you put down on the new property be protected should the relationship break down at some future date. Search this forum for other people's dreadful experiences when faced with this eventuality.

missile

It can work out OK. My son moved in wth his GF last year and got a tennant for his flat within a week. She is no trouble and pays the rent by standing order. He had zero experience as a LL and took no notice of my advice .........




sometimes it is better to be lucky than smart:j.

PasturesNew

missile wrote: »

sometimes it is better to be lucky than smart:j.

Until you get unlucky and realise it wasn't smart.

Mathew

Thanks for the responses.

andrewmp I spoke with Santander who said I simply need to pay £295 for consent to let and everything else remains the same! Very surprised as I thought they would want me to remortage into a buy to let! Paying £295 for what seems like nothing would stick in my throat though!

CLAPTON. With the above in mind I would have sufficient from the inheritance for the deposit and would only borrow on a fixed repayment term for the security of monthly payments on a new home. I would keep money (advice on amount would be great) aside for the flat. My repayments are 581 and in addition £100 pcm management fees (expensive I know!), similar sized flats go for £600 pcm. This 'pot' would need to be big enough to cover no tenant repayments, my other concern would be the interest rates shooting up, although as this is a relatively short term idea I'd hope that shouldn't happen!!!! The rent will fall short of my outlay, but I hope to get the back in a sale in the future!

Bitterandtwisted. My preference was to sell, but it just isn't and I'm not prepared to drop in value so if I want to move I can't see another option. Good point, we are not married and effectively it's my inheritance and I will be the only person named on the mortgage, but I guess that doesn't fully protect me? That is something that is a must, thanks for highlighting it. (should would not be to chuffed to read this!)

Do I use an agent? Having spoke to colleagues, some do some don't! It seems that those who don't hear from tenants only regarding electrics or water and those who do only get messages from the agent passing on the message and pay 10-15% pcm for the service? I have no gas, the water is covered by the management company, and I know a good electrician so I'm minded not to bother. Some seem to over an tenant finding only service which might be a better option.

BitterAndTwisted

Your flat has only been on the market for six weeks so if it is fairly and sensibly-priced it will sell. Have you checked what similar properties in your neighbourhood have sold for recently to check that your expectations are realistic?

If you really are considering renting out the flat as a short-term strategy this is to me an even more compelling reason to sell it. If the potential rent will not even cover the mortgage repayments and "management fees" I can see no sensible reason for holding onto it either. It all sounds much too risky.

How long could you afford to pay the two mortgages for without receiving any rent at all?

missile

Mathew wrote: »

Do I use an agent? Having spoke to colleagues, some do some don't! It seems that those who don't hear from tenants only regarding electrics or water and those who do only get messages from the agent passing on the message and pay 10-15% pcm for the service? I have no gas, the water is covered by the management company, and I know a good electrician so I'm minded not to bother. Some seem to over an tenant finding only service which might be a better option.

In the past, I have used agents to let my properties. IMHO, a good agent will be worth their fee, a bad agent is worse than useless, merely delaying messages re problems and requests for repairs from your tennant.

I found refernces and credit searches are not always the best guide. If you DIY, you may get a better feel for who is likely to be a good tennant. I would suggest you avoid DHSS, students and foreign workers on short term contracts who might do a runner. An ad in your local paper will not cost much and in my experience gets a good response. You might need help to draw up a contract and carry out an inventory? See landlord zone etc.
It helps if you are not too attached to your flat and be prepared for the inevitable damage / wear and tear :beer: