Renting out my ex council house

sassyjox

Hi all

I wonder if anyone can give me some advice.

A year ago, we bought our council home at a discounted price and as we will have to pay back 4/5ths of the discount back if we sell now we were considering renting it out.

Are there any rules and regulations in doing this?

I have emailed our local council but they take so long to get back to you and I am quite impatient to know.

We are quite desperate to move as the area is just awful and our children who are different sexes are sharing a room. We thought buying the property would be the right thing to do to get onto the property ladder but living here is now making us quite unhappy

Thanks in advance guys!

poppysarah

Was it that awful a year ago?

Do you have the paperwork you got when you bought it?

BitterAndTwisted

Now that you are the owner it's got nothing to do with your ex-landlord if you want to let the property. BUT you will need consent to let from your mortgage company and some will insist you go on to a Buy-To-Let mortgage rather than charging you a fee for consent.

I can't understand why you chose to buy this property if it has become so unsuitable so quickly; it's not like the place had enough bedrooms for your perceived needs before you bought it and suddenly overnight does not.

sassyjox

We planned to sell after 2 years. That way we would only have to pay back 3/5ths of the discount and use it as a step on the ladder for us. However, due to the council dragging their feet, it actually took 10 months to go through the process of buying it. Also my partner has since changed jobs and it would be more suitable for us to live closer to where he works to save on travlleing time & expense. We also had it valued 2 months ago and were given a price which was a lot less than we thought it would be so we would have to stay even longer than originally planned to be able to afford to move.

We were advised by so many people that this was our only way on to the property ladder and for us not to buy would be like throwing money down the drain but now I feel as though we are stuck in an area we hate! If we could keep the house as an investment this would be perfect. I just don't know where to start.

We do have the paperwork but theres nothing in there about renting out the property.

Should I talk to our mortgage lenders?

ILW

If you rent your current propert out, will you be able to raise the deposit for another?

sassyjox

The plan would be to rent ourselves until we are in a position to buy a big enough property...hopefully in 4 years when if we sell our house we do not have to pay back any of the discount we got.

BitterAndTwisted

sassyjox wrote: »

We do have the paperwork but there's nothing in there about renting out the property.

Well, of course there isn't. Presumably you got a residential mortgage. There's no guarantee that your lender will agree to give you consent to let and sometimes if they do give it, it's for a finite duration.

Please think very, very carefully about becoming an accidental landlord and do PLENTY of research about the legislation. The potential pitfalls are many. Have you undertaken any research about what rent you might be able to expect for this property and how you would fund the mortgage and your rent elsewhere if the !!!!!! hit the fan?

Cissi

Unfortunately it sounds to me like you've been badly advised by family and friends. The "right to buy" scheme is not designed to help you make a quick profit and enable you to buy a nicer house elsewhere than you'd otherwise afford. It's intended to give you security and reward you for staying put.

The recent market boom meant that the scheme accidentally worked out highly profitably for some people - all funded by the taxpayer. Those days are gone, and I highly doubt it's now worth buying into it unless you're actually planning to live there for the full 5 years. I think you're finding this out the hard way.

Alias_Omega

sassyjox wrote: »

Hi all

I wonder if anyone can give me some advice.

A year ago, we bought our council home at a discounted price and as we will have to pay back 4/5ths of the discount back if we sell now we were considering renting it out.

Are there any rules and regulations in doing this?

I have emailed our local council but they take so long to get back to you and I am quite impatient to know.

We are quite desperate to move as the area is just awful and our children who are different sexes are sharing a room. We thought buying the property would be the right thing to do to get onto the property ladder but living here is now making us quite unhappy

Thanks in advance guys!

Hi,

We purchased a council house in 2008 and in 2009 i found out that i was to be moved abroad with work, so we had to rent the house out.

You need to check your deeds, for what limitations you have. Ours was limited to basically selling the house as freehold, or selling as leasehold.

Nothing else was added into the deeds, and we checked with our solicitor to confirm this. We did not bother with the council, as it was our house now.

We applied for a consent to let from the mortgage company. It was granted, free of charge, though earlier this year i received a letter saying they would charge people for this, but funny enough were free if we wish to apply again, and wont achieve an higher interest rate.

Once you have the consent to let, get yourself a gas safety check, some landlord insurance and away you go...


We let our house through an agent, who found the tenant the same day the board went up. Our income from this goes something like -

Rental Income - £400

Outgoings -

Interest on mortgage - £200 a month
Agent fee - £50 per month
Landlord insurance - £10 a month (£120 a year)
Gas Safety Check - £4 a month (£45 a year)
Any repairs - ???
Accountant - £10 a month (£120 a year)

So you can see we clear about £140-£150 a month profit from the house, but this is taxable and you will need to provide a tax return. We therefore have employed an accounant who will sort this, and again is deductable from the income.

Note - You can only claim for the interest part of the mortgage, not the whole lot.

Happy renting..

Alias

theartfullodger

Well according this this government publication....
http://www.communities.gov.uk/publications/housing/yourright

I was surprised to learn, page 16...

Repayment of discount
If you have bought your home under the Right to Buy, you can sell it whenever you like. But if you wish to sell
within the discount repayment period specified below you will usually have to repay some or all of the discount.
If you sell within the first year of purchase, the whole discount will have to be repaid. Four fifths must be repaid
if you sell in the second year, three fifths in the third year, two fifths in the fourth year and one fifth in the fifth year. After 5 years, you can sell without repaying any discount.

- and, as far as I can tell, no mention of any restriction about paying back discount if renting... IMHO wrong, the scheme which many consider morally flawed anyway was surely not intended for what you are suggesting



However check with your council.. there may be other rules..

Surely when you bought you were given all the paperwork ?? What does that say about renting??

Cheers!

Artful

PS Don't forget to tell HMRC you are renting.. & declare your income as I'm sure you will. if someone else tells them first, before you do, they may be "suspicious"...

PPS If renting join RLA or NLA, go on one of their "how to be a landlord" courses, (about £75, tax deductible..) It'll save you more than £75..

robin_banks

sassyjox wrote: »

Hi all

I wonder if anyone can give me some advice.

A year ago, we bought our council home at a discounted price and as we will have to pay back 4/5ths of the discount back if we sell now we were considering renting it out.

Are there any rules and regulations in doing this?

I have emailed our local council but they take so long to get back to you and I am quite impatient to know.

We are quite desperate to move as the area is just awful and our children who are different sexes are sharing a room. We thought buying the property would be the right thing to do to get onto the property ladder but living here is now making us quite unhappy

Thanks in advance guys!

If the area is awful why did you buy the house ?.