Renting out my ex council house

sassyjox

Annisele wrote: »

I'm afraid that's exactly what "accidental landlords" are - people who bought a property with no intention of letting it out, but due to changed circumstances are having to consider becoming landlords. The term doesn't mean "some idiot who decided to become a landlord without thinking about anything"; it just means "somebody who became a landlord without originally planning to be one.

I see. As you can tell this is all new to me.

Anyhow, the advice I am looking for is whether I am actually allowed by law to do this.

I will seek further advice from the council and my mortgage lenders.

Alias_Omega

sassyjox wrote: »

Very helpful advice, thank you!

We have someone who is interested in renting out the property. I have got a lot of research to do before I take this step.

Do you find it stressful? What with repairs, etc?

Thanks again for your advice.

Sassyjox,

Your always going to face negative people on this forum, i think they secretly could be jealous.

For ourselves, we put the house in the sole hands of the agent, when we handed the house over to the agent, we made sure it was well decorated, fitted new cheap carpets and gave it a good clean. We took our own pictures, and the day the person came to view it, they wanted it right there and then.

There was a house 3 doors down which was a bit more in rent, not as nice and had been empty for months. We set our rent below the agents value, as we wanted a tenant. We knew what we wanted from the house.


When we handed the house over to the agent, we were getting on the aircraft to fly away from the uk 2 days later. The agent dealt with the tenantcy paperwork, and sent me the forms to sign in the post. They arranged the gas safety check, the inventory check etc.

Recently the tenant asked to modify the house, to fit a breakfast bar & for us to have a downstairs window to the repaired. We gave the agent a drawing of where the tenant could put it, and asked the agent to get a quote to repair the window.

The window repair cost £35, which will come from the overall profit of the house at the end of the tax year.

We contact the agent via email, and sometimes via telephone when the rent has been late. The rent is due on the 25th of the month, but the tenant gets paid monthly, so sometimes its fell a few days late (2nd, 3rd of the month) so we just make a nice call to chase them up.

We pay the agent £58 a month, to basically handle the house for us, we have authorised them to carry out repairs up to £X amount before contacting ourselves.

There is a lot to take on at the minute, the first step is to check your Deeds, then to get the Consent to let. These are the show stoppers..

The next step is what type of tenant you want, with landlord insurance (buildings & loss of rent etc) the price varies upon what type of tenant you have. Ours was £120 a year for a working couple, £220 for a LHA/HS/DSS couple, and £400 for a assylum seeker.

Though, all costs deductable from the overall profit, and at the minute we forecast a profit of about £2000 for the 2010-2011 year, which will be split between myself & my wife, so £1000 each.

Mrs Alias does not work, so thats £1000 free of tax, just me to pay...unless i decide to apportion income


Alias

Cissi

sassyjox wrote: »

We wouldnt become accidental landlords. We would think about this very carefully before we take the step. We are taxpayers ourselves! This is not what we set out to do. We had an opportunity to get onto the property ladder and we took it. We work hard for our children and yes we want better for them and will do whatever it takes to get that. Somtimes people are restricted to what options they have.

You'd still be accidental landlords in my book, and, the way that term is usually used on here: it wouldn't be a planned choice as you didn't buy the house with this in mind, but rather something that you felt forced to do because as you say your options are restricted. Of course you would need to research this fully and you're clearly asking the important questions.

Also, I don't doubt that you're taxpayers yourselves, you'd hardly have been able to buy even with a subsidy if you weren't. All I'm saying is that your decision to buy seems to have been misguided, and blinded by a hope/expectation of equity increase (which would have been funded by the taxpayer). Unfortunately you used the scheme with another purpose in mind than that which it's intended for, and in today's market this won't work (as you've found out).

I fear for you that renting out will only prolong the pain. I think there is a serious risk of further financial losses due to bad tenants, void periods, further loss of value (even if it does mean that you get to hang on to some or all of the subsidy). But it's your choice - as long as your mortgage company agrees of course.

theartfullodger

sassyjox wrote: »

Very helpful advice, thank you!

We have someone who is interested in renting out the property. I have got a lot of research to do before I take this step.

Do you find it stressful? What with repairs, etc?

Thanks again for your advice.

Hmmnnn Re: Stressfull.. I think you need a certain mentality & a particular financial + emotional resilience to be a landlord.


ONLY rent if you have the (apologies to all but I've posted it before: No it's never happened to me, other, related, things have..) the financial & emotional resilience to cope with the "Tenant from hell" who pays nothing after they move in, whilst you keep paying the mortgage & legal fees to get him out, then after 7 months (possible, it is possible) 'phones up Saturday night 10:30 pm "" Toilets leaking wodja gonna do baht it then eh?? "

You: "Sorry to hear that my good man, I'll have my maintenance man call on you Monday"

T: "Nah, Nah, gorra be quicker, leak innitt"

You: "Oh, urgent is it? When did it start then my dear chap?"..

T: "Dunno, 3 - 4 weeks ago, terrible stain in kitchen roof, spoilt all our food .."


- and you know you have to fix it, politely & promptly, or you'll be harassing tenant... and the judge at the possession order hearing will decide the tenant should be given more time to stay/you the Landlord are wicked and evil and chucks case out...

If you have the ££ & emotional reserves to cope, fine, go ahead: If you haven't find another solution. By asking if it is stressful I think you have indicated it could be a challenge...


Hope it works out..

Cheers!

Artful

PasturesNew

If you're renting it out, you need to know about the capital gains tax situation too. As you'll be making profit when reselling it, to avoid paying back the discount, there is likely to be a CGT amount to be paid.

sassyjox

Cissi wrote: »

You'd still be accidental landlords in my book, and, the way that term is usually used on here: it wouldn't be a planned choice as you didn't buy the house with this in mind, but rather something that you felt forced to do because as you say your options are restricted. Of course you would need to research this fully and you're clearly asking the important questions.

Also, I don't doubt that you're taxpayers yourselves, you'd hardly have been able to buy even with a subsidy if you weren't. All I'm saying is that your decision to buy seems to have been misguided, and blinded by a hope/expectation of equity increase (which would have been funded by the taxpayer). Unfortunately you used the scheme with another purpose in mind than that which it's intended for, and in today's market this won't work (as you've found out).

I fear for you that renting out will only prolong the pain. I think there is a serious risk of further financial losses due to bad tenants, void periods, further loss of value (even if it does mean that you get to hang on to some or all of the subsidy). But it's your choice - as long as your mortgage company agrees of course.

I do appreciate your opinion and it has gave me food for thought. Thank you.

sassyjox

PasturesNew wrote: »

If you're renting it out, you need to know about the capital gains tax situation too. As you'll be making profit when reselling it, to avoid paying back the discount, there is likely to be a CGT amount to be paid.

Thank you. Where do I find more info on this?

sassyjox

Alias_Omega wrote: »

Sassyjox,

Your always going to face negative people on this forum, i think they secretly could be jealous.

For ourselves, we put the house in the sole hands of the agent, when we handed the house over to the agent, we made sure it was well decorated, fitted new cheap carpets and gave it a good clean. We took our own pictures, and the day the person came to view it, they wanted it right there and then.

There was a house 3 doors down which was a bit more in rent, not as nice and had been empty for months. We set our rent below the agents value, as we wanted a tenant. We knew what we wanted from the house.


When we handed the house over to the agent, we were getting on the aircraft to fly away from the uk 2 days later. The agent dealt with the tenantcy paperwork, and sent me the forms to sign in the post. They arranged the gas safety check, the inventory check etc.

Recently the tenant asked to modify the house, to fit a breakfast bar & for us to have a downstairs window to the repaired. We gave the agent a drawing of where the tenant could put it, and asked the agent to get a quote to repair the window.

The window repair cost £35, which will come from the overall profit of the house at the end of the tax year.

We contact the agent via email, and sometimes via telephone when the rent has been late. The rent is due on the 25th of the month, but the tenant gets paid monthly, so sometimes its fell a few days late (2nd, 3rd of the month) so we just make a nice call to chase them up.

We pay the agent £58 a month, to basically handle the house for us, we have authorised them to carry out repairs up to £X amount before contacting ourselves.

There is a lot to take on at the minute, the first step is to check your Deeds, then to get the Consent to let. These are the show stoppers..

The next step is what type of tenant you want, with landlord insurance (buildings & loss of rent etc) the price varies upon what type of tenant you have. Ours was £120 a year for a working couple, £220 for a LHA/HS/DSS couple, and £400 for a assylum seeker.

Though, all costs deductable from the overall profit, and at the minute we forecast a profit of about £2000 for the 2010-2011 year, which will be split between myself & my wife, so £1000 each.

Mrs Alias does not work, so thats £1000 free of tax, just me to pay...unless i decide to apportion income


Alias

Thank you. This is great information. I am going to give the deeds a thorough read through tonight!

Cissi

Alias_Omega wrote: »

Sassyjox,

Your always going to face negative people on this forum, i think they secretly could be jealous.

(...)

Though, all costs deductable from the overall profit, and at the minute we forecast a profit of about £2000 for the 2010-2011 year, which will be split between myself & my wife, so £1000 each.

Mrs Alias does not work, so thats £1000 free of tax, just me to pay...unless i decide to apportion income

Alias, I doubt that anyone who has read the OP is jealous of their situation - I for one feel for them, trying to make the best out of a not so great situation. Good for you that you've got it to work for you and you've obviously put a lot of effort into being a responsible LL - but at the end of the day, £2000 profit (before tax) in a year is hardly a huge amount and isn't going to go a long way to helping OP with their living costs elsewhere! In the meantime they have to count with maintenance costs which may well be higher than what you've had to face so far (boiler etc), a certain number of void months and a potential further loss in value. And if the value does increase over time, then as PN pointed out they'll have to factor in CG tax - not sure how this works with the subsidy, but they may actually end up having to pay tax on the discounted amount?!?

Oh and Annisele, sorry, hadn't seen your post when I posted mine as I was interrupted mid-flow and came back later to finish it - you put that rather more eloquently than I did

To Sassyjox: best of luck with it all - I hope you do find a solution that helps your family forward.

poppysarah

Alias_Omega wrote: »

Sassyjox,

Your always going to face negative people on this forum, i think they secretly could be jealous.


Alias

Indeed. Jealous of someone being given foolish advice about buying a house clearly not right for them.