Renting out our property to rent another one

lollipop_28

We've lived in our house for the past 4.5 yrs when it was first built. It's a 3 bed three storey end terrace. We are a family of 5, our eldest being a girl of 11, middle a boy age 8 and youngest a girl of 5. We had always planned that when the time came for them all to have their own bedroom we would convert the integral garage into a fourth bedroom.

Unfortunately we have been refused planning permission as the estate is low on parking spaces and as it is classed as a parking space, the council will not allow it.

The back garden is tiny, so we can't extend and a house a few doors down which was bought for the same price we paid in 2006 (£220k) has been on the market for the past 18 months and is now on at an asking price of £185k with no interest. Our mortgage is £200k so we can't afford to sell at a loss.

Family life has been very difficult lately as our 11 year old daughter is finding it extremely difficult to share with her 5 yr old sister. The arguments we're having at the moment are really putting a strain on all of us, and I'm feeling at the end of my tether with it all.

There is a house to let round the corner from us which is 4 bedrooms and has much more space. Its on at £850 pcm which seems very reasonable as I've been told we could get between £800 and £850 pcm for our house.

Would this be advisable to do?

We've never let a property out before but we have been tenants in about 6 different properties ourselves.

Any advice greatly appreciated.

myhouse_2

There are things you need to know and understand - renting out your property is not guaranteed money and there are risks - you will certainly have void periods when you are getting no income and these could be many months long. You will also need to pay to maintain your property - tenants are not always as caring about your property as you are and maintenance bills will certainly be more than you expect. You need to ensure gas appliances etc are properly checked as per legal requirements.
If you think your income from rent will equal your expenditure on rent on the new house, then will certainly be mistaken.

BitterAndTwisted

You've never been landlords before and this is a REALLY, REALLY compelling reason to not start now until you understand what your responsibilities are. AND can afford the mortgage repayments on your house and the rent on the new one if you should acquire the tenants from hell who never pay you a penny in rent once they've moved in and it takes you months and months to get rid of them. And they cause thousand of pounds-worth of damage which you will have to pay for if you want new tenants in.

I honestly can't see what's wrong with two sisters sharing a room: millions do it without their parents tearing their hair out or World War Three breaking out. Where is everyone's sense of entitlement coming from?

satchmeister

I assume the rental income, say £850 per month is taxable as it is income. Would you be allowed to rent it out without a BTL mortgage? Ok you might not tell the bank but then I guess you would be in breach of you mortgage. But a BTL mortgage interest is tax deducible (I believe) however they tend to be more expensive.

Trollfever

https://forums.moneysavingexpert.com/discussion/2801156=

dopester

This was from a thread you began two months ago. Same house? If it is, then has the lender's position changed, and why has the rental value changed to between £800 to £850?

lollipop_28 wrote: »

The house has been on the market for 2 months and we have had no viewings whatsoever!! If we drop the price we will make a loss. We've looked into renting it out but we have been told that we couldn't get consent to let from our mortgage company. We are on an interest only mortgage but its on SVR of 5% so its quite a high payment each month and if we did rent it out we would only get £575 per month and the mortgage payment is £500 a month.

diable

You can appeal against the refusal so that may be a start, if you are to become landlords then you need to think about the tax, the relevant certificates required and if the house is un let or you have problems with tenants then can you afford six months with no rental income and having to deal with a court eviction.

I know some of what I have said is worst case scenario but its worth considering, hopefully some better advice will be posted soon.

diable

Trollfever wrote: »

https://forums.moneysavingexpert.com/discussion/2801156=

https://forums.moneysavingexpert.com/discussion/comment/39727246#Comment_39727246

stepharoo

We did exactly this, and it's not something I'd do again in a hurry. We are not overly fond of being landlords and there is a LOT more to it than people realise, as outlined above, with regards to legalities and tax etc. My DH and I are self employed and our accountant has gone through it all with us and we're not going to be any better off from doing this (infact, our tax payments will go up by about a grand a year from it). The only reason we are doing it at all is because our flat didn't sell and our little family outgrew it.

Our only saving grace was that we've rented to some incredibly close friends (almost family by marriage - long boring story) so we know we're not going to get ripped off and the place is being cared for. Otherwise I am not sure we'd have taken this route at all.

satchmeister, you can let without a BTL mortgage, but you need to get consent to let from the mortgage company, and as far as I know, it's for a finite period, ours is two years (Nationwide). I'm not even sure if that's easy to get anymore as we obtained this last summer and they told us it was changing :S

lollipop_28

dopester wrote: »

This was from a thread you began two months ago. Same house? If it is, then has the lender's position changed, and why has the rental value changed to between £800 to £850?

No, that was my sister logged in as my user account as she did not have her own. This is a completely different situation.

martindow

stepharoo wrote: »

Our only saving grace was that we've rented to some incredibly close friends (almost family by marriage - long boring story) so we know we're not going to get ripped off and the place is being cared for. Otherwise I am not sure we'd have taken this route at all.

I'm glad it is working out for you. The general opinion on this board is that mixing a business relationship with friends or family can be fraught with difficulties and is not advised.