Renting out a property.... whats involved?

bikingbarney

Hi all,

We are considering renting our house out and moving back into RAF married quarters purely to save some money so we are able to move houses in 3 or 4 years time.

does anyone on here own a house they rent to someone that could give me an idea of whats involved in doing so.

Apart from someone paying your mortgage for you are there any other benefits/pitfalls i should be looking at.

thanks

Steve

BitterAndTwisted

The very first thing you should do is to ensure that your mortgage lender will give you Consent To Let. Some lenders could insist that you convert to a Buy-To-Let mortgage which will attract a higher rate of interest.

You will need different buildings insurance.

You need to do some very serious research on rents for equivalent properties in the same area.

You absolutely need to join a landlords association and acquaint yourselves with all of your legal responsibilities when going into such a business. There are hundreds of bits of legislation and ignorance of any of them will be no protection to you if you ever end up in court.

DO NOT believe for one moment that should you instruct a letting agent to act of your behalf that you will be protected from any legislation. Agents only ever act for and on behalf of landlords so therefore the final responsibility will always rest with you. As has been demonstrated on this forum many, many times some agent are woefully ignorant of most of the legislation themselves.

Should you appoint an agent pay particular attention to what their tenant-vetting processes are and ask to see the credit-reports and references yourselves. Friends of mine have come unstuck by appointing what they believed were well-known and reputable agents who encouraged them to sign up a tenant to a two-year agreement who has never been up-to-date with the rent and meanwhile has caused damage to the property. It has since transpired that they carried out no credit-checks and took no references either and charged their commission on the two years-worth of rent-collection in advance! They are now going through all of the stress and expense of trying to evict the tenant themselves.

Bear in mind that all of rent will need to be declared to HMRC not just the "profit" or difference between the mortgage and rental-income for tax purposes although the interest element can be offset together with many of the costs of running your business.

You will have to detach yourselves emotionally from your home as once it's rented it ceases to be yours. As soon as it's rented it becomes the tenant's home and becomes your investment property so if there's anything you're not prepared to see damaged or lost it should be removed and stored elsewhere safely.

Have an extended read of the LandlordZone forum for pointers and some extremely valuable information from other experienced landlords.

The_Drama_Llama

bikingbarney wrote: »

Apart from someone paying your mortgage for you

What B&T said...

Plus, don't assume that all your mortgage will be covered by your tenants. By the time you have factored in maintenance, LA fees, mortgage company fees, insurance etc, it may well be that you are still having to pay a significant part of your mortgage yourself.

Renting out your current property and buying a new one is, in effect, vastly increasing your debt load. Think long and hard about how you would cope if, for example, you couldn't get a tenant for a month, or if a tenant caused a load of damage and you had to take them to court, meaning the property couldn't be rented out and you had to pay court costs.

bikingbarney

thanks for the replies.

the reason im looking at renting is currently im living in single accommodation on a RAF camp, my wife and kids are 100 miles away and im only getting to see them for a short period over the weekend.

we are considering selling our house and moving into a married quarter which works out it will cost less than half my mortgage a month including bills so very worth while.

our overall aim is to save a lot more cash so as to get a better house next time we look at buying.

or we could just rent ours out and still be on the ladder for when house prices decide to rise again??

not sure what to do really......

BitterAndTwisted

Weigh things up:

What happens if you get a foreign posting?

Where would your kids be better off being educated: moving around or staying put?

Is this current property your dream home where you will be retiring to?

Quite honestly, there is no property ladder any more: it's much more like a very long snake at the moment. If you have any equity you might be better off selling up and saving the difference between the MQ rent and your current mortgage for when you come out of the RAF.

Becoming a landlord is not something to be taken lightly and it's not a guaranteed money-spinner by any means, especially in the short-to-medium term once you've factored in voids, repairs & maintenance, tenant damage, possible arrears and eviction costs and it goes on and on.....