Should i be the Landlord

nickpe

Hello Guys - i currently have a few posts running so sorry for keep asking lots of questions.

Im currently really weighing up if i should rent out my current property to ennable me to purchase a property that is on the market at the moment that we feel would be our dream home. (the idea is get a consent to let from our current mortgage provider on the house we have at the moment)

The rent we have been advised by a local estate agent that we may acheive was quoted at £425 to £450 (i have researched lots of properties in my area and this price seems fair as many other properties are priced similarly, also the estate agents have said the renting market is thriving in my area) - my current mortgage payment is £300.......which would rise to £350 after Nationwide add a 1.5% increase on the rate after 6 months.
So in effect the rent would cover the mortgage - but im aware i would also need landlords insurance so the money i would have left over would not be much............and obviously any money left over would be used to add up to cover void periods and repairs etc.

Now my question is - is it worth using the local estate agent to act as my Landlord - they charge 8% of the monthly rent which would be around £45..........this £45 may not seem alot and im sure it would be worth paying it for my inexperience of being a landlord - but i attempted to be my own landlord then a years worth of £45 = £540 which would go along way in covering any void periods or also future repairs.

The estate agents do offer a much lesser service of "Tenant finder" - where they vet, market and supposodly get me a tenant. collect funds to cover a deposit, draw up a shorthold tenancy agreement, for a one off price of £200 - this sounds appealing...............

what are your thoughts??????????

Werdnal

You don't seem to understand the terminology. You will always be the landlord! Whether you choose to use an agent (and I would advise this is very wise if you are new and uncertain), or not. If Agent gets it wrong, it could still come back to bite you, although you could then sue the agent if you could prove they were negligent!

However, there are no minimum qualifications to become a Letting agent - you can set yourself up as one yourself tomorrow - no experience necessary. So choose carefully and if possible go for someone who is registered with ARLA or similar. Ask for a reference or 2 from their current clients who you could speak to to discuss their standard of service.

Finder only services are OK, but you must do your homework and learn how to run the tenancy after they hand over to you. Would you know your repair obligations for instance? How to deal with a tenant who stops paying, or loses their job and finds the benefits they get do not cover their rent, so they only pay you two thirds each month? How would you end the tenancy when you do want to sell it? How do you evict someone? TBH, an agent would not necessarily be of much help in any of these scenarios anyway - you as LL will always be ultimately responsible for the property, so you need to read, learn and inwardly digest everything you need to know.

I believe GM here posted twice in your previous thread, with a very good link to a thread with lots of useful advice for LLs. Read it, atleast twice, and all the links and other site info it contains, and if you still have any specific queries, come back and ask again. Don't think I am trying to put you off, it can be done totally on a DIY basis, and help and advice is there, but make sure you do your homework!

geoffky

And what happens once interest rates rise.....? You have not thought this through.

DVardysShadow

nickpe wrote: »

Im currently really weighing up if i should rent out my current property to ennable me to purchase a property that is on the market at the moment that we feel would be our dream home. (the idea is get a consent to let from our current mortgage provider on the house we have at the moment)

The rent we have been advised by a local estate agent that we may acheive was quoted at £425 to £450 (i have researched lots of properties in my area and this price seems fair as many other properties are priced similarly, also the estate agents have said the renting market is thriving in my area) - my current mortgage payment is £300.......which would rise to £350 after Nationwide add a 1.5% increase on the rate after 6 months.

what are your thoughts??????????

If the Agent who told you the rental value is the same one marketing the house you want to buy, go and get another agent to give you his take on the rental market. They will all exaggerate - but the others won't have so much hanging on it.

BitterAndTwisted

Please don't do it. It's all far too risky. OK if you have extra cash to burn in investments but not OK if you're risking the roof over your own head.

G_M

Read this post first.

Make sure you understand everything in it and everything involved with becoming a landlord.

Then decide - not before.

nickpe

Well....with respect i had thought it through - whilst i do not pretend to be an expert i figured that interest rates would only start to rise once property prices started to rise??????........how on earth could interest rates rise and property prices not - first time buyers cannot afford mortgages at the moment so if rates rose then the market would not only be stagnant then it would be finished for first time buyers that cannot buy now - how could they afford to with a rate rise??

Therefore my thoughts were that if rates did rise then hopefully so would property prices by which hopefully if the equity had risen in my property i could then switch to a buy to let mortgage and fix the rate to a price that was affordable (even reduce the monthly) by taking it over a greater period of time.

And whilst this had taken place hopefully i would be sat in the house i had always wanted and managed to get it whilst it was at its lowest ever price????

I know the above might sound "idealistic" - but please tell me If im wrong - becauce i dont claim to be correct.
And besides i havent actually done any of the above therefore any advice to warn me off making the biggest mistake of my life would be greatly appreciated?

geoffky wrote: »

And what happens once interest rates rise.....? You have not thought this through.

paddyrg

Look at it this way - base rate goes up, so interest rates go up, so payments go up. This means more people can't afford their already highly geared mortgages, so default on the loans and banks reposess. Forced sales flood the market, house prices go down. Interest rates up, prices down. We have not corrected/cleared all the artificially inflated prices yet - I think the above scenario is very likely.

Turnbull2000

Ignore the scaremongering. It seems a lot of people on MSE are against the principle of retaining a property whilst buying another.

Base rates won't rise much for many years yet. It's almost certain they'll not rise above 3% for the next several years or even more, by which time the rent the OP receives on his property will have risen by at least a third as demand massively outstrips supply.

nickpe

Hello thanks for further advice there.

Would you kindly browse my other posting and have a read at post number 23......again it does give me major concern but i feel the advice he is offering is basically trying to warn me off for protection.
https://forums.moneysavingexpert.com/discussion/3437459

Turnbull2000 wrote: »

Ignore the scaremongering. It seems a lot of people on MSE are against the principle of retaining a property whilst buying another.

Base rates won't rise much for many years yet. It's almost certain they'll not rise above 3% for the next several years or even more, by which time the rent the OP receives on his property will have risen by at least a third as demand massively outstrips supply.

paddyrg

Bear in mind neither Turnbull nor I can read the future, we are both guessing based on different interpretations of the state of the economy and historical trends in the past. Ultimately it will come down to what you think will happen, and your gamble and your payoff.

I only 'scaremonger' as I still believe the housing market bubbled bigtime, and the only reason it is stagnating now and not correcting further is due to all time ever lowest base rates, which can't last forever. Ireland is culturally very similar to the UK in many key ways, but they did the housing boom much more drmamtically - then the bust that came with it, leaving thousands upon thousands (really - it is as bad as Lithuania in that sense) of abandoned part-built homes across the country. I see the UK as having an unusually high (when you look at European norms) levels of 'have to own your home' which helped fuel unsustainable lending, but others may think differently, that house prices should only ever rise, and hey, maybe they are right and I'm wrong - the future's not ours to see ;-)