Should I let out and buy again rather than lose money?

hcb42

it depends how desperate you are. If you are in a one bed I feel your pain, but for two bed, my inclination would be to ride it out a few more years, paying off more of the capital/saving along the way.

But that is because I wouldnt want the hassle! Some tenants are just nightmares, even if they are educated and well paid etc. My sis had one recently who refused to change a lightbulb, she had to send an electrician in paying him £60 for his trouble (she lives overseas) ..it was something else as silly as that every month, and they were a professional couple, house in v desirable/expensive area.

I wouldnt make too much of what the mortgage advisor says though. What do your friends and family think? Rhetorical question...

Werdnal

hannah1977 wrote: »

Werndal -I wasn't really sure we would make any profit or at least I was more concerned that we would manage to comfortably cover costs. I guess I will need to look at how much the tax costs if the difference between mortgage payments and rent income gets used up in fees and maintenance and anything else...we don't really get any benefits except child benefits.

You must do an annual self-assessment tax return to account for your rental income, even if in some years you do not make a profit. HMRC will advise what if anything you need to pay, and they take into account your other income/earnings aswell. If property is owned in joint names, you will both have to account for 50% of the rent.

Southend1

Am I missing something here? Surely the "loss" on selling your flat is only a paper loss as the market has fallen but you're buying straight back into it at the same level. And you will still have a home. It would only be a real loss if you weren't buying another property at the same time? In your situation I wouldn't even consider renting the flat out unless you really want to be a professional landlord.

Werdnal

Southend1 wrote: »

Am I missing something here? Surely the "loss" on selling your flat is only a paper loss as the market has fallen but you're buying straight back into it at the same level. And you will still have a home. It would only be a real loss if you weren't buying another property at the same time? In your situation I wouldn't even consider renting the flat out unless you really want to be a professional landlord.

Which is why I posted in my first reply that the loss they make on selling, may be better than a loss in letting!

BitterAndTwisted

Well, if the OP isn't working they won't be paying any tax on the rental income as the single person's tax-free allowance is £7k per annum. If the OP's OH is on higher-rate that could be a fair whack.

OP: when you mentioned the mortgage company said £140k I'm assuming that's borrowing in addition to the mortgage you currently have now.

Have a really hard think about how much your repayments are going to be when (not if) interest-rates increase and whether two mortgages will still be affordable at x and y rate together with a void-period between tenancies. Luckily for you right now rents are increasing and very well shall continue to increase in good areas. But please have a long, hard ponder abut the worst-case scenario. Plan for the worst but hope for the best.

hannah1977_2

hcb42 wrote: »

it depends how desperate you are. If you are in a one bed I feel your pain, but for two bed, my inclination would be to ride it out a few more years, paying off more of the capital/saving along the way.

But that is because I wouldnt want the hassle! Some tenants are just nightmares, even if they are educated and well paid etc. My sis had one recently who refused to change a lightbulb, she had to send an electrician in paying him £60 for his trouble (she lives overseas) ..it was something else as silly as that every month, and they were a professional couple, house in v desirable/expensive area.

I wouldnt make too much of what the mortgage advisor says though. What do your friends and family think? Rhetorical question...

We have 1 bed and a box room that fits the two cots. I don't think it would be too bad if it was one baby but two is hard. I have to leave one downstairs while I bring the other one upstairs when we come in the front door. As you can imagine they don't like it! And I can't get the double buggy in the front door and a whole other host of things! I have made "mummy" friends here though and I like the area so it's hard. I just want something bigger for the babies now they are about to be running/triking around.

Your light bulb thing is so the thing that would kill me. I thought we might try and get a local handy man that could do those things for cheaper than an electrician or use an estate agents. I kind of think it could be like my "job" to be the landlord cos I'm not working but then I don't want to be sorting out stressful telephone calls with 2 toddlers hanging on my coat tails!

I think my family want us to have a house and we would probably move nearer to my parents and would have room for my husbands parents to stay with us for visits. But it is a completely unheard of thing to do for nearly everyone we know so I havent really had any advice from friends or family.

hannah1977_2

Southend1 wrote: »

Am I missing something here? Surely the "loss" on selling your flat is only a paper loss as the market has fallen but you're buying straight back into it at the same level. And you will still have a home. It would only be a real loss if you weren't buying another property at the same time? In your situation I wouldn't even consider renting the flat out unless you really want to be a professional landlord.

I think we panic bought and we ending up buying a flat that we loved even though it was more pricey than other flats on the street. It was 2007 and one flat we looked at went up 10k from organising the viewing to the actual viewing. Then we paid even more to renew the lease. So we'd have to really do some searching to get a good deal to balance this out I think.

I also thought that we seem to bit behind in that all our friends have much bigger houses than us. And this might be our way to catch up. In say 10 years we could sell both properties and buy a bigger one which we couldn't do if we just kept one property. Or is this crazy?

BitterAndTwisted

Looking after tenants if they're close by, you have someone at hand to deal with issues as they arise and full knowledge and understanding of your legal responsibilities would be like an occasional part-time job. And office hours except in a dire emergency. That's not the hard part. The hard part is the financial worst-case scenario.

hannah1977_2

BitterAndTwisted wrote: »

Well, if the OP isn't working they won't be paying any tax on the rental income as the single person's tax-free allowance is £7k per annum. If the OP's OH is on higher-rate that could be a fair whack.

OP: when you mentioned the mortgage company said £140k I'm assuming that's borrowing in addition to the mortgage you currently have now.

Have a really hard think about how much your repayments are going to be when (not if) interest-rates increase and whether two mortgages will still be affordable at x and y rate together with a void-period between tenancies. Luckily for you right now rents are increasing and very well shall continue to increase in good areas. But please have a long, hard ponder abut the worst-case scenario. Plan for the worst but hope for the best.

Thanks for the info about tax that's good to know. OH is not on higher rate tax and it would be a new mortgage. And yes you are completely right I need to get really meticulous on the figures and see where we are. And where we would be if the interest rate rises. And if things went wrong! I'm feeling a bot more like it's not a completely crazy idea tho

hannah1977_2

BitterAndTwisted wrote: »

Looking after tenants if they're close by, you have someone at hand to deal with issues as they arise and full knowledge and understanding of your legal responsibilities would be like an occasional part-time job. And office hours except in a dire emergency. That's not the hard part. The hard part is the financial worst-case scenario.

In a way that's good to know because I think I was more worried about whether it would be stressful to be a landlord than the finances. The finances I feel confident in looking at properly and making sure they work in the worse case scenario before we commit to anything. Thanks!