Move back into own property or rent elsewhere?

tylerjames

Afternoon folks, new here and looking for some advice...

I have my own flat which I rented out some time ago as I was struggling to meet the bills.

I've been staying at my parents for minimal rent ever since and have recently cleared my debts and saved some money.

I want my own place back, and can see two ways of doing it:

1. I give my tenants the 2 months notice they are allowed and move back in. I would feel a bit bad as they are wanting to stay long term. However my situation would be simple, I would be back to owning with a mortgage and paying bills each month.

2. I rent a flat somewhere else using the rent income I get as a budget for this rental flat. I have an advantage on choosing the location as well. Effectively I am a tenant and a landlord. It's a bit more complicated but should work, as my own tenants are likely to stay long term.

My dad recommends that I stay put and use my income to overpay the mortgage, which I understand financially. I do not feel however that he understands my need to be independent in preference to being extremely financially astute.

So, here looking for opinions on my dilemma and wondering if I am missing anything obvious. Appreciate all advice offered - Thanks.

dimbo61

How long have you been renting out your flat ?
Does the rent cover the mortgage and 25% extra?
Have you got permission off your lender to rent out the flat and is there a time limit?
Capital gains tax ???
Long term plans ?
Can you afford to move back into your flat and not run up debts again?
House share ? cheaper and sharing with other young people but living with other people who may not be as clean as you!
You can issue an s21 but that does not mean the tenants will move out !
Are you a good landlord who is doing everything right ?

tylerjames

I will respond to your questions:
I have rented it out for around a year now. The rent is, like you suggest, around 20-25% above the mortgage repayment.
I paid £100 for permission to let, but unsure if there is a time limit on this.
Sorry don't know anything about capital gains tax.
Long terms plans, pay off mortgage but in the meantime want my independence and enjoy myself.
Now I have cleared my debts I have worked out I can afford to live in my flat, my mortgage is about 35% of my income.
I don't fancy a house share - only if it was a close friend, but there is nobody currently who I could share with, they are all pretty settled.
I also want my own space without other people coming in or out, some days I like to 'hibernate' and do nothing without anyone questioning me!
I believe I have been a good landlord, any problems the tenants have had have been sorted quickly.

xylophone

In your position, and assuming you like your flat, I'd move back in.

Slinky

xylophone wrote: »

In your position, and assuming you like your flat, I'd move back in.

I'd second this.

If you become somebody else's tenant just because you don't want to get rid of yours, that landlord won't be sympathetic to your situation - they'll do what suits them whether that means continuing to rent it to you, or asking you to leave when it suits them. The problem you have here is that you could find yourself homeless without being able to get back into your own flat if your tenants won't leave when you want them to.

I moved back into this house which I had lived in before. I'd moved to another part of the country and rented the house out, our circumstances change, husband got a job local to here so we moved back. The tenants understood it wasn't personal to them that we asked them to leave, we needed our home back.

Kynthia

You have to declare your property income to the HMRC and potentially pay tax on it. If you rent somewhere and also let a property you will be paying out for your living expenses while also paying a mortgage and paying tax on your property income. You can't offset the rent you are paying against the rent you are receiving. Have you factored the tax into your decision?

paddedjohn

I could be getting this totally wrong but afaik the £100 you paid for permission to rent out is only temporary, after 12 months a BTL mortgage will be required which is more costly.
You say you can afford the mortgage if you move back in but can you also afford all the other bills (council tax,gas,electric,etc) without getting back into debt? stay with your parents, get waited on hand and foot;)

PaulLuke

Can't really add much to what you've already been told, other than to say either rent it out or move back but I don't think renting another flat would make much sense.

However the comment from Paddlejohn isn't correct as the period of time that you would be allowed to rent out a property with a residential mortgage varies from lender to lender (e,g, Nationwide allow up to three years.

theartfullodger

Find a rich widow - or widower - or both.

What makes you think tenants will ho after 2 months?? Section 21 is not a notice to quit & tenant does not have to leave on notice expiry.

In my experience those landlords who think they are good landlords would often be surprised by what their tenants thought- rather than what their tenants told them.

tylerjames

Thanks to everyone who has replied.

I would say the mortgage company isn't currently aware I am renting it out as it was a long time ago that I paid the £100 fee and as the other poster suggests it might have only been a one year permission.

The rent income is more than the repayment mortgage amd I am not declaring any of this income for tax purposes. I don't understand how this works either, because whats to stop me reducing the mortgage term in order to increase the interest to the same amount as the rent and then pay no tax?

I am looking for some help here so I will be honest. I am not happy with three things. First, I am 31 and I am at my parents house. Yes it is kind of them to have me and not ask rent, but it does not feel right, I need to be independent.

Secondly, I am not happy owning my property. I never bought the place for myself, it was as an investment. However it's not worth any more now than it was many years ago. I also have a problem in the lease is getting low and to get full asking price I'll have to pay £20 grand+ to renew it!

Third, I am not happy in my job, it is not 'me', it gives me no satisfaction, there is no future in it, and cuts are constantly being made with good people being sacked with increasing regularity.

Now, let me tell you where I'd like to be:

I want my own place, space to myself, desirable location. Personally I don't see the point owning a property until you want a family, but my actions so far go against that. I don't see a problem with sharing/renting but putting money aside for a deposit on a house later.

As for the job, I need a break. I want to quit, I want to have some time off, then get some new qualifications. Problem is how can I have my own place if I quit the job, can I rent somewhere else before quitting and then receive housing benefit to pay the rent? I know that sounds greedy, but I have worked all my life and paid taxes. What else can I do, sell my place? A mate is having trouble selling his house which is more desirable than mine, the market is stagnant.

Well I would much appreciate some advice, somethings got to give, I feel like I'm going to explode!!

tylerjames

What are the implications of renting out without permission???