Can't sell - rent our house out and we rent too?

supersavermum_2

My husband has recently gone self-employed and money is tight right now. Long term he thinks we'll be better off. We've been wanting to move for ages but been in lots of different situations when we came to sell and buy (gazumped, failed sealed bits, broken down chain etc). However I really need to move. We've no garden, 3 kids and this dark Victorian house is really getting me down. Apart from not being finacially stable we also are not sure if we want to move out of this area or if we would prefer living in the country. The question I wanted to ask was has anyone rented out their house and rented out another house ie off set one rent against another. It seems to answer all our questions but maybe I've not thought of something really obvious eg tax. We're also receiveing WFTC and I suppose it will affect that. Any suggestions.

Topsy1_2

You should probably be able to off-set a proportion of the rental income against tax - maintenance, insurances, management fees etc - but rent from your old house would also obviously count as income. Not sure how that affects WFTC.

Hmm. I would advise an appointment with a tax advisor asap...

Hopefully someone else will be along in a while with something slightly more constructive..

linlin_3

The calculation is this:
Income from renting your current house.
(You can offset some costs and you'll have to check with your mortgage lender as they may increase your interest rate.)
Less: tax - basic rate of higher rate?
(If the house is in joint names, and you're not working, check to see if rental income can be in your name only).
Less: cost of renting another house.
Any surplus = profit, but consider: cost of moving, problems with landlords.....damage deposit hassle.

If your husbands self-employment is client based, moving away will become increasingly difficult as he gains clients. Otherwise, research his likely income and cost of housing in the country. If he's only recently become self-employed, it's unlikely you'll get a mortgage until he can produce three year's accounts.

supersavermum_2

thanks for the replies so far. Would be a shame to lose wftc but I really want to move from here. I'll have to look into how income from this house offset against a new house would work. We don't want to do it to make profit. Infact the house wewould rent is likelyto be more expensive. So not sure how that leaves us? But renting might have to be the way forward if we can't get a new mortgage for 3 years. thanks again.

Poppy9

My friends rented out their one bed flat that they couldn't sell in Kent and rented a 2 bed room flat as they now had 2 children. The tennants in their flat suddenly moved out and the rent dried up and they were left with a mortgage and rent to pay. Their flat was in negative equity and eventually it was repossesed and 8 years later they are still renting as they cannot get back on the property ladder.

epz_2

i would stear well clear from this idea unless you plan on rentig out to a friend/family member wher you know their long term plans.

a lot of btl'ers are folk who have ended up with a couple of houses and can afford the voids etc, you on the otherhand are exposing yourself to a massive financial liability at a time you can least afford it. if you really must move why not sell the current one and look for somewhere else in the mean time, worst case you would lose a couple of % of the value of the propert due to HPI if it contines which may well be close to the rent you would be paying.

think about it like this, imagine you get a tennant who recks the place and needs to be evicted, as i understand it it could take over 3 months to remove them then god knows how much to repair any damange and however long it takes to find a new tennant. add the costs of say at least 4 morgage payments and £1000 in costs/damage and ask your self how that would affect you then ask yourself if you really hate the house so much that you would risk it.