Letting my property for 6 months??

banofi

Hi, I've recently been told I am being made redundant. I'll be owed (up to) 3 months notice period plus 3 months redundancy payout. However a potential opportunity has arisen where I might be able to work abroad for 6 months from January!! I have a 1 bedroom flat which is mortgaged, and I'm thinking of letting it out for a few months. Obviously this would be financially beneficial. Would I have to tell my mortgage company? Obviously I'd have to tell the contents insurance company. Also I'd finish the decorating and get the oven cleaned and boiler serviced and check fire alarm. The opportunity hasn't been confirmed yet but if it is confirmed that I can go, I'll need to act very fast!! Any thoughts would be appreciated!!

BitterAndTwisted

Yes, you will need to apply for Consent-To-Let from your lender. This is not always forthcoming as you originally applied for a residential mortgage to live there yourself. Plus, they could choose to charge you a fee or increase the interest-rate. Not all lenders take the same approach.

Are you aware of the very many legal obligations which would apply to you once you become a landlord? Gas-safety certs? Taxation? Agreeing a six month let doesn't always mean that you would automatically be able to secure possession if your tenant was unwilling or unable to go at expiry of the fixed-term.

theartfullodger

Can you afford (emotionally & financially..) the tenant (or letting-agent..) from hell who pays nothing for 6 months & doesn't leave when asked politely??

If not or not sure, don't....

banofi

I would have thought if the letting agent states it is a 6 month let and the tenant signs the agreement then they would have to leave at the end of 6 months?? I will phone the mortgage company and see where i stand regarding interest rates and fees. gas-safety certs, i guess I just get the gas company round to do a safety check, like i normally do every year??

Fire_Fox

It's worth running an advanced search, this all comes up several times a week. Six months is the fixed term, not the length of the tenancy, if the tenant does not vacate they roll onto a statutory periodic tenancy.

You will need to ASK your mortgage lender, may have to ASK your freeholder, inform the buildings insurers/ switch to landlords insurance, consider how you are going to manage tax, get the appropriate safety certificates and learn about the reams of legislation you would need to comply with.

Don't make the mistake of thinking you can delegate your legal obligations and responsibilities to a letting agent, the buck stops with you - it will be you in court if the deposit is not lodged or if you illegally evict your tenant. Nor should you expect to get all the answers from unqualified people on a forum.
http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12

Werdnal

Mortgage will need to be asked for consent, they may agree, but usually up the payments, charge a set-up fee and can even stipulate who you let to and how much rent you should charge. They can of course refuse!

Then if flat is leasehold, check the lease as you may need consent from the freeholder.

You will also need to delcare the rental income for tax, and even if you are paying the mortgage, only the interest portion of any payments is an allowable deduction.

There is much more to letting that you are probably totally unaware of and very good info here:

http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12

You should read through all this and the links it contains, and specifically, as you will be out of the UK, check out the non-UK resident tax info as you must register with HMRC and arrange for someone to pay any tax you owe them in your absence! You also need to have someone local to the property to handle repairs and act as a contact for the tenants - if you do not provide them with an address in England or Wales for contacting you, you cannot legally charge them any rent! Consider using an agent, but choose wisely as agents themselves can mess up big time and you end up carrying the financial and emotional can!!!!

You also cannot be sure that the tenants will leave at the end of 6 months. Even giving them a 6 month fixed tenancy will not ensure they up and leave then, and you may need to go to court to formally evict them which can take months!

Will you be financially stable enough to pay your mortgage and cover your own rent/living expenses, if the tenants decide to stop paying rent?

TBH, by the time you have got the place up to spec for letting, gained consent to let and paid the extra mortgage, gained consent to let and paid any fees the freeholder requests for amending the lease, sorted out gas safety certificate and LL insurance, paid letting agent fees etc, would you be making anything on this?

Werdnal

banofi wrote: »

I would have thought if the letting agent states it is a 6 month let and the tenant signs the agreement then they would have to leave at the end of 6 months??

Then in the words of Yoda "much to learn you have!"

The day after the tenancy fixed term ends, the AST - Assured Shorthold Tenancy, becomes an SPT - Statutory Periodic Tenancy. You or the agent can issue notice to the tenant that you require the property back at the end of the 6 months, but legally, this does not end the tenancy, and if the tenant stays and does not leave on the last day, you have to apply to court for a possession order to force them to move out. This can take several months, and even after the order is granted, the tenant may still sit tight and await the baillifs to arrive to chuck them out!


Almost forgot - you also need an EPC - tenant must be given a copy of this, plus the Gas Safety check must be a proper LL Check with a formal Certificate issued! And, as I assume you will let it furnished, all soft furnishings (sofas etc) must be up to current fire safety specs!

More costs to be aware of!

banofi

Wow- lots to think about!!! Will have a read for a few days. If I have no rental coming in for 6 months then yes I can still pay the mortgage as normal. I would have accommodation paid for me oversees. Just sounds like a nightmare if, like you say, I get the tenant from hell. I'll chat to an agent who has organised a let for my friend and hear what they have to say and check what the mortgage company says. Worst case scenario the flat will be empty and I'll ask a couple of good friends to sit for a few weekends and keep an eye on the place.

Fire_Fox

banofi wrote: »

Wow- lots to think about!!! Will have a read for a few days. If I have no rental coming in for 6 months then yes I can still pay the mortgage as normal. I would have accommodation paid for me oversees. Just sounds like a nightmare if, like you say, I get the tenant from hell. I'll chat to an agent who has organised a let for my friend and hear what they have to say and check what the mortgage company says. Worst case scenario the flat will be empty and I'll ask a couple of good friends to sit for a few weekends and keep an eye on the place.

If you do not let consider turning the water off and draining down your system - that means no house sitters but also no random leaks into the neighbours flat. Also consider switching to a 'no standing charge' tariff and switching off the gas. If you can move most/ all of the furniture out many councils offer six months free council tax. They need to agree that the place is 'uninhabitable'.

Check your insurance policies regarding leaving the property empty. If you take a penny from the house sitters you could be deemed to be a landlord and have to comply with all the legislation so be very careful how you proceed. You might be better beefing up security with a stick up alarm, window locks and door hinge bolts. My parents do all this when they travel for months at a time, but neither their front door nor their windows are accessible from the street.

It can be a bit damned if you do, damned if you don't.

ShALLaX

Uninhabited*. I don't think a few missing cupboards makes a place uninhabitable!

G_M

banofi wrote: »

..... I'll chat to an agent who has organised a let for my friend and hear what they have to say .

Bear in mind the agent will under-play the risks, exagerate the potential rent, be over-optimistic about the speed they'll find suitable tenants etc.

Their concern is to sign you up as a landlord, and get your fees (and the tenant's fees). They will NOT be concerned about your taxation, or what happens when you come back in 6 months to find the tenant still there leaving you homeless with the prospect of a 3-5 month legal battle to evict them.

Frankly, for 6 months rental income, it is not worth it.

For a year, maybe.

As advised above, read my post here:

New Landlords (general information for new or prospective landlords)