Becoming a Landlord - is it worth the hassle?

sghughes42

I currently have my own house in Stockport but have just accepted a new job in Chesterfield. The intention is to rent in the shorter term and decide longer term if we want to carry on renting or to buy.

I was lucky that I bought my current house before the prices went mad - I'm only paying £300 a month with about 11 years left on the mortgage.

As my new job is a lot better paid than my old one I can, just possibly, afford to pay rent and a mortgage at the same time, provided I'm careful.

I was originally planning on selling my house as soon as I pass my probationary period at the new job and everything is secure. I am, however, slightly worried as to how long it could take to sell. I don't want to be paying rent and a mortgage for too long, otherwise it will eat in to the redundancy payout I got which could be better used for other things!

I got the idea therefore that I could maybe rent my existing house - similar ones around here are going for almost £500 pcm so I'd have a decent margin over the mortgage payment.

However, reading up on here it does seem like becoming a landlord is a minefield! Has anyone in a similar situation done it and how difficult is it? Should a decent letting agent sort out most of the problems, or do I need to be hands-on? And what sort of fee does the average agent charge?

Can anyone suggest if the sums are likely to add up? If I get £500 pcm then I'm guessing I'll be paying £100 tax so would only have another £100 for insurance, agents fees and profit! I'm not looking at this as a short term money maker, more either as a long-term investment or as a shorter term way of making up for having to pay for two houses at the same time. However, even then it doesn't seem to offer a lot of margin - if agents fees are 20% of rent then I get nothing!

agrinnall

First of all read G_M's post on becoming a landlord.

It's unlikely that you would pay £100 tax on £500 rental income. But it's also unlikely that you'll do much more than break even overall. I think many people would advise you to sell if at all possible, being a landlord is fine if that's what your business is, but as a sideline it may well be more hassle than the alternative,

BitterAndTwisted

Agents fees for collecting your rent typically range between 10% and 15%.

Then there's the tenant-finding-fees and a whole slew of other fees you'll have to come up with as well.

That's say nothing of a whole raft of legal responsibilities and the potential financial risks. You'd need only one lousy tenant to scupper those numbers of yours and would be starting to cost you and your family a whole lot more money.

Has being a landlord ever been part of your long-term investment plans? If the answer is "no" then I suggest you look at selling in Stockport and buying a family home in Chesterfield once your employment situation is more secure.

sghughes42

Thanks, I've already read that post, it is part of what is putting me off!

My understanding is you can only deduct interest from rental payments for tax purposes. Interest seems to be around £125pcm so £375 is taxable. At 30% that is £75, as the balance of the mortgage goes down interest becomes a smaller percentage so the taxable amount goes up...

somethingcorporate

A good agent is an oxymoron.

Ours were criminally negligent and they are one of the biggest names out there.

They seemed to think that getting everything wrong was a "good service".

If you can sell, then do.

sghughes42

Being a landlord is something I've considered but not to any degree of seriousness. I thought it would be nice to keep this house as an investment but I didn't think about the practicalities until now.

I think you are right that selling is the best bet, however, what happens if I can't sell for 6+ months? I've worked out I can cover the dual costs for a year if I have to but beyond that it may not be sustainable...

sghughes42

Probably the wrong forum but relevant to the query, does anyone have a feel for how slow the housing market is at the moment? How soon should I be able to sell if I price sensibly? And how long does it take from appointing an agent to the house being on the market? I wouldn't want to actually sell until May when I pass my probationary period, but could I start the process earlier to try and gain an advantage?

BitterAndTwisted

There is no advantage to be gained by appointing an agent and then not putting the property on the market.

Every property, no matter how bad the area or its condition, will sell if it's sensibly-priced. Deciding on what is sensible requires some research into what has sold recently in the same neighbourhood. I suggest you start doing that soonish. If you price it really keenly if could sell in a week.


How far is Chesterfield from Stockport? Any sense in thinking about becoming a Monday-to-Friday lodger and returning home to your family in Stockport on the weekends? Might be a lot cheaper than renting a family home in Chesterfield and leaving the Stocky place empty until next year.

sghughes42

I did consider that, in my circumstances it isn't really viable. I have two cats so would need to either take them with me and find somewhere that would accept them which I would guess would be almost impossible, or I'd have to put them in a cattery over the week which again wouldn't be good and would cost more.

If it wasn't just me then it could work, but until the summer it is just me so my options are limited...

How long do things like getting an EPC and all the other legal checks take? Also, at what point can I back out? One thing I'm wondering is whether it wouldn't be better to sell anyway. I'd have the money in the bank and I should have £50k equity so wouldn't have to worry about getting a job quickly even if something did happen at this new one...

ognum

It is only worth being a landlord if you do it as part of a considered strategy rather than just jumping in.

I believe you need to look at it in the long term, have some cash behind you to sort out issues as you go along and for me it's important that my tenants live somewhere that I would be prepared to live so maintaining the properties and be proactive and reactive when needed.

There are hassles, things always go wrong when I'm not in the country but if you have a good agent and are prepared to change agents until you find one then that helps.

CWSmith

Yes it is worth it.
When my mum went into a nursing home, I rented out her house to pay the nursing home bills. I went through an agency, who are brilliant! They came round the day I contacted them, and had a tenant in within a fortnight. There was no find-a-tenant fee to pay.

The house is rented at £1300 a month, of which I receive £1100. The agency take care of everything - when the tenants lost their jobs and went into arrears, the agency personally marched them down to the council and got their housing benefit sorted out. They sort out repairs immediately and cheaply, without me having to lift a finger.

Find a good agency (yes they do exist!) and you are sorted. It is absolutely no hassle whatsoever. I will add that I had never rented out before, so didn't have a clue how it all worked.