Exchange or Letting out?

crvs

HI All,

We are planning to buy a house in 2 years but thought to do some home work to take a proper decision.

We currently own a 2 bed room flat which we bought 2.5 years ago. This flat is in central location and close to university and city centre. Therefore finding a tenant for renting is not an issue at all.

We are thinking of two options. I would like MSE forum members to give us some suggestion that will help us to take proper decision.

Option 1: Sell this flat or exchange and buy new executive house.

Option 2: Rent this flat and buy decent house.

If we were to consider option 2 , should we manage renting ourselves or use property management. What are the pros and cons ?


If we are choosing option 2 are we too ambitious?

Any suggestion will be helpful.

Thanks

ognum

crvs wrote: »

HI All,

We are planning to buy a house in 2 years but thought to do some home work to take a proper decision.

We currently own a 2 bed room flat which we bought 2.5 years ago. This flat is in central location and close to university and city centre. Therefore finding a tenant for renting is not an issue at all.

We are thinking of two options. I would like MSE forum members to give us some suggestion that will help us to take proper decision.

Option 1: Sell this flat or exchange and buy new executive house.

Option 2: Rent this flat and buy decent house.

If we were to consider option 2 , should we manage renting ourselves or use property management. What are the pros and cons ?


If we are choosing option 2 are we too ambitious?

Any suggestion will be helpful.

Thanks

Do you have a mortgage on the flat, will your lender give consent to let?

Are you prepared to be a landlord with all the issues it brings?

crvs

We still have mortgage on the flat and assume that we should be ok to let.

Im not sure what issues we will facewhen we rent out the flat. Main reason for me to post is to know all ifs and buts and take a proper decision.

Thanks

Yorkie1

Does your lease allow you to sub-let? Check it out.

Read this thread about all the stuff you need to consider as a LL (assuming you're in England/ Wales):
http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12

What is the flat worth, and how much is the outstanding mortgage?

Do you have the financial resources to pay two mortgages if the tenant refuses to pay up / there is a void period, or to rectify lots of damages if need be?

Werdnal

crvs wrote: »

We still have mortgage on the flat and assume that we should be ok to let.

Im not sure what issues we will facewhen we rent out the flat. Main reason for me to post is to know all ifs and buts and take a proper decision.

Thanks

You cannot just "assume" you will be OK to let it. You have to formally ask the lender. They may agree, they may add extra costs, set-up fees, reserve ther ight to review the consent to let every 12 months or rescind it at any time. They may also refuse, so you have to check this first.

If its a leasehold property, your lease may prohibit letting, so check that aswell.

Then you have to change to landlord based insurance as normal household policies do not cover letting.

How will you finance paying the mortgage and your own living expenses if the rent dries up through bad tenants or gaps in letting or you own financial situation changes (long-term sickness, redundancy etc). What about a major repair bill - you cannot just tell the tenants that you cannot afford to get the heating put right this month - you have to attend to repairs promptly, otherwise they can report you to the EHO at the council.

Read the linked thread mentioned by Yorkie, which covers a lot of the legal obligations of being a landlord.

You will also have to declare your rental income for tax and this may affect any benefits you are entitled to.

crvs

Thanks guys. I live in Scotland. May be law is bit different from that of England/Wales but most of the point should apply here as well.


Thanks

Werdnal

crvs wrote: »

Thanks guys. I live in Scotland. May be law is bit different from that of England/Wales but most of the point should apply here as well.


Thanks

In that case you also have to register as a Landlord!