To Sell or Let?

gersin008

Hi

I am in a bit of a dilemma and would be grateful of any advise.

I currently stay in a flat in Scotland where have I had a mortgage for five years. I paid £72k for it and would be lucky if I got £60k for it in todays market. I have had numerous issues with neighbours, who have gone but I now realise that a flat isn't for me therefore I need to stay in a house and now been looking at letting one, in a nice quiet area.

My current mortgage payments are about £300 and any House letting would cost £550 though would able to let out my own property for about £425. I guess I have about 57k left on mortgage

Is this wise? Or would I be better selling at a loss?

Thanks in advance

Guest101

Depends if you want to take on all the responsibilities of being a landlord, if your mortgage company even let you and if you'd make any profit after tax.

Only the interest aspect of the mortgage is tax deductible.

Can you cope with void periods paying both mortgage and rent?

gersin008

Very valid points and what has been going through my head.

I know I wont make a profit, unfortunately and as for stress of being landlord I was going to give it an initial six months to see how I feel, so less risk?

Guest101

Unfortunately the first let is where you could go the most wrong, being Scotland rules about tenancies are different to England and I'm not fully upto date with them.

Do u know any local landlords?

Unless u are commited to running a business I would stay clear, personally, however if u are up for a challenge, your local council may have advice about this. Regulations, registration and so forth.

You must remember one important thing if u do it, it is your property but your tenants home. So emotional attachment is never a good idea.

gersin008

After the few years I've had, I am far from emotionally attached.

Thanks for the advice

brit1234

You could get a consent to let deal for 1-2 years if your lender allows probably at a higher interest rate cost. However at the end of term they will want you to go to a buy to let mortgage which you do not have the equity for so you are stuck. So to make work you will need to save about £20k while on consent to let to plough back in and up the equity.

sstteeww

gersin008 wrote: »

Very valid points and what has been going through my head.

I know I wont make a profit, unfortunately and as for stress of being landlord I was going to give it an initial six months to see how I feel, so less risk?

Hi, I am a LL in Scotland. I would strongly recommend using a letting agent since this would be the first property that you rent out. There are very many regulations that you need to adhere to when a LL (Tenant Information Pack, EPC, Gas Safety, Tenancy Deposit Scheme, PAT Testing, Proper Lease, LL registration, Hard-wired smoke detectors, Fire-Safety Compliant Furniture, Specific LL Building Insurance, B2L mortgage or Consent to Lease from your mortgage provider).

On top of the legal aspects, you also have to find good tenants (vetting required) and allow for costs to repair and maintain your flat. So there is a lot to undertake and a lot to learn, you have to treat it as a business.

LA's will charge around 10% + VAT of your gross rental, but they will keep you in the right and help fill your property.

When I first became a LL, I didn't use a LA and I made many mistakes, I almost quit after the first year! But my let was an investment, I didn't "need" the rental income to cover mortgage payments, so could absorb lost rental income without issue (although I obviously wasn't happy about this).

So the advice I would give to any new LL is to use a LA initially, it'll most likely save you quite a bit of money initially.

gersin008

Thanks for the responses

I did phone my mortgage provider and they said I'd need to get costs from the Letting Agency ie a break down of all costs and they would see if they can organise a higher interest rate. Using an LA will be my route to be honest, even if it's just to check the legal side of things

Guest101

2 points:

Ur LA and mortgage are completely seperate, what have ur costs got to do with your lender?

And LA aren't always honourable or even knowledgable. I could set up a LA in my name I about 45mins, choose carefully

sstteeww

Guest101 wrote: »

2 points:

Ur LA and mortgage are completely seperate, what have ur costs got to do with your lender?

They will want to know expected outgoings and incomings to decide whether to give "consent to lease". Even residential mortgages want to know incomings and outgoings to help decide if monthly payments can be met.

Guest101 wrote: »

And LA aren't always honourable or even knowledgable. I could set up a LA in my name I about 45mins, choose carefully

Very good advice, visit quite a few. I have known of other LL's who got very different quotes from letting agents (£525, £575 and £700 pcm for the same flat). Went with LA who could get £700 pcm and the flat has been constantly occupied. It pays to have a good, locally knowledgeable LA.

gersin008

Hoping get a couple of quotes in the next few days, so grateful for all advice

jamesubrown

I would be interested in why you say that?

My gut feeling is don't sell but friends and family want me to wash my hands of it