OH wants to rent our house out

lulu_92

OH and I are looking to buy a house this summer. He bought a house 8 years ago and has around £15k equity. I've managed to save around £4k, which will increase to about £6-7k by the summer.

The original plan was to sell up, use the equity as the deposit and my savings to pay for solicitors, estate agent fees and any furniture needed with what's left over.

OH now wants to keep his house and rent it out. This would mean we would not be able to afford a bigger house (which is why we want to move as we're trying to start a family), and I doubt any rent payments would cover the mortgage on the rented property.

I've been a tenant and I've got relatives who are landlords so I know of all the hassle. OH won't listen to any of my concerns and insists that this is foolproof.

Can anybody please give me their experiences as a landlord, or a tenant to either change my mind or change his?

Thanks in advance

ognum

lulu_92 wrote: »

OH and I are looking to buy a house this summer. He bought a house 8 years ago and has around £15k equity. I've managed to save around £4k, which will increase to about £6-7k by the summer.

The original plan was to sell up, use the equity as the deposit and my savings to pay for solicitors, estate agent fees and any furniture needed with what's left over.

OH now wants to keep his house and rent it out. This would mean we would not be able to afford a bigger house (which is why we want to move as we're trying to start a family), and I doubt any rent payments would cover the mortgage on the rented property.

I've been a tenant and I've got relatives who are landlords so I know of all the hassle. OH won't listen to any of my concerns and insists that this is foolproof.

Can anybody please give me their experiences as a landlord, or a tenant to either change my mind or change his?

Thanks in advance

Lulu, I suggest you and your hubby's read through this forum to find out all the issues for tenants and LLs.

MisterB1959

do the sums first and don't just go with your thoughts. if they dont work out then the decision is made for you, if they do, why not try it?


the future is a funny thing, it can mean so many things to many different people at different times of their lives. you need to ask, what do you want from yours, both long and short term

Pixie5740

One of the golden rules of letting is not to let out a property that you have an emotional attachment to.

It seems daft to not buy the bigger property you want so that you can start a family in order to hang on to an investment property that doesn't make you any money.

Get your OH to do his sums. Based on the outcome he might not be able to get CTL or a BTL which could put the kibosh on the whole venture.

G_M

Do a proper budget.

Get realistic figures for rental income (NOT exaggerated letting agent figures designed to get you to sign up!) and multiply by 10 for annual income. Not 12 months - you can't guarantee constant rent...

Work out what costs you'll have
1) setting up the house ready for letting
2) ongoing running costs
3) tax/repairs/agents
4) Contingency money for big unexpected bills (boiler gives up)

Read

New Landlords (information for new or prospective landlords)

Then work out similar budgets for your new home
1) savings you'll have left over after the costs above are covered
2) mortgage based on salaries etc
3) purchase/set-up/moving costs

and look at realistic prices of properties you could afford.

Do it all on a spreadsheet/paper and then sit down wih OH and ask him (her?) to find any errors.Don't present it confrontationally as "Look at this we can't afford...." but as "Here I made a start but not sure I got it right, what o you think...."

Between you you'll reach a conclusion!

skint-student-nurse

Pixie5740 wrote: »

One of the golden rules of letting is not to let out a property that you have an emotional attachment to.

Couldn't agree more with this...

My ex and I had a flat that was too small for us but selling it would have left us with negative equity (OH fixed the mortgage literally weeks before interest rates crashed) so our mortgage company gave us permission to let the property out. We went through an agent, made sure everything was done and all the requirements were met (I had rented several properties before as a tenant) Happy days, or so we thought...

Two months later, the rent payments dries up as it transpired our rent was paying for her wedding.... we served a section 8 as our letting agent 'forgot' and ended up seeking a possession order to gain access to the flat. Locks changed, and the flat had been completely trashed, it smelt of smoke and weed, and she had kept several animals in the flat. It took a good month to fix the damage and make it liveable again. We couldn't even get the deposit back as the council claimed it due to her housing benefit being overpaid. We mutually agreed a time for her to collect her items but it didn't stop her from breaking in.

And the best bit...? This tenant was a good school friend of my ex.

I would advise researching the letting agents in your area and who will work best for you and your interests. Make sure you get adequate insurance and that your tenants are fully referenced before signing to anything. It turned out our tenant wasn't fully referenced. As suggested, this forum makes good reading from both the tenants and landlords perspective.

Good luck with whatever you decide

theartfullodger

lulu_92 wrote: »

OH and I are looking to buy a house this summer. He bought a house 8 years ago and has around £15k equity. ....etc etc etc....
OH now wants to keep his house and rent it out. ....

OK: He presumably has a normal residential mortgage: Which does not allow the place to be rented to tenants:

a) Now yes he could just go ahead & rent it out: But the lender will likely find out (they have ways..) and has the right to repossess the place, kick the tenants out & sell it: Probably for less than is you sold yourselves. It happens rarely but has happened.
b) He could request "Permission to Let". Chances are there will be fees or an interest-rate increase: Likely only 12 months then...
c) He could try for a Buy-2-let mortgage: But with presumably less than 20% equity he was no chance...

So well dodgy..

And, only become a landlord if you have the financial AND EMOTIONAL reserves to cope with the tenant (or letting agent..) -from-hell who doesn;t pay for 7 months whilst you pay mortgage & legal fees to eject & repair costs: Repairs? Yes, as no repairing probably means tenant is allowed to stay longer.

You are right, OH is wrong.

Best wishes to you for the future...

lulu_92

Thanks for all the input

To be honest I never thought about the points theartfullodger raised, in terms of the mortgage.

No matter how many stories I tell him of people having the tenants from hell he doesn't listen and thinks he can give 24 hours notice to kick them out (which I know is wrong, plus as stated above giving notice doesn't necessarily work anyway!)

I don't have an emotional attachment to the house, if anything I want to get rid of it as soon as possible. I think my emotions come into play when talking about our next house and us wanting a family.

I told him last night that I do not want the house renting out full stop. It is not worth it.

Pixie5740

lulu_92 wrote: »

No matter how many stories I tell him of people having the tenants from hell he doesn't listen and thinks he can give 24 hours notice to kick them out (which I know is wrong, plus as stated above giving notice doesn't necessarily work anyway!)

It's that complete lack of knowledge and understanding that's going to leave him crying in his cornflakes every morning when he gets landed with a professional tenant.

If you can't talk him out of this at least try and save him from himself by getting him to join a landlord association and take a couple of courses.

Lily-Rose_3

Pixie5740 wrote: »

One of the golden rules of letting is not to let out a property that you have an emotional attachment to.

It seems daft to not buy the bigger property you want so that you can start a family in order to hang on to an investment property that doesn't make you any money.

Get your OH to do his sums. Based on the outcome he might not be able to get CTL or a BTL which could put the kibosh on the whole venture.

This ^^^ I would stick with your plan Lulu, to sell and get a bigger property, (or stay where you are for now!)

To be a landlord is fine, if it is a business for you, and you have numerous properties, and you tend to your tenants when they need you, and leave them alone the rest of the time. But for someone who has only one house - that they have lived in - no.

And as you will still be paying the mortgage on the house (and your new one) it seems pointless and daft. (JMHO.) You will fall apart if the tenant misses a month or two of rent.

Don't do it.

My daughter's LL has 7 properties in the place where her university is, and they are all paid for, years ago, and every penny she makes is profit. Although she does have to maintain them of course. If someone is late paying their rent, she doesn't even care, because she is not desperate for the money to pay mortgages.

And this woman is LOADED, and is very chilled. I think my daughter got lucky! Also, this is her 'living,' and she has no other job, so when the tenants (all students) need her, she is there really quickly, and any repairs done very quickly. No faffing around, claiming she has no money for repairs, and leaving people with leaks, or a dangerous house, or no heating for a month! And as I said, she doesn't go hysterical if the rent is a few days late, because she needs it to pay the mortgage. (Because she HAS no mortgage on any of the houses!)

Landlords like this are fine, (the ones who treat it as a business,) but the ones who are just renting out 'their' house, and who need the money, are a flipping nightmare! They treat the house as if it's still their home, they think they have the right to tell the tenant how to live, they think they have the right to come and go as they please, they rant if the rent is a day late, and they moan if anything needs doing, because they NEVER have the money, because they are maintaining another property that THEY are living in!

Don't become that person LOL!

ellesbellesxxx

HI Lulu!
So does that mean your money will be the deposit for the new house...the 6/7k? If so, you will have a massive mortgage to repay. We managed to save 25% deposit (well, we borrowed 8000 at the time from my parents to make it up to that, only got 5800 to repay to them now) which meant we got a better mortgage rate.

We rented out my husband's flat, instead of selling it, as we had had hardly any interest and only one pitiful offer (which would have left 2k after fees!) in 10 months on the market. At the moment, we are covering the costs on the rented property and luckily have had a fantastic tenant in for 18 months. However, we know that this is pure luck and only temporary. We would like to sell it really and pay off a chunk of our mortgage however whilst we have a good tenant we are best off them paying down the mortgage for us!


I can see both sides but with what you have said about the deposit you will have then I would sell it. xx