Buying house to rent out but keep a room?

duchy

josh1924 wrote: »

Thanks for all the responses everyone. If it's ok I do have a few more questions, apologies if they are silly.

Is there any way of guaranteeing lodgers for long term periods? Or is that down to the initial agreement?

No to both
Lodgers have few occupancy rights but they also can leave with little or no notice. How long they stay is to a large degree up to you and how comfortable they feel there (I've had lodgers stay three years -I've also had to ask a lodger to leave after a couple of months due to them growing drugs in their room <eye roll> )

Are there companies that exist which would find and vet lodgers for you? I'm going to be pretty busy the next few months so this would be ideal.

With lodgers I've always relied on them having a decent job and my gut feeling - The one time I didn't listen to the gut feeling I had problems (see above)

After a period I would like to switch to a buy to let mortgage is this possible?

Possibly- depends how long the period is and your lender. BTL is more expensive so unless you were in a position to afford two mortgages there would be little point unless you would be switching from lodgers to tenants.

Would I have any extra costs having lodgers? Or would it just be usual bills, council tax, insurance etc? Trying to do some calculations...

Wear and tear, higher utility bills,

With the rent a room scheme do I earn the £4250 tax free and then anything else over this I pay income tax? Would I get any kind of return doing this after taking into account all my costs? This is still a bit hard to get my head around.

Depends what your costs are - simple maths.

Thanks everyone for all the friendly help

I think you may be over thinking a bit- Just think about if you were looking for a houseshare what would be attractive and attract the kind of tenant you want. What houserules would you have - eg smoking, visitors etc. I found hospital staff made particually good lodgers.

Kevie192

josh1924 wrote: »

Thanks for all the responses everyone. If it's ok I do have a few more questions, apologies if they are silly.

Is there any way of guaranteeing lodgers for long term periods? Or is that down to the initial agreement?
Yes, set an initial agreement up with a minimum term. Of course, if they decide to just up and leave you'd have to take them to court to enforce the contract.

Are there companies that exist which would find and vet lodgers for you? I'm going to be pretty busy the next few months so this would be ideal.
I don't know of any, but why don't you Google and see what information you can find?

After a period I would like to switch to a buy to let mortgage is this possible?
Probably not, given your situation. You usually have to own or have a mortgage on your own property to be eligible for a BTL mortgage.

Would I have any extra costs having lodgers? Or would it just be usual bills, council tax, insurance etc? Trying to do some calculations...
'Extra' costs on top of what?

With the rent a room scheme do I earn the £4250 tax free and then anything else over this I pay income tax? Would I get any kind of return doing this after taking into account all my costs? This is still a bit hard to get my head around.
No. You either stay under the threshold or you go over it and get taxed on the whole lot. The only people that can tell you if you will get a return after the costs and tax is you or your financial advisor. Get all the numbers together and then get advice.

Thanks everyone for all the friendly help

You seem to think that buying and letting property is a simple way to make money or 'invest'. The truth is, it isn't. Some are lucky and make money from it but if I'm honest you sounds so inexperienced I think you'd be better investing in something else...

booksurr

Kevie192 wrote: »

You seem to think that buying and letting property is a simple way to make money or 'invest'. The truth is, it isn't. Some are lucky and make money from it but if I'm honest you sounds so inexperienced I think you'd be better investing in something else...

the comment in red from this poster "No. You either stay under the threshold or you go over it and get taxed on the whole lot." is wrong

if your total income exceeds 4,250 then you pay income tax on the excess over 4250, you do not pay tax "on the whole lot"

Kevie192

Sorry, yes, that wasn't very clear of me.

If the income is over the threshold, you have 2 options:

• Pay tax on ALL income over the threshold with NO ALLOWANCE for expenses at all.
• Pay tax on ALL PROFIT made, which obviously allows for expenses.

I just assumed you'd do the latter as you mentioned 'allowing for expenses'.