What will it cost me to rent my place? Advice needed for newbie to being a landlord!

supersezzie

Hi all,

This may be an impossible question but I wondered two things...

I have a mortgage on a two bedroom flat but am planning to move in with my partner (renting initially before committing to buying somewhere together in the future).

Firstly, if I was to rent out my place, is there a handy how-to guide anywhere?! How do I know I have covered all bases? E.g. contracts, insurance, declaring the income and the tax/accounting side of it/safety issues like boiler certificates, other stuff like logging and storing the deposit. It seems overwhelming!

Secondly, and this is the impossible question I think, ignoring the maintenance costs of the property, how much does it cost roughly to be a landlord and is this a financially viable option? My current mortgage through Natwest is £412. Do I need to speak to them and is it likely the mortgage will increase? Rental value for my place is about 800pm. I'm looking to pay about £350 rent for the place with my partner and wondering if I will break even, be in profit, or just be under great stress and worse off!!!!

Any help or advice would be much appreciated I don't want to sell my place yet, I'm quite attached to it!

Cheers

tom9980

https://forums.moneysavingexpert.com/discussion/5180214

Being a Landlord can be a pain at times, so far this year i have had to fork out £1300 for a new back door and window repairs. Been told the boiler will fail in the next two years despite being installed in 2012, and now the tenant is having a payroll issue so the rent hasn't been paid this month.

Its plain sailing being a landlord :beer:

marksoton

supersezzie wrote: »

I don't want to sell my place yet, I'm quite attached to it!

It'll be your tenants home, not yours.

Having an emotional attachment to a rental property probably isn't wise.

Cornucopia

supersezzie wrote: »

Hi all,

This may be an impossible question but I wondered two things...

I have a mortgage on a two bedroom flat but am planning to move in with my partner (renting initially before committing to buying somewhere together in the future).

Firstly, if I was to rent out my place, is there a handy how-to guide anywhere?! How do I know I have covered all bases? E.g. contracts, insurance, declaring the income and the tax/accounting side of it/safety issues like boiler certificates, other stuff like logging and storing the deposit. It seems overwhelming!

As a new LL, the best advice you can get will be to use a reputable letting agent. They will assist you with (and in some cases arrange for) the various bits & pieces of bureaucracy. The only thing they won't help with is Tax, but that is fairly simple: if you already complete Self Assessment, then add your rental profit to it. If you don't already complete a form, then ring your tax office, tell them your are a new LL and they will start sending you a SA form every year.

If the letting profit is small and you are in PAYE employment, then they will probably adjust your tax code rather than asking for a tax single payment.

Secondly, and this is the impossible question I think, ignoring the maintenance costs of the property, how much does it cost roughly to be a landlord and is this a financially viable option? My current mortgage through Natwest is £412. Do I need to speak to them and is it likely the mortgage will increase?

You MUST speak to them and obtain their permission to let the property ("Consent to Let"). There will be fees, possibly one-off and certainly on-going. Typically you will be looking at a 0.5% uplift on your interest payments, or the equivalent.

Rental value for my place is about 800pm. I'm looking to pay about £350 rent for the place with my partner and wondering if I will break even, be in profit, or just be under great stress and worse off!!!!

It doesn't sound like a great financial proposition, TBH. The rental itself may show a small profit, once fees, insurance and maintenance costs are covered. Is it a flat? There is the service charge & ground rent to be paid if it is.

You're unlikely to make a major dent in your new rent payments, but offsetting one rental with another is unlikely to achieve that.

Any help or advice would be much appreciated I don't want to sell my place yet, I'm quite attached to it!

Cheers

Is there a particular reason for parking your mortgage and renting? Wouldn't you be better off with your OH moving in to your place and forgetting about being a first-time LL, at least until something comes up with slightly better numbers.

FWIW I cover the mortgage three times over on one of my properties - and that's definitely what I consider to be a grown-up rental proposition that is relatively safe for the long-term.

Lioness_Twinkletoes

If there is one thing that programmes like "Nightmare tenants, slum landlords" and others has taught me is that absolutely no one should consider becoming a landlord if they can't afford void periods, tenants refusing to pay rent, the cost of possession and bailiffs and damage to the property. All of these things happen and it is staggering the number of landlord that wail they're facing financial ruin because the tenants are refusing to pay rent or move out.

I think you need to treat it absolutely like a business. This means no emotional attachment to the property, knowledge, and the wherewithal to fund the above issues, should they arise.

You wouldn't decide to replace a boiler with training and knowledge - what makes you think you can be a landlord without the the same?

supersezzie

marksoton wrote: »

It'll be your tenants home, not yours.

Having an emotional attachment to a rental property probably isn't wise.

Thanks, appreciate the advice but that was tongue in cheek I just meant I'm not ready to decide if I want to sell it yet but I'm already going through the letting go process mentally!

Cakeguts

If you cannot bear to sell this flat you won't be able to cope if it gets badly damaged. What will you do if there is a fire? You need commercial landlord insurance that also has public liability cover this is more expensive than normal insurance. Some tenants don't pay rent for months and months but during this time you will still have to pay the mortgage. Not all properties that you would buy to live in make good rental properties. If you don't have a property that tenants like you will not get the pick of good tenants. People will compromise on something that they own to live in. Tenants prefer something that has all of their requirements.

teddysmum

As your mortgage for one person is only £62 more than your share of the rent you will be paying, could your girlfriend not move in with you ?

Pixie5740

Does your lease permit you to let the property?

booksurr

mortgage - you need permission from Nat West to let your property. They may give you either Consent to Let (a fee and/or % increase may be charged and it may be time limited) or they may require you to switch to BTL mortgage (a fee and/or % increase may be charged but no time limit)

insurance - you would be mad not to get LL insurance (it may be a condition of the mortgage anyway)

you will need to pay for an EPC before you can market for let

if you have gas in the flat you will need to pay for the annual gas safety inspection

you will need to pay whatever service charges apply to the flat (that is if your lease allows you to let it in the first place)

your current mortgage is presumably a repayment one so for tax purposes you need to understand that only the interest element is deductible from your rental income as a cost. The capital repayment element is not, so your taxable profit will be (a lot?) higher than your cash in the hand profit after everything (including the tax) has been paid.

[Deleted User]

Check your prospective tenants out thoroughly, don't just rely on credit checks and last LL reference (LL may be only to glad to foist a bad tenant on someone else). Go to see the property they are living in to make sure they don't trash places (to discuss the TA). Ask to see bank statements as only CCJ's and bankruptcy will show up on credit checks (not that they owe 6 months rent but don't have a CCJ yet).

And yes watch http://www.channel5.com/show/nightmare-tenants-slum-landlords

I am a tenant myself, not a LL. But I know how I'd be doing things if I was a LL.