Renting out my property

Mike4010

I purchased a new build home nearly 2 years ago and I've since moved out with my girlfriend to her house. To sell my house means I will get less than what I paid so I'm thinking of renting. After talking to agents I can get a decent rental return at least to cover the mortgage and other costs, but I'm not sure on what tax I'll pay starting from next year as I've heard it's all changing. Rent is expected to be £725 pm and my mortgage is 75% ltv at 2.79% will I be making a loss and if so how much?

G_M

* Tenancies in Eng/Wales: Guides for landlords and tenants This thread is intended to provide information to both landlords and tenants relating to Assured Shorthold Tenancies (ASTs) in England and Wales.

Topics covered:

* Repairing Obligations: the law, common misconceptions, reporting/enforcing, retaliatory eviction & the new protection (2015)

* Deposits: payment, protection and return

* Ending/renewing an AST: what happens when a fixed term ends? How can a LL or tenant end a tenancy? What is a periodic tenancy?

* Rent increases: when & how can rent be increased?

* Repossession: what if a LL's mortgage lender repossesses the property?

* New landlords: advice, information & links

* Letting agents: how should a landlord select or sack?

G_M

Mike4010 wrote: »

...... Rent is expected to be £725 pm and my mortgage is 75% ltv at 2.79% will I be making a loss and if so how much?

So the agent told you this or you did your own research?

If agent, then assume £675. Then assume you'll get 10 or 11 months rent a year, not 12.

Then knock off agents fees, tax, EPC/Gas/risk assessment etc costs, repairs...........

What are your mortgage payments?

Bluebirdman_of_Alcathays

AFF8879 wrote: »

Someone with more knowledge on this please correct me / confirm - but I believe the tax changes only apply to BTLs being run as a business (I.e on an interest-only mortgage). If you're sticking to a capital repayment mortgage which I assume you are, I don't think you will be any worse off; this is clearly due to personal reasons as opposed to a business venture.

I might stand corrected...

Whrre to begin.....

Cornucopia

Mike4010 wrote: »

Rent is expected to be £725 pm and my mortgage is 75% ltv at 2.79% will I be making a loss and if so how much?

I'd be surprised if you will make a loss, but you haven't supplied enough info to say one way or the other.

If, for example, your property value was £150k, your mortgage advance would be £112,500 and your monthly payments on interest-only would be £261. LLs often prefer interest only mortgages because it simplifies the tax calculations. You can still make periodic overpayments, subject to the terms of the mortgage.

You need to ask your existing lender for "consent to let", or move the mortgage onto a BTL product.

Cornucopia

AFF8879 wrote: »

Someone with more knowledge on this please correct me / confirm - but I believe the tax changes only apply to BTLs being run as a business (I.e on an interest-only mortgage). If you're sticking to a capital repayment mortgage which I assume you are, I don't think you will be any worse off; this is clearly due to personal reasons as opposed to a business venture.

I might stand corrected...

Yes, you'll need to - this is pretty much entirely wrong.

The changes apply to all Landlords who let properties as private individuals. It affects those people who are already 40% tax payers, or close to it.

cyantist

Will you be able to/do you have consent to let?

This may not be given in which case you'll need to get a BTL mortgage (usually with a significantly higher rate) so this may well alter whether you can actually cover all costs from the rent.

If the mortgage provider gives consent to let, it won't be permanent so take this into account.

Are you a higher rate tax payer? How much are the mortgage payments and how much of this is interest vs repayment of the capital?

Cornucopia

cyantist wrote: »

...usually with a significantly higher rate...

The OP's original rate is not that low for a residential deal, and he should be able to get something similar on BTL.

e.g. Coventry BS, 2yr fix @ 2.99%, £0 fee, 75% max LTV

In fact, that will probably be cheaper than the OP's original deal + consent to let fees.

MerrilyA

New tax changes would mean:
(yearly Income x your tax percentage)- (yearly mortgage interest x 20%) = how much tax you pay.

Is the mortgage a tracker or is it fixed? Fixed could offer more certainty at least over the amount of time it last for.

If you want to rent out your property its worth doing some good research. You'd want to know the highest, mid-point and lowest rental figures in your area and get an understanding of why that is (e.g. standard of property, nearer to amenities, inclusive of bills, good offerings like speedy WiFi). Which point do you want to be at and what can you offer? Is there a big enough demand?

You'd also need to think about other monthly expenses in addition to the mortgage. Think about monthly maintenance if bills are included and also a contingency pot for repairs when needed.

However, if you're still keen to sell you could consider an auction you could possibly get a decent price there.

Mike4010

A letting agent said rent would be £725 pm and a mortgage broker had recommended a deal at 75% ltv at 2.79% my current deal which ends in April is 2.49% payments at the moment are £533. the house has been valued at £140,000. I'm a basic rate tax payer at £35k a year. I hope this info helps

Thanks for the information so far

marksoton

Mike4010 wrote: »

A letting agent said rent would be £725 pm and a mortgage broker had recommended a deal at 75% ltv at 2.79% my current deal which ends in April is 2.49% payments at the moment are £533. the house has been valued at £140,000. I'm a basic rate tax payer at £35k a year. I hope this info helps

Thanks for the information so far

Was that a BTL mortgage though?

Have you read the links G_M provided?