First time landlords: opportunity to rent to friends but want it all legit

pph

Hi there,

We are moving from a property we own to another city. We have checked with the bank and it's fine to transfer the residential mortgage into a buy to let. We're also aware that if/when we come to sell we'll need to pay capital gains tax. Am also aware we'd need to declare the rent as earnings.

We have two rental agencies pawing away at the traps like greyhounds to start marketing but as I am moving from work (got the job, confirmed verbally :j ) and have not yet signed a contract, references have not been taken up I have asked them to hold their horses.

In the meantime a friend has said they might be interested in renting the place which would be good as we'd avoid the 13%+VAT managed agent package we would go for.

But it means we would take on potential risk and headache.. ideally I'd like to hand it over to a managing agent and forget about it. Any thoughts or opinions? The difference would be £224 a month not going to a letting agent which is very tempting, and my g/f knows the father of the two guys in their twenties who would rent the place.

So ideas and thoughts?

4 main things I can think of are:

- Tenancy agreement (found this, any good? https://www.gov.uk/government/publications/model-agreement-for-a-shorthold-assured-tenancy)
- Inventory (we'd let it out unfurnished though so nice and easy)
- Landlord insurance
- Other insurance* such as home heating from British gas / drainage insurance from Thames Water etc


*might be going overboard here but I just want a hassle free life!

Cheers!

Pixie5740

pph wrote: »

Hi there,

We are moving from a property we own to another city. We have checked with the bank and it's fine to transfer the residential mortgage into a buy to let. We're also aware that if/when we come to sell we'll need to pay capital gains tax. Am also aware we'd need to declare the rent as earnings.

We have two rental agencies pawing away at the traps like greyhounds to start marketing but as I am moving from work (got the job, confirmed verbally :j ) and have not yet signed a contract, references have not been taken up I have asked them to hold their horses.

In the meantime a friend has said they might be interested in renting the place which would be good as we'd avoid the 13%+VAT managed agent package we would go for.

But it means we would take on potential risk and headache.. ideally I'd like to hand it over to a managing agent and forget about it. Any thoughts or opinions? The difference would be £224 a month not going to a letting agent which is very tempting, and my g/f knows the father of the two guys in their twenties who would rent the place.

So ideas and thoughts?

4 main things I can think of are:

- Tenancy agreement (found this, any good? https://www.gov.uk/government/publications/model-agreement-for-a-shorthold-assured-tenancy)
- Inventory (we'd let it out unfurnished though so nice and easy)
- Landlord insurance
- Other insurance* such as home heating from British gas / drainage insurance from Thames Water etc


*might be going overboard here but I just want a hassle free life!

Cheers!

The number 1 rule of being a landlord is never let to friends or family.

See G_M's guide to Tenancies in England/Wales which contains information for new landlords, selecting a letting agent, deposits, repairing obligations and ending/renewing an AST.

Edit: Actually I see you've already been given those links. Do you require further clarification?

https://forums.moneysavingexpert.com/discussion/5598436

ognum

Do not agree to. 13% management fee that is rediculous, fees are negotiable and you should get below 10%, I pay 7% fully managed.

asus1987

i paid 6% management, 2% admin,

now pay 0% management 0% admin as i sacked the agent,

Contracts are availible online through rentify etc

online letting agents can also be cheaper- ( maybe a way to go if you want an agent but not the expense)

If you insist on letting to friends ( they could go through the online agency, easy rent etc) or speak to the agents that have already spoke to you, see what they agree to,

i would be looking for a significant reduction as they wont have to market the property, Also keep in mind tennant fee's , your friends wont be happy if the agency charges them £200 refereing fee's etc when there your "mates" ,

Lastly if you go through a high street agent, make sure you find out what the exit clauses are should you wish to terminate there services ( from my experience thats collecting the rent, keeping it for a few days and passing it on, not responding to tennants emails, landlord emails etc)

ThePants999

pph wrote: »

I just want a hassle free life!

Don't let to a friend, then.

LEJC

A tenant is a tenant,a Landlord is a landlord and a friend who enters the equation rarely leaves as one!

I am a LL and would never let to friends or family it is just too much hassle,as a LL you still have obligations regarding the property and f &f rarely understand the line that needs to be drawn.

With regard to your letting agent contract you should be able to negotiate this down,certainly to 10% possibly around the 8% mark....but get quotes from several agencies if there are several expressing an interest then there is no need to pay the % you have quoted.

I would suggest that if you are new to letting then go with an agency in the first instance...you will then get to know what you are capable/able/willing to do with regard to managing the property and as you gain confidence you could pull away from the agency and self manage at a later stage.
Not all letting agents offer the same things so make sure you get one that suits your needs.

Dont forget things like the need for a gas safety certificate cp12 if the property has gas appliances/heating...an annual thing that can be arranged either yourselves or via an agent
Invest time into an inventory...it may seem easy that you are letting unfurnished...but this document together with good photos will be what you rely upon to get your property back in good condition at the end of the tenancy.

Guest101

pph wrote: »

Hi there,

We are moving from a property we own to another city. We have checked with the bank and it's fine to transfer the residential mortgage into a buy to let. We're also aware that if/when we come to sell we'll need to pay capital gains tax. Am also aware we'd need to declare the rent as earnings.

We have two rental agencies pawing away at the traps like greyhounds to start marketing but as I am moving from work (got the job, confirmed verbally :j ) and have not yet signed a contract, references have not been taken up I have asked them to hold their horses.

In the meantime a friend has said they might be interested in renting the place which would be good as we'd avoid the 13%+VAT managed agent package we would go for.

But it means we would take on potential risk and headache.. ideally I'd like to hand it over to a managing agent and forget about it. Any thoughts or opinions? The difference would be £224 a month not going to a letting agent which is very tempting, and my g/f knows the father of the two guys in their twenties who would rent the place. - That would be silly, you still have a contract with your tenant, anything goes wrong, they sue you, not the agent

So ideas and thoughts?

4 main things I can think of are:

- Tenancy agreement (found this, any good? https://www.gov.uk/government/publications/model-agreement-for-a-shorthold-assured-tenancy)
- Inventory (we'd let it out unfurnished though so nice and easy)
- Landlord insurance
- Other insurance* such as home heating from British gas / drainage insurance from Thames Water etc


*might be going overboard here but I just want a hassle free life!

Cheers!

You are ultimately responsible, always

Mossfarr

If you don't want hassle then you are probably not cut out to be a Landlord. Its always hassle, whether its with your tenants or your letting agent.

Cakeguts

Here is another vote for do not let to friends or family. If you want a hassle free life get an agent to deal with the repairs, the inspections and the issuing of notices to leave after non payment of rent because someone has lost their job. You don't want to do this with someone you don't know but it would be 10 time worse if you had to evict someone you did know.

teddysmum

I've never been concerned with renting to or from family, but do know that lending to family doesn't guarantee that you will get your money back.

jackomdj

It can work. We know the people who rent from us, 6 years and no issues.