Renting out my one bed flat yay or nay?

Crashy_Time

Deleted_User wrote: »

I also bought a two bed house in 2012 (not Londinium tho) and am selling. Rented to friends for two years and if I hadn't got them out sharpish then the house would be in bits....agent looking after it or not...you get dirty lazy people in you're knackered. How much did you buy for in 2012 ? Let's guess £200k....its probably gone up £70k...sell it !!

Yep, sell it while you can....


http://www.telegraph.co.uk/news/2017/05/18/stamp-duty-tax-raid-prompts-sharp-drop-buy-to-let-lending/

movilogo

If the property can generate positive cashflow (actual amount is immaterial), considering some insurance factor if things go wrong

=> let it

If generating negative cashflow => don't let it

PS: Make sure you understand how tax is calculated on rental income.

Crashy_Time

movilogo wrote: »

If the property can generate positive cashflow (actual amount is immaterial), considering some insurance factor if things go wrong

=> let it

If generating negative cashflow => don't let it

PS: Make sure you understand how tax is calculated on rental income.

The problem is finding a buyer when loads of other BTL are running for the exits?

mn2203

Robomb wrote: »

I own a one bedroom flat in the suburbs of London. I bought it back in 2012 just before prices rocketed, I have lived in it ever since. I am now in the position where my boyfriend has asked me to live with him and so I am seriously considering renting my flat out to tenants. However there seem to be so many financial factors to consider that I feel a bit lost and am starting to wonder if it is a realistic move.

Hi - can I ask if you have decided what to do?

I am in a similar boat and trying to weigh everything up


I own a 1 bedroom flat with £12k left to pay looking to reduce term of mortgage down to 2.5 years to end in August 2019 as this is when the 5 year fix is up.

Plan to move into bf's property next April - he has a 3 bedroom new build with help to buy scheme. This would not be our long term home, as would purchase something together a few years down the line.

I've been researching the renting (either long term or until I want to buy a bigger joint property with bf) vs selling up when I move in with him in April and save my lump sum to use as my share when we buy a joint property down the line.

I have been told I can get £695 per month rental income, but I know this would be taxed at 20%, plus pay agents fees, insurances etc. I would not necessarily be renting it to make money, but I am reluctant to give up my only asset.

I am weighing up the pros and cons - with renting I would have income that would cover/ go towards my share of a joint mortgage and I would also not loose my financial independence but does come with added responsibilities and the impact of CGT when I sell eventually (unless this was within 18 months of me moving out of the property) and a higher SDLT as I would be buying a second property - I suspect our joint property would be over £250k.

If I sell when I move out next April, I would have £125k capital but would not be looking to purchase a joint property for a year as our careers could change in a couple of years which could take us elsewhere in the country, so what to do with this cash in the meantime.

Thanks

Crashy_Time

mn2203 wrote: »

Hi - can I ask if you have decided what to do?

I am in a similar boat and trying to weigh everything up


I own a 1 bedroom flat with £12k left to pay looking to reduce term of mortgage down to 2.5 years to end in August 2019 as this is when the 5 year fix is up.

Plan to move into bf's property next April - he has a 3 bedroom new build with help to buy scheme. This would not be our long term home, as would purchase something together a few years down the line.

I've been researching the renting (either long term or until I want to buy a bigger joint property with bf) vs selling up when I move in with him in April and save my lump sum to use as my share when we buy a joint property down the line.

I have been told I can get £695 per month rental income, but I know this would be taxed at 20%, plus pay agents fees, insurances etc. I would not necessarily be renting it to make money, but I am reluctant to give up my only asset.

I am weighing up the pros and cons - with renting I would have income that would cover/ go towards my share of a joint mortgage and I would also not loose my financial independence but does come with added responsibilities and the impact of CGT when I sell eventually (unless this was within 18 months of me moving out of the property) and a higher SDLT as I would be buying a second property - I suspect our joint property would be over £250k.

If I sell when I move out next April, I would have £125k capital but would not be looking to purchase a joint property for a year as our careers could change in a couple of years which could take us elsewhere in the country, so what to do with this cash in the meantime.

Thanks

You are making assumptions about renting out (no voids and the level of rent you can get) and about being able to sell at a certain price sometime in the future, none of this may pan out as you expect. Paying down the 12k and keeping the flat is a good idea, but the tax implications of renting it is something you will need to think about, especially as there will likely be more tax grabs made on BTL in future.

mn2203

Crashy_Time wrote: »

You are making assumptions about renting out (no voids and the level of rent you can get) and about being able to sell at a certain price sometime in the future, none of this may pan out as you expect. Paying down the 12k and keeping the flat is a good idea, but the tax implications of renting it is something you will need to think about, especially as there will likely be more tax grabs made on BTL in future.

I have considered voids and even considerably less rent per month would cover my mortgage payments, so I am thinking about all options available.

I also don't necessarily expect to get what the agent has valued it at which I believe is over inflated.

I would only have approx 1 year left of mortgage to pay when i come to rent it out, so not a buy to let, but yes potentially there could be more changed to regulations down the line - could go either way!!

Crashy_Time

mn2203 wrote: »

I have considered voids and even considerably less rent per month would cover my mortgage payments, so I am thinking about all options available.

I also don't necessarily expect to get what the agent has valued it at which I believe is over inflated.

I would only have approx 1 year left of mortgage to pay when i come to rent it out, so not a buy to let, but yes potentially there could be more changed to regulations down the line - could go either way!!

Tax implications won`t affect you like they will people who have multiple properties and are over-leveraged on mortgage debt so you are in a good position there.