Moving in together, what to do with houses?

downinja

Me and the missus have decided to move in together

We are both in the fortunate position of owning our own homes, although both of us are pretty much at the start of paying our mortgages off.

The question is, what to do with our houses?

Obviously one of them we will want to live in, but should we rent out the other or sell the other?

From the brief bit of reading I have done, we have to consider; mortgage, insurance, letting fees, income tax, capital gains tax etc.

Anyone done this? What advice/reading should I do?

hazyjo

Personally, I'd sell both and buy together. It's not always easy moving into someone else's space - and vice versa.


Being a LL has never been on my agenda though!


Jx

aneary

I would have a trial period see how things go maybe rent one out for 6 months to cover the bills and some if not all of the mortgage. Reassess after 6 months and see if you still want to live together and then if you want to continue as is or sell both and buy together.

EmmyLou30

As I'm a cautious person I'd say live in the better house of the two, rent the other for a year to see if it works out between you before making bigger decisions.

I imagine most people don't want to live in what feels like the other persons house (might feel they haven't got the freedom to decorate etc as they might like if it were their 'own' and that sort of thing) and if you pool your resources you'll get a better house too so may well want to sell both and move onto a fresh house you've both picked equally and feel like that's your joint home. Depends where you live of course, if both of your houses are already your 'forever' home then maybe you just want to sell the other to clear the mortgage on the remaining house, or keep it as a rental.

Being a landlord isn't for everyone, landlord insurance, fees for letting agents, phone calls from tenants at inconvenient times, non payment, void periods, damage etc etc. It's not the easy money a lot of tenants think it is. So only you can decide if long term you want to be a landlord or if you'd be better pooling resources for a nicer house.

saajan_12

If you rent person A's house and live in person B's house, make sure you decide
- who collects the rent or is it joint?
- who pays the captial gains tax when sold?
- who pays for rental costs / repairs / agents etc?
- can both decorate the residential property equally?
- what happens if you split up.. esp if person A needs somewhere to stay until the rental property is vacant (may need to wait out a year's fixed term + few months for eviction through courts).

If you sell person A's house and live in person B's house, make sure you decide
- what happens to the equity in house A (pay off chunk of B mortgage and house B becomes jointly owned? if not who gets the cash?)
- will house B become jointly owned? can both of you make decisions on decor etc?
- what happens if you split up? who stays / how long does the other have to find another place especially as they gave up an owned property to move in.

If you sell both and buy together, everything is symmetric, but will incur extra selling and buying costs, stamp duty..

Soundgirlrocks

Personally I'd rent them both out and rent a place together to see if living together works. That way there isn't the compromise of one of you moving into the others space and no complicated beneficial interest situations arising

martindow

You may find your options limited by whether your lenders will allow to let out either house. Sound them out and see what scenarios are possible first.

downinja

martindow wrote: »

You may find your options limited by whether your lenders will allow to let out either house. Sound them out and see what scenarios are possible first.

Already booked to see the bank Saturday. I think this could be the limiting factor, if I can't get the bank to allow me to rent my house (and it most likely would be) then it wouldn't be possible to move forward with the rental plan anyway.

Don't have too many concerns re: decoration etc.

If we do end up selling, equity would be put into the other property as tenants in common. Makes it easier to split if things don't work out.

hazyjo

downinja wrote: »

Already booked to see the bank Saturday. I think this could be the limiting factor, if I can't get the bank to allow me to rent my house (and it most likely would be) then it wouldn't be possible to move forward with the rental plan anyway.

Try for 'consent to let' which may come with a small fee and the same mortgage rather than BTL. You may be aware, but it's prob worth mentioning as it could be the decider.


Also have a plan for if you split up while tenants are in. I presume whoever rents theirs our will just take that rent money and use it to rent elsewhere? Will they be out of pocket what with LL expenses? I suppose that's just the risk they'll have to take.


Jx

downinja

We both have parents around the corner with spare rooms, as horrifically painful as that might be!

00ec25

downinja wrote: »

Already booked to see the bank Saturday. I think this could be the limiting factor, if I can't get the bank to allow me to rent my house (and it most likely would be) then it wouldn't be possible to move forward with the rental plan anyway.

Don't have too many concerns re: decoration etc.

If we do end up selling, equity would be put into the other property as tenants in common. Makes it easier to split if things don't work out.

If I'm reading this correctly:
- you each have sole ownership of your respective properties?
- you are legally married (as opposed to being merely a "partner")?

why do you think the property you purchased to live in as a single person would be suitable for letting? Just because you bought it does not make it the sort of property a landlord would buy in order to let.

Are any other identical properties in that area already let and what rental rate do they attract? What yield will you get, if your financial aim is simply to cover the costs why are you bothering with the significant risks of being a landlord?

Who is the target market for that sort of property: singles? couples? families? students?

If you are the sole owner all the rental profit is attributable to you alone. You cannot share it with the missus until after you have paid your tax on it. As a married (?) couple you can make her a co-owner without any CGT implications, but as you imply the o/s mortgage is "large", then any transfer to her could trigger higher rate SDLT (highly likely given it would be an additional property for her and her share would probably be more than £40k?)

is your property near her property? You may need to be local to be able to respond to issues as they arise - or else pay an agent to deal with them and therefore factor that extra cost into your calculations