Renting out a property

helpmesave123

Hi everyone

I’m thinking about moving to a new property and renting out my existing one but I’m a bit worried!

My friend and I are going to buy a new place and rent out the one I currently own with my ex-partner (we’re still good friends!). I have a consent to let from my current lender but am paying about £1050 (split between me and my ex-partner) for the mortgage (which is a repayment mortgage).

I’ve spoken to an estate agent who reckons we’ll get £1650 per month for the current property. He’ll charge £120 per month in agency fees. I’m earning £52,000 per year.

How much will I likely have to pay in tax? I’m not sure if it’s worth letting out the current property - I’ve heard tax is going up and lots of calculators have suggested that the tax and repayment of the mortgage will cost more than the income of the property!

Please help - am I doing the maths right? Does anyone have any good calculators or spreadsheets?

Thanks!

G_M

Bad move quite apart from the tax.

A business with your ex? :eek:

The finance doesn't add up. Even if you get £1650 pm, you won't get that every month - Voids are unavoidable. As are running costs/repairs. And what happens when the tenants default?


But if you decide to go ahead, read


* New landlords: advice, information & links

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


Sell the property. Invest the money. Get a hassle-free income from investment.

helpmesave123

Hey G_M, thanks for your advice. How do you mean the finances don!!!8217;t add up? And I!!!8217;m not too worried about a business with my ex - we!!!8217;re on great terms!

00ec25

52k per year but unable to do basic research/reading?

https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income

https://www.gov.uk/guidance/changes-to-tax-relief-for-residential-landlords-how-its-worked-out-including-case-studies

https://www.taxinsider.co.uk/property-tax-uk.html

https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property

http://www.ttrbarnes.com/rental-businesses-can-cant-claim/

[Deleted User]

There are other costs, repairs, refurbishment, voids as has already been said.

Sell the house and invest the money. Far better return and no legal risks with not knowing what a LL should do.

paddedjohn

00ec25 wrote: »

52k per year but unable to do basic research/reading?

https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income

https://www.gov.uk/guidance/changes-to-tax-relief-for-residential-landlords-how-its-worked-out-including-case-studies

https://www.taxinsider.co.uk/property-tax-uk.html

https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property

http://www.ttrbarnes.com/rental-businesses-can-cant-claim/

So what? I know a bloke worth millions who can't even read. Why do you have to be so rude?

helpmesave123

Thanks for the responses everyone! What is I changed to an interest only mortgage? That would be £450 per month and with a rental income of £1650 that seems to make more sense....

FBaby

I have a consent to let from my current lender but am paying about £1050 (split between me and my ex-partner) for the mortgage (which is a repayment mortgage).

If neither of you have any intention to come back, you shouldn't be getting consent to let but a buy to let mortgage on interest only. This way, you can rent for as long as you wish/can, make a bit of a profit each month, and hope that the market continues to grow and make a profit on the equity before you do sell.

Cakeguts

You have to factor this in.



1 Letting agents sometimes value rentals like properties for sale. They over value to get the business.


2 Not all properties bought to live in make good properties to let.



3 He might be able to get £1650 for one 6 month letting if you are prepared to wait 6 months until someone who is desperate enough turns up willing to pay it. Under normal cirumstances it might only be worth £1200 per month but you don't know because you haven't done any research on places like Rightmove to find out what the actual rent might be.


4 You have to pay for repairs.


5 Your tenants might stop paying the rent and it will take you over 6 months to evict them through the courts.


6 Your tenants might wreck the place causing more damage than the deposit will pay for.


7 I hope you can continue to pay the mortgage if you are not receiving any rent?