Renting out my flat, and moving in with Partner....

satbav

Hi all,

I purchased my flat not to long ago, in December 2018. Something I've been saving towards for a long time. My partner has her own flat, and we've decided that towards the end of the year I'm going to move in with her. That leaves me with a situation where I need to rent out the flat, as as I won't be able to afford both.

What is the recommended/best thing to do here? Convert the mortgage to a Buy to Let mortgage? Nationwide say I'd have to apply for this and get permission first, and I assume if successful, they'll add 1% to the mortgage rate according to the Nationwide website.

The options I've looked into as a possibility are:

• Convert mortgage to BTL, and rent out, cover mortgage and pay tax
• Go via the rent a room scheme, effectively offering the whole flat out at £625 to avoid paying additional tax, and having to file returns etc. How would council tax work? Would I have to stay registered at my flat and pay council tax along with a lodger?
• Airbnb - I'd get a management company to run the show, but will this breach the terms of my mortgage contract?

According to my sums, the BTL route will get me marginally more money than the rent a room scheme, but it feels like it'll be more work, and I'm trying to get someone's opinion based on experience.

Other concerns I have are that I won't even have lived in the flat for a year before deciding to move out. Will this cause issues if I try to convert to a BTL, or do they not even care?

Just wondering if anyone has done anything like this before?

Thanks in advance.

da_rule

Rent a room will not work as you will not be a live in landlord and will be committing fraud. Also, you’d be giving exclusive possession to the lodger which would therefore make it a tenancy.

Have you done your research on this? Looked at costs? I.e. insurance, management agent (if you want one), potential capital gains liability.

Would it not be better to sell up, put the proceeds in an account and earn some interest?

Also, as it’s a flat, have you checked the lease, as sometimes these can restrict renting the property out (or present another cost for obtaining permission).

G_M has made a really good sticky thread in relation to being a landlord. Have a read and decide if it’s worth the hassle.

El_Torro

I don't think you could go down the rent a room scheme if you aren't living there. Also if you rent it out via Airbnb that won't get around the fact that your residential mortgage assumes you are living in the property.

You're with Nationwide now, but you can always get a Buy to Let mortgage with a different provider. Are you on a fixed term and are there penalties to exit?

Your best best is probably to find a mortgage adviser who can assess your options.

To answer your question, I have done something similar in the past. I just got consent to let from my existing provider and paid the extra 1% interest since I was in a fixed term and would have had to pay a large penalty to remortgage.

Nationwide should be OK to give you consent to let as long as you have lived there for 6 months or more.

Socajam

I would not sell - this is your safety net - you have no idea what will happen 3, 6 or 12 months or a couple of years from now. Been there and it is not something I would wish on anyone.
I would go with the BLT and incorporate the 1% into the rent.
You will not be responsible for the council tax, this will be on the tenants.
Check out the rent for flats and charge a little below that rate, save the extra for wear and tear.
Make sure you get landlord's insurance.

da_rule

Without knowing what your mortgage payment will be and what your potential income will be (after income tax) it is somewhat difficult to say for any certainty whether renting will be financially viable.

G_M

BTL is a specific mortage product.

CTL (Consent To Let) is an alternative where a home-owner moves out from their residential home, usually for a specified time-frame (which can often be extended).

N/W will not grant CTL on your current residential mortgage as it is so new, suggesting (to them) that you may never have intended it to be your home.

But in 6+ months they may well grant CTL on your current mortgage if asked.

As for the rest:

* airbnb: lots of work, insurance issues - use google!
* Rent a Room Scheme only applies to resident landlords which you won't be
* Tenancy? Read


* New landlords: advice, information & links

Dazed_and_confused

Convert mortgage to BTL, and rent out, cover mortgage and pay tax

You should read up on the new rules for loan interest paid by landlords. Basically the ability to claim this as an expense against your rental income is being phased out and you will, in some cases, be able to claim a tax credit off your overall tax bill instead. This can affect people in a variety of ways, in particular ignore any article that claims it doesn't affect existing "basic rate" taxpayers. It can do quite easily.

satbav

Great, thanks for the advice, looks like trying to get a consent to let is the only legal option really that doesn't breach my current contract. It'll be a while before any of this happens anyway, so I guess we'll see what happens then.

Many thanks!