Letting out our house

Mayfair321

We are going to be letting our house out in order to purchase a new one to live in. Our current house has been refurbished to a good standard in the last 10 years but some of the rooms would benefit from redecorating, which we would do if we were staying. Is it worth us spending the £2-3k it would cost to redecorate before getting our first tenants in? By the looks of it we would not be allowed to deduct this as an expense when calculating our tax returns?
Also, we will need to leave all our built in appliances and fridge freezer, washing machine etc meaning we have to buy new ones for our next house. Is there a way to deduct these expenses by saying we are buying them for the rental house?
Thanks in advance

Comms69

Is your current house mortgaged?

need_an_answer

What type of redecorating are you planning?

What you have to be mindful of is not putting too much of your own character into the property...
Don't wallpaper,it tends to suffer to much and its difficult to maintain over a longterm...youll see that many rentals are neutrally painted simply because its far easier and cheaper for all concerned to paint a wall than completely redecorate a room because wallpaper became ripped.

You need to step away from the hoUse as it is now and put in something that is nice but also easy to maintain for both you and the tenants.

If carpeting and flooring is needed again go for something neutral (no cream carpets) mid range that will take cleaning well between tenants.

Honestly spending £3k on redecoration will not mean that the rent increases substantially or even in line with your spending.That will take you many years to recoup the cost...its just not worth it.

Mayfair321

Yes we are remortgaging to finance our new purchase and by the time we have factored in all the letting costs and tax on the income, we will not e making much profit. What we do make will be saved for any future repairs on the house.
In terms of redecorating, we are only planning a lick of neutral paint in most of the rooms, no wallpapering or new carpets. I would prefer not to have to spend the money but I also want the house to be presented nicely for tenants, although as it is likely to rent to families it will probably get scuffed up again in no time!

[Deleted User]

Before redecorating (spend a couple of hundred on paint and do it yourself, don't leave any white goods/furniture behind you don't mind being ruined) read this so you have some idea of what you are proposing to get into https://forums.moneysavingexpert.com/discussion/5180214/tenancies-in-eng-wales-guides-for-landlords-and-tenants. Houses can be rent with no white goods, then no repair responsibilities and you can take your white goods with you to the new house. If they aren't good enough for that, why are they good enough for tenants?

Consider how you'd manage if you are not receiving rent on the old house but have to pay the mortgage on house 1 and 2 (if house 1 still has a mortgage).

Don't think you can just hand a house over to a Lettings Agency and everything will be dealt with, you are still the LL and responsible for what happens legally. Some Lettings Agencies aren't as good as they seem.

The risk free way to do this is actually to sell house 1 so you can move into house 2. Watch as much of Nightmare Tenants, Slum Landlords as you can find.

Also calculate how much extra SDLT you will be paying on House 2 and how long it will take for the rent on house 1 to 'pay that back'. That's before you include other lettings costs and tax.

Mayfair321

Thanks deannatrois. We are slightly regretting deciding to keep this house but they only accepted our offer on our new house if we were chain free. Luckily we can afford both mortgages if need be (interest only on the rental house) but obviously it is not ideal if we don’t get tenants. We actually have two different people interested in buying our house (although they haven’t sold theirs yet) so that is an option down the line if renting doesn’t work out. We do understand all the obligations of being a landlord and want to do a good job of it.
I may try and do some of the decorating myself but am short on time as I have lots to sort out before the house move, plus our high ceilings are putting me off doing it myself!!

tacpot12

I would suggest you do a HHSRS risk assessment on your house.

I'm a landlord and do them on my properties. They are pretty simple to do - you just need to view your property objectively - see it as a council inspector would see it.

Have a look at: https://www.gov.uk/government/publications/housing-health-and-safety-rating-system-guidance-for-landlords-and-property-related-professionals


Will you be using a letting agent?

tom9980

Mayfair321 wrote: »

Yes we are remortgaging to finance our new purchase and by the time we have factored in all the letting costs and tax on the income, we will not e making much profit. What we do make will be saved for any future repairs on the house.
In terms of redecorating, we are only planning a lick of neutral paint in most of the rooms, no wallpapering or new carpets. I would prefer not to have to spend the money but I also want the house to be presented nicely for tenants, although as it is likely to rent to families it will probably get scuffed up again in no time!

Why rent if you wont make any money? you are in for a rough awakening being a landlord if you get anything wrong, even using an agent wont protect you from mistakes. Just get it sold now and be done with it.

Cakeguts

The only problem I can see is that you are assuming that a house that you bought to live in will make a good rental property. Sometimes they do but often they don't. As a buyer you would have been prepared to make more compromises than a tenant will. If this house doesn't work as a rental you could be facing huge bills and not much rent.


The second thing is that families do not want your white goods. They have their own and they do not want to put theirs into storage in order to accommodate yours. So take the white goods out unless they are fitted into the kitchen. If they are fitted into the kitchen then you have already got a house that is not suitable as a rental. For a rental property a family will want to put in their own fridge, freezer, washing machine and dishwasher otherwise where do they put them while renting your house? Built in ovens and hobs would be standard in a rental.


Is there anything else that you think you can palm off on your tenants by leaving it behind?

Mayfair321

Thanks @tacpot12 I will check out your link.
Yes I will be using a letting agent who have advised me my house is perfect for our local rental market and should rent easily.
@tom9980 we will actually make around £6k a year after expenses but I would keep that for expenses/repairs initially.
@cakeguts the letting agent advised me to leave my white goods, I am not palming them off to tenants! They are all good quality items which I would rather take with me to my new house if I can!

00ec25

Mayfair321 wrote: »

We are going to be letting our house out in order to purchase a new one to live in.

your later posts imply that is a nonsense reason to become LL. You state you can afford 2 mortgages for a while so sell up and get free of one them

Mayfair321 wrote: »

Is it worth us spending the £2-3k it would cost to redecorate before getting our first tenants in? By the looks of it we would not be allowed to deduct this as an expense when calculating our tax returns?

depends on your target market and what they expect.
Obviously newly decorated simplifies describing the condition of the property when first let and thus its change in condition when handed back when negotiating deposit deductions. But that is hardly a reason in itself.

your assumption that redecorating is not an allowable cost is too narrow. Timing matters as does state of occupation whilst work is underway. Move out and do the work immediately prior to marketing for let and it would be allowed. Remain in occupation, do the work but then carry on living there whilst taking months to market and get a tenant and it won't as it fails the wholly and exclusively test

Mayfair321 wrote: »

Is there a way to deduct these expenses by saying we are buying them for the rental house?

complete non starter

learn the replacement rules
https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim3210