Renting out my property

kittykatneedscash

I’m looking for some advice on renting out my residential property. Please bear with me as I’m new to this. I bought my property 6 years ago and have lived in it since. The house was my late grandparents who lived in it for 67 years the house has great sentimental value to me and I have fully renovated it over the last few years and love it. I didn’t buy or renovate this property with the intention to rent it out but you can’t predict the future. I am now planning to move in with my partner and hopefully start a family very soon we are just in the process of extending his house. I don’t want to sell my property so plan to rent it out early next year. This will stay my only mortgage as I won’t be going on my partners.

Outstanding mortgage balance £69000
19 years remaining
Monthly mortgage payment £367 (currently overpaying an additional £60-£70 per month)
Estimated rental value £600-£650

The rental income will cover the mortgage with some left over. I’m planning to continue to overpay the mortgage so say I pay £450 towards the mortgage then save the extra £150-£200 per month towards any costs, landlord insurance, repairs and months that the property may be empty. Anything left in this pot at the end of the year can also go towards the mortgage. Does this sound ok as a rough idea?

My 3yr. fixed rate of 1.89% finishes next March so just starting to think what is best to do, am I right in thinking that I don’t need to change to a buy to let mortgage if I didn’t buy this property with the intention of renting and have lived in it since 2013. If so can I fix into another fixed term agreement and then seek permission to rent the property from my mortgage provider once that’s in place or would it be better to explain my plans for next year now. Any other advice welcome I know I have a look of things to look into and research just starting to make tentative steps.

sal_III

You are wrong in thinking you don't need BTL mortgage. Ignore the label "Buy to let" or your intentions when you bought it. You generally won't be able to obtain a residential mortgage if you are not going to be living in the property, but letting it out. You will need "consent to let" (which they are not obligated to provide) from your current mortgage provider to allow you to rent out the property with your current residential mortgage and is usually valid for a limited time and often incurs charges.

You will need at least 25% equity for a BTL mortgage.

The main question is are you happy and ready to become a LL with all the consequences? It might sound like a great idea to make some extra money, but is also guaranteed to cause stress and on occasion financial loss.

Comms69

kittykatneedscash wrote: »

I’m looking for some advice on renting out my residential property. Please bear with me as I’m new to this. I bought my property 6 years ago and have lived in it since. The house was my late grandparents who lived in it for 67 years the house has great sentimental value to me and I have fully renovated it over the last few years and love it. - Then don't rent it out! I didn’t buy or renovate this property with the intention to rent it out but you can’t predict the future. I am now planning to move in with my partner and hopefully start a family very soon we are just in the process of extending his house. I don’t want to sell my property so plan to rent it out early next year. This will stay my only mortgage as I won’t be going on my partners.

Outstanding mortgage balance £69000
19 years remaining
Monthly mortgage payment £367 (currently overpaying an additional £60-£70 per month)
Estimated rental value £600-£650

The rental income will cover the mortgage with some left over. - that's unlikely once you take all costs into account I’m planning to continue to overpay the mortgage so say I pay £450 towards the mortgage then save the extra £150-£200 per month towards any costs, landlord insurance, repairs and months that the property may be empty (tax??). Anything left in this pot at the end of the year can also go towards the mortgage. Does this sound ok as a rough idea? - the numbers don't add up

My 3yr. fixed rate of 1.89% finishes next March so just starting to think what is best to do, am I right in thinking that I don’t need to change to a buy to let mortgage if I didn’t buy this property with the intention of renting and have lived in it since 2013. - you need consent to let If so can I fix into another fixed term agreement and then seek permission to rent the property from my mortgage provider once that’s in place or would it be better to explain my plans for next year now. Any other advice welcome I know I have a look of things to look into and research just starting to make tentative steps.

Do you want to be a landlord? What happens when the tenants don't pay rent and trash the property?

GDB2222

I suppose keeping your house and renting it out provides some security in case it doesn't work out with your partner.

However, a house that you have lovingly renovated for your own home is very very difficult to let. The tenant is simply bound not to look after it as you would wish. You'll be far too emotionally attached to the house.

Besides that, the wear and tear on the house will reduce its value should you decide to sell it in a couple of years.

[Deleted User]

kittykatneedscash wrote: »

I’m looking for some advice on renting out my residential property. Please bear with me as I’m new to this. I bought my property 6 years ago and have lived in it since. The house was my late grandparents who lived in it for 67 years the house has great sentimental value to me and I have fully renovated it over the last few years and love it. I didn’t buy or renovate this property with the intention to rent it out but you can’t predict the future. I am now planning to move in with my partner and hopefully start a family very soon we are just in the process of extending his house. I don’t want to sell my property so plan to rent it out early next year. This will stay my only mortgage as I won’t be going on my partners.

Outstanding mortgage balance £69000
19 years remaining
Monthly mortgage payment £367 (currently overpaying an additional £60-£70 per month)
Estimated rental value £600-£650

The rental income will cover the mortgage with some left over. I’m planning to continue to overpay the mortgage so say I pay £450 towards the mortgage then save the extra £150-£200 per month towards any costs, landlord insurance, repairs and months that the property may be empty. Anything left in this pot at the end of the year can also go towards the mortgage. Does this sound ok as a rough idea?

My 3yr. fixed rate of 1.89% finishes next March so just starting to think what is best to do, am I right in thinking that I don’t need to change to a buy to let mortgage if I didn’t buy this property with the intention of renting and have lived in it since 2013. If so can I fix into another fixed term agreement and then seek permission to rent the property from my mortgage provider once that’s in place or would it be better to explain my plans for next year now. Any other advice welcome I know I have a look of things to look into and research just starting to make tentative steps.

You will need to factor in tax into your calculations.

https://www.gov.uk/government/news/changes-to-tax-relief-for-residential-landlords

I would also caution against renting out a property you love and have a sentimental attachment to. If you did not already own this property is it the one you would choose as an investment property? Would you even choose property as an investment over other, more tax efficient, investment vehicles?

need_an_answer

Its often difficult to detach yourself from a loved home that you've renovated to then transition it to a rental.

I've been there,my first rental property as a LL was a cherished family home that was built by my grandfather...it is now a reasonable rental although its not without its problems.

Sometimes family homes don't make the best rentals...I've learnt that along the way and its not uncommon that in the past,and even now I still refer to the first one as the "expensive hobby"...its often subsidised quite heavily by my other rentals.


How would you deal with a tenant who doesn't treat the property as you would like? that's a difficult one to come to terms with and again I often say to potential first time LL's in your situation never to expect any tenant to treat the property as you would...it just doesn't happen....believe me the emotional attachment that you have will get in the way....for at least the first 10 years!

Whos going to manage the property....?
You need to factor in agency costs and have a healthy slush fund for ongoing repairs,even things like a tap that needs replacing that you would normally do yourself will probably end up costing far more than you expect for a plumber to fix,simply because you are not on hand to do it and will probably eat quite a bit into your monthly overspill that you are currently thinking will be profit.

AnotherJoe

kittykatneedscash wrote: »

I’m looking for some advice on renting out my residential property. Please bear with me as I’m new to this. I bought my property 6 years ago and have lived in it since. The house was my late grandparents who lived in it for 67 years the house has great sentimental value to me and I have fully renovated it over the last few years and love it. I didn’t buy or renovate this property with the intention to rent it out but you can’t predict the future. I am now planning to move in with my partner and hopefully start a family very soon we are just in the process of extending his house. I don’t want to sell my property so plan to rent it out early next year.

There's a massive disconnect between the first statement and the second.

kittykatneedscash wrote: »

Monthly mortgage payment £367 (currently overpaying an additional £60-£70 per month)

Probably a bad idea, pension likely to be a better bet as an investment
My 3yr. fixed rate of 1.89% finishes next March so just starting to think what is best to do, am I right in thinking that I don’t need to change to a buy to let mortgage if I didn’t buy this property with the intention of renting and have lived in it since 2013.

No you are not. You might get consent to let for a while but you'll still likely find the rate increases.
Overall this is probably a bad idea unless you are hanging on to grandparents house as a safety net in case this relationship doesn't work out.
But most likely financially this is a poor idea all round, you won't be taking maximum advantage of inflation to decrease your mortgage, you are paying it off with after tax money rather than investing with before tax money,your special house will be lived in by people who won't treat it with the reverence you have for it, and you are going into BTL at probably the worst time since the 1970's as regards tax, house price inflation and government regulation.

Cakeguts

How are you going to feel if your tenants wreck the interior?



What are you going to do if they don't pay the rent. It could take you 6 months to evict them with no rent coming in but you still have to do repairs.



You need to do some research on Section 21 being removed and all future tenancies being assured tenancies. It is important to understand what this means if you think you will ever want to move back in. Many landlords are selling up at the moment because of the new rules.



The best thing to do with your house is to sell it and then you won't have memories of it being damaged inside.