Would you become a landlord now?

tharyla

Hi all, apologies for another Covid 19 related post but I am seriously doubting my plan.
I am in my early 30s and I am in the process of buying a house in London. The house is absolutely beautiful and one that I would not normally be able to afford but due to some special circumstances I am lucky to be in a position to buy it. 

My plan is to have 2 lodgers in the house and stay there most weekends.

I currently live in a Central London flat that belongs to my parents who live abroad. I only pay for the bills so it is fair to say that I live here almost for free. I always dreamed to buy a property in London for investment, however the current pandemic has me rethinking my strategy. The house purchase would literally wipe my savings accounts and commit me to monthly outgoings that I am not used to but can definitely afford. 

Would you buy a house as a rental investment now? 

For anyone with landlords’ responsibilities in London, how easy is it to get lodgers? 

Slithery

Do you need a residential mortgage?

princeofpounds

Just to be clear, there is no mortgage here?

If you are not using the property as a primary residence, then they will not be lodgers. There are also some further rules about whether the property has been your primary residence prior to the letting. They will be tenants and that is a very different situation. Read Sections 1.3 and 1.4 here:

https://www.gov.uk/government/publications/letting-rooms-in-your-home-a-guide-for-resident-landlords/letting-rooms-in-your-home-a-guide-for-resident-landlords

The pandemic should not particularly affect your strategy. It will likely be over in a year or so, and a house should be a multi-year, or even multi-decade, investment.

It is very easy to get tenants or lodgers in most of London. It will depend on the price you charge and the hoops you make them jump through, but finding someone will not be hard. However, any business plan for being a landlord should incorporate void periods as standard - even if it's not hard to fill the room, there can be delays. Perhaps assume a month or two a year - I'm sure some experienced landlords on here can suggest what's appropriate.

Having free accommodation yourself does complicate the picture. If you give that up to be a resident landlord, you should charge it as a cost to yourself (an 'opportunity cost'), and you'll probably find it is not economic to do it.

As for being a non-resident landlord... your crystal ball is as good as mine; the outcome of your investment will largely depend on house prices and - outside of the very long term - who knows which way they go. 

hazyjo

You know the rent a room scheme is only tax free up to £7500pa?

As above, be very careful they would be lodgers, not tenants (unless you choose to let the flat out).

tom9980

I would keep saving, investing and piling cash into your pension given your cheap current accommodation. If the economy and house prices do go crazy you will be in a position to benefit.