Second house for work purposes

Grufflovgreen

Hi!

I’ve got a situation where I’m spending more and more time in Manchester with work, and finding it a pain in the neck to have to find different accomodation every time - it always ends up being really expensive and never feels like home.

So I’ve been thinking recently that I could buy a second property in Manchester (I currently own a place in North Wales and could remortgage to release enough cash for a deposit on a new place), and then rent out a room in that Manchester place to a full-time tenant, leaving a spare room for me to use as and when I need it.

In my head, this makes sense, as it means I’ll eventually be saving money and will always know where I’ll be staying when I’m working there, and can make the place feel like home. I know the stamp duty is a bit steep on second homes, and people have told me that being a long-distance landlord is a nightmare, but would be good to get some more thoughts on this.

Thanks!

Keswick1uk

Do you mean have a lodger?
My son was a lodger when he moved out first and the owner worked away a lot. It was great for him. He had a lot of time as the only one there on a cheap all bills included rent. The owner gave him a very strict set of rules , which he kept to, but it also meant he was inside as security when the owner was away.

The situation worked really well. He only moved out when the owner packed the house with lodgers and also moved back to work from home. Its was fine, it was his house,  but it didn't suit my son so much like that so he moved to a different rental. He was very lucky as it would have been even worse during the pandemic. 

It's still a situation he enjoyed originally being in and one he would consider doing himself.

Grufflovgreen

It’d kind of be in between a lodger and a tenant from my understanding, so I’m not sure what to call it. But yes, I would like to think that it’d be an attractive prospect for potential lodgers to have the whole place to themselves for large chunks of the year.

Keswick1uk

I guess you need to vet the person and be strict on rules.

Although I say it myself, this guy was lucky to get my son. He has always been a sensible lad, with his head screwed on and who respects other people. He was given strict rules and kept to them. He would never have dreamed of holding parties there,.for example .

So be careful you vet them properly! Money matters but the right person matters more!

Grufflovgreen

Yes exactly, would really need to find someone I could trust to look after the place properly. Hoping that wouldn’t be too difficult..

moneysavinghero

It’d kind of be in between a lodger and a tenant from my understanding, so I’m not sure what to call it

A todger maybe?

Annisele

The person you let the room to can't be "between" a tenant and a lodger - they'd have to be one or the other.

Have you had a chat with a mortgage broker about how much you'd be able to borrow in total and how much deposit you'd need? It sounds as though you're wanting to have a mortgage on each of the two properties, and it's likely they'd both have to be residential mortgages (because if you take a buy-to-let mortgage on the Manchester property, you won't be able to live there yourself). Some lenders want higher deposits for second residential mortgages, and they might be prepared to lend less. If you haven't already, a chat with a broker will help you decide whether the plan is feasible.

Grufflovgreen

Annisele said:

The person you let the room to can't be "between" a tenant and a lodger - they'd have to be one or the other.

Have you had a chat with a mortgage broker about how much you'd be able to borrow in total and how much deposit you'd need? It sounds as though you're wanting to have a mortgage on each of the two properties, and it's likely they'd both have to be residential mortgages (because if you take a buy-to-let mortgage on the Manchester property, you won't be able to live there yourself). Some lenders want higher deposits for second residential mortgages, and they might be prepared to lend less. If you haven't already, a chat with a broker will help you decide whether the plan is feasible.

Thanks, yes - I have discussed with a mortgage broker, who has managed to find a mortgage deal that accepts my plan of not buy-to-let but letting a room. It’s all possible financially, so it’s more a question of ‘is it a good idea’ as a potential investment, and would it be better than renting somewhere different every time I have a job in Manchester, which can be months on end?

hazyjo

Grufflovgreen said:

Annisele said:

The person you let the room to can't be "between" a tenant and a lodger - they'd have to be one or the other.

Have you had a chat with a mortgage broker about how much you'd be able to borrow in total and how much deposit you'd need? It sounds as though you're wanting to have a mortgage on each of the two properties, and it's likely they'd both have to be residential mortgages (because if you take a buy-to-let mortgage on the Manchester property, you won't be able to live there yourself). Some lenders want higher deposits for second residential mortgages, and they might be prepared to lend less. If you haven't already, a chat with a broker will help you decide whether the plan is feasible.

Thanks, yes - I have discussed with a mortgage broker, who has managed to find a mortgage deal that accepts my plan of not buy-to-let but letting a room. It’s all possible financially, so it’s more a question of ‘is it a good idea’ as a potential investment, and would it be better than renting somewhere different every time I have a job in Manchester, which can be months on end?

Sounds a bit dodgy to me. Did they give it a name/title, or did they just say they'd be classed as a lodger? Really, it's very important. If you give someone full access to your second home, you could find yourself with a tenant who could change the locks and take well over a year to evict, plus you could be at risk of a hefty fine or worse for failing to carry out legal landlord duties.

Grufflovgreen

I’ll find out more this weekend, but I guess officially they’d be classed as a lodger, because I wouldn’t be allowed to live there if they were a tenant. Surely I’d have to be very unlucky to be landed like someone you describe! 

RAS

If you Grufflovgreen said:

But yes, I would like to think that it’d be an attractive prospect for potential lodgers to have the whole place to themselves for large chunks of the year.

That could be a problem. Landlord goes away on holiday or for work for a few weeks, lodger is still a lodger. Landlord stays at other home for a few months - may well establish exclusive use and a tenancy. Think you'd need to spend some nights there every couple of weeks.