Inherited property with tenant in situ

nurse1980

The house needs a full renovation. The rent is £400 a month for a three bed semi and she can’t afford to pay more. 

We’ve told HMRC. 

AdrianC

How much would the rent be with the house fully refurbished?
How long will the house be empty during the refurb?
How much will the refurb cost?

This will tell you what your payback time on that investment is...

What area is it, and what's the LHA for benefit claimants for a 3-bed house?

nurse1980

Thanks, the rent would be £850-£900 pcm after it’s had a refurb. The house would be empty for approximately 4 months but this could be longer if any problems etc. 

The refurb would cost £30,000. 

It’s in greater Manchester and it’s £93 a week for her as she is a single woman with no dependants. 

AdrianC

nurse1980 said:

Thanks, the rent would be £850-£900 pcm after it’s had a refurb. The house would be empty for approximately 4 months but this could be longer if any problems etc. 

The refurb would cost £30,000.

So let's say six months by the time a post-refurb tenant has moved in. £35k to recoup from about £400/mo rent increase. It's going to be damn near two years before you actually get any benefit in your pocket from the work.

It’s in greater Manchester and it’s £93 a week for her as she is a single woman with no dependants. 

And what's the LHA for a three-bed house?

Robbo66

AdrianC said:

nurse1980 said:

Thanks, the rent would be £850-£900 pcm after it’s had a refurb. The house would be empty for approximately 4 months but this could be longer if any problems etc. 

The refurb would cost £30,000.

So let's say six months by the time a post-refurb tenant has moved in. £35k to recoup from about £400/mo rent increase. It's going to be damn near two years before you actually get any benefit in your pocket from the work.

It’s in greater Manchester and it’s £93 a week for her as she is a single woman with no dependants. 

And what's the LHA for a three-bed house?

But the capital appreciation would be greater over time for a house that has been updated compared to one that needs doing. 

SpiderLegs

AdrianC said:

nurse1980 said:

Thanks, the rent would be £850-£900 pcm after it’s had a refurb. The house would be empty for approximately 4 months but this could be longer if any problems etc. 

The refurb would cost £30,000.

So let's say six months by the time a post-refurb tenant has moved in. £35k to recoup from about £400/mo rent increase. It's going to be damn near two years before you actually get any benefit in your pocket from the work.

It’s in greater Manchester and it’s £93 a week for her as she is a single woman with no dependants. 

And what's the LHA for a three-bed house?

The OP doesn’t need to recoup the £30k cost from the rent. They need to recoup the proportion of it which is over and above the increase in the property’s value (both tangible and intangible).

nurse1980

The LHA is £136 for a three bed. 

By spending that amount I will considerably increase the value of the house. This is a long term plan to rent the house so I believe I will recoup the costs 

nurse1980

How will I know that the tenancy agreement from 2008 is valid? Is it worse paying a solicitor to have a look at it? 

AdrianC

Robbo66 said:

AdrianC said:

nurse1980 said:

Thanks, the rent would be £850-£900 pcm after it’s had a refurb. The house would be empty for approximately 4 months but this could be longer if any problems etc. 

The refurb would cost £30,000.

So let's say six months by the time a post-refurb tenant has moved in. £35k to recoup from about £400/mo rent increase. It's going to be damn near two years before you actually get any benefit in your pocket from the work.

It’s in greater Manchester and it’s £93 a week for her as she is a single woman with no dependants. 

And what's the LHA for a three-bed house?

But the capital appreciation would be greater over time for a house that has been updated compared to one that needs doing. 

It might be. It might not be. We simply do not know and cannot predict.

How often do "project" houses get a couple of buyers into purchase fever, and go for far more than makes sense given the final value and cost of getting there? All the time.

B'sides, running a residential lettings business is all about the yield. It's a mug's game to ignore yield by focussing on capital appreciation.

Pixie5740

nurse1980 said:

How will I know that the tenancy agreement from 2008 is valid? Is it worse paying a solicitor to have a look at it? 

If your plan is to rent the property out long term then consider joining the NLA and doing some courses. 

There is a valid tenancy in place. Rent is received in return for exclusive occupation of the property ergo an assured shorthold tenancy exists.