Becoming a landlord for a short term

warwick2001

OP, I did exactly what you proposed in your first post i.e rented out '1st' house on BLT mortgage, moved into new house (with domestic mortgage), sold '1st' house.

Overall, having now sold my '1st' house, reclaiming the additional SDLT, paying off the BLT mortgage after only 8 months etc. I think it cost me in the region of £2000. Which, for me, was cheaper than taking out a bridging loan for the same timescale.

HOWEVER.... I was lucky in that I had a work colleague that needed a short term rental property for 6 months whilst they sorted out a move to Ireland. I still did everything expected from a Landlord (Gas certificate, EICR, DPS etc.) so be prepared for a bit of hassle to get everything legit before you start renting (if you choose to go down this route).

This option is a bit of an extreme, and certainly isn't for everyone. However, it did work for me (we were desperate to move, and the £2k loss was pretty insignificant on the amounts we were spending on the new house).

Hope that helps.

lookstraightahead

warby68 said:

Its probably more common to do it the other way round to be an attractive non chain buyer as in you sell your house first and then YOU become a tenant/lodger for a shortish period. 

Main risk is that the property market moves against you once you step off the ladder but if you know your areas and target properties you can make a judgement on this.

This.

Becoming a landlord is like going into a new business with all the pitfalls. And as you only want to do it short term, I don't think it's a good idea.

patchyX2

warby68 said:

Its probably more common to do it the other way round to be an attractive non chain buyer as in you sell your house first and then YOU become a tenant/lodger for a shortish period. 

Main risk is that the property market moves against you once you step off the ladder but if you know your areas and target properties you can make a judgement on this.

There's two problems with this approach (for me).

First is that I don't want the hassle of uprooting the family temporarily. If I was single it would be no problem. 

Second is that it's unlikely that a house I'd want to move to would become available, so I could potentially be in rented for 12-18 months. That's an awful lot of money down the drain (rent would be ~3x our current mortgage too). Even if I had bad tenants, I'm not sure I'd lose that much money.



Regarding the stamp duty, yes I'm aware of that, but I wasn't aware of the hefty arrangement fees for a BTL mortgage. 

housebuyer143

PledgeX2 said:

warby68 said:

Its probably more common to do it the other way round to be an attractive non chain buyer as in you sell your house first and then YOU become a tenant/lodger for a shortish period. 

Main risk is that the property market moves against you once you step off the ladder but if you know your areas and target properties you can make a judgement on this.

There's two problems with this approach (for me).

First is that I don't want the hassle of uprooting the family temporarily. If I was single it would be no problem. 

Second is that it's unlikely that a house I'd want to move to would become available, so I could potentially be in rented for 12-18 months. That's an awful lot of money down the drain (rent would be ~3x our current mortgage too). Even if I had bad tenants, I'm not sure I'd lose that much money.



Regarding the stamp duty, yes I'm aware of that, but I wasn't aware of the hefty arrangement fees for a BTL mortgage. 

Arrangements fees for BTL can be £0 or £6000, it depends on the product you choose. Get a broker to do it for you as the loan you get depends on the rent you can achieve so you don't want to apply to people who can't give you what you need. That's when the high arrangement fees come in because landlords needs to lower rate to get the borrowing they need, and so they can do this but have to settle for a huge fee.

 If you do down that route you should get a broker because on a few occasions clients have got stuck because the BTL lender won't issue an offer without an offer from the residential lender and the residential lender won't issue one without an offer from the BTL lender first. Proper stalemate there 😅🤦‍♀️ 

dimbo61

Why are you making life complicated ?
Do you think a person, couple or family want to Rent a property for 6/12/18 months to suit you ?
The costs of moving around, deposits, moving costs, mail redirection, moving schools and finding another rental are Bad enough 
Sell your current home and buy a new home on the same day like hundreds of thousands of other people do each year.
Your starting up a business which has set up costs ,  solicitors, NRLA, EPC,EICR, GSC, Pat testing, Video Inventory, Deposit, agents and hundreds of rules, regs, licence and laws to follow.
Tax implications
Being on call 24/7 
Evicting a tenant/s to suit your interests not the tenants 

london21

Ending tenancies not so straightforward can take months.

tightauldgit

dimbo61 said:

Why are you making life complicated ?
Do you think a person, couple or family want to Rent a property for 6/12/18 months to suit you ?
The costs of moving around, deposits, moving costs, mail redirection, moving schools and finding another rental are Bad enough 
Sell your current home and buy a new home on the same day like hundreds of thousands of other people do each year.
Your starting up a business which has set up costs ,  solicitors, NRLA, EPC,EICR, GSC, Pat testing, Video Inventory, Deposit, agents and hundreds of rules, regs, licence and laws to follow.
Tax implications
Being on call 24/7 
Evicting a tenant/s to suit your interests not the tenants 

While I generally would say becoming a landlord for a short term is probably not a great idea - there are loads of people who just want to rent for 6/12/18 months. I've done it many times. You move to a new area or start a new job and rent somewhere nearby for 6 months then when you get the lie of the land you move somewhere else or look to buy somewhere or whatever. As long as landlord is up front about it then it's certainly not a problem. 

patchyX2

dimbo61 said:

Why are you making life complicated ?

Because the chances of a house coming up for sale that I'd be willing to move to are very small.

Selling my house now and having a buyer that is willing to wait for months, potentially years, for me to find the right house is very unlikely, hence me looking at alternatives to the traditional approach. 

born_again

PledgeX2 said:

dimbo61 said:

Why are you making life complicated ?

Because the chances of a house coming up for sale that I'd be willing to move to are very small.

Selling my house now and having a buyer that is willing to wait for months, potentially years, for me to find the right house is very unlikely, hence me looking at alternatives to the traditional approach. 

Do you think that your current home will sell quickly?

Given I'd want to sell as soon as I moved into my new place really, but I'd be willing to suck it up for a year or two if need be. 

Clearly selling with tenants is a big issue & will reduce the price. So you will need them out while you sell. So loops back to my 1st question.
Given you seen to know exactly the house or one of a few that you want.
Why not try a mail shot & see if any of these would be interested in moving?

macman

'Bad tenant' losses: worst case is you might get no rent for a year (maybe £24k), plus they might trash it and leave you with maybe another £20K in repair and renovation costs. Can you afford losses on that scale?
Of course, you'd sue for a CCJ, and get it, but the chance of a tenant like that actually having any recoverable assets is negligible.
I'm painting the worst possible scenario, but it's one you need to consider nonetheless.