Renting out my house so I can move in with partner

rachielu73

Hi, advice request pls for a few areas re. Potentially renting out my house.
So I have 3 years left on my current fixed rate deal on my mortgage. So will incur ERC's if I sell now, about £8k. I have approx 130k in the house.
I want to move into my boyfriends house so we can live together and stop the issues with long distance relationship.
I am considering renting my own house out vs selling it now.
Q1.
Would I be liable for capital gains tax if I do rent it out then sell it in 3 years when my mortgage term ends? I won't be on my Bf's mortgage until I sell my house and have proceeds to pay a lump sum to his current house (only bought last month- I will match what he put as a deposit and what equity he's paid off when I join him on the mortgage as joint tennant)

2. Is renting your property more hassle than it's worth? Would an agent be advisable or is it manageable enough on its own?
My house is 5 years old in a very good state.

3. If I decide to rent mine. But contribute to my boyfriends current property including the mortgage what are my rights if god forbid we split up and ive paid ( for eg, 2.5 years towards the bills and mortgage)
4. What other tax implications could there be do I self assess? 

 Thanks alot in advance 

silvercar

1. Yes, but you get some allowance for the time it was your home. Have you made much profit on it?

2. can be a dream or it can be a hassle. 

3. Agree on that before you move in,

4. declaring rental income if you decide to rent out your home. Potential capital gain on sale.

35har1old

rachielu73 said:

Hi, advice request pls for a few areas re. Potentially renting out my house.
So I have 3 years left on my current fixed rate deal on my mortgage. So will incur ERC's if I sell now, about £8k. I have approx 130k in the house.
I want to move into my boyfriends house so we can live together and stop the issues with long distance relationship.
I am considering renting my own house out vs selling it now.
Q1.
Would I be liable for capital gains tax if I do rent it out then sell it in 3 years when my mortgage term ends? I won't be on my Bf's mortgage until I sell my house and have proceeds to pay a lump sum to his current house (only bought last month- I will match what he put as a deposit and what equity he's paid off when I join him on the mortgage as joint tennant)

2. Is renting your property more hassle than it's worth? Would an agent be advisable or is it manageable enough on its own?
My house is 5 years old in a very good state.

3. If I decide to rent mine. But contribute to my boyfriends current property including the mortgage what are my rights if god forbid we split up and ive paid ( for eg, 2.5 years towards the bills and mortgage)
4. What other tax implications could there be do I self assess? 

 Thanks alot in advance 

You would have to check with you mortgage provider if they would let you rent it under the current mortgage.They may let you on temporary bases but in the long term (don't no what they consider long term to be) it's a buy to let mortgage.Would advise using a agent.Need to pay a fee to register as a landlord.Whats the current EPC?
If it's below a E you would be required to spend £3500 even if those improvements didn't bring it to a E and then register an 'all improvements made' exemption.
You may be able to apply for funding and £3500 cap does not apply
May only apply in England
Scotland appears to heading towards a C 2025 to 2028 with a possibility  of fines imposed 
Wales is E possible grants available.
Non complainance fines 
NI requires EPC certificate only

Emmia

If you don't want to start taking equity in your boyfriends place until you formally go on the mortgage,  you should contribute to bills only - food, utilities, council tax, broadband, sky etc.

If you've rented your place out, and you split up you would be homeless as you'd then need to evict your tenants, so the money you save by not paying rent to your boyfriend should be saved to give you money to rent something yourself whilst you evict the tenants. If it goes well, you can put that money into the boyfriends place when you become a joint owner 

ThisIsWeird

Hi Rachiel.
5 year old house, presumably owned from new? Ideal rental, as there should be no maintenance issues - provided you get a good tenant, this should be plain sailing.
Capital gains would be payable on sale, on the proportion it has increased in value whilst being rented - that's the gist, anyway.
You'd need permission, possibly a change of type, from your mortgage provider. Ditto house insurance. And all the other renting malarkey - gas certs, possible guarantor, etc., but that's standard stuff.

Good suggestion by Emmia - contribute only to the living expenses at your partner's house, not the 'mortgage'. Obviously that's largely semantics, but it should keep things uncomplex. 

I think a simple system is to split all the bills in half - utilities, BB, food, drink - and leave the mortgage sum alone. He saves, you save. Then, if your rental is going really well, and you find yourself quids-in, you can tweak that if you like; you buy a full shopping, or pay for nights out, that kind of stuff. But also don't leave yourself without accruing some savings.

And the caveats do need to be mentioned; you must consider the 'gawd forbid' part, if only in your head. Should you split up, you'll not want the trauma to be better made more complex by working out sums. So also keep some of the rental building in your bank account. Should the worst happen, you need to be secure, and the break should be, as much as possible, "It was really nice whilst it lasted, good luck with your life...", with as little messiness as possible - and there shouldn't be any financial hangups from this arrangement.
For renting, using an agent is safer, but you may wish to consider finding your own tenant, perhaps via work, for example? As long as they have solid glowing references, you should be fine. But your call.

FlorayG

I can answer 2
You must no longer treat it as 'your home'; you need an emotional distance from a rental property, because once it's let it becomes the tenant's home and they can live there pretty much as they like as long as they do no serious damage.
What are you going to do with your own furniture? Absolutely tenants will not keep it pristine, plus it all needs to adhere to fire regulations.
If you get bad tenants they are a nightmare and as said above, you can't 'just' evict them if you want it back
In your circumstances if you're not 100% sure of the boyfriend then don't move in with him. If you ARE sure, sell your house and invest the money in case you need to buy another ( or even buy a rental, that will be easier on your mind than renting out your home and will increase the value of your money)

subjecttocontract

It's worth mentioning that we will have a BIG budget on 30th October which may introduce additional costs/charges for landlords. It's probably a good idea to wait 2 weeks until we know what changes, if any, are coming before deciding what to do.

FlorayG

subjecttocontract said:

It's worth mentioning that we will have a BIG budget on 30th October which may introduce additional costs/charges for landlords. It's probably a good idea to wait 2 weeks until we know what changes, if any, are coming before deciding what to do.

yes and then we landlords will all decide to sell up, making the private rental sector even more difficult and expensive for renters. Sometimes the government has no idea

RHemmings

As has been recommended in this forum elsewhere, you can join the NRLA association for residential landlords, and read every bit of their advice and resources. https://www.nrla.org.uk/

This isn't free, but if you're not prepared the £100 or so outlay and/or not prepared to spend the time reading, then that isn't a good sign for becoming a landlord. 

tacpot12

I did exactly what you are proposing to do, and would endorse the advice given above. 

I found that keeping ownership of my house was very reassuring in case the relationship didn't work out, but there was a whole load of extra things to worry about as a landlord! Occasionally if there was a problem at the house, I felt I needed to travel there to review the problem before agreeing what should be spent to resolve it. I ended up selling the house after 5 years, and did well out of the rental income (although I split this with my partner - they didn't have a mortgage, but also didn't want me to gain a beneficial interest in the property because, following their divorce, they wanted to leave their home to their children). I also did well out of the increase in property prices, but I sold just before the CGT allowance dropped below £12,000 so I saved quite a bit of CGT. 

There is a great deal involved in being a landlord, and using an agent is more or less essential given that you will not be living near the property. (I use a letting agent for another rental property I own which is 10 minutes from my home!) It can seem daunting when you start to realise the extent of what you are responsible for and how difficult it can be to evict someone - and this is only going to get harder.

If I was doing it again and had the benefit of hindsight, think I would trust that the relationship was likely to work out and sell my house immediately. (I had been seeing my girlfriend for about five years before we agreed I would move in with her). You don't say how long you have been in your relationship for, but if it less an six months, I might suggest that you move in together, prepare the house to be rented (or sold) and then take a decision after three months or so - you will need to plan to spend a few nights sleeping at the house during this time to meet the requirement of your home insurnance. You will need time to find a letting agent, agree terms, and provide all the documentation that the letting agent wants. 

You should also have a read of this webpage to find out more about beneficial interest: Occupation rights if one partner is the sole owner - Shelter England