Selling up vs. renting out?

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  • andybenw
    replied
    Renting out my house as an HMO worked well for me. As long as you have no planning/licencing hurdles the biggest risk is the possible requirement for an EPC at level C, though as I've said above that's not been confirmed and might well not be for HMO's.

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  • andybenw
    replied
    Originally posted by Lesney Park View Post
    The cost of bringing a large victorian house up to EPC level C would likely be prohibitively high. On top of all the other modifications noted above.
    As far as I am aware we don't know for definite yet that an HMO will require an EPC. Doesn't at the moment.

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  • landlord-man
    replied
    Many larger houses can be split into 2 or 3 self-contained flats pretty easily - get a builder in to discuss likely costs.

    See if any similar houses nr you have been converted as that will give an indication on successful PP (you could give the Council planning a call and ask too)

    If you go ahead, the 2 or 3 flats should sell for a lot more than the single house - even after costs.

    Or you may decide to let all of the flats which is far easier than a HMO etc

    A lot of what you can do and get depends on exactly where your property is - middle of countryside, coastal, nr a university, city centre or close to a major employer etc

    Having said all that and re-reading your post, it doesn't look like you have the funds to split the property --- in which case, you could still get the PP and sell as a development prospect.

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  • Lesney Park
    replied
    The cost of bringing a large victorian house up to EPC level C would likely be prohibitively high. On top of all the other modifications noted above.

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  • jpucng62
    replied
    I agree with the above comments about HMO LL not being an ideal entry point and I would also add that the emotional distress of watching tenants turn your loved family home into something far less desirable would be heartbreaking.

    Sell it and take the gains, keeping your memories untarnished!

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  • royw
    replied
    Being an hmo landlord is not the place the start. My first option would be to sell this property (no gct) and live mortgage free in the smaller property. If you really want to be a LL buy a 2 bed terrace to rent out.

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  • jpkeates
    replied
    Originally posted by TK-421 View Post
    At some point in the future we may want to sell, at which point I understand there will be capital gains to pay, on the difference between the value when it became a HMO and and when it was sold. (Unless there is a better way to organise things to minimise this?)
    It doesn't work like that, the gain is calculated as a straight line from the purchase price to the sale price (less associated costs) and apportioned between the two periods of ownership (currently adjusted 9 months in favour of ownership).
    The value when you let it is academic.

    If you are not currently landlords and have never had an overriding ambition to be landlords, I'd not recommend becoming one simply because you have a spare property

    And being an HMO landlord is a very different challenge than being a residential landlord, it's generally more income but more work.
    I've been a landlord for a long time and I have no interest in running an HMO.

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  • Section20z
    replied
    Er, local authority licence, fire safety, gas safety , asbestos, electrical certificate, legionnaires, deposit schemes, scumbag tenants.
    for a start.

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  • TK-421
    started a topic Selling up vs. renting out?

    Selling up vs. renting out?

    Hi all,
    Not sure whether this needs to be in the tax or HMO forum, but here goes...

    My wife and I are 8 years into a 23-year mortgage on a large Victorian house. Kids have or are about to move on. We are thinking of downsizing.

    Rather than selling up, I'm wondering about the feasibility of turning the house into a (well-run) HMO. We have the savings to put down as a deposit on a smaller property, so it should not be necessary to sell in order to fund the move. We would need to move our residential mortgage, and get an HMO mortgage on the current place.

    I'm unsure about the practicality and tax implications, but the idea would be to continue to pay off the equity in the property as well as taking a small income each month from the rental. At some point in the future we may want to sell, at which point I understand there will be capital gains to pay, on the difference between the value when it became a HMO and and when it was sold. (Unless there is a better way to organise things to minimise this?)

    Mad idea, or what else do I need to consider?

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