Looking to rent our house out to move to the cotswolds.

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Looking to rent our house out to move to the cotswolds.

    Hi all, I've read through a lot of stuff on here which is all very useful but just wanted to know whether our plans are viable.

    We currently live in Crawley in sussex with great links to the town and airport aswell as three bridges station which has excellent links to london and the coast.
    We want to move to the cotswolds nearer my daughter and keep our house as we believe the value will continue to increase due to its location.
    We've done a brief look into figures but just wonder if I'm on the right path here.
    I'm not too clued up on what you can claim back etc as I know it changed recently.
    I'm currently a train driver so I would be paying 40% tax.
    From speaking to estate agents they think we can get around 11-1200 a month for a 2 bed house.
    If we go onto an interest only mortgage then I'm hoping we can make the figures work.
    We have got about 26% equity in the house so our mortgage on interest only would be about £280.
    Landlord insurance is coming back about £17 a month. Not sure if that is good or not?
    Fully managed they want anything between 12 and 18% of the rental income so between about 130 and 215 depending on the estate agent.
    Obviously with the 40% tax I think that's about 200 a month so leaves us with about 3-400 a month?
    I know there other fees at the start and end of tenancies and they can be covered just trying to work out the monthly figures.
    Are we in the right ball park on figures?
    Obviously we need to research it more thoroughly but just trying to work out whether it's an option as we dont want to sell this house as we've spent a fair bit of money on it recently.
    Sorry for the long winded post, we just want to be realistic on what to expect.
    Thanks

    #2
    Hi,

    If you keep your house and buy in the Cotswolds you will pay the extra 3% Stamp Duty for second homes. Obviously if you intend to rent that will not apply - you don't say in your post which you are planning to do.

    Amongst your figures you need also to consider maintenance costs, void periods, a non-paying tenant and other less regular expenses.

    As well as insurance you will need an electrical safety check every 5 yrs (£140-170), a gas safety every year (£40-80), EPC every 10 yrs (£50-80).

    In between tenants you may need to paint, recarpet, clean, maintain - will you be able to manage this adequately from the Cotswolds? How much will this eat into your potential profit.

    When you do sell the house, if you have bought in the Cotswolds you will pay CGT at 18 or 28% depending on your tax bracket - does the predicted rise in value exceed this?

    If you are intending to rent in the Cotswolds are you happy with the lack of security and control over cost of rent?

    I think Buy-to-let can be seen as an easy way to make money but in reality it can be hard work and sometimes not very financially rewarding. You need to be sure it will work for you before committing and I sense from your post that you are just hoping to make some easy money. It may not be that easy!

    Whatever you decide, Good Luck

    Comment


      #3
      Originally posted by class2ldn View Post
      we dont want to sell this house as we've spent a fair bit of money on it recently.
      Beware that no matter how nice they are, tenants will never look after your lovely house the way that you do. They may even trash it.
      So if it has just been done up to a high standard, you may be better off selling it.

      Comment


        #4
        First of all (as above) this is a business, your home is something you are attached to and your tenants won't be.
        You have to be able to be objective about it - which is next to impossible in my experience.

        Secondly, try working through the plan based on 10 month's income per annum.
        That allows for a month's worth of maintenance / repairs every year and one month between tenants.
        Hopefully it won't work out like that, but it's better to be realistic (a new boiler can cost close to £3k for example).

        Otherwise you're pretty much in the right ballpark for the figures.

        If the property is owned by more than one of you, you'll have to split the income, which might be helpful if the other owner is in a lower tax bracket.
        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

        Comment


          #5
          Thanks for the replies.
          we are aware of most one off costs and obviously periods where theres no tenants etc but it's easy to forget that.
          In the cotswolds we are planning to buy, we've seen a nice little 2 bed and it's something I would like to get more involved in.
          i know it's not an easy task to start off with and at any point it can bite you on the behind.
          in regards to dealing with issues from the cotswolds, my in laws have just bought a house down the road,(not the reason for moving, honest lol) but they may be able to help sort out any emergency situations.
          We would definitely like to have it fully managed to start.
          Is it generally the way to go with interest only on btl?
          Unless you've got a massive equity a repayment mortgage wouldn't make sense financially as we would be losing money.
          We are not in it to be rich but if it works well then its definitely something I'd like to expand a bit.
          When I say we've done the house up, it's not a complete renovation but we've had new windows put in, redecorated etc.
          Obviously theres always a risk but that's always going to be there if you rent so I guess you just have to cross that bridge at the time.
          We want to keep our house as the value will go up so I'm pretty sure the income will increase because of its location.
          We are aware of the 3% stamp duty which I've taken into account on the new mortgage calculations.
          The house we have seen is actually cheaper then our current one so a repayment mortgage on that would be cheaper then our current house.
          What are the things you can claim back for now?
          I did have a look but seems to be so many different sites out there it's hard to clarify.

          Comment


            #6
            Originally posted by jpkeates View Post
            First of all (as above) this is a business, your home is something you are attached to and your tenants won't be.
            You have to be able to be objective about it - which is next to impossible in my experience.

            Secondly, try working through the plan based on 10 month's income per annum.
            That allows for a month's worth of maintenance / repairs every year and one month between tenants.
            Hopefully it won't work out like that, but it's better to be realistic (a new boiler can cost close to £3k for example).

            Otherwise you're pretty much in the right ballpark for the figures.

            If the property is owned by more than one of you, you'll have to split the income, which might be helpful if the other owner is in a lower tax bracket.
            Yeah well it will be me and my wife and she is in the 20% bracket so how would that work?
            Obviously I need to get onto a financial advisor really but not many about on a sunday lol.

            Comment


              #7
              Originally posted by class2ldn View Post
              Yeah well it will be me and my wife and she is in the 20% bracket so how would that work?
              Obviously I need to get onto a financial advisor really but not many about on a sunday lol.
              What you want is an accountant or family solicitor.
              A financial advisor is naff all use for property rental in my experience (unless you have one already).

              Don't get hung up on the tax, but, with the help of a solicitor you would be able to shift the ownership of the property (using a thing called a deed of trust) to 99:1 in your wife's favour, so 99% of the income (and costs) are in a lower tax regime.
              You use a standard document called Form 17 to tell HMRC - this is a routine and completely legal and non-dodgy thing to do.

              For most solicitors it's a bread and butter issue - but they will charge for it, and it's not exactly as simple as I've outlined.
              Your wife would need to be on the mortgage and it's possible that the way you and your wife own the property as joint tenants might need to change.
              But it's a fairly routine and boring paperwork exercise.

              You'd also probably want to make new wills at the same time to make sure they reflect the new arrangement.

              Whether it saves enough tax to be worth while is part of the exercise - because all the costs are "now" and all the benefit is in the future.

              You might find that you want to become landlords first and then worry about the fine tuning of tax afterwards, but it can save you money.
              It's definitely worth a visit to the solicitors, though.
              When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
              Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

              Comment


                #8
                I would seriously advise you not to do this. The chances of you getting a good agent who knows what they're doing and doesnt land you in the sh1t are slim. You will spend a lot of time worrying about the property and could lose a lot of money. The rental market has changed dramatically in the last 10 years and is no place for amateur, accidental or casual landlords in my view.

                Comment


                  #9
                  Thanks for that its definitely something we need to do.
                  Interesting to know that.

                  Comment


                    #10
                    Originally posted by DPT57 View Post
                    I would seriously advise you not to do this. The chances of you getting a good agent who knows what they're doing and doesnt land you in the sh1t are slim. You will spend a lot of time worrying about the property and could lose a lot of money. The rental market has changed dramatically in the last 10 years and is no place for amateur, accidental or casual landlords in my view.
                    I appreciate that but it is something I'd like to expand into.
                    Will definitely be a learning curve to start but you've got to start somewhere, take the rough and the smooth.
                    We are quite realistic about it.
                    Just want to go in with our eyes wide open

                    Comment


                      #11
                      What is the current EPC rating of your home?
                      At the moment, it can't be rented out with an EPC of less than E. But the government are talking about changing that to a C. Can you afford to do the necessary upgrades?

                      Comment


                        #12
                        It's on C now I believe or at least D.

                        Comment


                          #13
                          Look at it from the other end and see if it still looks attractive. You're living in the Cotswolds - would you buy a house miles away in Crawley, currently in mint condition and at the value it is now, in order to rent it out? When you do come to sell it in the future there will be work to bring it up to it's current condition. If you want a house to rent out I would advise you to buy one where you live, it's so much easier to keep an eye on it.

                          Comment


                            #14
                            Well like I said the in laws are buying a house down the same road so we will down frequently anyway I would think.
                            my wife is quite close to her mum so shouldn't be a massive issue.

                            Comment


                              #15
                              I would seriously think twice about becoming a Landlord. It's not an easy job and the government is making it harder and harder.

                              Comment

                              Latest Activity

                              Collapse

                              Working...
                              X