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Renting home we own to rent another

(22 Posts)
MrsWhirly Sun 03-Dec-17 08:00:11

Has anyone rented out the property they own and live in to move away and rent somewhere else?

We need to move to live near by erderly and sick in-laws but we cannot get a enough in the way of a new mortgage to afford something there.

Is this a totally crazy idea? We would need to live there for 2-5yrs and will involve moving our children's school.

Is there anything practical I should be aware of? Thank you.

Mosaic123 Sun 03-Dec-17 08:06:29

My son now rents out the flat he bought when he needed to move for a job. He rents another flat in a different town to live near his new job.

He, of course, had to tell the mortgage provider otherwise he breaks a condition of the mortgage who, after a six month period, increased the mortgage rate to a buy to let rate (higher).

He'd lived in it for 3 years before he moved for the job and he hadn't bought it to let out but to live in.

BarchesterFlowers Sun 03-Dec-17 08:11:27

We did this when we went abroad.

No problem at all, we didn’t use an agent. There was a fantastic builder/property man in the village who had an army of good tradesmen behind him. We lined him up to deal with any issues (quicker than an agent would) and bring in anyone he needed to.

My best friend and her husband was the other emergency contact number (very reliable).

Insurance, mortgage, finance/tax return, I had a five year electrical certification done on the house before we left, boiler service (oil) annually, chimneys swept annually.

We had done the house up,to live in to really high standards so knew it was all good for years.

My property man checked the gutters/roof/roof valleys twice a year. Nipped any problems in the bud -was an old house, listed, built in 1598 so needed looking after.

Went well for us, tenants stayed three years and then bought a house in the village when we returned.

You need to be able to afford to keep house you own trouble free/have the cash to fix anything instantly when you have got tenants in.

SavoyCabbage Sun 03-Dec-17 08:15:47

We did this when we moved abroad. You have to tell your mortgage provider like Mosaic says. It might be empty before and after any tenancy so plan for that.

You have to distance yourself from the house emotionally as well. Having an agent to manage it helps with that. It's hard when it's your actual home and you know that you are going to return. Ours was in a right state when we got back to it. It needed a new kitchen and all of the bathrooms replaced.

friendlessme Sun 03-Dec-17 08:37:12

We also did this when we moved abroad, and are doing so now again. We had to inform mortgage co and they very kindly are increasing our rate. The rent just covers the mortgage and there is quite a lot of extras like maintenance and agent fees. I second that you need to detach emotionally as when we moved back in the first time it was like the house had been in a coma - it had aged and was in need of decoration etc without us having the pleasure of living in it. I also hated that other people had lived in my house. However it is quite reassuring to know the mortgage is being paid off.

BarchesterFlowers Sun 03-Dec-17 08:39:59

Yes, you do need to remember that if you want an income from it you are going to have wear and tear. I am not precious about my house so it wasn’t a problem for me.

MissWimpyDimple Sun 03-Dec-17 08:49:29

Plenty of people do this. Just remember that renting your property can be very time consuming.

Agents will charge around 10% to collect the rent and manage the property for you.

You can do it yourself but you need to be ready to spend a fair bit of time organising things and potentially dealing with non payment of rent.

venys Sun 03-Dec-17 08:57:00

We have done it and it was fine once with a good agent. But there is still paperwork to do and remember you will be taxed on ALL the rental income (in addition to your salaries or other income) so you won't be getting as much as you think with agency fees, electrical and gas certs, maintenance etc

MrsWhirly Sun 03-Dec-17 10:29:50

Hi everyone, thank you for sharing your experiences of doing this and the fantastic practical advice. Quite a few I hadn't thought of! Need to get planning so will look for an agent as I don't want the fuss of maintenance, although DH is a builder but still. X

specialsubject Sun 03-Dec-17 11:23:52

Finding a good agent is hard and even if you do, you need to monitor everything.

Insurance ( buildings, contents, rent guarantee, legal, malicious damage)
Gas checks
Electrical checks mandatory soon
Epc e or more
Paperwork - get it wrong, big trouble
Deposit - ditto
All your stuff out. Dissociate

I'd be very surprised if this worked out financially. Can you shift the in-laws instead?

MrsWhirly Sun 03-Dec-17 13:51:40

No chance of shifting the in-laws. They live in a nice area in a modified bungalow, so perfect for them. The blow is slightly softened for me by the fact that schools there are better than were we live, but still!

Financially, we will 'earn' about 600-700 pcm from renting our home, but will use that and and double to pay rent on new place. In addition my travel will increase by 1 zone. Then the insurance, maintenance etc. So not great financially at all.

BarchesterFlowers Sun 03-Dec-17 16:29:07

Sometimes it isn't just about the money though MrsWhirly.

We sold a house last year at a knock down price to allow us to move quickly to be nearer my elderly parents when Mum was really poorly (200 miles).

Could have held out for a higher price but I knew that I wanted us to move, right then, and if it hadn't sold quickly I would have rented somewhere and left it empty. The money I shaved off the price for a sale (sold on day one) would have been wiped out in a few months with mortgage, rent, and two lots of house expenses to pay for.

I would do it for my family and take the hit as long as I could remotely afford it.

Your plans might change, you might choose to stay there - at that point you might be able to get a mortgage and sell your house but for now I would live for today.

specialsubject Sun 03-Dec-17 18:04:52

That sounds a massive financial burden - sadly unsurprisingly.

A sale may be the answer.

genehuntshoops Sun 03-Dec-17 18:04:53

Don forget that you'll have to pay tax on the rental income you receive.

MrsWhirly Sun 03-Dec-17 18:53:47

Sadly we can't sell as we can't get the additional mortgage we need to buy close enough to in-laws otherwise that would be our preferred option. We have see all matter of banks and financial advisors but simply don't earn enough to borrow the additional we need. Very stressful

MrsPicklesonSmythe Sun 03-Dec-17 19:59:26

We're doing this.
We had 2-3 months of paying for both houses before we got tenants in which we planned for and we don't make lots from the rent we receive (ours and our tenants rents are the same but outgoings to cover our place mortgage/service charges/management fees/insurances etc is around 60% of it).
Property we own is an investment close enough to london to make it feel worthwhile whilst we've moved to suburbia to be close to family and a better standard of living for the kids.

It's definitely not going to be plain sailing financially but for us it's worth it. we have an informal agreement with our landlord that we will buy this place from him in around 5 years time.

another20 Sun 03-Dec-17 20:33:44

Where do you see yourselves in 2-5 years? Assuming that is after Il have passed away - that might focus your dilemma.

MrsWhirly Sun 03-Dec-17 21:13:15

2-5yrs time we are likely to have inherited IL's property - DH is an only child. So we will either move there, or back to our home.

It's really to understand the complexities of renting our home to rent another.

specialsubject Mon 04-Dec-17 09:04:46

Take the point but this plan really puts you at risk. Brutally, if one dies and the other needs a care home the house will have to be sold to pay for it. Then you've been paying out for ages and will have no inheritance.

MrsWhirly Mon 04-Dec-17 09:40:17

Indeed, but we own our on home anyway so the point is always to be near enough to look after them. If one dies and another goes into a home we will just move back to the house we own.

MovingOnUpMovingOnOut Mon 04-Dec-17 09:50:11

I’ve let to buy. In some ways it was relatively straightforward but there are a few things I wish I had done differently and it was eye-wateringly expensive in the short term.

With the stamp duty changes renting rather than buying often makes more sense in the short term. The extra SDLT can be a sizeable chunk of rent.

As regards renting out our old house, getting consent to let was easy with our mortgage provider and no penalties. We had to pay a fee which wasn’t very much iirc. We needed to do work prior to letting and that’s where it cost us. Paying two mortgages and no income was stressful! We now have a good agent and since it’s been let it’s not a huge bother. It doesn’t make much money but it is appreciating in value which is worth more to us.

A good agent, a good market and consent to let makes everything else much simpler. They tell me what to do and I do it. The tax return is a bit of an arse ache though.

MovingOnUpMovingOnOut Mon 04-Dec-17 09:56:08

In terms of work I have to do myself (and I do the admin for dh and I):

Annual insurance policy
Legionnaires disease risk assessment (annual review after I wrote it)
Read two property inspection reports annually
Authorise work on the property.
Deal with any ad hoc queries (can we drill a hole through the front wall? Can we get a dog?).

I used to organise my own boiler servicing and gas safety check but let the agent do it now as the company I used to use aren’t that good and they now book the two together. In the past they have been very keen to spend my money but I just check everything carefully and check it’s my liability and not the water company or someone else.

You do need to respond to queries very quickly but it’s hardly arduous.

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