Are you a landlord? How do you find it?

[RainCloudsInTheSky]

We may have an opportunity to be a landlord but we are cautious about it. Does it take up much of your time? We would probably pay for the fully managed option so hoping it wouldn’t take up too much?

we’ve had a chat with estate agents and feel like we are understanding what is expected. Insurance has been recommended and I am yet to see what the cost of this may be.

would you recommend? Or wouldn’t do again? Interested in anything

How long do you have to live at the property before you’re exempt from capital gains tax?

You will still need to pay CGT even if you live in the property for some time but the longer you have lived there, the more reduction there is to the tax bill you will have to pay when selling.

One way around having to pay the CGT is some people gift their property to someone else. So the property value will be what it is at time of that happening meaning no increase in value meaning no CGT needed to be paid when selling property.

Don't be ridiculous, you are incredibly naive.

My oldest is looking to move in with his GF
The last thing they want to do is buy
they’ve been together a couple of years

he’s seen how difficult it is when young relationships break up and they have to try and sort a house which nether can afford on there own

and my niece who is going to live abroad for a year but need to rent in the mean time

and let’s not forget people With shit credit rating who can’t get mortgages

Thanks.

really can’t decide what’s the best option. Guess I have plenty of time while probate is going through due to the back log.

It really depends so much on the tenants and it’s very hard to know how they’ll be once in. I had two lots and both were couples who looked good on paper but treated the place badly and in one case were also very high maintenance. I personally found it extremely stressful even with managing agents (in my case, both sets of those were rather rubbish) and wouldn’t do it again.

In addition to the considerations others have mentioned, have you looked into capital gains tax implications? I’m not sure about how that works on an inherited property anyway but if you rent it out you will be liable for quite a lot when you come to sell. Also is it a place that means a lot to you? In my case it was my home (periods working away) and I found it quite upsetting when the tenants did some crazy things (like rip up half the garden I’d spent years planting!) It’s easier if you don’t have an attachment to the property I’d say.

Many questions OP. Depends which part of the country you are in as to whether you will get growth in yield, capital value or both; what are you looking for? I see it's a flat - is it suitable for a family of just a professional couple? Are you able to treat it as a business and not get emotionally involved?
I started with one rental property 24 years ago and have built up to 8. Was able to manage these alongside a fairly full on part time job and bringing up a family. Most I manage but 3 I use a managing agent for. That said you if you want to be a good landlord you have to choose your managing agent well and stay on top of everything. I can tell you off the to of my head when all the various certificates are due, what the yield for each property is, when the tenancy agreement is up, etc.

Personally I would only ever have 1 or 2 bedroom flats/houses and not go down the HMO route.
As previous posters have said there are many costs that tenants do not even consider like selective licences, safety certificates, TDS registration, inventories, tax, accountant fees, bills during voids and of course the obvious repairs that must be done immediately. BUT if you can keep on top of all this then its actually a pretty easy way to make money and hopefully provide some security for your future.
One last thing; treat your tenants well! As well as the obvious timely dealing with repairs giving them a gift if they have a baby, a box of chocs a Xmas never hurts.

Oh, and in 24 years I've never had a tenant fall behind with the rent or had to evict anyone.

Then you are incredibly fortunate.

Probably! But also super fussy who I rent to. Also I have tenants stay for many years and until recently have had a policy if not raising their rent

I was fussy too. It was hospital nurse with two school age who trashed my house and stopped paying rent. There's no fail safe way to avoid it.

She got another house with no issues what so ever so my experience with her was silent. I don't even think her partners assault would be on record if she dropped charges as as she got vack with him ASAP too

@DyslexicPoster i know I’ve probably been v lucky. I’ll probably get slated for this but I only rent to singles or couples, no kids (although a few have been born to my tenants over the years), no sharers.
I do all the standard referencing on them and then thoroughly check them out on social media. I then check their friends and families social media profiles too.
I appreciate that wrong uns can always slip through though.

I was an accidental landlord when I moved in with (now) DH in 1990. The market was not moving and I couldn't sell it thanks to a structural problem caused by building work next door. It cost me £200 pm to subsidize the mortgage, although that resolve itself, as did the structural stuff: I could have done without the hassle. Then there was a relatively halcyon six year period while a close friend rented it, followed by another when a young couple lived there. I actually made a little money then, and interest relief was still available. But the young couple bought their own property, bought some of the furniture from me, and then I sold it at a time London property was soaring in value. I was very fortunate. The managing agent was pretty good, until I asked them to value the flat for sale, at which point they significantly under-valued it (about 30%) in the belief that I was an elderly woman living in rural idiocy.

Bear in mind that the hidden costs will always be a lot more than you’ve bargained for.

That boiler that breaks down at 5pm on a Friday of a bank holiday weekend, and the tenants need a new one immediately (when this happened to me, I found a heating engineer who replaced it on the Sunday - at bank holiday rates, obviously, but the tenants kicked up a fuss about being without hot water for 48 hours and threatened all sorts), tenants who have animals - if you agree to it, they might not abide by what you’ve agreed. I said yes to one family for one dog, they actually had three and when they left every carpet in the house, plus underlay, was soaked and stained with dog pee. Their deposit didn’t even touch the surface of the replacement cost. One tenant failed to report a leak (no, actually, two tenants on different occasions) until it was so bad it cost thousands to repair, rather than it being a quick plumbing job. I could go on…

Some of these things aren’t covered by insurance, or if they are you see your premiums hiked up alarmingly in subsequent years.

I’m getting out of rental properties, with all this and the other points already made by previous posters it’s all too much hassle these days and doesn’t look like getting any less so in the future.

Just a note re Capital Gains Tax.

Capital Gains Tax is only due on the increase in value between when you buy and when you sell (assuming it has always been a rental and you haven’t lived in it).

If you have lived in the property the capital gains tax is apportioned relative to when it was lived in and when it was rented. E.g. if the property has been your home 50% of the time and rented 50% of the time then Capital Gains Tax will be due on 50% of the rise in value less allowances such as the 3k annual allowance. It is not relevant when house prices actually rose and when they stayed flat or fell so you can’t say house prices didn’t rise while it was rented out to get out of paying it.

Capital Gains Tax is still due on a rental property that you give away. Even though you are giving it away it is due at market value. It does look like you can potentially give your main home away without paying Capital Gains tax though in this article which I didn’t know. I guess like how you can sell your main home (always lived in) without Capital Gains Tax too.
https://www.thetimes.co.uk/money-mentor/article/gifting-property-tax-implications/

I thought you only pay capital gains tax on a sale so on money you get, if you give a property away, rental or lived in you don't have any money to pay capital gains on??

Here are a couple of screen shots from gov.uk.
Capital Gains Tax due if you sell or “dispose of” property that is not your main home and “dispose of” includes gifting it.

This page/section (gov.uk) talks about calculating Capital Gains Tax when for example you have let out part of your home/let your home for some of the time you have owned it. There are pages that walk you through the calculation.
https://www.gov.uk/tax-sell-home. It calculated how much “private residence relief” you are entitled to (the Capital Gains Tax exemption for private homes).

Note again the page says tax due when you sell “or dispose of” your asset.

"Amateur" landlords are the bane of many private tenants. Many are clueless. At least use this forum to find out what it involves:

https://forums.landlordzone.co.uk/home

Sadly I have read many of here break the sensible rules. Never let to relations or friends, it will cause problems. Always use a reputable, efficient agent who knows all the laws and regulations, most have a selection of reputable trades people who work for them.

Don’t be greedy over the amount of rent

We’ve been accidental landlords for nearly 8 years now. We couldn’t sell our first home so we rented it out and we rent somewhere else. It’s the perfect house for people on UC as it’s small and cheap but we’re selling it as the mortgage goes up and up every month (except this month ironically) and we can’t just keep putting the rent up to cover it.

We’ve only had one bad tenant luckily and she was there during Covid so we couldn’t do anything. I had constant complaints from the neighbours, she never paid the rent on time, she trashed the house, would have parties that spilled into the street during lockdown, her partner was drug dealing from the property and was abusive to her (not her fault). He wasn’t on the tenancy so we made it a condition of her staying (mostly to protect her) that he couldn’t live there and she would literally sneak him in so the neighbours didn’t see, we’ll they did as but she tried. She’d constantly ask to “borrow” her deposit back despite being told that it was in a tenancy deposit scheme as required by law, which is a good thing as she got none of it back when she left due to how much damage she’d caused. When she finally left, she hadn’t cleaned up at all, there was ketchup all over the kitchen sides, she’d unloaded the dishwasher halfway through a cycle and there was water all over the floor, the toilet was disgusting 🤢 and it took us a week to redecorate and recarpet the whole house.

Obviously, if something needs doing, such as the boiler breaking, you have to sort it straight away so make sure you have a pot of funds put away to cover anything that goes wrong.

Definitely use a letting agent, we didn’t and all of the new rules for landlords are impossible to keep up with.

Once the sale goes through, we’ll have no house to fall back on if we need to but it’s such a relief to no longer be landlords!

If you gift it, you still need to pay capital gains.

I guess the government feel if you can "afford" to give money away, you can Schmidt to pay the tax.