To rent my house out and rent a more expensive bigger one for me?

[TheSunnySide]

I have a small 2 bed house with a smallish mortgage in an area I don't like with no garden. I could quite easily rent it out for more than my mortgage (Slightly more) payments.

I have seen a bigger 3 bed house with a garden nearer to my child's school - the rent is twice the amount I pay in Mortgage but we could manage it easily.

I can't get anyone to lend me the money to get a mortgage for a bigger house, even if I sell the one I own.

Has anyone done this and how did it work out?

Can you afford to pay mortgage if tenants stop paying rent? Does tour current mortgage allow you to rent?

Personally, I wouldn't do it. If you're unlucky and you have tenants who don't pay their rent, it takes months to evict people and without the rent would you be able to pay the mortgage? The risk of having tenants who don't pay is very small, but the outcome would he catastrophic for you. For professional landlords it's different, as they spread the risk over several properties.

Also you'd have to tell your mortgage provider and it's likely your mortgage would become more expensive.

The most financially sensible thing to do would be overpay on your mortgage, and then enjoy the fruits of that in a few years.

You will need permission from your mortgage company to change the house to a let - they may charge a fee, put restrictions on who you can let to or want you to convert to a different mortgage with associated fees.

As others have said you need to consider the impact of the coming tax changes. There is also landlord insurance and gas and electrical safety checks to consider. Check your area - where I live if you rent to 3+ sharers rather than a related family you have to obtain an HMO license for renting (which are highly restricted here) and carryout extra adaptations such as putting in fire safety doors.

Also, if you ever need to claim housing benefit or council tax reduction for your new rental (you lose your job etc) then the fact that you already "own" a property makes you ineligible.

However, I know as a self employed person how hard it can be to get a mortgage (mine has a much higher interest rate than one I had when in an ordinary salaried job) and so it could be a really good idea. You always have somewhere to move back to if the experiment fails. I do know people who have done this when the differential from moving from a flat to a house was too great and it has worked out well.

Thanks for all the advice.

What I really think I might do is rent, do my house up and then sell. My husband would like to keep it 'for the future' but I just feel like we have outgrown it, we need a bigger place for my child - I would feel so much happier inviting his friends (And mine) over if we had the space - and renting is the only way I can do that.

Please don't become a landlord. You obviously know nothing about it. We already have far too many people renting out their properties without knowing the 1st thing about it.

I'm doing this currently except I moved into a smaller property to save to buy in the area I like.

"Please don't become a landlord. You obviously know nothing about it. We already have far too many people renting out their properties without knowing the 1st thing about it."

If I did become one I would find out about it. My husband already lets out a flat so we do know something about it, as well as how hard it can be to have to deal with a flat which has been completely ruined by the tenant.

Personally, I am not that keen on being a landlady - my preference is to sell my house and keep renting out my husband's flat while renting a bigger place for us.

The thread was really about getting as much info and opinion as possible from people who have done it.

Thanks

You clearly don't know anything about it if you didn't even know about the tax changes. That can make a huge difference in the amount you could make. Keeping that in mind you might lose money and won't be able to afford that other house. You really need to research everything before even thinking about this.

I hope it works out for you, I know how shitty it can be living in an area that isn't quite right. You need to really research and understand it is a huge responsibility if you do go ahead.

Your DH already has rental income but you were unaware of income tax implications? He is declaring the income isn't he?.......

"Your DH already has rental income but you were unaware of income tax implications?"

This is his rental and so nothing to do with me - unless by being married it becomes my responsibility? The renting of my house is something I / We have only discussed in the last week or so and is one option (The other being selling) but the main issue really is to do with me deciding to rent a bigger place and what to do with the property I own (It is mine not his) which is why I asked the question in the first place.

Many thanks to all the people who have offered advice and experience so far, particularly those who have done so in a pleasant and helpful way.

I am also absolutely aware there are Tax implications - but as I said I need to look into what those are as we haven't got to the point where we were needing to consider those yet.

Gov.UK has given me some stuff to think about and LOOK INTO MORE

Running a property business
You have to pay Class 2 National Insurance if your profits are over £5,965 a year and what you do counts as running a business, eg if all the following apply:

being a landlord is your main job
you rent out more than one property
you’re buying new properties to rent out
If your profits are under £5,965, you can make voluntary Class 2 National Insurance payments, eg to make sure you get the full State Pension.

You don’t pay National Insurance if you’re not running a business - even if you do work like arranging repairs, advertising for tenants and arranging tenancy agreements.

sorry - didn't mean to use caps there.

Thanks again.

and, Doh - I completely posted the wrong bit

Property you personally own
You must contact HMRC if your income from property rental is less than £2,500 a year.

But you must report it on a Self Assessment tax return if it’s:

£2,500 to £9,999 after allowable expenses
£10,000 or more before allowable expenses
If you don’t usually send a tax return, you need to register by 5 October following the tax year you had rental income.