Active discussions

Meet the Other Phone. Protection built in.

Meet the Other Phone.
Protection built in.

Buy now

Please or to access all these features

Talk
AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

Rental property as main income?

31 replies

Givemecoffeeplease · 21/04/2021 22:21

I’m about to lose my job (ugh). I live in a popular seaside town where there are lots of airbnb rentals etc. I have a small inheritance I could use to buy a seaside cottage and rent it out. Aibu to think I could run it as a job, cleaning it etc myself, and make a living off the rent (obviously more money in summer so would eke that out over the year). Or are the tax implications of a second property just too big and scary?

The thought of unemployment is very scary, but nor do I really want to go back to traditional office work (whatever that is after Covid) when this might give me more freedom around the kids.

Yabu - taxes are too complicated, rents won’t add up

Yanbu - sounds like a good way to make a living to me (and please explain the tax implications!)

Thank you.

OP posts:
LIZS · 21/04/2021 22:23

Yabu, it is unlikely you will cover much beyond running costs to earn enough to live on.

Freetodowhatiwant · 21/04/2021 22:24

Taxes are not really complicated, it’s the same as being self employed. Well, they’re not much fun a necessary evil many of us self employed people deal with every year. The one thing I would worry about is if there is (let’s really hope not) another lockdown or curb on travel and you don’t get the short term rentals in. Would the long term price be something you can live off. I have two properties and I have had to rent them out long term. It’s handy and at least stable income so you know what you’re getting. But obviously you need to not bank on those bigger short term profits.

Binswangers · 21/04/2021 22:25

I don't actually think you're being unreasonable. I just don't think you'll earn enough.

musicinspring1 · 21/04/2021 22:27

I think to rely on rent from a second home as a holiday let is a bit risky - just from experience of a friend recently (not my own so disregard if you want!)
Say Covid / similar happened again and travel restrictions were put in place - could you survive financially with an empty property
Can you afford two lots of council tax , insurance , ultilities etc every month no matter on how occupied your let has been
Have you got enough money as a buffer for repairs and maintanace - things need to be fixed / replaced immediately in a holiday let if you want good reviews and people to have a nice experience
Can you afford to allow for wear and tear - especially if you allow pets which seems to be a big plus for Uk holiday lets at the moment
Can you afford it if there are empty periods - eg in winter / term time

Just initial thoughts - don’t mean to be gloomy but my friend has had a tough time with her holiday let and Covid recently so it’s fresh in my mind ! You have an obvious advantage of doing the cleaning and linen change overs yourself which is a plus (but factor that it to cost of time to do as well ! )

I think it sounds ideal as long as you go in to it with eyes wide open and prepared

Catswithflamingos · 21/04/2021 22:28

Could you not work it out yourself?

listershologram · 21/04/2021 22:32

I doubt you'd earn enough as if one property is empty that's your income gone, you'd need a property portfolio of at least 5-6 houses to earn your living from it as then the others can carry the empty one for a while.

BillieSpain · 21/04/2021 22:33

I have just stopped doing i, after 15 years. I earned alot of money. I live in Spain so can't help with the tax situation.

I didn't pay much though.

It is a full time job. As others said you need to constantly maintain/replace things/be on call.

It is good being your own boss. You could love it. Surely property is a good investment anyway?

Mosaic123 · 21/04/2021 22:34

Could you buy a property that has an annex and rent that out? Plus, perhaps, a part time job?

Lockheart · 21/04/2021 22:35

It's not complicated but I doubt you would make enough to live off year-round unless you were supplementing with a job on the side.

Eking it out over winter is all well and good until something goes wrong; another lockdown, the boiler breaks, the car won't start.

By all means do it, just don't rely on it.

BillieSpain · 21/04/2021 22:36

Depends on your property, but renting for half the year high season/shoulder season, carries you through. Any long term winter bookings are a bonus.

Good luck, but do the maths!

anniegun · 21/04/2021 22:39

Its unlikely to work but you will have to work through all the numbers. You would be self employed and the cottage will be part of your business so costs will be offset on revenues before being taxed (I doubt you will earn enough to pay tax). There will be no council tax but you will have other costs including insurance, letting fees (AirBNB take a lot). A huge issue is the uncertainty of income so you would need enough savings or alternative income if bookings dont materialise.

Viviennemary · 21/04/2021 22:39

I think it would be hard to make a living as your sole income. Perhaps it could work together with a part time job. As for the tax implications. All the running costs of the property would be tax deductible.

jackstini · 21/04/2021 22:41

Depends on the property - work out what the average return will be
Are you buying outright or with a mortgage?
Could standard buy to let be more secure than a holiday let?

We did it after DH got made redundant for 3rd time and it was a good investment (standard BTL)
We then reinvested to buy more and it's his 'pension fund' and sole income now

Taxes are not too difficult but if you are unsure or don't have the time/inclination, an accountant will do your return for around £400

LemonRoses · 21/04/2021 22:41

It would depend on what size property you buy and what condition it is in. Business use brings significant tax benefits and it’s really not complicated. Whether you would get enough to live on depends how much you need/want. It might be you could work part time and rent for more secure income.

We have a cottage that is rented for about two thirds of the year. We could probably rent it all year, bar a few weeks here and there but want to use it ourselves sometimes. It’s three bedrooms with good sea views from the terrace. Three bedrooms, two bathrooms. Not huge but pretty and in good repair, with panoramic views to the back from all windows.

We get about £1,500 a week in peak season, but that’s mainly to friends/acquaintances and repeat use holidaymakers. If we charged commercial rates, we’d get more but also risk more wear and tear and more damage. We don’t advertise and don’t use an agent. We do pay a neighbour to caretake and clean. We change all the bedding every year, all the towels every year and mattresses about every two years. Then obviously we have council tax and utility bills. It adds up but we don’t make a huge profit- maybe about £20k a year profit.

RubyFowler · 21/04/2021 22:41

Perhaps consider doing it alongside a part time job?

bunglebee · 21/04/2021 22:47

You need to sit down and work out the numbers. How much you could realistically charge, how many weeks a year you would have occupancy, fees you'd have to pay to Airbnb, tax, money set aside for repairs, upkeep, maintenance. Would you require a mortgage or would you be in a position to buy outright? What will you do if the roof needs urgent work in January when nobody is booking in?

I'd be surprised if it'd get you an income equivalent to a job, but you won't have a realistic picture until you sit down and actually make a spreadsheet. Err on the conservative side on cost/occupancy. Do your research on hazards and things that will go wrong (which they will).

caringcarer · 21/04/2021 22:49

I have 6 btl properties and although I do make a profit it would not be enough for me to live on. You will be self empoyed and can earn first £12,500 before paying tax. If you rent out for 6 or 12 months if house is empty you will pay council tax on it. If tenants in then they pay council tax. This is slightly different if you have a holiday rental. In this instance you pay business rates for property which are much lower than council tax on a residential house. You can also claim mortgage interest payments back and other expenses like gas and electricity certificates. To get these perks you are supposed to let it out for 40 weeks each year. Sunak looks set to tighten up this loophole if only let out occasionally. You will never live off income from 1 property.

Irishterrier · 21/04/2021 22:55

You wouldn't make enough. I have two BTL properties and they are very much a supplement to my actual full-time - I couldn't live on the rental income alone.

CeibaTree · 21/04/2021 22:55

Surely it would make more sense to buy a flat/cottage and rent it out on a regular tenanted basis not as a holiday let?

stroopwafelgirl · 21/04/2021 22:57

Think what you would do if you didn’t have an inheritance that you could spend on a buy-to-let. And then do that.

ILoveAllRainbowsx · 21/04/2021 22:58

This reply has been deleted

This has been deleted by MNHQ for breaking our Talk Guidelines.

DustyMaiden · 21/04/2021 23:01

You need to do the maths, find out what you are likely to receive in rent, cost of insurance etc. If you f not have enough money you will not be eligible for benefits.

Lillyhatesjaz · 21/04/2021 23:03

I have done this with a holiday rental for several years, some years after wear and tear and upkeep on a quite high maintenance property my yearly profit has been only a few thousand pounds I have never made any thing near enough to live on

Milkywaystars · 21/04/2021 23:17

I'd use the inheritance to pay a chunk off or all of my mortgage to get living costs down. If there's anything left, I'd use it to retrain and look for a job working from home. Build up your savings pot because you don't know how long it'll take to get a job.

PurpleRainDancer · 21/04/2021 23:18

@LIZS

Yabu, it is unlikely you will cover much beyond running costs to earn enough to live on.
Rubbish what are you basing that on? Hmm In the right area holiday rentals can be highly lucrative.