Husband wants to rent our house out and I don't

[inappickle]

Really clashing with my husband about this and we just have such different opinions I’m not sure what to do. Financially we’re ok, he makes out it’s very doom and gloom and we do have a big mortgage but we earn £68k between us and I’m only working 3 days a week, we have an expensive car (£300 a month) and we don’t budget or skip on luxuries so we do have ways in which we could cut back, as well as extra earning potential if I was too go back full time if needed. We have a young child who has been in an expensive private nursery and another baby due soon.

My husband has an opportunity for us to live at his work, it’s secure employment and the accommodation is nice (nowhere near as nice as our current house) and in a nice area I will give it that we wouldn’t need to drive as much and would be walking distance to kids school etc. He is desperate to do so, it’ll cost us half the price of our mortgage inclusive of bills and he wants to live there and rent our house out. He says it’ll pay for our retirement and set us for life. I hate the idea of someone else living in my house, we designed it ourselves and it’s my home. I hate the idea of living somewhere that isn’t ours again. I hate the idea of living where he works so he never switches off. This is our family home we worked so hard to build and I don’t want to leave. He also talks about renting it out at what he could realistically get for it but it’s more than our mortgage and I feel like it’s just being part of the problem and ripping off people that need housing.

I want to enjoy our lives now, but he’s so set on sorting ourselves out ‘for life’ and that our retirement would be sorted we’d be able to travel and save up loads in the mean time and it all just seems too far fetched and at too big a cost

Who’s right here? Am I being too attached to the house and possibly missing a good opportunity or is he just getting caught up in this idea that being a private landlord will set him for life when it isn’t realistically that straightforward

I'd be jumping at this based on the numbers - even just for the primary school years. But I am a financially conservative person.

Walks to school were some of the loveliest times I spent with my small child. And it's free exercise, and brilliant for the environment.

I think you should try it for a minimum period, e.g. 2/3 years. But, as a LL I will say this: get a good managing agent. Don't try to do it yourself if you have tiny children and jobs.

I wouldn't do it either. We had to move for DH's job, so we rented out the house we owned and went into rental (too expensive to buy in the new area). After three years, we had to leave our rental and we managed to buy. The feeling of being home was vastly different to in a rental. Hanging pictures, no redecorating, putting up with poor insulation etc.

We both used to work in hotels and lived-in. I agree with your concerns about him never truly being off. This was definitely the case for us when we were on-site. Sometimes you'd be trying to sneak back to your flat before someone asked you a question like a pair of blooming secret agents.

Nevertheless, is he right to be concerned about a lack of financial planning for the future? Is this something you've haven't paid a lot of attention to?

You are both young enough that some smaller investments now could have a big pay-off in retirement. Why don't you ask for suggestions on the money matters board on here and then sit down and have a conversation about how you could plan for retirement without renting out your house?

Neither of you is wrong - you just have different priorities.

I think you should sit down with him and put on a spreadsheet the different options. Agree on a savings target and think of different ways to achieve it (one of which is renting out your house, but other possibilities are you working 5 days after mat leave or reducing expenditure in other places). Also factor in the tax you would pay on the rental income, how much it would cost for estate agent fees, repair works, any changes to mortgage necessary when renting out. Are there tax implications for him getting free accommodation at his work?

Personally I Would compromise and say yes to renting out for 5 years, then you get priority to make the next decision (ie moving back or staying at his accommodation for longer). I think I would rather have the security of some saving for the future.

I have been in a very similar situation and whilst initially reluctant have done it and it has worked out brilliantly. We are short-term holiday letting though not longer term renting.

I actually found being 'released' from my home-making has freed up a lot of mental and financial space! I didn't realise how much time I spent pondering the decor or making it 'nice' for me and my family. Now as long as where we live is clean and tidy I'm happy. Also our 'home' is still there which gives me huge comfort.

May be try holiday letting if you live in a tourist area - its less of a long term commitment.

Also isn't a 4 minute drive = to a 20 minute walk in most areas? You could drop that car journey now!

If you could secure the work accommodation for five years and the rent would cover your mortgage and your rental costs, then I'd go for it. I'd want an agreement on moving back when your eldest is around seven. It's at that age when you need extra bedroom space etc. As he enquired about the rental mortgage rate?

Honestly, renting a single house out is not actually all that profitable.

I can see how it's profitable at scale, but if you're just renting your own house out like this, with your combined income you will be paying quite a lot of tax on it, and there is no deductible portion any more like the interest.

So I would get out a spreadsheet and put in all the expenses -

-> Mortgage
-> Estate agent fees (around 1 month's rent and they NEVER get you the long term tenants you ask for, so that's going to be once every year or two)
-> Landlord's insurance (not much)
-> Maintenance - you have to fix stuff faster for tenants that you might for yourself, and there can be surprise £1k costs when you least expect it.
-> Boiler insurance like British Gas Homecare etc.
-> Any kind of landlord registration your local council might be bringing in
-> Repairs, gardener, smartening up at the end of tenancies - easily £1k
-> Random new mattresses
-> Random new kitchen appliances
-> Occasionally repainting the whole house (like maybe once every 5 years, so divide that insane cost by 5)
-> Tax on whatever little is left after all that

You might find you clear less than £10k a year at the end of all that. Is it really worth it for that? I'd be inclined to go up a day in my job and enjoy my nice house that's MINE.

It's not even like you're building up equity in the place you'd be moving to. I'd be more inclined to do it if you were BUYING something and doing it up to rent out or flip, but you'd (potentially) be making so little money for such upheaval, I don't think I would do it.

Sounds like you have already decided. Have you thought that renting a property is not passive income it is running a business and a lot of work. The climate in the UK for small landlords has become increasingly hostile these last few years and is only going to get worse. Are you aware of the huge amounts of legislation surrounding property rental that you will need to comply with? Even if you use a letting agent you will still have a fair amount of hassle. If you do decide to rent a property go into it with your eyes wide open.

I dont think either of you are right or wrong just a difference of opinion and at the moment you both seem to be entrenched.

Staying there for a long time until retirement seems daft - what is the point of owning a family dream home if you dont ever actually use it!

But at the same time the option to save some money especially nowadays and with the threat of cost of living it isnt something you can ignore either

Move for a couple of years pay off any debts, get some money together to do any work you want on the house and then move back to it maybe?

I would jump at this personally, but there's a lot of ifs and buts. You need to discuss how your mortgage will work, and any penalties you might need to pay to move out of your current mortgage to a buy-to-let one, as well as reading up on all the ins and outs (and costs!) of being a landlord, including maintenance of the property plus getting it back to it's current state just in case it does get trashed.

I would also ask a letting agent how much you can actually get - your husband may not be being realistic.

Once you've done all the sums, I would make sure you agree on a set time frame.

Sounds as if your ideas of enjoying life differ. He thinks disposable income and being close to work, yours centres on your property. You need to determine shared priorities.

So you both have pensions and your quality of life during your working life will feel much worse for you away from your home for what will feel like little marginal gain in retirement if your pensions are sufficient? Doesn't seem to make much sense to me.

I'm not sure it would be the cash cow he thinks. I agree with the points made above. Add in electrical and gas safety certificates.

Can you go full time to make things less tight?

He's got a point, so have you. My advice is that if you do decide to rent your home out then you'll probably not feel the same about it again in the future. Having other people in there will change your view of the place, and you have to be prepared for them not looking after it as you would. When you rent your home out it becomes a business.

I would say no.

You have said it’s not as nice as your current home, and it is rented. It may be that you have the best landlord who keeps up with repairs, isn’t intrusive, and doesn’t make demands - which could be great. Are you sure, however, that having accommodation tied to his work does not bring any obligation for it to be used by the company, for example accommodating visitors?

One thing about your own property is that you don’t have anyone looking over your shoulder, and you can decide upon improvements, etc.

Do you know what your Capital Gains Tax position would be if you let out your home for several years?

I am a landlord, and have had property left in various states, from very good to very bad. It would have broken my heart if the one gutted and used as a cannabis farm had previously been my own home. I realise that was an extreme case, but it happened to me and I don’t own many properties.

We did, although only for a 3-5 year block (ended up being 4 years). It needed redecorating when we got back, but otherwise has been great. We carried on the mortgage as we had been used to (accomadation/bills were free with the work deal), and put the rent and bills money as an overpayment. Made a massive difference to the term, and we are mortgage free way before many of our peers.

However, it wasn't a beautiful house that was tailored to our exact preferences.

If you do not have a pot of money to deal with the costs of managing a rental, which include management fees (if you choose not to manage it yourselves), maintenance (every single thing from broken extractor fans, window locks, faulty fridges up to the exploding boiler scenario!)regulatory costs, periods of void (which will incur utility and council tax bills to you), landlord insurance etc etc plus income tax on any profit at your highest marginal rate then DO NOT DO IT

I say this as a landlord. There is no money in it and the time and costs incurred in eviction is huge.

So you have choices: stay put, or sell and invest the proceeds while you live cheaply at the other place,

We do enjoy life and we do have disposable income we just aren't putting much away towards the future. We go abroad once a year, one or two UK breaks, we have an expensive car, takeaways, meals out, day trips with kids etc. it's becoming less tight temporarily now our oldest is 3 and from this month my income is now available as it only covered childcare, obviously will take a hit with maternity leave and more nursery fees but then after that we'll be plus £850 a month more so if we cut back in other areas, easily done and more so again if take on more hours in few years. My argument is we aren't so tight that we're struggling apart from with savings, but there are ways that we can cut back and gain more money without having to uproot our family and take on the risks associated with being a landlord. We had good savings but put a lot of money into this house and then a big wedding so it's been an expensive few years.

OP how much profit do you think you’d make per year from renting out your current house once you’ve subtracted tax, converting your mortgage to a buy to let mortgage or whatever it is that needs doing regarding the mortgage, minus the right insurance, gas checks etc etc?

I think I’d prefer to give up the foreign holiday over giving up living in my house.

You will need a BTL mortgage (even if eventually). They typically need a higher equity amount.
Have you looked at the taxation implications (particularly of 1 is a higher tax payer). The subsidised rent on the new home may be a benefit in kind and so this will impact on income (even if you don't receive it as income)

Complex- it may need to to be about double the mortgage for BTL affordability for high rate taxpayer (a quote we got was £638 interest only mortgage at 1.51% and £2000 rental and it just met affordability with a higher deposit as high rate taxpayer).

Why not try it for a year and see what happens?

we do have disposable income we just aren't putting much away towards the future. We go abroad once a year, one or two UK breaks, we have an expensive car, takeaways, meals out, day trips with kids etc.

Are you saying that you do all this and don't put any more than the absolute minimum into your respective pensions?

It does feel like there's an easy 10k a year to trim there, as you say.

I completely disagree that this would "sort you for life" - overly simplistic and I don't think he understand the realities and risks of being a landlord.