Renting out home to relocate

[Potatomashed]

Looking for some advice please.
We own (mortgaged) a lovely home but need to move for work. We have a mortgage deal for another 2 years and if we leave now early repayment costs would be 10k.
We were thinking that were would rent it out and that the rent would cover our rental costs in the new place. After a bit of reading I’m feeling less certain because of income tax on the rent, eventual capital gains tax etc (we’ve renovated this place from a wreck and the area is v popular so we’ve made quite a lot).

Our mortgage is 900. We could rent this place out for 1700 a month. Rental costs in the new area are slightly cheaper and we could potentially go for a smaller house for 1200-1600 maybe?

Can anyone explain the finances for me? I’m lay in bed worrying about all of this! Thanks

Hi OP,

We thought we'd just bump this up for you.

I ^think tax from renting out your own house is different to the tax paid for buy to let properties. Hopefully a wise owl will come along....

Before you do anything you'll need to speak to your lender to make sure you can rent it out with your current mortgage in place.

Being a landlord comes with a lot of legal requirements so it's worth researching thoroughly.

I'm not sure how this works but when we moved we kept our mortgage and it transferred to our new property???

I'm not versed in this area by any means but some points I've seen other people bring up.

• You have to pay tax on rental income (not rental profit)

• Would you even be able to rent the whole house out on your current mortgage. Or would you have to change to BTL?

Think very carefully op . We did this as an emergency stop gap when we relocated . It was so expensive and we then sold it and the capital gains tax was huge because it wasn’t our residence any more . You have to do a tax return on rental income each year and as well as that paperwork there are lots of admin tasks and safety regulations. You also have to change to a buy to let mortgage.
If the tenant does not pay their rent or causes damage it is a long and winding legal pathway to take back the property.
We thought it was an easy solution , but far from it - never again !

Suggest

First ask your mortgage lender if you are able to rent the property out

Ask a few Estate agents how much rental income they estimate your property would generate per month, per year

Ask a few Estate agents how much their fees are to vet & manage the property & tenants

You will have legal responsibilities as a landlord
Gas & electrical safety checks
Fire alarms
Tenancy agreement
You will need to complete an HMRC self assessment & may need to pay tax on the income generated, but it depends on your individual circumstances
Landlord insurance
Capital gain tax, once you sell
Extra stamp duty if you buy a second, third + properties
Manage the property yourself if you don't wish to pay an agency
You will need to pay mortgage, council tax, bills if property is empty
You will need to pay repairs

Not as easy as everyone thinks !

You probably wont be able to rent out your home on that mortgage deal, you would need to get the mortgage providers consent to lease, and buy to let properties normally have specific mortgage deals.

You should be able to port that mortgage deal that you are on to your new property. Speak to your mortgage provider its very common to do this, any extra borrowing would then just go on a new rate and you pay the combined payment every month. That will be far cheaper than lying the penalty.

Thanks for all your messages! I’m going to speak to an accountant as I’d hate to make the wrong decision @Splashinginpuddles15. Yours is a cautionary tale!

It also needs an EPC. And not F or G or you can’t rent it out…