Does anybody here rent out a property?

[coldtea]

We are thinking of renting out our house as a long term investment, but i'm a bit scared of the risks.

I would appreciate any advice from anyone that has done (or is doing this) so at least we can go into this with our eyes wide open! Tia

We're renting out our house whilst overseas. Be prepared for everything to go wrong in the 2 weeks prior to the tenant moving in (and being jealous that your tenant is using your brand new, twice used Bosch dishwasher for the year whilst you wash every blinking thing by hand). Seriously though, get as much info as you can on all the landlord resposibilities - gas checks, electrical appliance testing etc. Consider your target tenants and bear in mind that different rules apply for multiple occupancies (3 or more people not related to each other) and lets to families/single people. Find a good, reliable solicitor. Consider whether you want to be onhand for all landlord duties or whether you want to pay a leasing agency (or your solicitor's firm) to manage the property beyond the preparation of the lease. That's all I can think of off the top of my head. Do your own market research on what is being let for what amount around your area to get a feel for what is realistic. More later if I think of things. HTH

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Thank you-anyone else?

Agree with hannahsaunt. We rented our house out whilst living abroad. There are new rules coming in soon regarding letting to sharers and separate contracts/deposits so you'd ened a legal eye cast over any tenancy agreements.

Check regulations for any soft furnishings you may leave (must be labelled as post 1988 or be pre 1950's), gas (annual inspection/safety certificate required) and electrical standards (inspection of all appliances required at outset and possibly at further intervals). We maintained our British Gas service contract in case of emergency and the agency took care of any maintenance issues below a certain pre-agreed cost.

You also have to be prepared to replace things at the drop of a hat if the tenant claims they don't work - you can't easily argue unless you are close enough to visit and check - and there will be damage due to tenants using things differently to how you might care for them (we replaced a bathroom carpet but within 18 months of dripping from volume fo showers with sharers and misuse of shower curtain it , and the floor panels below needed redoing).

Also think about whether you can still fund it if it lies empty for a few months during which you have to pay the utilities and council tax at 90% as well as any mortgage. Depending on area demand may fluctuate. Our house is near an airport and the impact of 9/11 meant our then tenants subsequently lost their jobs and demand subsided for a while, so we had a few months of unoccupancy.

hth

we have rented our flat out before, both the whole place and our spare room.
we came across many problems such as unpaid rent and bills, ridiculous mess being left, furniture being ruined etc.
if you get with a good letting agency you will have to be prepared to pay them between 10- 15% of the rent, but they will take care of aany problems, will guarantee rent, even if the property is empty, and can provide you with lanlords insurance to cover your property.
this way you also ensure you have a fully legally binding lease.
i think the fees are worth it for the peace of mind and the fact that someone else will do the stressing for you!
We plan to rent our place out with mark beaumont next time..i'm not sure if they are london specific but they are very good.

did anyone see the story of a woman in west london who hired out a hitman to get rid of problem tenants?
scary! I will try and find a link for it

we have two flats and we pay a letting agent to do all the work. He is very diligent and well worth the money we pay him. He decorated them both himself to a high standard that would encourage tenants to look after them. In 4 years we've not had an 'empty' month, and only minor repairs that the agent has done himself.

Pay an agent to do everything for you. Yes, there will be times when you think he is getting money for old rope, but do you want to be told on Sunday evening that the central heating has packed up and have to sort out getting someone in to look at it?

Agree 100% with Hannahsaunt - if it doesn't go wrong two before they move in it will go wrong 2 weeks after!

You can also insure against tenants not paying rent, having to get them evicted etc, would also recommend this.

Have to say our agent was c**p - at least we only paid them when it was occupied and generating an income ! (You can offset the fees against income for tax purposes, as well as maintenance and soem other allowable expenses.)

Also be careful of the landlord/tenant insurance policies - ours didn't cover accidental damage when we tried to claim. You also have to maintain buildings and sufficent contents insurance to cover whatever is left, including carpets, appliances, fixtures and fittings.

but it does cover theft!
we had a nightmare lodger as out first tenant, she didn't pay her rent upon arrival and as she was a friend we said we'd wait til she got a job..which took her two months, then first pay check she went out shopping and boozing all weekend and didnt have any money left to pay us. she then 'moonlighted' while we were on holiday, leaving over a grand in unpaid rent, £300 + in bills, and took loads of my clothes!
she obviously wasn't a friend..hehehe

Yes we rent out our house as we are overseas. Rented it unfurnished as at the time we moved abroad the landlord was more secure that way 0 can't remember why exactly and I think that may have changed.

We use an agent which does help with the practicalities HOWEVER check your agent out too. Our first agent stole 6 months rent from us after using them for 3 years - we were in the midst of having DS and moving countries again so DH wasn't keeping tabs. Went to a solicitor who turned out to be handling 7 or 8 other cases against the same agent. We were advised not to take him to court as others had and although the court awarded in their favour the guy never paid. I still get angry when I think about this. If I hadn't had DS I would have picketed the guys house I can tell you.

what happens to any extra money left over from rental as to mortgage amount? do you have to pay tax on that , as we `are thinking about renting out a property and want to know whether any extra are accountable , can we set aside money for any emergencies arising or do we have to pay tax on it?

Rental income is taxable, just like any other earnings but you can offset the mortgage interest, agency fees and many expenses (such as insurance policies) and maintenance to reduce the amount on which tax might become payable. It is then added to your other UK income for income tax purposes. If the property is joint owned you can split the net income from it by 50% so if one of you doesn't otherwise earn or have income you could get up to the personal allowance tax- free. You do have to watch out for Capital Gains tax liabilities if you keep this as not your main residence for so certain number of years (can't recall exactly) and then sell though.

Hausfrau, that is the situation we're in. have come back to a house we'd pretty much outgrown when we left it 4 years ago. It is a tight squeeze and less than ideal.

We kept it to keep a foothold on the UK property ladder, adn have made about 50 % in the menatime on paper but with the market as it is we are going to have to live in it for a while, get some updating work done then try to sell. It is n't easy either to rent out or to sell from a distance.

I've done so for the last 8 years. So long as you get a proper agent to act on your behalf, and as long as they don't take the ''SS, you'll be OK.