Help? Renting out home what will it cost?

[xmyboys]

We are thinking of renting city pad and moving to the country. What costs should I consider? Obviously aware of real estate letting/management fees but what about tax implications?
I was hoping swap rent I receive for rent we pay but realise this could be a big difference with 'real' costs.

You can offset certain costs against your rental income - mortgage interest (but not the repayment element), maintenance and repair, and the management costs. There are others which I forget, but they're the key ones. You would pay tax on any profits above this. Also, once you haven't lived there for (I think it's) three years, then your profits when you sell would be subject to capital gains tax (although, again, there are costs you can offset, around improvements that you've made to the property). You would probably also have some initial set up costs - if your city pad is leasehold then you would need to let the landlord know (and if they're like ours, they want to be notified - for a fee - each time the tenant changes). You should also get some basic safety checks done, although your management agent may do these on your behalf and hold back from the rent they pay to you. I guess the other key cost is void periods between tenants, when you're paying out but have no revenues coming in.

Be careful of your mortgage - check the terms
Also Landlord Insurance

I checked this out a short while ago - most rental agencies will charge you something like 10% of the rent I think. You have to tell the mortgage company and they usually ask you to prove that the rent will cover the mortgage payment and agency fee. Although our mortgage isn't very high at the moment, we decided not to as the rent coming in would only just about scrape the amount we'd need on the new place, and with the potential for having the property sitting there empty, we thought it best to just sell and rent, and then buy again later. Hope you make it work though!

We've just done this!

No problem getting our mortgage company to agree, although they will only do so for a year at a time. Our rental is about £500 higher than our mortgage. Agent cahrges 12% but that comes with a rent guarantee which was important to us.

You need a gas safety certificate (around £100) and there will be other set up costs (like inventory) and landlord insurance. We also had a few jobs that needed doing that we were lived with but needed to be fixed before a tenan moved in.

My understanding on tax is that profit is calculated as the amount you make minus costs, upto 10 per year for maintenance and minus the interest on your mortgage (i.e. you only pay on money that goes into equity and any extra you're left with at the end of the month). Basically, we don't make any profit after all this is taken into consideration.

Beware of capital gains tax if you rent for more than 3 years or don't plan to make it your home again before you sell. We're going back in a year so not really an issue for us.