advice on renting or selling

[CakesnKids]

we currently own the property we live in. We bought it just over a year ago, unfortunatly my health and my dc health mean we really need to move 80 miles south where we have family and friends who can help us out. Weve been on the market 10 weeks (i know not very long) and have had 2 viewings. We've dropped the price and are now one of the cheepest in the area for what we have to offer.

I rang round a few of the other agents who have houses in this area enquiring about the houses to find out how long they have been on the market, how many viewings and if any serious intrest (I am aware EA talk out their backsides!) but the picture doesnt look good.

So were considering renting out this property and renting ourselves where we want to be.

what do we need to think about? do we need to change our mortgage? what other costs are involved?

I have a lettings agent (the same company our house is on with) coming to talk to me tomorrow afternoon, but I really dont want to be coersed into doing something only to find out there are more costs/legal stuff thna we first thought and actually we end up in a really bad financial place.

We had our house on the market for two months with not much interest. Decided to rent it out. And it was rented out the second day it was advertised.

You have to have an energy efficiency test which you may have already had with it being up for sale. Costs about £50. Ea should have a number for someone to do it.

You need to have a gas safety check by a gas safe engineer who is qualified to check all gas appliances and verify they're safety.

Electrics don't have to be checked but you obviously need to know they are safe.

Our ea advised we left flooring and blinds/ curtains in each room.

And be prepared for you house not to look like you left it when tennants leave.

We decided on the most basis service from our ea which was one months rent fee to them. They literally just found a remnant and did all the checks on them.

You can get other services from them where you pay, for example, 10% of each months rent to them and they will be the first point of contact for the tennant if there are any problems or repairs need doing.

You can also decide whether you are prepared to take pets, dss, unemployed etc.
Take lots of photos before you leave of everything and ask the tennant to view, check and sign the photos. Then you both agree what was there and what wasn't when they arrive.

Initially there's a lot of faff. But once it's done it's a quick process really. The cleaner, more organised etc the house is, the quicker it will go IMO.

Good luck an I hope your health and your dc health improves x

Oh-you'll need permission off your mortgage provider and they'll be a slight increase in mortgage payment.

And you'll need landlords insurance. There's dozens of different types. You just need to do your research online. Our is £33 a month.

Oh and...... Any profits you make on the rent has to have tax paid on it too. With us were actually a little out of pocket each month. But only by about £20.

But that includes money we put aside each month for any emergency repairs that may arise.

Hmm, that's a lot to think about. I really dont think we will make anyvmoney and will struggle to cover the la fees, mortgage and insurance out of the rent we will get.

It might be a no go.

You may not have an increase in mortgage. Some companies allow you to rent your property out for a short amount of time (e.g. 2 years) with no increase.

You can offset most of your rent against expenses (NB you can only use your mortgage interest, not capital repayment) so it's unlikely you would have a huge tax bill.

There are companies who guarantee rent, can't remember what they're called but you can google them. Means that if money is tight you don't have to worry about empty periods.

Good luck and I hope your health improves.

I've just done a search on properties fro rent in our area and was shocked at the prices, although its good news for us!

boysboys I also just got a quick quote on landlords insurance and it came up at £12.99 a month, thats less than half your quote, am I missing something really important?

thanks unexpected, didnt realise we might be able to rent out for a short amount of time

hmm, its not as dead in the water as I first thought!

Basic insurance is really cheap so quite possible 12.99 is fine

We just decided to get everything covered for this first period as we've never rented out before just wanted everything covered.

Good luck with whatever you decide

I knew I was missing something! When ivr got 5 minutes I'll go through in more detail.

On the mortgage, you will either need to move to a buy-to-let or get permission to rent out for a short(ish) period.

Many banks will give permission to rent out if you explain that this is a forced move due to health and being unable to sell, rather than an investment choice. Some banks are more hardline on this than others (First Direct, for example, rarely if ever agree). If you can stay on your current mortgage deal it will likely be cheaper. However, also have a think about whether you want to move to an interest only mortgage - you may not want to if you are renting in your new area, but that could also relieve financial pressure.

Also do bear in mind that, as and when you come to sell, if it is more than three years after you move out, you may need to pay capital gains tax on any increase in the house value (not the total sale price, just any rise whilst you own it). There are various exemptions and offsets, so the actual bill can be quite small, but do be aware it might be something you need to look into.

Bear in mind (as mentioned) that you'll pay income tax on the rent and this may take your income into a higher band. You can ofset the interest portion of your mortgage against the tax bill but for most people the interest portion isn't massive at the moment anyway.

I considered doing this when I sold my last place (we now rent). The main decider for me was predicting that house prices will fall. You need to take a view on that - if you let for 12 months, are you assuming you'll subsequently be able to sell at current prices, 10% more or 10% less than today?

we've got friends who did this in order to get their DC into school by the application deadline (i.e. they had it on the markee t, with a view to selling and buying in their new place, were unable to sell in time so rented it out and are renting in their new place). They bitterly regret it. The income on the rented out property covers the cost to rent their existing property, but they really want to buy in their new area to put down roots.

They gave their tenant notice and put their house on the market about 6 months ago. Selling an empty/previously tenanted house does not make for a quick sale - their house, which was a really nice welcoming family home when it had their furniture and belongings in it now looks drab and tatty in the photos, and in real life. In addition the market has fallen so they've had to drop their price. So they were in the situation of paying out a mortgage on their old house, and paying out equal rent on their current house, without any rental income. They got so desperate they went to auction but the house didn't meet their (modest) reserve. They've used all their savings so had no choice but to put it back up for rent now, so are stuck living in their rented house, unable to a buy a house, and about £12K worse off (which would have been their deposit) due to the missed rent.

Consequently it's not something I would do unless you would be happy to live in rented in perpetuity, or can afford to pay the mortgage without getting any rent for the 6 months+ it can take to sell a house.