Renting out your house so you can rent/buy elsewhere...

[DuelingFanjo]

My house has lost value in the last few years and we have done a lot of work on it. So I am reluctant to sell but need to move from where we are.

Has anyone else done this?

Can you talk me through the pitfalls etc.

Yes we did this 3 years ago! You are in a really good position as you are not dependant on selling your house so it is a good negotiating position for a good price on your new home so make the most of it!
We bought before we had tenants so for a few months we were paying two mortgages which was a pain. Get a good idea as to your rental value for your present house before you take on a mortgage for your new home and how likely it is to get rented out. It took us about 3 months to find tenants but after they left it only took us 2 days to find new tenants as the rental market is really good. We managed the tenancy ourselves for 3 years but do not recommend this, use an letting agent, I could write pages as to what to look out for with tenants to protect your house, bit of a learning curve. Get to know capital gains tax rules and also how to set off the expenditure on your rented house against your income tax liability.

And you will need a buy to let mortgage on your rented house if mortgaged and landlord insurance and a gas, electric and energy certificate.

And of course to be a landlady you will need animal print dress, stilettos, back combed hair and a large bust, I have all of these things.

Ask your current mortgage lender if they will let you do it for a period, some do for up to 2 years, particularly if you are moving out of the area. It's a bit of a pain as the rental income is taxable (you can deduct some expenses), but when you pay your rent that comes out of your after tax income. After 3 years you will start to become liable for capital gains tax.

We did it previously and it worked out well for us, so just look to see if the finances stack up

thanks for the answers.

We've seen the mortgage people about changing the mortgage so we can rent it out and it seems to be a simple process.

So my plans were to try to save up enough money to cover a few months mortgage payments just in case we can't rent the house out straight away.

Probably move out and rent and then sort our house out (as in get all our stuff out) to rent it unfurnished or part furnished.

I am a bit worried about becoming a land-lady (and not just because of the animal print dress!) because I know nothing about what to look out for in tenants, doing checks, the house being safe etc.

Are there things I need to have checked? The boiler for example - I have a feeling we will need a new one.

I have rented various flats over the years so have been there from the tenants point of view but I was a pretty undemanding tenant and would hate to end up with someone who was constantly asking me to do things. I live in a University town so could possibly rent to a student couple (it's a small house).

By law you need a gas check done every year and we also have an electricity one done. I would get a letting agent to do the tenant find and manage the tenancy at least to teach you what to do. If you are moving away from the area then I think that you will deffo need a letting agent. If you live close then you can learn from a letting agent eg the condition survey is absolutely vital etc.
It is a leap of faith at the end of the day, to put strangers in your home where they could do anything , but see it as a business and bricks and mortar and make some money !!!

Use a good letting agent, they will find the tenant and do all the checks.

Up to you if you want them to manage it, we didn't go down that route and don't regret it. We knew the house was in good condition, so there have been very few issues that need resolving, and we were very lucky finding a good plumber early on

We have two properties that we let. (Our own homes respectively before we loved together.) A few recommendations I would make:

1. Make sure the mortgage company know that you are letting the house. I had some dramas regarding this, having not realised I was supposed to let them know. They threatened to put the rate up as a result, but thankfully they didn't.

2. Use a letting agent!!!! Let them vet the tenant and sort out deposits etc. Managing yourself can be very time consuming, so decide if you can afford to use a full management service. We do with one property as it is older and more prone to problems. The newer one we deal with ourselves.

3. Make friends with local tradesmen. These contacts will be invaluable because, at some point, something is bound to break down! We include appliances so we have taken out specific insurances for the washing machine etc so the tenants have a number to call if it goes wrong to cut out us as middle men.

Good luck with the move!

I have just done this, and moved into my new house 9 days ago. :)

I guess you'll be taking out a let to buy mortgage to release some capital? If so, beware of arrangement fees, which can be v high indeed - £2-3k!

I have taken out landlord's insurance. It can cover you (depending on terms) for damage, unpaid rent, etc.

You need gas safe checks for any/each gas appliance you provide, and electric checks for the electrical appliances. It is this that makes some landlords prefer to let unfurnished.

You must also by law have an energy performance certificate.

If it goes wrong and you need to get a tenant out, there are very specific 'rules' for how you do this, and if you do not follow them, you can find yourself in court. If you do, it can take 2+ months... So it is definitely worth taking references and getting a good tenant to start with. I would happily leave the management etc. to an agent, but I personally want to look a potential tenant in the eye before letting to them.

We are in the process of doing this. It's scary.

Mumof3 - please do share your knowledge of how to avoid tenants who will ruin your house. We are going to use a letting agent and she was honest and said she comes across 5 bad tenants for every good one.

We tried for a long time to sell. We are very reluctant accidental landlords. Even more scary is the fact that I have no stilletos, back combed hair or big bust. But I do have the animal print mumsnet scarf. Does that count??

I am not planning on releasing capital and there's no need to change to buy to let as you can just get this thing that I can't remember the name of but it allows you to rent your mortgaged property.

Our house is not a show home, it is rough around the edges but has a nice new kitchen and bathroom.

I just need to get a move on because my son is getting bigger and we need more space and more choice of schools.

Baking, I can't help thinking that if that agent comes across 5 bad tenants for every good one, then either she's scare-mongering, or her judgement is flawed because she picks so many 'bad 'uns'... And maybe you need another agent...?

use an agent and get the tenants vetted. Make sure your insurance covers malicious damage and legal expenses; if you get a rogue who won't pay it takes months to get them out.

most tenants are no trouble and good people, but there are some professional crooks out there so you need to guard against it.

Ok so.... Hmmm where to begin....some tips which
not everyone will agree withbut bear in mind that I have had some bad experiences but having said that, I am still a landlady because the benefits outweigh the risks:

1. Money permitting, don't go for the first tenant that comes your way if you have reservations, NOT ALL TENANTS but a fair few have a story behind them as to why they are renting that they don't want you to know about and once they are in, the law is very much in their favour.

2 ideally use a letting agent to find a tenant as they do all the checks. They don't however ask them if they have a criminal record, guess they are not allowed to.....we ended up with a convicted criminal living in our very nice house on a street amongst my friends.....it was an awful, awful situation. A google search on names doesn't hurt for your would be tenants, that's how we found out when it was too late. Letting agents will set up the contract as well- very important. The arrangements between yourself and the letting agent needs a thorough vetting by yourself, they can slip in some outrageous clauses! but are usually quite happy to remove them.

3 The Cindition Survey is vital and get it back signed off of tenants we had ones who never gave it back and we were left with not a lot of comeback when they left

4 Ideally get a letting agent to manage the tenancy if you don't then make sure you do regular property checks , don't be afraid of moving objects as tenants often cover up eg stains in carpets with plant pots etc. be wary of tenants who say they are none smokers but when you go round there are windows open and air fresheners , as long as there is no odour it doesn't matter. Check the law on smoke detectors and make it the tenant responsibility to keep checking them. Always check on your visits and get them to sign to say they are working. We had tenants who took the batteries out then accused us at the end of the tenancy of breaking the law.

5 get them to have to ask written permission for hanging pictures etc and repainting

I could write so much more!!! Insurance is key and I agree with the above that malicious damage is important, and the also for accidents, none payment of rent etc. Even if tenants stop paying rent you are not entitled to enter the property. if you do not have a letting agent then at least join the Landlords Association ( about £80 per year) you get access to legal advice helpline which is Brilliant.