Advice needed on renting our house out

[elliegoulding]

Does anyone have any tips or 'need to know' information on renting a house out? We are planning on moving into my parents house and renting ours out for the next few years, probably until the mortgage is paid off (6years)

Were happy to leave it furnished, its modern and the estate agent (we had it valued for sale and rental potential) said it was very well presented but its mainly IKEA stuff so not difficult to replace, which is more attractive to potential tenants? or do you go with what the potential tennant wants?

Shall I allow pets? can I 'vet the pet' first? happy to have a well behaved continent spaniel but wouldnt fancy a geriatric slack bowelled Basset hound! for example

Any advice?

As a landlord myself, I can only advise that this is a serious business and at times costly and time consuming. Be VERY sure its what you want/need to do.

It will be easier of you're local and if you find a good agent (not all are by any means). Join NLA for £100 a year for their free legal advice and forms if nothing else.

I should imagine it will be preferable to have it unfurnished, apart from white goods. But agents should say. If you let furnished, make sure its accepted that when things break there will be no replacement.

If it doesnt reduce your prospective tenants too much Id say no pets. If the pet scratches carpets, skirting boards, or nibbles doors etc, you could very easily be left with thousands of pounds of damage - the deposit just wont cover it. If you must let to tenants with pets, then yes visit (the tenants too!!). And be very nosey in their current home. Be aware that some tenants just get pets anyway.

As I say, really give this whole thing some serious thought, you could end up being thousands worse off if you dont get alll the rules and regs right or chose bad tenants.

Make sure to inform your mortgage lender and get the necessary permission.

Make sure you put away enough to meet your income tax bill.

We are in rented at the moment and the boiler packed up Christmas night. Luckily the landlord has suitable cover and it was quickly fixed. Check insurance policies. A good agent should be able to advise you with a lot of the nitty gritty.

thankyou sunny I didnt think of pets wrecking stuff more just piddling! can you get insurance against tennants wrecking your home? do I need to let my mortgage provider know?

income tax!!!? I didnt even think about that!

I was planning in keeping the boiler insurance going

You do need to ask permission from your lender. Some make a charge for this, others will increase the interest rate either immediately or after a concessionary period.

Income tax will be payable on rental income less allowable deductions.

Yes, let your mortgage provider know.

They may or may not switch you to a buy to let mortgage with higher interest rates. eg, our payments went up 300quid per month when we let our house and the rent doesn't cover it. We're in it for the long haul though so don't mind putting funds towards it.

If you are in the NE I can recommend an excellent agent who is independant.

You may want to reconsider leaving it furnished . All soft furnishings need to comply with flammatory regs and have the label intact ie. Sofas. Worth having annual cover on boiler, heating etc as you will need a gas certificate anyway. Are you planning to use an agent , to find tenants , do an inventory, references , handle rent , deposit and so on. Don't forget you will need to register for self assessment and pay income tax on the net profit.

We looked into this briefly before we sold ours. There are a lot of set up costs. Tenancy agreements, inventory etc.

Agents generally offer different levels of service. We were going to go with the fully managed option which costs more but we felt we would need it as we didn't have the experience.

Perhaps talk to a couple of different agents and get an idea of their costs and level of service and find out what they advise you to do in terms of setting up. For example, our carpets were new but the agents we spoke to would have wanted a professional clean done beforehand if they had been older.

Cost it all out fully beforehand so that you know where you are.

The agent we spoke to advised to go unfurnished so that we wouldn't need to worry about expensive repairs or replacements.

This is exactly what I was hoping for, thankyou all so much I had no idea about half of the stuff you have told me.

we are building a granny flat on my parents house so may be as well selling ... decisions decisions!

Get a good agent.
Expect to replace everything when you take the house back.
Get a clause in the lease about the tenants being responsible for ventilating the place, and paying for any remedial work dealing with mildew.
Expect everything to break or go wrong within the first few months.
Claim 10% wear and tear when doing your tax return, plus your mortgage interest.
If you're a higher rate tax payer, expect a fairly hefty tax bill and make sure you have the money to pay it (or ask if you can pay via PAYE).

If you are going to sell, I'd sell now as you house will never look at good as it does now. If you wait say 3 years, then you'll need new carpets decoration throughout, garden maintenance, maybe even a new kitchen or bathroom. Dont underestimate how much damage can be caused.

The other consideration is that predictions are house prices will fall for the next 2 years. You might have to spend £10k refurbishing and lose £10k off the sale price.

Mortgage rates WILL rise in the next 12 months or so. How much will you pay at say another 2%?

You need to plan for voids (empty periods between tenants). I assume 1 month per year.

Assume approx 10% of rent for maintenance

15%+ VAT of rent for an agent, gas safety £80, insurance £300....

For most landlords properties are only profitable if they were brought a long time ago or if the mortgage is small, or if they run an HMO or student house.

People get into letting without any thought and to be honest its not good for that person, their tenants, or professional landlords who then have to suffer with added legislation, costs and rules because of these amateur's mistakes. (sorry I dont mean you as obviously you're here thinking about it and asking advice). So fed up of the assumption that landlords make piles of money and do nothing for it.

you can only claim the 10% wear and tear if you let it fully furnished. Don't.

you need landlords buildings and contents insurance, legal expenses cover and malicious damage insurance (which is not in all the landlords policies, e.g. Direct Line and Aviva). Rent guarantee insurance is also a good idea.

you need a gas safe cert, deposit protection, a full inventory. You need landlord's home emergency cover. You need to be fully clued up on everything so pick a decent agent who is an ARLA member - and STILL get clued up on everything.

you will need to do a tax return and declare the income, less expenses. (this isn't hard but you need to keep full records).

you need to dissociate totally. You need to be prepared to redecorate frequently. Even the best tenants are not as careful as those who own, and the mere fact of people moving furniture in and out causes damage.

pets? Cats don't bark but can scratch and wreck. (Been there). Dogs can also wreck the place. The deposit won't cover it.

if you have a mortgage to pay consider very hard whether it is worth it, especially on a bigger place. Gross returns on let properties vary from 2 to 4.5% - the only people who get more are those who rent out lots of small places possibly not in the best condition.

in my opinion - sell it.

Wow, I'm reading all your replies out to DH!

We have a small mortgage (we pay about £250 per month - we will have paid it off in 6 years)

I don't really want to sell our house as there is a small chance (My DF is in a NHome and if my DM needed to go into a NHome the house would be sold to pay for the costs and we would be thrown out!) we may need to move back, it's worth about £150k, we wouldn't get anywhere as nice again for the money if you see what I mean!

Lots and lots of food for thought, thankyou :)

Sunny how do you know Mortgage rates are going to rise and House prices are going to fall? I want insider info! this could really affect our decision ;)

Please get clued up if you're going to let the house. We have LL's who've done as you plan and have let their house to us after becoming accidental landlords. Honestly as lovely as they are, they're terrible landlords. They haven't done any of the standard legal bits and bobs that you'd normally expect, and just seem to expect that we'll sort everything out if we have concerns. I never thought I'd say it, but next time I move out want a professional landlord.

Please think long and hard about this, be prepared for tenants not to pay their rent, to cause damage, to move their mates and pets in without asking you and to redecorate to their own taste and to feel very hard done by when you do eventually want them to move out - because at some point you might be turfing them out of their home.

tinsel your landlords do not have the option of the 'bits and bobs'. Please make sure you have a protected deposit and a gas safe cert. If they haven't told the mortgage company the place could be repossessed.

and of course mortgage rates will rise eventually. Check your recent history. Whether house prices will fall is much more debatable totally unlikely.

We rented a house out a few years ago. (DHs job meant we weren't living in the area we were going to live in eventually, so we rented a house near his job and rented our house to someone else).

It was a right faff. We rented to friends, who were really good tenants, but after three years, the house looked nothing like it had done when we started the arrangements. The carpets were wrecked, the wallpaper scratched, a window frame broken. It also seemed like every other month they would phone us up to say something had gone wrong. The boiler broke, the toilet was leaking, the front door is jamming and won't open properly, there are mice getting in. It's really wearing. We didn't have an agency, we managed it ourselves and I used to dread them phoning in case it cost us money. We already were making a loss (mortgage was higher than the rent we charged), and we also had to pay insurance, pay the mortgage company for permission to rent a property on a normal mortgage, pay for gas safety checks and what ever other expenses we had to pay (I don't remember the official stuff it was a few years ago and I think stuff has changed now)
They moved out about three months before we were due to move back in and financially those three months were really tough, paying the mortgage and our rent nearly crippled us.

I had also heard rumours that interest rates were expected to rise in the next year or so, but you have no idea if it is actually going to happen until it does. I'd heard nothing will happen till after the election and then they will probably change the rates when all the government uncertainty is sorted.

you're not selling this renting malarkey to me Dear Tennants and Landlords of Mumsnet!!

I am now (after this thread) 75% sure I want to sell instead now (we actually have a potential buyer waiting)

I'm going to book a solictors appointment to discuss where we stand with all the scenarios of moving into elderly parents house ... thanks again

forewarned is forearmed... and I think you've made entirely the right decision in your position.

you'll hear lots of nonsense (both here and in the press) about how being a landlord is an easy route to lots of money. Not if you do it legally and properly - in the same way as burglary makes a lot more money than legitimate work, until you get caught. Of course being a landlord can make some money (note many on here strongly disapprove, which means they must logically do their work for free) and it does keep you in the property market.

but the days of huge price rises are over and if the property has a mortgage, income will be negligible. So if interest rates go up, the 'asset' starts costing you money.