Becoming a landlord. How bad can it be

[oinkety]

We’ve had to move for work reasons. House refuses to sell so need to let it out.
Really not keen on becoming landlords but it is what it is.
How bad is it going to be? I think I’m just massively panicking about the whole situation now.

I’d get rent guarantee insurance, because their standards for acceptable tenants are such that you’re less likely to find yourself with a wrongun. Other than that - employed people are the way to go, check references, speak to previous landlord/s and ask for proof of income.

Thanks. Yes we’re using an agency as too naive to have a clue about what we’re doing. What does rent insurance do with regards to tenants then?

Landlord insurance is pretty cheap. About £120 mine is. It can cover you for a number of things. Definitely get it.

You need to thoroughly research ll responsibilities as these are becoming increasingly tight and , even with an agency involved, the legal buck stops with ll. Mortgage company and insurance need to agree. You will need to register for tax self assessment with hmrc. Can you afford overheads of utilities, council tax etc in void periods?

If you have a mortgage you need to tell your lender. You also need to declare the income to the inland revenue and fill out an annual tax return.

All good advice thanks. Yes we’ve spoken to our bank and we’re all good to switch mortgages from a repayment one.
We haven’t got much of a choice but to let it out unless by some miracle our house sells in the next month after 6 months of not a lot of interest and £100k price drop(!) . (Please cross all fingers for a miracle house sale )

We will have to afford bills etc if there are gaps. We’re in prime commuter spot so hoping to possibly get a professional couple. can you request that through the agency?

How large is the house? You may find it hard to be that specific.

@lizs it’s only 1000 sq ft. Agency has said it would compete with apartments with rent at about £1.7k pm.

Hoping that draws in the right crowd. Am very nervous. Not great with the unplanned. And this most definitely was not part of the plan!

“How bad is it going to be?” You ask.

On the understanding I know nothing about being a landlord I worked with someone who rented out his flat when he met wife and married. Tennant defaulted her rent owing an unrecoverable £11K by the time she was evicted.
My colleague almost lost both homes through mortgage arrears & trying to feed his family including a baby. Oh yes, because of the stress he lost his marriage.

Therefore I’d say you could lose plenty.

That seems quite sizeable for just a couple, how many beds?

@Grumpyunleashed thanks for your reply 😭
This is why we dropped the price so much but still not had much interest.

We sold it a few years ago and had people bidding against each other but because it’s so close to station we couldn’t find anything that would end up with a bigger commute and we just took it back off the market. Totally kicking ourselves right now!

@LIZS 3. We have it as 4 but agency said one as a living area and again go along the line of apartment space that comes with the privacy of a house plus tiny easy garden.

Sorry that didn’t make sense agency said market as 2.5 bed ie box room for storage and then 4th bed as second living area

I'm just answering your question because if I could go back and not be a landlord I totally would. Go with your gut on the people you're picking, whether employed/not/single/partnered up etc. Best tenants We ever had was an unemployed traveller girl who moved a boyfriend in a few weeks in. They were lovely. Our residents association tried to make life he'll for us and them but we fought them. We had a married couple who were in great jobs that an agent got in and they asked us to change everything then were regularly late with rent and left the place in bits ( after stealing some of our furniture). You always have to have money put aside because have had calls for a plumber/electrician and you're expected to pay straight away( one to the tune of 2000euro where the boiler had gone). Is there no chance at all of staying on? (Sorry to ask you this but if it's for convenience as opposed to need it needs to be thought about)

What does rent insurance do with regards to tenants then?

They pay if the tenant defaults, but their initial referencing process is so strict (for the obvious reasons) that it acts as a useful screening tool imo.

I have been a landlord on and off for around 15 years and only had one tenant who did an overnight move with only two months in arrears.

I let the agency handle everything, they will contact me about repairs and instruct repair people on my behalf.

I would arrange a separate account for any income/outgoings. Also set up a spreadsheet to track these on a monthly basis as this will make self assessment a lot easier to complete. Mine is now set up to track how much tax I will be liable for. Remember, repairs are tax deductible so you may want to spread non-essential over tax years.

I've done it for 15 years. I was relocating to be with my partner, and my house wouldn't sell. Some years later, we were able to save enough to buy without having to sell the rental house to fund the purchase so we've carried on being landlords.

Longest void period has been 3 months. I've had to evict one tenant, whilst pregnant (me, not the tenant), which was stressful but luckily had rent guarantee insurance which covered the costs and the unpaid rent - so I second the recommendation to pay the modest cost of the premium for that peace of mind. Two other tenants have left the house in a less than great state. The other 3 have been absolutely great.

I manage it myself and just use agents for the initial letting process.

Having rented out what was formerly my home, I found the hardest thing initially was detaching emotionally. The second hardest thing was constantly feeling on the wrong end of the deal as both landlord and tenant (while we were renting ourselves) - somehow we were always the ones who ended up doing the end of tenancy cleaning, whether it was the house we were renting, or the house we were landlords of because our tenants hadn't done what they were supposed to.

Will you be returning to live in the house at some point? If not, what is your long term plan - if you intend to sell eventually, can you afford to cover the mortgage and overheads as well as renting in your new area, while it's on the market? It can be harder to find a buyer when the house is empty because you're living elsewhere so bear that in mind.

I let out five properties. Two to friends and they are totally reliable. Two I have managed by agents as I live too far away. Last one I used agency to get tenants but I manage it.
One flat is always let to students. They tend to be from overseas pay six months up front as no credit rating. No problem. Another is let to professional couple here for 18 months from abroad - they were a bit demanding to start but smooth sailing since. Another is a single guy had a few issues with him flooding flat below but seems ok now.
There are certain things you gave to have : EPC at least E rating, gas safety certificate, hard wired smoke detectors and carbon monoxide if you have a multi fuel stove. You won’t have to pay council tax or utilities but you will have to pay for repairs. Strongly advise you have a professional inventory check done which will be signed by all parties.
It’s not hard. You have to keep the paperwork in order. You have to accept they may wear your house hard and if you plan to sell it will have to fork out for redecorating and possibly new carpets etc.
Beware no tax relief on mortgage interest anymore.

Don't forget to check your safety obligations - not just gas safety certificate, but also other things like legionella assessment, electricity and appliances, carbon monoxide detection, smoke detectors etc. As another pp has said, even if you have a managing agent you are ultimately responsible.

And also check whether you need a licence - may depend on the area, and whether you're letting as an hmo, but more and more councils are introducing licensing requirements. And have the insurers agreed, or do you need a replacement policy?

I became a landlord in similar circumstances and for me, it’s been great. I thought the process would be fairly stressful but I let the agency handle everything and it’s been very easy.

Mortgage company were very helpful too and easy to get a consent to let.

Have your wits about you, but you’ll hear far more scare stories than positive ones cos that’s just how people are

(As in, people love to talk about dramatic stories of stuff going wrong rather than right)

You need to look at the tax implications too

You will need to do a tax return to declare your rental income, there are restrictions now on how much mortgage interest you can offset, so you need to be aware of that.

Also when you go to sell the house there may be capital gains tax to pay on the period that it was rented out.

Ok I already do a tax return so will have to work that one out for rent. Haven’t thought about capital gains though.
Tbh I’m happy to hear actual stories because I have no idea good or bad what to expect. Only that if I had a choice I wouldn’t become a landlord.
I won’t be able to afford to buy somewhere in the new area if I drop my sale price too much.

I was an accidental landlord, having to manage two rental properties on behalf of my dad when he developed dementia. I went from knowing next to nothing to being landlady in one day when I got power of attorney. It was harsh at first especially as dad had neglected quite a few things due to his illness. The number one thing was ensuring both properties were legally compliant. Gas safety checks, smoke and carbon monoxide alarms, fire safety assessments, electrical certificate as well as total redecoration. Plus one set of tenants hadn’t got a valid contract in place and could have been sitting tenants. What I found useful to educate myself was the website Landlordzone ( beware there are some hard nosed landlords on the forums who will delight in puncturing any illusions or misconceptions you may harbour, but on the upside they can dispense some very useful info). I joined the RLA for about £90 pa you get legal advice over the phone and can download their contracts. Good luck! Once it’s running well there is a satisfaction to be had from providing a comfortable and well maintained home for a tenant. As long of course as the tenant is respectful of their side of the contract ie pay rent and maintain the property in reasonable shape.

Well as you can see people do do it successfully, in spite of the various risks and pitfalls.

I'd still say it's not a job for the nervous or over-thinking person!