Is it difficult to rent out a property?

[Plantsandwine]

A few months ago we moved house and now live in a 4 bedrook detached house. We have a 33 year mortgage. However, we have recently thought about moving to singapore for two years in around two years time (only if we can find suitable jobs with good packages).
We were thinking about renting out our house so tenants would effectively be paying off the mortgage. How easy and realistic is this? I have read around and think we would need to get a buy to let mortgage instead which might be more expensive. Has anyone done it and it has all gone smoothly? Thank you for any help or advice.

I rent out my old flat on a BTL mortgage. It really depends on how desirable your property is and what the figures look like (ie what your likely rental income will be -v- your mortgage). BTL mortgages are, as you say, more expensive. I think you’d also need to get some tax advice if you’re resident in SG.

You could ask your lender for consent to let, however you are unlikely to get it if the mortgage was only taken out a few months ago. 4 bed detached would have a smaller market than a 3 bed semi however if it is priced correctly, anything will sell or let. The main thing is who is going to manage the let, take care of repairs, you will need to let HMRC know.

As the landlord the buck stops with you. If you bugger off to Singapore and leave an agent to handle it and the agent screws up, you are the one potentially breaking the law. Letting agents are unregulated and there are many shit ones around.

Being a landlord should be treated as a business. It's not a passive investment.

We have mixed experiences of renting out properties. We rented out our 2 bed starter home when we had our second child and it got too small, but we couldn’t sell it (2008) and managed to get someone who rented it for the whole time we needed and kept it immaculate. When my Dad went into sheltered accommodation and we rented out my old family home the tenants stopped paying rent, we lost several months income and when they finally left they had badly damaged it - think dig up the garden left lots of rubbish and put holes in the plasterboard (in addition to seemingly not having cleaned it in 2 years). I’d be a lot more wary now. The letting agent were useless as well.

I let out several properties and if you get a good managing agent then it can be fairly hassle free. See how your mortgage is affected and look at the rentals in your area.
Sounds like a great opportunity.

You are highly unlikely to get consent to let on a property you’ve bought so recently, and consent to let is usually only given for up to 24 months.

BTL are often interest only.
The costs to set up renting out can be very high (various certificates etc).
If you’re in Singapore realistically you’ll need a full management service which is about 10% of your monthly rent then any maintenance on top.
You can definitely make a profit but it’s not the cash cow it was 10 year ago.

Letting it out for 2 yrs is an obvious and excellent solution. You don't need to change mortgage either. Use a good lettings agency to manage it for you.
You may need to let it unfurnished in which case everything into storage but letting agent will advise on all of this.

People move for jobs and let their properties all the time.

Key things:

• Find a good agent, get recommendations etc
• Remove anything of value - assume tenants won't look after your stuff like you will
• Assume you will need some ££ for redecoration etc when you get back to make it feel like yours again.

You also need to consider CGT implications - if you let it out for 2 years and sell after 8 years, you would need to pay CGT on 25% of the increase.

@Hels20

You also need to consider CGT implications - if you let it out for 2 years and sell after 8 years, you would need to pay CGT on 25% of the increase.

What is CGT? Sorry I am rubbish with all the terminology

You need to consider how you might feel if your home was not treated as well while away and depersonalise it. Put your possessions in storage. Letting agents charge up to 15% of gross rent to find tenants and manage the property. There are tax implications for being a non resident landlord and you may be effectively taxed twice on the income. Mortgage company may give permission to let, but may not in which case you pay redemption fees and need a btl mortgage. Plus insurances, maintenance, fund for repairs or replacement appliances etc.

@Hels20

You also need to consider CGT implications - if you let it out for 2 years and sell after 8 years, you would need to pay CGT on 25% of the increase.

Capital Gains Tax. If the op has lived in the property and does so again on her return that may satisfy criteria not to be liable.

I let out my flat briefly last year before I sold it. There are a few things to bear in mind:

1. gas and electricity safety checks and certificates. I'm out case the electrics we're not up to standard so we had to put that right first.

2. fire doors, smoke alarm, CO2 alarms and other regulatory requirements to consider.

3. swap to a BTL mortgage.

4. Tax. It's not as easy as the rent covers the mortgage. You have to declare the income and get taxed appropriately depending on other earnings and overall income.

5. maintenance and upkeep. If you are including furniture then you are also responsible for maintaining and replacing furniture too.

6. in your case you will also have letting agent fees. And as they will be managing the property there are additional fees.

Personally I thought it was a nightmare and I was lucky that I was only trying it out with a short term let. I sold my flat shortly after that and invested my equity away from property.

There’s a number of posters on here that have no idea what they’re talking about. Op speak to your local ARLA registered agent, they’ll talk you through it, it’s very straightforward.

You don’t necessarily have to swap to a BTL product. Call the lender and find out. Many would be happy with a consent to let in this kind of situation. And no fire doors are needed for a single let. Fire alarm and Carbon monoxide detector will be needed however.

I would consider storing your furniture. A tenant is likely not to look after your prized possessions quite as well as you would. Lastly make sure you have adequate buildings insurance and rent guarantee insurance too.

@SpaceRaiders actually a lot of your advice is also not correct. Not all dwellings require fire doors but in my case, although I let to couple, I needed fire doors because of a loft conversion. And my lender would not entertain a consent. All we are saying to the OP is that there are a number of things that she may want to consider before making this decision.

I was thinking I would get an agency to manage the house rental side while I was away. I am guessing they all charge different amounts and all have different packages. I think the first step is for me to talk to my mortgage company and see if we could use our current mortgage or if we would have to get out a new one.
Could we rent out the house for more if it came furnished?
Would I need to speak to a financial advisor to get all the information regarding extra tax we would have to pay or would that go through the mortgage company too?

You might want an accountant if it seems complicated but you can deal with Non Resident Landlord scheme yourself. www.gov.uk/guidance/paying-tax-on-rent-to-landlords-abroad The agency , if used, normally deducts the tax from the rental (and their fees)and pays it over to HMRC with the balance to you each month. Whether to offer furnished or unfurnished may depend on local market and the type of renters you hope to attract but you don't usually gain much extra rent, it will suffer wear and tear and you would be obligated to repair/replace anything which breaks. White goods are normally included even if unfurnished. Any soft furnishings, beds and sofas have to meet fire safety standards and be labelled. There are also statutory obligations on ll, even if an agency is used to carry them out, such as using a registered deposit scheme, gas safety certificate, energy certificate, checking tenants' right to reside in UK , issuing guide to renting etc. Councils may have additional local requirements such as for an hmo.

@Dogsandbabies Your fire door would have been necessary to get buildings regs sign off when converting the loft space. Respectfully, that is not what was being discussed here.

Your lender didn’t approve your consent to let and I’m saying there are many that would agree. FWIW I work in a related industry. Op won’t know for sure until she does her own research.

We did it for five years and it was totally fine the agents did everything. I’d totally recommend it. But get good agents, a large chain, who specialise. They will also handle all the tax implications as you will be an absentee landlord.

One of my sons does this. Rents out his London flat whilst living and working in Singapore. The whole process is completely handled by an agent. He’s been in Singapore for 5 years and I think there have been a couple of tenant changes.
As far as I know there have been no problems.

Sign up to one of the landlord forums and have a read.
It may be trouble-free, or you may have non-paying, havoc-causing tenants you can't evict and who won't let anyone in to carry out the various checks you are personally liable for - gas, electric, Legionnaires disease etc.
Likely to be somewhere in between. Good luck whatever you decide.

We did it for 4 years whilst living abroad.
We didn't have to move to a BTL mortgage but the rate we paid increased slightly and I seem to remember that we had to pay a couple of hundred quid for permission.
We used an agent to find tenants and manage the tenancy. They paid basic rate tax for us on the income but we still needed an accountant to sort out full tax liability at the end of every financial year. We were also able to sell a few years after our return without attracting CGT as having a job abroad is a reason for exemption.
My top tips :

• Get a good UK accountant to help with your tax returns etc
• Accept that you probably won't make money and may only just cover the mortgage. That means you will have to have extra funds to cover repairs and any void periods which can get very expensive!
• Accept that even the best letting agent won't see your house the way you do and will be less bothered about damage by tenants - in my experience they have to have totally trashed the house before the agent notices.

-Try and make peace with the fact that you are a long way away and very dependant on other people to look after your asset. This means you may get ripped off for repair costs and things probably won't get done to a high standard, as they know you can't check. -Try not to let it spoil your foreign adventure! We spent a lot of our time abroad dealing with problems with the house or tenants, even with agents supposedly managing everything. This was stressful at times, especially with a time difference that meant everything had to be done via email. I'm not sorry we kept the house, as it meant we had something to come back to, but it did mean we weren't entirely free to enjoy living abroad.

@Puppylucky that is great info, thank you.
As long as we make enough to cover the mortgage and estate agent fees we will be happy. I guess it is just a worry if there is a long period without any tenants.

My dad rents out a number of properties, he’s recently changed agents because the last one happily took their % and did no checks on one of the flats which was left in a right state by the last tenant which cost him £££ - the deposit wasn’t anywhere near covering it.

So, be careful with the agent you choose, his had previously been fine but had some internal changes of staff and it all went wrong.

If the house is empty for any time can you cover the mortgage? How long could you financially do that if for some reason you couldn’t find a tenant?

Consider the energy rating of the property first. It needs to be an E or above unless exempt. After the conversation with your mortgage co Start there, then gas and electricity Certs. Remember you now pay tax on the whole rental income even if you have a mortgage. This may be a deal breaker if your LTV is high and then you need to pay management charges on top. You also need to consider that rarely is a property 100% utilised. You will have periods where it could be unoccupied and you’ll incur costs nevertheless. Best of luck.