Totally shocked at the cost of rental properties

[Bumfluff29]

I had no idea the cost of rentals now are so high. We’ve been thinking of selling our house and moving into rented accommodation to break any chain if needed. I’ve looked at the cost of rents and can’t believe how much they are: much more than our mortgage payment. What’s shocked me most is the condition of some of these properties- they look like they haven’t been updated since the 70s in some cases. Has the rental market been like this for a while or is this a recent thing? Maybe I’m totally naive but before we (luckily) managed to get our mortgage we rented an enormous 3 bed house for 550 a month (2016) with all new appliances etc. A lot of the properties I’ve seen look like they desperately need new kitchens and bathrooms at the least, yet the rent is at least 900 a month.

@sudoscream not so! We are accidental LLs of a nice 1 bed garden flat in average Zone 2 - nothing glamorous at all.

We listed it on OpenRent last week for £1700 pcm, got 150 enquiries. Narrowed it to 25 applicants - we showed one around every 15 mins for a total of just over 5 hours this Saturday. (Wanted to minimise disruption to outgoing tenants who are lovely).

By Sat evening had offers from 22 of the 25 - almost all over asking. One couple offered £1900 pcm but we chose to proceed with someone with professional DIY skills who loves gardening and offered us £1850.

£1900 for a 2 bed looks like good value, I'd say.

That's great advice but I was advised only if you have multiple properties?

The tax on dividends is going up next year thanks rishi and I found lenders won't loan easily to LTD companies, they charge higher rates as a specialist mortgage.

So the savings weren't there.

It's gone crazy. I'm not surprised it's increased, but by that much?? I was interested by this thread and just had a look at the current estimated rent for our rental house (3 bed/garage/off road parking in South East). I'm shocked at what they go for here now. We're charging £700 pm but it's estimated at exactly double that. Lunacy (we won't be putting it up!!)

My advice to any landlord is to create a shell LTD company for the property or properties you rent out. It’s totally legal. So instead of the rental income being classed as part of your personal income and taxed regardless of expenses, the income is now business income and you can deduct all your expenses and then only pay 19% corporation taxes on profits. You can then pay yourself dividends from this business also at much lower tax rates. https://www.freeagent.com/rates/dividend-taxx// Youu would need to set up a free business account for the rent income to be paid into either from the tenant(s) or estate agents. It’s best to do this to keep things clean accounting and tax wise. You’d pay around £300/Yr for an accountant to do the company house filings and tax return for the business- which is a business expense and totally deductible reducing your tax bill.
Hmmm not sure about that. Our accountant said different. We considered this for 3/4 properties but it would have meant we would have had to buy around 10 and couldn't rent to family members, which was our original plan.