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Original poster

Renting out house if it won't sell?

44 replies

Rentyhouse · 20/05/2023 13:30

We are currently trying to sell our house and buy another. My parents have lent me the money to buy the new one as I didn't want to lose it waiting for mine to sell. But time is going on and nobody is buying it! I'm about to drop the price for the second time.

I'm conscious I owe the money to my parents, who need it for another purchase of their own. Luckily nothing has come up further to buy in the meantime.

If nobody buys mine, would it be possible / wise to get a buy to let type mortgage on it and rent it out? I really don't want to do this but do need to do something. I can afford to take a price drop to sell it but can't just keep dropping the price forever.

So far we have had 3 offers. The first changed her mind, second didn't produce his proof of funds, and third withdrew as she can't sell her own (bigger) house.

OP posts:
LIZS · 20/05/2023 13:35

There are increasingly onerous responsibilities on landlords. How would you pay your parents back? Can they move into it?

Original poster
Rentyhouse · 20/05/2023 14:59

I was thinking to get a mortgage and give them the money I owed with that, then pay the mortgage back with the rent. Its not my preferred option though but nobody seems to be buying at the moment.

OP posts:
Rainbowshine · 20/05/2023 15:12

Have a think about what is involved in being a landlord, your property will need to meet some requirements E.g. gas and electrical safety, fire safety, insurance for letting out, will you be expecting the tenants to be responsible for the garden or not etc…and in some areas you need to be licensed by the local authority, the deposit needs to be put in the proper account etc. Are you really prepared to do that and have enough money for any repairs or other expenses that will come up? Will you let through an agent? How much are the fees? Will you even be able to get a buy to let mortgage? You need to interrogate the reality of this, you seem to be looking at it very simplistically in your post.

C4tastrophe · 20/05/2023 15:25

Reduce the price and sell it. Will be cheaper than getting a BTL mortgage, and certainly less stress.

Original poster
Rentyhouse · 20/05/2023 16:54

I know about most of those things involved but really was wanting to know if it's even possible to get a buy to let mortgage on a house I already own.

I thinkni will just keep trying to sell it. I'm just feeling stressed about it taking so long when it's not my money.

OP posts:
PickledPurplePickle · 20/05/2023 17:38

Yes it’s possible but likely you will need to leave a really big chunk as a deposit - I was told 40% but that might have changed

Rainbowshine · 20/05/2023 17:42

wanting to know if it's even possible to get a buy to let mortgage on a house I already own

It is possible to convert the existing mortgage or apply for a new mortgage, the question is whether you would meet the lending criteria. One of the aspects that the lender would expect to see is that you can afford the mortgage for a period of time in the event that the property is vacant, whether you will get a decent return on it, and whether you can afford to maintain the property (which is the asset you’re borrowing against) in the current market and in the future.

So going back to my previous post, you really need to consider all the aspects that are involved in being a landlord and whether you can and want to do it.

CatsOnTheChair · 20/05/2023 17:51

Selling will get your additional stamp duty back. Factor that into your calculations as to how much you can drop the price.
DH and I had raging arguments about this. Having been the contact when we rented the house out as we were abroad, I was adamant it needed selling at any price. DH just saw the £££ (which weren't many).
Do your sums very carefuly
Also factor in CGT when you do sell.

LIZS · 20/05/2023 18:11

We did rent out a property (with permission of mortgage lender) while abroad short term and planned to return. Tbh if we had not been able to afford the void periods (with full liability for utilities, insurance, council tax, repairs etc without any income) we could not have managed. We lost our first set of tenants in the wake of 9/11 when airlines made redundancies, something completely unforeseeable. I had researched the statutory requirements which were less than now and costs more generously offset. If you rely on the rental income to pay a btl mortgage could you afford it? You are also liable for income tax on the rental income. Are you staying local, or would you need a managing agent?

AHugeTinyMistake · 20/05/2023 18:25

How long has your house been on the market?

We only sold ours last week after being on since Feb, similar story to you regarding offers - one stupidly low offer, one person who hadn't sold their house yet and one person who couldn't get a mortgage.

If you can avoid it don't panic and be patient.

Chenford · 20/05/2023 18:29

We did this - it’s called rent to buy. We used the equity released from house 1 to buy house 2. We had to leave 25% equity in house 1 as a deposit on a BTL mortgage.

It got us out of a hole at the time - but I’m so glad I’m not a landlord anymore; it’s a lot of responsibility and the government is making it increasingly less attractive - we didn’t make a lot of profit at all (until we came to sell, having owned the house for 10 years). A couple of big expenses (new boiler, tenants wrecking the place) would have seen that profit really eaten into.

Think very carefully OP.

Chenford · 20/05/2023 18:30

Sorry, let to buy. Not rent to buy n

happinessischocolate · 20/05/2023 18:33

You're probably better off just dropping the price more now. Don't chase the market down, go below valuation and then it'll sell.

Being a reluctant landlord of a depreciating asset is not good.

Movinghouseatlast · 20/05/2023 18:58

You don't need a buy to let mortgage immediately, just consent to let from your lender.

Santander gave us consent to let in the same situation. They swapped us onto a Buy To Let automatically when our fix was up.

It's worked out well so far for us.

AnnWithoutAnnie · 20/05/2023 19:31

@Rentyhouse

when do your parents need the money??

NellyBarney · 20/05/2023 20:45

You will also need to pay capital gains tax once you sell a buy to let. And it's tricky selling a buy to let once you have tenants in situ. We were in the same situation about 8 years ago. We still haven't managed to sell our old house/the now buy to let. We used savings and extended our mortgage on the old house that wasn't shifting for a deposit on our new property. The rent covers just about the mortgage but there are extra maintenance costs that we need to pay for from our salaries. It's now all so complicated to sell that we just leave it.

headmaiden · 20/05/2023 20:51

The amount you reduce by could be less than the CGT you'll have to pay. Even if you rent your house out for one day you're liable.

I would strongly not recommend unless you intend to rent your house out for many years

rainingsnoring · 20/05/2023 22:07

Oh goodness, don't get involved in renting a property now. It's really not the time to start being a landlord without the experience. You will just be stuck with a depreciating asset and a new mortgage.
Your house will sell but you need to reduce the price by enough to make it affordable to prospective buyers. The market has fallen and continues to do so as you seem to know. If you need to sell, drop the price properly now rather than tiny reductions and chasing the market down.
Which area of the country are you in? Have you researched the local market to see what is selling?

Twiglets1 · 21/05/2023 07:00

If you do this you will be complaining in a year or so that renting out a property if stressful & less profitable than imagined and that you are an accidental landlord as you originally wanted to sell the property but couldn't.

If it's not selling then you need to reduce the price again, it's that simple.

ThankmelaterOkay · 21/05/2023 07:09

I’d ask family/friends/other EA’s what they think your property is “worth”.

If they think it’s fairly valued then maybe you’ve been unlucky and can hold tight for a few more weeks. If they don’t..then it’s time to reduce.

ThePanda · 21/05/2023 07:49

I think you should look at a Bridging loan secured on your new property. It will bridge the gap until your property is sold, and you only pay it back within 12 months when you've sold your property, no monthly payments.
Or sit it out until your parents need the money!

Pippylongstock · 21/05/2023 08:01

It’s absolutely possible to get a buy to let mortgage to release the equity and pay your parents back. The rules for buy to let are different and it will in part be based on the rental valuation. You can speak to an estate agent and asked them about this. We moved overseas for 5 years and rented. Being a landlord is not for the faint hearted, and I remember at any time could have to pay both mortgages.

DrySherry · 21/05/2023 08:30

Your house will sell, you just need to price it right to reflect the new cost of borrowing.
The rent it out option is full of pitfalls and legislation is only going one way.

Original poster
Rentyhouse · 21/05/2023 08:46

Thank you for all replies. I don't actually currently have a mortgage - this is because I bought a £42k flat with a 100% mortgage when I was 23, not because of high earnings or previous help from parents. I paid it off a year ago.

I think I will keep it on the market and reduce the price. My parents only need the money if/when they see a bungalow they want to buy. I could look at borrowing from the bank from the new house if old house hasn't sold by then.

I think I put it on the market in February and have already reduced it once since then but maybe estate agent put it too high to start with.

OP posts:
Twiglets1 · 21/05/2023 08:59

Rentyhouse · 21/05/2023 08:46

Thank you for all replies. I don't actually currently have a mortgage - this is because I bought a £42k flat with a 100% mortgage when I was 23, not because of high earnings or previous help from parents. I paid it off a year ago.

I think I will keep it on the market and reduce the price. My parents only need the money if/when they see a bungalow they want to buy. I could look at borrowing from the bank from the new house if old house hasn't sold by then.

I think I put it on the market in February and have already reduced it once since then but maybe estate agent put it too high to start with.

I think estate agents often do put properties on too high to start with - they are often in competition with other agents & know sellers are drawn to high valuations. It's so common to reduce the price one or two times until you get to the right price for the market.

In your case you have had offers so the pricing after the first reduction is about right but a small further reduction would bring other potential buyers out.

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