Renting our family home - experiences

[xenialtothecore]

Looking for experiences from anybody who rented out their family home. Was it worth it? How much financial reserves did you have?
I've got an exciting opportunity to move abroad (family etc all paid for). Looking to rent out our 4 bed family home. Nice big rooms, big kitchen (no box room or anything like that). In the nice bit of an 'ok' area close to train/bus, decent schools. Small mortgage.
My only worry would be the house being trashed, non-payment, void periods etc I am able to cover (not for long). Similar to repairs although I expect nothing major occurring in the first year. The house has been well maintained and is in good condition.

Be there to vet everyone even if rented through an agency. We had some shockers look round, but have a lovely family now.

Thanks! Do you mean, have a chat with them yourselves?

Not a chat, an interview.

I suggest:

Involve an agent and be very specific about who/what you want e.g. a no pets clause or someone with local connections to the area.

Be cautious about any kind of ‘sympathy’ based arrangement where emotional strings are being pulled before you even start.

Spend some money de-personalising the house before you leave, so it doesn’t feel so much like your home.

Set aside some money for deep cleaning and work when you come back. Assume that some damage will occur - see previous point.

Get on top of exactly what is tax-deductible for HMRC and keep good records.

Hope that helps.

You physically show them round your home and talk to them and ask pertinent questions.

We had one guy out of prison with no job, but with a lump sum to pay the rent for a year. Shocking the agency thought this would be ok, but I don't think they are allowed to discriminate.

It has to feel secure for you.

Yes we did between 2013 till 2020 at this time tax rules were better so we didn’t lose out , it is different now but if you have small mortgage it should break even
you need buy to let mortgage sometime banks agree for one year to let out on same mortgage u need to talk to them
get a reliable estate agent who will do all the vetting for you and management of rental fees regular inspection etc it is worth it
we had problems that the agent was not communicating the tenants complaints it got better after someone else in the agency over our property
yes there were empty periods but not long like 1-2 months in between tenancy , if u got a good family and if you respond to them when any repairs they likely will stay
we also rented out for slightly lower than market value as we preferred them to stay longer
eventually we sold in 2020 as the CGT rules changed

Thank you. Yes we definitely want a family to stay. We are not aiming to make the most profit we just want to keep our family home. We considered selling but we really love the house and don't want to buy another upon our return plus Stamp Duty etc etc.
If we do end up gaining permanent residency and staying on in the other country we will probably sell.

How did you vet the estate agents did you get recommendations from other LL's in the area?

Thank you.
Someone with local connections is interesting - did you find lots of those?
What I find strange about the rental market is that it seems to depend more on the size of house rather than area.
We moved from renting in a rather 'upmarket' area (one of the few in Greater Manchester where house prices are on par with London) to our current area as we couldn't afford to buy there. But there's very little difference in rents.
I have no idea why someone would pay the same rent to stay here instead of there. Unless it's closer to work or family.
We lived there as it was close to both our workplaces (10 min drive instead of current 40).

It is going to be difficult if you really love the house as it is. You need to detach and accept no-one will look after it as you do, however hard you vet them. Employ an agent involved to do the tenant finding, checks and manage maintenance issues. Agree in advance a limit they can agree to spend on repairs before you need to authorise.. They can also deduct your income tax as a non resident landlord.

Be very careful. If for instance it gets like Scotland (eviction moratorium and rent increase cap). You may go from being able to cover your mortgage with rent payments to huge increases in mortgage (eg 50%) but only be able to increase rent by 3% (or 6% after intense investigation) . You may think your property is beautiful/well maintained (it may well be right now). However, you may have people in who do not open windows and allow ventilation (due to heating costs etc, that dry clothes inside on radiators) allow condensation to sit and rot window panes etc. Allow for costs you couldn't envisage
...... I would avoid or at least charge a market rent that allows for £1000s over course.of year for unexpected repairs and maintenance, vacant periods etc.

@yoyo1234

Thanks for your tips. Definitely, I don't think a tenant will maintain the house similarly to an owner-occupier. Our attachment to the house is more structural - we love the layout and size of bedrooms + transport links. So many 4 beds with rooms you couldn't swing a cat in when we were looking to buy we're loathe to give this one up.

Rent increase is a good point. I know some LL increase rent every year I did think that was too much for good, long-term tenants who look after the property. Ours only did once every 3-4 years. But I suppose, if there's a cap not increasing will lead to expenses (e.g. mortgage) outweighing costs as you can't do a big increase after a few years if needed. We're not particularly worried about mortgage costs as it's tiny.

Condensation etc is definitely a worry! I'm hoping older adults with kids will be sensible but you never know.

I guess it really depends on who we get as tenants. We're moving to a country close enough that if it all goes horribly pear shaped I supposed we'd be better off leaving it unoccupied and staying/visiting a few times a year than shelling out thousands of pounds in repair costs.

@xenialtothecore - FYI it will be difficult- if not impossible- for you to get buildings insurance cover if you leave it unoccupied for months or years.

At the very least you will either have to drain your radiators and turn the water off, or leave the heating on low in the colder months. You would also need to have someone coming in to inspect the house for leaks, rodent infestation or criminal damage regularly.

We rented out our house when we were expats for many years: we did have one tenant who stopped paying rent and did a moonlight flit (which was far preferable to evicting them) but you have to stop regarding your property as your home and not have an emotional attachment to it if you’re going to rent it out. Btw we had an estate agency doing the full management (we were in different time zones) as we only returned to the UK once a year on home leave.

You may find that because you won’t be resident in the UK for more than 6 months per tax year the tenant or agency may have to withhold 20% of the rent depending on HMRC and your tax status. Look up the “Non-Resident Landlord Scheme’ on www.gov.uk

A great site for information is:
www.landlordzone.co.uk

Ditto what others have said about needing to emotionally detach from it as 'your home' as tenants will never treat it with the respect and care that you do. Also expect to have to spend a lot to repair it/ bring it back to a level you're happy to live in when you return. You can rarely claim enough from a deposit to replace damaged items - you'll simply get a token sum e.g. £50 for a massive red wine stain on a beige carpet.

The biggest problem we find with renting is that the agent just sends out a tradesperson for even the smallest complaint, so everything costs a minimum of £100 and it soon adds up. Strangely, our tenant managed to break every single kitchen appliance within 18 months (!) and although we believed it was negligence on her part, we had no proof, so just had to suck up the replacement cost. One of my friends recommends visiting prospective tenants in their current home to see how they live and the condition of the place, but I'm not sure how practical that is.
Definitely try to ask around about the best managing agents and try to meet prospective tenants though.

I rent out the house I used to live in. Re Letting Agents - the one I use is a small local business, owned by one woman. The advantage of this over big companies is that it is in her interests as much as mine for everything to go well, for the tenants to be good ones, and for there to be no hassle.

I did for some years. It was fine really - I had an agency to fully manage it, no-one failed to pay, or had to be evicted, although one couple who insisted on a year's tenancy with no break clause then wanted to do just that after 6 months. I let them actually, although I could legally have insisted on the next 6 months' rent, given the contract they'd insisted upon!

I'm glad I did it because I'd never have been able to afford to buy the house again on my return, although the rent did only just about cover costs (mortgage, insurance etc) and some months I was actually subsidising it by £100 or so. But better to have done that than not have a house to come back to.

We are in the opposite position of renting.

We are renovating and looked for somewhere for 6 months and thankfully found it. (Our landlords move to New Zealand each year for 6 months). They let us keep cats which I’m very grateful for and we don’t let the cats in rooms with carpets by themselves and shut them out of the couple of carpeted rooms when we aren’t at home.
Im worried about losing deposit money so I’m more careful here than in our home - so the 3 DSs are only allowed to eat / drink in kitchen and I make sure I ventilate / dry the windows of any condensation and dry down the shower after using. So I don’t agree that renters don’t care as much as if it is their own home. That said, it’s getting us in good practice to move back into our newly done up home!
I wrote an email explaining a bit about us and sent via the letting agents when we were keen to get this rental! I’m sure it helped to give a picture we weren’t going to trash the place.

I our experience the local Estate agents are better than national ones with local branch/franchise as less chances of communication falling thru ,ask around in the neighborhood
u will incur income tax minimum 20 percent I think and will have to submit self assessment to Hmrc
I wouldn’t leave the house empty for fear of squatters ,lack of maintenance ,break in, insurance liability etc
yes repairs will cost but the rent should cover them if u r not looking to make profit and these will be allowable expenses in tax
in terms of tenant professionals in secure jobs and good reference etc is important

I think the local connections one is just a matter of preference, but it can point to stability or a reason for remaining in the area. As examples:

Couple A: long standing relationship with parents living in nearby towns. One runs a local business, the other is employed nearby.

Couple B: new couple moving in together. One has some local connections, the other thinks it’s a good place to move because it’s cheaper.

We did this for about ten years. We had decided to stay in new country about three years in and knew we wouldn't go back to live in our much loved family home so it then became a purely financial investment issue.

This was probably fortunate as we had a terrible tenant which was completely unforseeable, they were a family within small community.

It was very very stressful resulting in a court eviction with bailiffs etc.

We had a great agent who was the husband of one of my friends which made the whole thing possible/bearable ; he even went to court on our behalf totally free of charge to us.

Despite all that, cost of renovating trashed house etc it was a very wise financial decision. If we moved back it would have been great to be back in the Uk properly market and selling after ten years gave us great options financially in our new country.

Just don't assume it will be easy. I was luckily working part time when our difficulties all kicked off but it felt endless with the stress, emails, phone calls. It was also stressful at other time for various reasons ( eg negotiations with surveyor about neighbours party wall application, broken boiler at Christmas etc ) but not to that level.

Also speaking up for tenants. I live in a beautiful house that my LL built for herself ten years ago, and we absolutely look after it. I consult her on maintenance we should be doing and improvements all the time. I am often horrified at how much she did NOT because you scratch under the surface of the beauty and jesus wept, absolutely nothing has been built to a good standard, maintained or looked after. It sure does look pretty to the casual eye though (and she is loaded - millions, so the only excuse is effort).

As a landlord, you can insist on whatever vetting you want these days. For this house, it wasn't just a credit check. We had to provide our full bank statements for three months (with the specific instruction that nothing is allowed to be blacked out) and both our entire credit reports. It was over 150 pages in total. Plus employer, landlord, payslips.

Anyway, don't be afraid to ask for whatever evidence you want to reassure yourself you are unlikely to end up with a bad egg.

I must admit I was extremely pissed off when they asked us for reams of pretty private paperwork, but then I guess they got to see with their own eyes (rather than a generic credit report number) that at least our last three months of rent was paid on time, and we had 20k sitting in the bank, and neither of us have a gambling habit or many debts.