What are the disadvantages of renting out your house?

[jacksonlamb]

The market for large family houses is very quiet where we are and we've had no offers on our house. We're wondering about renting it out for a year and renting somewhere in the area we want to move to. Has anyone experience of doing this? We know about the legal requirements (gas safety checks, paying tax on the rental income etc) but is there anything else we should look into? All advice welcome!

I did this (time abroad, then divorce).
Disadvantage, harder to arrange viewings for sale with tenants in/make it look good once you aren't there.

Upkeep. Agents just weren't as invested in upkeep as we were, and there were 3 weeks when tenants had reported gushing pipe, where the lacklustre agents just nudged their usual plumber once or twice, rather than the fullscale ringing round to stop it I would have done. But if you're only doing this for a year, much less of an issue.
Advantage, you get distanced from the house emotionally which makes the sale process easier, and are more bought into where you are.

Good luck.

I used to rent a cottage out. You have to factor in agents’ fees and small things like fire alarms in every room. You also have to remove appliances such as washing machines or be responsible for breakdowns. You will be responsible for general repairs and upkeep as well.

Frankly, after a tenant rented for six months and left the place in a horrendous mess I decided to stop renting it out. The letting agency were about to give him the deposit back until I saw the state of the place. Clearly not all letting agencies are diligent in their checks.

If you’re actively selling I wouldn’t rent your property out as it will put potential buyers off.

Yes, I did the same thing. We use Open Rent as we wanted to vet the tenants ourselves. We found a local handyman who looks after any repairs so we don't need to use an agent who in my experience do fuck all for their huge fees.

The tenant has stayed for 5 years and sadly is moving out next month. We'll have to go back for a couple of days to choose a new tenant.

I don’t think you need a smoke alarm in every room. There’s guidance on where they should be. Carbon monoxide alarm is also important.

The huge downside is not being able to get rid of the tenants and they often don’t look after it as you would. Not everyone sticks to agreements and you need a proactive agent. Some came very good. You must detach yourself from the house and accept tenants are not you.

My friend’s DD had to go to court to get her house back after exactly the same scenario as you. They wanted to sell as they liked their new area. The court gave the tenant more time to pay! He didn’t so it was back to court again.He just stayed in the house after the rental agreement ended saying it was his home and he had nowhere else to go. Second time in court, they got the house back with no rent payed for the “overtime” which by then was 8 months. I would just move.

I have done similar to this. Thing is I felt it wasn't my home anymore and had to accept they wouldn't treat it the same. But other than that no downsides if you are not hoping to move back into it. You will have to manage it (or pay someone else to). Anything that goes wrong (boiler, damp, fridge breaking down) is down to you. I've just paid £600 for a new washing machine that I hadn't budgeted for!

@TizerorFizz You do indeed need a smoke alarm in every room as well as on the landing, hall, etc.

My best tip would be, make sure you have a list of reliable trades, and contact them directly when you need anything done. IME the tradespeople on the books of the letting agency view landlords as a bottomless pit of wealth and quote higher prices, or say work needs to be done when it doesn't (eg replace a full roof rather than repair it).

A good letting agent will be on the ball and help you find good tenants. They can also advise on all the legal/health and safety stuff that is really important.

Are you mortgage free then? Because you pay tax at your highest income tax rate on the full rent you receive minus only allowable expenses (repairs, agency fees, insurance) and you can only deduct a part of the mortgage, not the whole thing by far. So for many people this is simply not an option because you get taxed through the roof. In addition, you will have to pay double stamp duty in the short term if you buy somewhere else, if you sit on it too long you may end up paying capital gains tax.

CAPITAL GAINS TAX!!!
Which may well be at PAYE equivalent rates under a labour government.
You could loose ££££££’s depending what your gain is, since you bought the house.

We’re planning on moving back into our house at some point, would CGT still apply in that case?

You need at least one smoke alarm on each story where there's living accommodation. Law from 2022. That's not necessarily every room.

CGT only applies if you sell a second home. Ie it's not your main residence. You haven't made a gain if you don't sell and it reverts to your main residence. As far as I'm aware. Many people move out and rent whilst doing renovations. Obviously they don't pay CGT as they haven't sold anything.

Look which agencies have "protected rent".
So in case tenant doesnl not pay l, they cover rent amd organise getting them out. It is payed extra but imo worth it.

And yes, no one will care about your home as much as you do. Be prepared for replacements and bad state.

After nine months you pay a percentage, even if you move back in.
If you are living somewhere else, then your house is no longer your main residence. There are a few exceptions.

Should have said you pay the HMRC bill when you sell.

Thanks for clarifying.

Isn't temporary non residence about being abroad? Cannot see where it applies to being in uk. So my friends who have renovated houses and rented elsewhere haven't paid CGT when they sold. The examples on the Gov web site are about the owner being abroad.

Don’t do it! We have and it’s very stressful. Better off selling. Houses will always sell even if you have to reduce the price. Knock 5% off until it sells.

I looked into renting out my property but decided against it. There's so many regulations these days, when I rented out a property years ago only a gas certificate was needed. Also I think you're taxed on the whole rental income now - you can't offset the mortgage interest anymore - something you'd need to look into.

But what would prevent me from renting a property out again is if the tenant didn't pay. With the courts backed up it could take you a year to take them to court then (provided everything was done 100% correctly) a few months for the bailiffs to remove them. At a cost of thousands in lost rent and legal fees, not to mention possible damage to your property.

Happens more often than you think. I knew someone, outwardly respectable working in the legal profession, that secured a property, paid the first few months then nothing. It would take the property owners up to 2 years to get them out (they did it 3 times). One of the property owners couldn't take the loss of money and their property was repossessed. If you can afford to take the risk go for it (and are okay with the possibility of tenants calling you around the clock about trivial matters).

Biggest hassle will be having a problematic tenant who you then struggle to evict. Labour will introduce S21 as soon as they can once they are in power and probably introduce more regulation for landlords which is already pretty substantial. The courts are not fit for purpose so evictions are taking months and months and (anecdotally) often not proceeding due to judges trying to keep tenants in their homes.

Thank you all - some very helpful points and much to ponder. We would much rather sell but the market here is completely dead. We have reduced our house a couple of times, and even those which have been reduced by over 20% are still getting no viewings. I think we may have to stick it out for another year and hope the market picks up in 2025.