buying a house as an investment.... and letting it?
Discussion
Say you had £350K in several building societies and the mortgage on your house is paid off… With interest rate so low, I have been thinking about buying a local house at say £150K and then renting it out.
I figure that house prices will either stay as they are, or maybe rise a little now, and around here the sort of house I can get for £150k will rent for £400 - £500 per month.
Never having done this before, how does it all work? Do I just buy it; rent it out and pocket the £500 a month? Do I need a letting agent? Do I have to pay tax on it? Who pays the council tax?
Any advice guys?
I figure that house prices will either stay as they are, or maybe rise a little now, and around here the sort of house I can get for £150k will rent for £400 - £500 per month.
Never having done this before, how does it all work? Do I just buy it; rent it out and pocket the £500 a month? Do I need a letting agent? Do I have to pay tax on it? Who pays the council tax?
Any advice guys?
Long term, a good idea. The tennent pays the council tax, and yes, you will pay tax unless you can offset it against interest paid on the mortgage.....which you won't have!
I'll pray for you to get good tennents, as all of the ones I have had have been sh!t. Do your homework on that front!
I'll pray for you to get good tennents, as all of the ones I have had have been sh!t. Do your homework on that front!
Tennents: 
Tenants:
Rough guide:
- find tenant (either yourself or via an agent who will charge you for the privilege of doing very little)
- satisfy yourself tenant will pay
- sign tenancy agreement, get gas safety cert for property, independent condition report / inventory
- take deposit and lodge with a deposit scheme
- wait for the rent to come in every month / pray the tenant pays
- fix things that brake
- rinse / repeat
- declare income and expenses as part of self assessment
Tenants:
Rough guide:
- find tenant (either yourself or via an agent who will charge you for the privilege of doing very little)
- satisfy yourself tenant will pay
- sign tenancy agreement, get gas safety cert for property, independent condition report / inventory
- take deposit and lodge with a deposit scheme
- wait for the rent to come in every month / pray the tenant pays
- fix things that brake
- rinse / repeat
- declare income and expenses as part of self assessment
UpTheIron said:
Tennents:
Tenants:
Rough guide:
- find tenant (either yourself or via an agent who will charge you for the privilege of doing very little)
- satisfy yourself tenant will pay
- sign tenancy agreement, get gas safety cert for property, independent condition report / inventory
- take deposit and lodge with a deposit scheme
- wait for the rent to come in every month / pray the tenant pays
- fix things that brake
- rinse / repeat
- declare income and expenses as part of self assessment
Pot. Kettle.Tenants:
Rough guide:
- find tenant (either yourself or via an agent who will charge you for the privilege of doing very little)
- satisfy yourself tenant will pay
- sign tenancy agreement, get gas safety cert for property, independent condition report / inventory
- take deposit and lodge with a deposit scheme
- wait for the rent to come in every month / pray the tenant pays
- fix things that brake
- rinse / repeat
- declare income and expenses as part of self assessment
Make sure your tenant(s) has good references (ie current employer + another) or get a guarantor(s) instead if they can't.
Make the rent exclusive of bills and leave it up to the tenant to pay them.
However, but even if they don't pay the rent, the eviction process can be costly, a pain in the arse and take time.
Only speaking as a tenant, but make sure the house isn't a s
t hole and fix things when they break and you will get no trouble if I was renting from you!
As you are buying outright, don't take dss, students or pikey tts as they will try anything.
HTH
Make the rent exclusive of bills and leave it up to the tenant to pay them.
However, but even if they don't pay the rent, the eviction process can be costly, a pain in the arse and take time.
Only speaking as a tenant, but make sure the house isn't a s
t hole and fix things when they break and you will get no trouble if I was renting from you!As you are buying outright, don't take dss, students or pikey t
ts as they will try anything.HTH
Do I need a letting agent? You don't have to but it will be a lot easier to get them to market the property for you and arrange and carry out all viewings etc. They will also offer to manage and collect rent etc but they will prob take about 10% of your rent per month. The letting agent I use runs all the credit checks on the prospective tenant and checks their history. Gives some piece of mind.
Do I have to pay tax on it? If you own another property which is registered as your primary residence you will have to pay tax when you sell the house and also income tax if you earn enough through rent.
Who pays the council tax? The tenant pays all bills and taxes to do with the running of the house.
£150k is the lowest stamp duty threshold so if you get a house for less than that you'll save yourself £1500.
Hope this helps a bit.
Edited by difontaine42 on Wednesday 19th August 21:25
Most Landlords in the Bristol area, buying your average 3 bed house, are seeking planning permission to convert the house into 2, either one or two bed flats, which not only immediately increases their gain against their investment, but improves the potential for letting.
I can let you have an Application for Tenancy (obtaining references and possible future reference), an Assured Shorthold Tenancy Agreement, a Deed of Guarantee and an Inventory.
Most Landlords today, myself included, rent out properties unfurnished, this being partly due to fire, health and safety regulations, the former particularly on beds and furniture. Any gas boiler or gas appliances need an Annual Landlords Gas Safety Check/Certificate from a Gas Corgi engineer. Whilst no certificate is required for the mains electrics, for peace of mind, particularly on an older property, the Landlord should ask an electrician to check the same. As for electric appliances, the regulations merely requires that a responsible person checks the safety of the same (see above why Landlords let unfurnished).
The property will also require an Energy Performance Certificate/EPC, which costs about £50 to have carried out and lasts for 10 years, a Google search will provide you with more details.
I myself have stopped taking Deposits, since my experience has found that tenants will withhold back on the last months rent, together with my properties being unfurnished, the costs and paperwork of registering the Deposit, taking Deposits are more of a nuisance than they are worth. I now take a 2 months rent in advance, but that must be stated in the Tenancy Agreement, together with any other requirement/stipulation/s you want to make ie. No pets etc. etc.
I can let you have an Application for Tenancy (obtaining references and possible future reference), an Assured Shorthold Tenancy Agreement, a Deed of Guarantee and an Inventory.
Most Landlords today, myself included, rent out properties unfurnished, this being partly due to fire, health and safety regulations, the former particularly on beds and furniture. Any gas boiler or gas appliances need an Annual Landlords Gas Safety Check/Certificate from a Gas Corgi engineer. Whilst no certificate is required for the mains electrics, for peace of mind, particularly on an older property, the Landlord should ask an electrician to check the same. As for electric appliances, the regulations merely requires that a responsible person checks the safety of the same (see above why Landlords let unfurnished).
The property will also require an Energy Performance Certificate/EPC, which costs about £50 to have carried out and lasts for 10 years, a Google search will provide you with more details.
I myself have stopped taking Deposits, since my experience has found that tenants will withhold back on the last months rent, together with my properties being unfurnished, the costs and paperwork of registering the Deposit, taking Deposits are more of a nuisance than they are worth. I now take a 2 months rent in advance, but that must be stated in the Tenancy Agreement, together with any other requirement/stipulation/s you want to make ie. No pets etc. etc.
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