Renting out a house

[Belle427]

Just wondered how many here do it.
I inherited my fathers house recently and although it s not worth a fortune its in a very good state of repair so ideal for rental really.
Monthly rental at a rough guess would be £800 ish, house value maybe £180000. Its only a 2 bed end of terrace so value isn`t climbing dramatically.
Just trying to decide if I want the hassle of being a landlord, I suppose it depends on my situation financially too. I have not looked into the tax implications yet.
Rental wont quite cover my mortgage which runs for another 12 years and ends when I am 64.
Pension wise nothing that meaningful, I have switched companies over the years and although have a few they will not be worth a huge amount.
Part of me thinks just sell it an move on and try and make the money work for me in some other way.

[Badda]

Sell it and clear off your mortgage and/or put some
In your pension would
Be my advice (as a landlord).

[Alex Z]

If it’s in a good state of repair it should sell reasonably easily - not necessarily the case after it’s been rented out now.

I’d be inclined to sell it now, clear your mortgage and then invest the rest

[Trevelyan]

My advice as a landlord of one property is to sell it and invest the money somewhere easier. I rented out my old house when I got married and moved 80 odd miles away, our thinking at the time being that we weren't sure where we were going to end up settling long term and might move back to it. Several years later our lives have moved on and we'd never consider moving back there now.

Despite having good tenants the house has become a liability and a constant source of worry. It loses money every month (it's on a buy to let mortgage) and we're always waiting for the calls from the agent about the next pipe leak, maintenance issue or problem. Add to that you've now got the government deciding that all landlords are evil money grabbing monsters and implementing new legislation around tax, renters rights and energy efficiency and it's just not worth the trouble of being a small landlord anymore.

Several times over the last few months I've looked at cutting my losses and selling but the housing market in the area is dead and despite being an evil landlord I'm reluctant to evict the nice family who live there unless I have no choice. I'll hold my nerve for now but at the next change of tenant or new attack from the government I'll be throwing in the towel.

[Belle427]

It would clear the mortgage which would be the most sensible thing to do really.

[Badda]

The freedom that would give is a nice legacy to receive too.

[Belle427]

For sure yes, would be hit by fees sadly as we have not long signed up to another 5 year deal. May be beneficial to overpay every year until that deal comes to an end.

[Cats_pyjamas]

Belle427 said:

For sure yes, would be hit by fees sadly as we have not long signed up to another 5 year deal. May be beneficial to overpay every year until that deal comes to an end.

Yes, it likely won't make sense to pay it off, but overpay within the terms. And pay it off at the end of your agreement.

You could Max out you ISA(s), and premium bonds for the short term. Or dump a load into a SIPP (less accessable).

Assuming you have a partner you trust, that's 80k into ISAs within 6 months.

It's a nice problem to have, but I wouldn't be taking on the hassle of a rental.

[ThingsBehindTheSun]

Badda said:

Sell it and clear off your mortgage and/or put some
In your pension would
Be my advice (as a landlord).

I have one Buy To Let, after eight years I have finally decided it just isn't worth the hassle. My tenants have been there the full right years and I am just starting the process to regain the property.

I plan to sell it, pay off my mortgage and put the rest into an ISA.

I wish I had never bought it in the first place, the hassle and return just isn't worth it.

[The Grouch]

Belle427 said:

For sure yes, would be hit by fees sadly as we have not long signed up to another 5 year deal. May be beneficial to overpay every year until that deal comes to an end.

Is the mortgage on the property that you currently live in or your father's house, assuming there are two houses? If so, then sell your father's house, invest the money in a variety of pots and plan to clear 10% of your own mortgage off each year until the fixed term ends. Then clear the whole thing. Gives you flexibility to do other things with the money should you decide.

[Belle427]

Our house is mortgaeged, currently £170k owing.

[The Grouch]

Clearing 10% each year for 5 years would consume £65-75k (rough guess) of the proceeds from the sale. You could then, in theory, find a new fixed rate deal at a much lower repayment rate after 5 years, keeping a small mortgage and a lump sum from the sale. As I mentioned, just clearing the maximum overpayment of your existing mortgage gives you options later on, rather than sucking up the early redemption figures and wiping the mortgage in one go.

[VTC]

Having tried the Landlord life
I too wish I had never bothered.
tennants(gits)
repairs, insurances certificates etc etc,
I truly hated the entire process.

Sell the house and get your home paid for ASAP.

[Countdown]

Belle427 said:

Just wondered how many here do it.
I inherited my fathers house recently and although it s not worth a fortune its in a very good state of repair so ideal for rental really.
Monthly rental at a rough guess would be £800 ish, house value maybe £180000. Its only a 2 bed end of terrace so value isn`t climbing dramatically.
Just trying to decide if I want the hassle of being a landlord, I suppose it depends on my situation financially too. I have not looked into the tax implications yet.
Rental wont quite cover my mortgage which runs for another 12 years and ends when I am 64.
Pension wise nothing that meaningful, I have switched companies over the years and although have a few they will not be worth a huge amount.
Part of me thinks just sell it an move on and try and make the money work for me in some other way.

For that level of gross yield I'd definitely sell. You're getting 5.5% gross and you wouldn't get much less than that from a decent savings account with far less hassle. You'd get even more if you invested in stocks and shares but obviously that comes with increased risk. In the "good old days" you'd also get a healthy capital gain but I'm not too sure how healthy the housing market is where you are.

[Sheepshanks]

Belle427 said:

Rental wont quite cover my mortgage.....

Is that the rental after you've paid tax on it? It's the tax that kills it for many people, especially if you're on, or it takes you into, 40%.

[ThingsBehindTheSun]

Countdown said:

For that level of gross yield I'd definitely sell. You're getting 5.5% gross and you wouldn't get much less than that from a decent savings account with far less hassle. You'd get even more if you invested in stocks and shares but obviously that comes with increased risk. In the "good old days" you'd also get a healthy capital gain but I'm not too sure how healthy the housing market is where you are.

It won't be 5.5%, you will lose 10% to the managing agent and 20% or 40% depending on what tax band you are in. Even at 20% you will end up with £576 a month. It will be less than that as you will need landlord insurance, gas safety certificates and any repairs that need, plus you will lose half that amount in the first month in fees.

that is 3.84% return, you can get 4.55% from Hargreaves Lansdown in an ISA and sleep at night.

Just don't bother

[butchstewie]

Perhaps think about it from the other angle too.

If you'd got the cash would you clear the mortgage or buy a house with it and rent it out or do something else?

[98elise]

Countdown said:

Belle427 said:

Just wondered how many here do it.
I inherited my fathers house recently and although it s not worth a fortune its in a very good state of repair so ideal for rental really.
Monthly rental at a rough guess would be £800 ish, house value maybe £180000. Its only a 2 bed end of terrace so value isn`t climbing dramatically.
Just trying to decide if I want the hassle of being a landlord, I suppose it depends on my situation financially too. I have not looked into the tax implications yet.
Rental wont quite cover my mortgage which runs for another 12 years and ends when I am 64.
Pension wise nothing that meaningful, I have switched companies over the years and although have a few they will not be worth a huge amount.
Part of me thinks just sell it an move on and try and make the money work for me in some other way.

For that level of gross yield I'd definitely sell. You're getting 5.5% gross and you wouldn't get much less than that from a decent savings account with far less hassle. You'd get even more if you invested in stocks and shares but obviously that comes with increased risk. In the "good old days" you'd also get a healthy capital gain but I'm not too sure how healthy the housing market is where you are.

Agreed at 5.5% gross its not a good investment. It needs to be more like 8-10% minimum.

Then there is the hassle of being a landlord in the first place and the danger of a st tenant. Last eviction I had to do cost me 10k and took months. These days it can be 18 months.

I can't wait to be out of it. Every year is losing me money vs my equity investments.

[LooneyTunes]

Belle427 said:

Just wondered how many here do it.
I inherited my fathers house recently and although it s not worth a fortune its in a very good state of repair so ideal for rental really.
Monthly rental at a rough guess would be £800 ish, house value maybe £180000. Its only a 2 bed end of terrace so value isn`t climbing dramatically.
Just trying to decide if I want the hassle of being a landlord, I suppose it depends on my situation financially too. I have not looked into the tax implications yet.
Rental wont quite cover my mortgage which runs for another 12 years and ends when I am 64.
Pension wise nothing that meaningful, I have switched companies over the years and although have a few they will not be worth a huge amount.
Part of me thinks just sell it an move on and try and make the money work for me in some other way.

I have a few. It’s not a market to get into unless you do it at reasonable scale, for the long term, without emotion, and can carry the risk/cost of a defaulting tenant (or worse).

I have had the opportunity to rent out former homes before and have never done so. Too many positive memories of them.

The best way to look a the question is “if I had £180k, would I want to become a private landlord in the current climate?”. Not many people would say yes!

[Belle427]

Thanks all, sell it is then. Will do some reading up on the pay off mortgage vs invest route.