My house - sell it or rent it?

[Joeman]

Presumably, the really important thing is to ensure that you recoup any costs to repair anything that would significantly devalue the property so that you still sell in a few years for a similar price to what you would get selling it today, so that everything else made in the middle is a bonus?

 

exactly!

the actual condition of the property doesn't matter whilst its generating rental income, and if its doing that well, you're unlikely to sell.

And when you do eventually come to sell the property, no prospective purchaser is going to be too putoff by scratched worktops - if you put a chopping board over the marks, they wont even see

[Mr Fro]

No offence taken!

What I meant by the worktop thing is that if someone can't be arsed to take reasonable care by using a chopping board that is provided then they should expect to pay for their laziness. After all, the level of rent would be justified by the finish and if they degrade the finish significantly i.e. beyond normal wear and tear then the rental value would decrease in the eyes of the following tenants.

Just the same as if they smashed a load of floor/wall tiles. If I wanted to rent somewhere and saw cracked tiles and low level finish, I'd walk straight back out again!

I don't expect for a second that a tenant would take care of my property in the same way that I would and I'm happy with that. I wasn't meaning to come across as bashing renters either - I'm sure we've all had the experience of being done over by a greedy landlord.

You are, of course, both right in respect of any net earning over the final resale is a bonus. I'm just trying to get people's knowledge and opinions of something of which I have no experience.

[Fozzie]

You'd need an inventory clerk to tell you what's what!

They act as a legal go between, they act in the interest of fairness.

So if you see a couple of fine knife marks on the surface after a period of a year or 2, they are likely going to say it's barely noticeable so fair wear and tear. Everything has a "lifespan" so if it is covered in knife marks and damage then they will be charged for the repair.

The odd little stain in a carpet and damage will be fair wear and tear, along with the usual scuffs on walls and so on. Anything that can be tidied up by a really good deep professional clean will fall under this.

If it is professionally cleaned (with receipt) before a tenant goes in, then they will be liable to pay for another clean like this if a clerk notes it has not been professionally cleaned when they leave.

You have to factor in that unless you're going to rent it out for a good length of time, that selling it is just as good an idea as if you rent it out for a long time and have a big profit at the end of your run, you can spend only a small amount to do it up and sell it on at a "best" price.

[Matt Strange]

Bit of a bump, some big tax changes have gone through regarding letting property. (Source: http://www.taxjournal.com/tj/articles/r ... 5-18112015 )

 

Restrictions on the amount of financing costs which can be deducted by individuals, partnerships, trusts and personal representatives when calculating their income from a property business are included in the Act (s 24). The amount of mortgage interest or similar which can be deducted is restricted to 75% in 2017/18, then 50% in 2018/19, 25% in 2019/20 and to nil from 2020/21 onwards. Individuals will receive a basic rate tax reduction in respect of financing costs which cannot be deducted as a result of these measures. A committee stage amendment to s 24 ensures that companies chargeable to income tax are not subject to these restrictions (because companies generally are outside these provisions), and to enable trustees to claim the basic rate tax reduction in certain circumstances. A report stage amendment then clarifies that relief for interest on a loan to invest in a partnership is restricted where the partnership uses that investment for carrying on a UK or overseas property business that consists of residential property.

The withdrawal of the wear and tear allowance announced in the Summer Budget and its replacement with a relief for costs actually incurred is to be included in Finance Bill 2016. The proposed increase to rent a room relief with effect from 6 April 2016 has now been made by statutory instrument.

 

Three things.

*Tax relief on interest cost of any loan/financed used can only be claimed at the basic rate of 20% from 2021 in certain circumstances, regardless of the individual tax circumstances of the landlord or company that holds the deeds to the property.

*Foreign based entities are not exempt (underlined).

*10% annual wear and tear allowance withdrawn, only (provable) costs incurred are subject to relief.

No mention of the Capital Gains Tax liable, with regards to any rise in equity from existing property then used to fund addition property purchases, though?.

[Joeman]

yep, its just the uk.gov devising ways to stitch us up even more...

[Matt Strange]

I think it puts Landlords on a more even and fairer footing with regards to owner occupiers (especially first time buyers) by removing some of the substantial tax breaks and other financial advantages they once had over them.

Businesses couldn't offset their loan interest in the same way, if borrow to let is to be treated like a business instead of being seen as speculating with the aid of leveraged finance then surely it should be subject to the same rules regarding the lending of money?

[Joeman]

Just watch the rental prices go up... It will only hurt the renters and make saving for a deposit even harder.

[Matt Strange]

Going by several property forums, a lot of landlords currently breaking even (due to extracting as much equity as possible to buy more property and keeping the cashflow profits down for lower taxation purposes, prior to the new legislation ) will be forced to sell as they will soon be making quite substantial monthly losses. I doubt they can just raise rents as they can only charge what the current market rate offers, landlords with lower LTVs (loan to value) on their properties won't be affected and can surely undercut the more indebted out there. I think i read a report stating 1 in 5 would be in serious trouble, that is a huge amount of extra property to flood the market.

I can see a quite big drop in both house prices and rents. This as a result of the increase in supply of the rental housing stock being offered for sale and having to be sold for what renters can afford, and the subsequent drop in demand for rentals due to the "priced out" being able to buy again and no longer needing a rental.

[Hoggs]

Hey Matt, out of interest was that nation wide or area specific? I'm not looking to rent out my place just curious as London rent is ridiculous! I imagine it's one of a few places that is still massively profitable for landlords

[Joeman]

Hey Matt, out of interest was that nation wide or area specific? I'm not looking to rent out my place just curious as London rent is ridiculous! I imagine it's one of a few places that is still massively profitable for landlords

Don't forget the cost of buying is much higher in london, so typical mortgages will be larger. Before the cost of the mortgage could be deducted from profits but in the future this won't be possible.

So we could see London landlords with big tax bills which could force them to put the property up for sale.. But then the overseas investors will step in and buy them up.. Londonders won't get a look in.

[RantMachine]

Tl;dr

If you don't already own a house you're even more f**ked than before

[soll]

Tl;dr

If you don't already own a house you're even more f**ked than before

 

totally agree, last year i had bought my council/housing association house i would have got £75000 DISCOUNT, this year due to a clause... £35000 max which them makes it pointless....

need to do some reading

[Fozzie]

It's harder to be a landlord for sure.

And it's harder to get into property now. But I sort of despair when I see people paying £700+ on rent a month.

I could have mortgaged a studio near a nice area in London for virtually no deposit and paying that much. In fact I nearly did as it sat on top of its own garage. So I often think there are a fair amount of people who pave the road to their own ruin in that regard, as with property prices rising as they are, it's better to get on the boat so you rise with the tide rather than be drowned by it.

[RantMachine]

Average UK house price - £186k

Average London house price - £500k

Average Cambridge house price - £482k

Aaaaand this is why I dream of one day owning a garage. No house attached, just a garage.

When I went on holiday in September, I looked in the windows of some estate agents in Paris. Buying OR renting cost between half and a third of the price of Cambridge!

Probably even cheaper now!

[Joeman]

Next few years won't be much fun for me.

Tax laws are changing so dividends are going to be taxed more and there will be more tax on rental income. Those are my primary sources of income so I'm expecting my tax bills to rise considerably with little return in terms of public service improvements or quality of life.

UK.gov are slowly increasing taxation on all ways people have traditionally used to save for retirements with the state pension remaining pitifully low.

Basically then don't want people to retire because retired people don't generate much tax income.

Couple of years ago they dropped the council tax exemption on empty rental properties, so landlords need to make sure they have no vacant period between tenancies otherwise they are liable for council tax.

I actually got court summons last week for unpaid council tax on a rental I left empty whilst it was being freshened up to make it a nicer place to live for my next tenants!! Trying to be a responsible landlord cost me council tax, legal fees and the hastle of sorting it out ontop of the renovation costs - Cheers uk.gov!

Buy2let won't be as profitable as it once was unless of course youre rich enough to own the property outright which very few landlords have done, and the UK.gov know this, hence the tax changes directly targeting landlords.

The UK residents are being shafted!! But all it will do is cause people to think of more creative ways to avoid tax, or just leave the country taking skills and experience with them. That's what I'm considering. Bail out before the plane goes down under the weight of all the tax bills..

UK is broken, and the weather is crap. Why am I still here??

[Hoggs]

But I sort of despair when I see people paying £700+ on rent a month.

 

I shall join you in your despair - Two bed place down the road from me was being rented out at £1300 pcm. Which is why people are being forced to live with family for longer because there's no way you can save up for a deposit whilst paying that.

 

Aaaaand this is why I dream of one day owning a garage. No house attached, just a garage.

 

I've had to make do with renting a garage

[RantMachine]

But I sort of despair when I see people paying £700+ on rent a month.

 

I shall join you in your despair - Two bed place down the road from me was being rented out at £1300 pcm. Which is why people are being forced to live with family for longer because there's no way you can save up for a deposit whilst paying that.

 

Aaaaand this is why I dream of one day owning a garage. No house attached, just a garage.

 

I've had to make do with renting a garage

 

Afraid to say that I don't think Fozzie was saying he despairs for people, Hoggs, more of them

[Arwen]

I have the fun task of meeting with my landlord tonight... Really hope she is not selling up. We don't have any where near what we would need for a deposit for our own house yet. And to get another house like this one we'd be paying probably £150+ extra a month that what we currently are.

[Six30]

Don't know if any one else mentioned this I didn't read through it all, but if you rent it out you will be liable for Capital gains tax when you sell it, you do get discounts to get the bill down though .

[Six30]

I have the fun task of meeting with my landlord tonight... Really hope she is not selling up. We don't have any where near what we would need for a deposit for our own house yet. And to get another house like this one we'd be paying probably £150+ extra a month that what we currently are.

 

I've got a nice torture... I mean cellar I'll let you have for next to nothing

[Arwen]

I have the fun task of meeting with my landlord tonight... Really hope she is not selling up. We don't have any where near what we would need for a deposit for our own house yet. And to get another house like this one we'd be paying probably £150+ extra a month that what we currently are.

 

I've got a nice torture... I mean cellar I'll let you have for next to nothing

 

Does it have a garage or can I bring my bike in the house?

[Six30]

I have the fun task of meeting with my landlord tonight... Really hope she is not selling up. We don't have any where near what we would need for a deposit for our own house yet. And to get another house like this one we'd be paying probably £150+ extra a month that what we currently are.

 

I've got a nice torture... I mean cellar I'll let you have for next to nothing

 

Does it have a garage or can I bring my bike in the house?

 

Yeh no problem

[Gin]

Jesus.. This is one depressing thread!

I'm looking at renting with my partner at the moment as we've both just started jobs out of uni in roughly the same area (Blind luck!)

£700 a month is pretty standard for the Banbury - Brackley - Buckingham band, especially as I have two cats..

We know we'll be applying for mortgages next year, once we're both more settled but until then I did not think it would be this difficult to just find a rental for 6 months!

Joe I may ask for your advice when we come round to looking for places to buy if that's ok?

In answer to the original question I would rent out but accepting that basic damages are going to happen!

[Hoggs]

I noticed when we were looking to rent most places are a year minimum now. Although I think on ours there was something in the small print that said after 6 months we could give a months notice? That estate agent was an idiot though so they may just have copied and posted the entire thing off the internet.

Ooh have fun house shopping next year Also be prepared to call your solicitor and the estate agent Every. Single. Day to get them to do anything. My top tip is to be as annoying as possible so they do stuff to make you go away!

[Fozzie]

Afraid to say that I don't think Fozzie was saying he despairs for people, Hoggs, more of them

 

80/20 split. 80% despair of people stuck, 20% despair at peoples own short sightedness.

In city areas where high rent rules. They are locked in as they can't save, no way out. They have to go much further out to enjoy savings but then transportation costs fill the gap some of the way. It's a lose lose that grips too many people.

The only people I despair at are those who *could* do something, but don't.

For example, I had a one bedroom flat, cheap, quiet area, but in range of work. It was cheap with a drawback it was cramped with 2 living there, having guests over was difficult, and it was more of a trek into the city.

Work peers, on roughly the same wage, had a 2 bedroom house rented. Near a train station (which balloons rent right away) for links to the city, and a spare room for guests. 50% more expensive than what I had at least.

All I could say was you pays your money, you make your choice!