Buy a flat then rent it out! Implications?

[Ry@n]

I would like to buy a flat soon and live in it for a year or so with a normal first time buyers mortgage.

Now after a year i want to leave to go travelling for a year or two, and ideally would like a tennant to live in the flat to cover the mortgage etc.

Are there any obvious implications? (such as having to change the mortgage to a buy to let mortgage)

Thanks for any basic advice

 

[cm1179]

i think you might need a buy to let mortgage from the get go though i'm not sure on this, you may be able to change it with a fee.
the biggest risk you run is if something goes wrong and you are out of the country, could turn into a nightmare.

 

[Morba]

Wait until you come back?
You need to pay fees and have money spare should something go wrong while you are away.

 

[Maccapacca]

Loads of people I know have buy to lets on normal mortgages, the banks don't care as long as you have landlords insurance, write them a letter saying what your doing before you go, they'll probably not respond.

Let it out managed and as long as you put it all in one account the letting agent will manage any repairs, saying that if you haven't bought it yet, think about a new flat with communal / district heating then you'll have little to worry about

Gas safety certs if it has it's own boiler

Obviously you should pay the tax on whatever you earn from the let, but as your travelling you should be under the single person allowance therefore not need to pay any

Keep all receipts you can offset this against tax

Consider a council tenant, I have one in, rent every month on the dot and a long term let now 2yrs

Don't go furnished, just unfurnished and white goods, you don't get any extra rental and you have to make sure verything has fire certs, you'll need PAT tests for whatever white goods you leave that aren't directly wired, i.e. if it has a plug it needs PAT testing

 

[Hatter The Mad]

Loads of people I know have buy to lets on normal mortgages, the banks don't care as long as you have landlords insurance, write them a letter saying what your doing before you go, they'll probably not respond.

The banks do care, because they want you to pay higher rates. If they find out the hard way that you're letting on a normal mortgage (i.e. if you default and get taken to court), you get a big black mark on your future mortgage prospects.

 

[Maccapacca]

Obviously

How would they find out unless someone tells them?

 

[Bes]

Probably a bad idea if something goes wrong. What if it's empty? You'll still have to cover the mortgage. Also house prices are stagnant/ falling at the moment, so why bother? Do it when you get back.

 

[daz]

You can offset the interest portion of the mortgage against income tax.

I'd recommend using a letting/management agents so that you know things will be OK whilst you are gone. Also consider keeping up to 6 months mortgage payments aside so that you can cover the payments should the house be empty for any reason.

Depending on how much equity you have in the house and the rental market in your area, you may find that the rent is less than the mortgage payment, just something to be mindful of.

 

[alex_tank]

It's a good idea but obviously a calculated risk if you don't get a tenant or something goes horrendously wrong, get a letting agent and get full management so they'll sort any problems. Biggest worry here is getting a good trustworthy letting agent that'll look after the place properly, there are no regulations for them.

 

[Maccapacca]

Probably a bad idea if something goes wrong. What if it's empty? You'll still have to cover the mortgage. Also house prices are stagnant/ falling at the moment, so why bother? Do it when you get back.

Yeah do nothing it's much easier and you won't regret it later in life.


Seriously if your up for it and fancy being a landlord it's OK if your in a decent area and you get a decent tennant, I've had mine 4 years and it's been empty for 5 months out of that, all tenants have paid on time and left the place clean and tidy and they are nicely paying a mortgage off for me.

I have mine interest only, leave it in one bank account at the end of the year look at the balance decide if I need maintenance etc spend a bit on the place to keep it tip top pay a bit of tax on the earnings after costs and then whack the rest into the bank to knock off the debt

 

[Simon]

It's likely banks will have no issue if it's a temporary situation like yours.

 

[MrMoonX]

you must tell the bank as any agent or tenant who has a clue will check that you have your mortgage lenders permission, make sure you have savings to fix anything as when renting your going to look like an amateur if you tell your tenants you cant fix things cos you have no money.

plus you have tax implications and dont forget to protect any deposits as your tenants can and will legally take you for 3x the deposit in small claims as its against the law not to put a deposit in a protection scheme.

 

[Morba]

Yeah do nothing it's much easier and you won't regret it later in life.

So in his instance he should buy a flat, rent it out against mortgage providers permission, potentially lose out in terms of money when it's empty for a portion of time or when the rent is less than the mortgage?

I agree that people should do things, but it's a calculated risk that is relevant to that person only. You cannot compare your situation tbh.

 

[Simon]

you must tell the bank as any agent or tenant who has a clue will check that you have your mortgage lenders permission, make sure you have savings to fix anything as when renting your going to look like an amateur if you tell your tenants you cant fix things cos you have no money.

plus you have tax implications and dont forget to protect any deposits as your tenants can and will legally take you for 3x the deposit in small claims as its against the law not to put a deposit in a protection scheme.

Agents dont check the mortgage, they purely advise potential landlords to inform the mortgage provider.

 

[Maccapacca]

So in his instance he should buy a flat, rent it out against mortgage providers permission, potentially lose out in terms of money when it's empty for a portion of time or when the rent is less than the mortgage?

I agree that people should do things, but it's a calculated risk that is relevant to that person only. You cannot compare your situation tbh.

I'm not saying that at all, calculate your risk yes, but there are a lot of people that would try and discourage people just because they wouldn't do it themselves.

If you listen to all the negatives and prepare for every disaster then it won't financialy stack up, you have to take some kind of risk otherwise everyone would be doing it.

Personal bit, I stretched myself to much and ended up paying stamp duty and solicitors fees on a credit card and then spent two years paying it off bit by bit, now I have enough equity to get a decent BTL mortgage deal and income (of which I plowback), If i'd listened to all the 1/2 empty crowd I'd not be in the position I am now

 

[memyselfandi]

Make sure you have the correct landlords insurance.

 

[Morba]

I'm not saying that at all, calculate your risk yes, but there are a lot of people that would try and discourage people just because they wouldn't do it themselves.

If you listen to all the negatives and prepare for every disaster then it won't financialy stack up, you have to take some kind of risk otherwise everyone would be doing it.

Personal bit, I stretched myself to much and ended up paying stamp duty and solicitors fees on a credit card and then spent two years paying it off bit by bit, now I have enough equity to get a decent BTL mortgage deal and income (of which I plowback), If i'd listened to all the 1/2 empty crowd I'd not be in the position I am now

Lol! So in your two years you almost screwed it right up. That's the same period (or twice as much) that the op has. Yep, he should go for it!

 

[Bes]

Yeah do nothing it's much easier and you won't regret it later in life.

What an idiotic comment, you have no idea how much he could **** himself up.

Fact is house prices are NOT rising, and he runs a reasonable risk of having empty months. If he is off travelling and not earning, does that sound like a reasonable risk to take?

 

[Fuzz]

Good luck in finding a buy to let mortgage at the moment!

 

[Xordium]

Where I live rental stuff is never empty and prices are going up and up and up. Before I sold my house a few years back I was going to rent it and HSBC told me that I could rent it out for 12 months on a "owner" mortgage before I would have to switch it to a buy-to-let one.