I know there are a few mortgage people on here, just a question for you all. If I am currently living in a property, and wish to move but not sell the current house and keep it in my name to rent out, what is the best way to do that?

Also, what would I then need in terms of getting a new mortgage on the new house? Would I need another 10-15% deposit?? Or would the current lender be able to work with us so we didn't need to have that??

Or is it just easier/better to flog the old house outright??

Thanks

You will need to change your current mortgage to a buy to let if you have a mortgage on the property you plan to rent out.

You will then still need to find a deposit for your new property, but you can add the excess income from the rental property to your new mortgage application.

Don't forget that if you rent a property there will be tax implications, and you may have to file a self-assessment return with HMRC, even if only to declare a nil return.

So better to sell off the old house then, to reduce the amount of paperwork and stuff?

Is it even worth trying to rent out a property in the current market, especially if it's empty for a couple of months while looking for/awaiting tennants to move in??

As with everything it depends in your current personal situation.

Selling at the minute isn't great. The 'best priced' properties are selling, which basically means your property has to be spot on and not overpriced; buyers have a lot of choice.

Renting, however, is flying and good rentals are being achieved because of the sheer number of tenants in the market. Again, dependent on market in your area, you shouldn't have much trouble getting a tenant, and will stand more chance of renting it out than selling it for the price and timescale you want.

If you're ABLE to rent your own property (more on this later), then in this market it could be seen as a great option; prices are comparatively low compared to the boom years (though probably still too high in real terms - yes we know all this Mintball, codead, Scooter Nik, FA etc etc - this is for another topic) and will probably rise again in years to come. So it could be said that if you rent out your old house, someone else is paying the mortgage for you, which reduces it, and natural price rises will increase the amount of equity you have. SO in the long term, it's probably better to keep hold of it, and sell when the market is more fluid.

That said, your ability to do the above depends on several factors. Firstly, whether a lender will lend on the strength of your renting your house out, which will have a lot to do with your income and outgoings. Secondly, you will need a good deposit, probably 15% on your new house. If you have this, great. If not, you could look at the equity available in your current house and look to release some of that. If you haven't the equity or the money saved up, then you'll find it difficult to do, in all honesty.

Two things...

If a letting agent manages the property for you, depending on the software they use, they can often print off an 'income from property' portion of the self assessment form with all the fields filled in. My company can do this, and has done for several clients, saving them hours.

In any case, it's a case of comparing income with expenditure. You can offset your mortgage interest, management fees, letting fees and repairs against your income. This often means that if you play your cards right, you often don't need to actually pay any tax.

It's worth noting however, that certain things are not allwed. For instance if you replace a single glazed window with a double glazed one, you can't offset it as it is classed as an improvement. Like for like replacements, however, are deductable.

My understanding is that if you replace ALL single glazed units with ALL double glazed then it's still deductable, as is an entire new kitchen etc etc, it's only elemental changes that are classed as improvements, a full component replacement is deductable?

I could be out of date, then, on that one.

Yup - HMRC will accept single glazing being replaced with double glazing as a like for like replacement rather than an improvement.

As others have said, doublr-glazing is ok - just the modern equivalent of the old, not an improvement. what also needs considering taxwise is whether the letting is furnished or unfurnished.

If changing to a buy to let mortgage is bothering you, have a chat with your existing mortgage provider first.
It might have changed since I looked at it, but Nationwide for example used to allow you to rent the property for three years on an existing personal mortgage.

only reason I know is because it's changed the way we capitalise and depreciate social housing stock, it used to be elemental and now it's component based, which is a royal pain in the backside!!

not sure what impact for tax furniished/unfurnished has, council tax maybe, but not income tax?

As I understand it, but I could be wrong as I was with the window example, is that any furniture you buy is offset against that year's income, and there is an element of depreciation allowed in following years. Again, any replacements are offset also.

You're better asking an accountant, really.

All of my stuff is rented unfurnished anyway.

Best way. Less stuff to get wrecked.

Unless you're renting apartments in a city centre of course - they all tend to be furnished. I mean if you're only staying for six months or so, would YOU want to lug all your stuff up ten flights of stairs...?

Whenever I've looked at the difference in income it's never seemed worth furnishing the properties I have.

Totally agree. I find that most people want unfurnished properties anyway, and the lack of people wanting to rent furnished property effectively negates any gain in value you would get by including furniture. Certainly round here, anyway.

Eg With furnished you can claim a 10% (of net rent) wear & tear allowance - which usually works out better than the alternative.