Potential Capital Gain Tax liability
If if turns into a long term thing and you make a profit.
Suggest you sell and take the hit.
Is that because in Cen . London people move more often? Or expect the rent to include furnished ?
Yes, both when letting in the upper quartile of the market. Due to price, vast majority of enquiries are from professional people with above average income. They are are typically time poor too so looking for somewhere requiring the minimal amount of effort to make home. Saying that, this doesn’t mean that they are any better at looking after a property or the goods within it.
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Thanks for all the replies. I can see you all think I am hopelessly naive! I’m doing this for personal reasons and hoping to manage and mitigate the risks as far as possible, in the knowledge they can’t be eliminated. Constructive suggestions to that end most welcome. On the points raised:
Tenant suddenly stops paying rent: If this happens out of nowhere then, yes, I would be in a pickle. So how do you guard against this? Being thorough with selecting and vetting a tenant is presumably key. This 1-bed flat, in London, should rent for £1400 a month, so I should be able to get a good tenant with a stable job. I’m happy to accept a bit less than market rent if that will help get a good tenant. Am I naive for thinking that being reasonable with them makes it more likely they will be reasonable with me? And what else can be done - Is Rent Guarantee insurance any good?
Tenancy agreement: Is it really a terrible idea to draw it up yourself? And if you want to keep your options open, what is the best type - a 6 month fixed term then let it go periodic?
Furniture and utilities: The idea behind leaving furniture/leaving utilities in my name is to make it easy to move back in. But perhaps I am misguided on this point, will reconsider.
Letting agent: I’m not sure this still stacks up financially if I have to pay a letting agent a chunky ongoing commission, but will look into it.
This has worked for me. Generally speaking, I think if a tenant “knows” you and hopefully respects you then it’s more difficult for them to be unreasonable. (As long as you act ok)
A regular agents tenant usually doesn’t know landlord from Adam so probably easier not to pay them, just my opinion of course.
Utilities in your name . Do NOT do it . You are naive. Do NOT draw up your own agreement 6 month and then periodic. Leaving furniture? Risky
As Colin says, you are naive. There are 160+ landlord and tenant laws and the penalties for simple mistakes or admin errors on most of them are fines of £xx,000 or even imprisonment. Judges dont care how reasonably youve behaved. At the very least you need to do some landlord training.
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