More couples than ever are considering renting out second property

Published January 16th, 2017

Reaching the point in your relationship where you are ready to live together is exciting, but if one of you already owns a property it can be tricky. With a buoyant rental market and currently low interest rates in the UK, there are several options available. We discuss them below.

I already own a house but my partner and I are moving in together. Should I sell my house or let it out?
It depends on individual circumstances as to what the best answer is.  While now isn’t a bad time to sell a house, if you able to retain a house for the purposes of residential letting it can provide a long-term income stream which can prove more profitable in the long-run and potentially capital growth

But is now a good time to be a landlord?
Although red tape is increasing, residential lettings remain a worthwhile investment prospect.  A lot of the newly introduced and well-publicised legislation relates to the Government’s discouragement of the purchase of new homes to let, rather than those which are already owned.  It is likely that some landlords will be deterred by compliance and leave the industry; as the supply of houses to let is already short this is pushing up rents which is improving returns for landlords.

Are there any tax implications I need to be aware of?
As a landlord you will need to pay tax on your profit (not on your income) which means you can offset costs such as management and letting fees as well as repairs.  The right to offset mortgage interest is being reduced from April 2017.
When you sell the property you will have to pay Capital Gains Tax on any gain, but each owner will be allowed to use their annual exemption, which is why many people own property jointly.

Fixing things, dealing with tenants – it seems like a lot of hassle and I don’t have much time.

Is there anything I can do to minimise the stress?
A good managing agent will steer you through all the legal compliance as well as making sure that your property is suitable commercially for letting.  On a full management basis they will oversee rent collection and deal with repairs, being the tenant’s first point of contact.  This can take quite a weight off the shoulders of a novice landlord.

If you are thinking of renting out your second property and becoming a landlord in 2017, we are here to help you through the process. Get in touch today for more information.