Author Topic: Renting UK house for income  (Read 6187 times)

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Renting UK house for income
« on: March 09, 2008, 08:27:39 AM »

Here is the story so far, a bit long but it may give people here some idea of what can happen.

My original idea was to borrow £50,000, about P5M at the time, to buy a lot and build a house. I expected the loan to be covered by the rent I receive from my UK house. However, because of my age I had to repay over 5 years instead of the original plan of 10 years. This was a little too expensive, so I reduced the sum to £30,000. We bought a very nice lot for just under P1M leaving, in theory, P2M to build the house. Some research on the internet suggested that I could build for P10,000 per square metre, so I designed a 200 sq metre bungalow. I was told at the time that a bungalow would be cheaper than a two story house, but I am now not convinced that, that is true. We found a builder that we felt we could trust and asked him for an estimate. After a long delay he came back with a figure of P3.5M without any plumbing and insulation. He described himself as a contractor which we discovered later that meant he charged 50% material costs for labour. He was also quoting for expensive materials and fittings. Never did understand why it costs more in labour to lay an expensive tile than a cheap one. We did not understand about contractors previously but canceled the plans when we did. I tried designing houses at 120 square metres but could not get all the features I wanted. By then the exchange rate had dropped in value so the money I had waiting in my UK bank account became insufficient. At this point the tenant in my house decided to leave, and as I had now decided that I was never going back to the UK, I decided to sell the house. It had always been a possibility, but I wanted to make sure that there were no problems living here permanently. When the tenant moved out she left owing one month rent, left the place in a mess and even took the greenhouse. The letting agent is now in the process of taking her to the small claims court to get £1200 from her. In the mean time it looks as though I will have to pay to get the place cleaned up before the agent can put it on the market. My plan now is put around half the money into a good safe investment which will give me some extra income, and also be there for my daughters when I eventually die. The other half will be used to build something really nice here. I am working on the plans now.

Colin

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Re: Renting UK house for income
« Reply #1 on: March 09, 2008, 09:00:02 AM »
Hi Colin,

A cautionary tale on many levels. You clearly had a well thought out strategy to start but good job you had a plan \'B\'. Did you not get a security deposit & advance rental on your house to protect against the tenant leaving owing rent & taking stuff?

It is interesting noting the comparison on buying a plot & building a house to buying a house & lot. I am sure there are people who have had a negative experience but for us, we bought our house as a basic model for P3.5 mil from Avida (a subsidiary of Ayala). Exterior walls, some interior walls,bathroom, driveway etc to complete to our spec added maybe another P500K. Almost 2 years later & we are still VERY satisfied that we made the right choice. We also have a 15 years construction warranty which from our experience of Avida will be honoured.

Hope your dream home goes according to plan.

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Re: Renting UK house for income
« Reply #2 on: March 09, 2008, 01:39:00 PM »
Hi Colin,

A cautionary tale on many levels. You clearly had a well thought out strategy to start but good job you had a plan \'B\'. Did you not get a security deposit & advance rental on your house to protect against the tenant leaving owing rent & taking stuff?

It is interesting noting the comparison on buying a plot & building a house to buying a house & lot. I am sure there are people who have had a negative experience but for us, we bought our house as a basic model for P3.5 mil from Avida (a subsidiary of Ayala). Exterior walls, some interior walls,bathroom, driveway etc to complete to our spec added maybe another P500K. Almost 2 years later & we are still VERY satisfied that we made the right choice. We also have a 15 years construction warranty which from our experience of Avida will be honoured.

Hope your dream home goes according to plan.



Hi Keith,

Yes, the agent took 1 month deposit and 1 month rent in advance, but the tenant failed to pay on time then moved out early. It is very difficult to get the missing money and the only thing the agent can do now is take them to the small claims court. The deposit will cover the missing rent but there is £1200 worth of damage and missing items. I will not bother to replace the greenhouse because it will add little to the resale value of the property, so my loss may not be as bad as it first appears.

Colin

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Re: Renting UK house for income
« Reply #3 on: March 09, 2008, 08:15:08 PM »
When I was renting houses/apartments in Indiana.....weekly rentals needed a 1 month deposit....monthly rentals 3 months deposit.
***Locks were changed if weekly rentals 2 days late, monthly 5 days late *** Harsh but necessary

Always used to check people\'s shoes....if they took care of their shoes, they\'d take care of house/apartment...that was before the yob/sneaker generation tho\'

Don\'t know what benchmark I\'d use today† ???

Offline RUFUS

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Re: Renting UK house for income
« Reply #4 on: March 09, 2008, 11:40:43 PM »
I look inside peoples cars...
The inside usually gives a good idea what their house will look like.

RUFUS
SO SAYETH THE RUFUS

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Re: Renting UK house for income
« Reply #5 on: March 10, 2008, 02:34:12 AM »
When I was renting houses/apartments in Indiana.....weekly rentals needed a 1 month deposit....monthly rentals 3 months deposit

Always used to check people\'s shoes....if they took care of their shoes, they\'d take care of house/apartment...that was before the yob/sneaker generation tho\'

Don\'t know what benchmark I\'d use today† ???

In one of my former lives as a real estate salesman, when a young couple would drive up to an open house in a new car we knew that they couldn\'t possibly afford the down payment and monthly mortage...†

Offline RUFUS

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Re: Renting UK house for income
« Reply #6 on: March 10, 2008, 03:07:32 AM »
 affordability not withstanding...new cars or old, if the inside is filled with trash, half eaten food, animal hair and stinks...
you can pretty much bet that in a short period of time the inside house will look just like it.

RUFUS
SO SAYETH THE RUFUS

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Re: Renting UK house for income
« Reply #7 on: March 10, 2008, 02:47:07 PM »
I\'ll ride my \'cycle in future.... :D

Offline fred

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Re: Renting UK house for income
« Reply #8 on: March 17, 2008, 05:14:24 PM »
Colin.
I think you have made a good decision..
I hope you can sell it before prices drop any further in the UK.
The only problem is the safe investment idea..The only safe place to put that kind of cash is perhaps in a national savings acc or perhaps that other government institution, Northern rock..
I think you can still get around 6% tax free of course with other banks.
Good luck.