Advice-Rent out house or get lodger??

andreac

Heres my predicament, i have a house that i got with my ex. We broke up and i kept the house.

I had to get a lodger in to help with the mortgage and shes moving out now.

I have a few options.
1. Get another lodger in and stay in the house
2.Rent out the house as a whole and move back to my work premises (accommodation on site, practically rent free)

Has anyone rented out there house as a whole and would you go for renting out the house if you had the option of living practically rent free for a while?

Thanks

Cathmandooo

Why not try to do both and see what 'bites' best, the market is so tricky at the moment for landlords that you're probably better off being as flexible as you can be.

Put it up for a full letting and for a house share and see how much interest you can get. If you get good interest in both options then it leaves the ball in your court of which you'd prefer. If you get more interest from lodgers and no one looking for the house as a whole then you have your answer.

You're in a very lucky situation to have work accommodation to go to.

andreac

Thanks Cathoo, yeah i am very lucky indeed to have the option,people think im mad not to take it if i can get someone to rent the whole house out.

Ill talk to the lcoal estate agents and see if there is much demand for houses in the area, fingers crossed there is.

El Stuntman

Hi OP, is there an Option 3: sell it?

becoming an 'accidental' amateur landlord is not a great idea at the present time

andreac

Nope. selling not an option, 100% mortgage, dropped in value i would owe the bank huge money.
So renting or lodger are only options, plus i dont want to sell, its just a temporary measure to get me out of a fix for a while.

Cathmandooo

andreac wrote: »

Thanks Cathoo, yeah i am very lucky indeed to have the option,people think im mad not to take it if i can get someone to rent the whole house out.

Ill talk to the lcoal estate agents and see if there is much demand for houses in the area, fingers crossed there is.

To be honest you might be better off just putting your house up on one of the property websites like daft.ie to really see what people are looking for. Estate Agents are highly unlikely to turn you away and tell you there's no market for your property. I believe an ad on daft costs about €20, so for the sake of €20 it's worth having a go at it yourself rather than paying agents fees for them to possibly eventually say they can't find anyone for you.

However you might want to just make life a little easier and go with the agent. Obviously it's up to you

andreac

Thanks, ill talk them first and see what they charge and what way it works before i do anything.

They might only charge when they get someone in for you on a monthly basis and collect the rent etc, ill see.

Will prob put it up on daft too.

jelly&icecream

Just some stuff to consider:

At the moment you should be getting tax relief at source (TRS) on your mortgage as its your principal residence. This can be up to 187 quid a month depending on how much interest you're paying. If you continue to live there and take in a lodger you'll keep getting this and as long as you aren't getting more than 10 grand a year from the lodger you don't have to pay tax on the rent.

To the best of my knowledge if you move out and rent the whole house you will lose the TRS and have to pay tax on the rent. If you bought the house as a first time buyer you didn't pay stamp duty. If you're not resident in the house and you bought the house in the past 5 (? I think, maybe less) years you'll have to pay a clawback on this.

I'm open to correction on this but I think its correct

andreac

Thanks, im aware of the TRS thing. That time frame has been changed from 5 to 2 yrs so im ok there.
Even if i do have to cover the TRS ill still be better off as the mortgage should be nearly covered by the rent so it would just mean id have to pay a small balance. I wouldnt be paying rent if i move back to the place where i work, so financially i would be a lot better off.

jelly&icecream

Well if you've worked out all the sums relating to tax etc and you are definitely better off then go for renting out the full place. Just make sure the rent you are looking is competitive and realistic so you fill the place quickly. Also make sure there isn't any crazy late night drummers etc living beside you in the work accommodation

El Stuntman

andreac wrote: »

Nope. selling not an option, 100% mortgage, dropped in value i would owe the bank huge money.
So renting or lodger are only options, plus i dont want to sell, its just a temporary measure to get me out of a fix for a while.

bear in mind that it may well drop further in value (in fact this is pretty much a nailed-on certainty as the economy continues to deteriorate at frigtening speed), please also bear in mind that rents are dropping fast also and also that the number of properties available to rent is increasing. Check out daftwatch.

you may well be in a bigger hole in a year's time in relation to negative equity and your 'asset' yield may well have turned negative by then (if you can rent it at all).

Not pleasant scenarios to contemplate but I really think you should consider them carefully.

Hope for the best, plan for the worst!

best of luck whatever you do

Kipperhell

I'd be suspicious that your rent would cover the mortgage if you have a 100% mortgage. You pay tax on the rent and considering you have a job that would be 42%. You have to register with PRTB, change your insurance etc... You need to do all the sums first . There is a lot to know.
The chances are you will be better taking a lodger when you consider everything. You will be in much better control of the situation and avoid lots of hassle.

Don't even try to rent the place without the tax man knowing look at any complaint here and you will see one of the first things people will suggest is report them to the tax man. There are people out there who will simply stop paying rent once they get in who look for an inexperienced landlords.

andreac

Thanks for all the replies, its nice to know all the ins and outs of this as im not fully up on everything.

What way does the tax thing work on the rent and when and how do i go about paying it if it should happen that im going to rent out the house? Is it deducted weekly/monthly or annually?

Is there a website or place where i can get all the info i need on renting out my house, as like you said i want to do all the sums first and see what would be best.

Emerald Lass

you will also need to get a BER cert if you rent out the house entirely. And rents have dropped a lot, so you may not get as much money as you planned. also if youdo rent it you have to start thinking of the property as a business, and no longer your home. If you keep feeling like its your home, then it will be very difficult to give up control of that. Finally, if you do rent it out entirely, remember that you will be out of it for 6 mths - 1 year (if you get a fixed term lease which is advised). So you need to be sure that you can stay in the work accom for as long as the lease is in effect, otherwise you would have to evict your tenants if you needed to move back and to do this you have to follow a lot of procedures and serve notice to ensure its done properly.

good luck

Emerald Lass

look at irishlandlord.com website for info - very useful and helpful

andreac

I can stay at work accomm indefinately if i really want to.

Im going to be checking out the going rate for rent in my area, im not rushing into anything, thats why i came on here to ask all the ins and out and what exactly is involved and the costs etc.

Im only thinking of renting it out for 1-2 yrs anyway, just to give me bit of chance to save some money and get myself back on track and get money saved so for when i do move back in again.

MysticalSoul

I would go with renting room, as if a house is less than five years old, there is a lot of tax involved in renting it - capital gains etc.

andreac

No, its has been changed from 5 to 2years now.

dandelion

If you go ahead and rent it you will have to pay the stamp duty on the purchase price. There may also be a penalty interest rate as the revenue have only your word that you didn't buy it originally with the intention of letting it eventually, deferring the stamp duty in the meantime.

Renting a room is more tax efficient if you can live with it and meet your commitments.

There is a body of opinion that things are going to get worse over the next 5 years, might it be an option to sell and take out a loan for the loss?

Merch

I'd be of the opinion to get lodgers in, if you go the fully let route you will be liable for tax on that, you could write off the interest, but you will then not get the TRS, by letting a room/s under the limits you get the full amount, plus you have full control over the property.
Not to be forgotten is capital gains on the property after you dispose of it, this will seriously eat into any potential profit.
You could be in the house if you need to be or use the work property if that suits you.
As you are not a person with a number of properties I'd recommend that route.
tenants have rights (justifiably so) but lodgers have no rights, so as an inexperienced potential landlord you could learn the pitfalls of potential renters by getting lodgers in instead.
Make certain rules clear so there is no dissagreement afterwards.
If someone decides to play drums, or not clean up their mess it might affect your other lodger Assuming you get 2 other people in, not just you.
But if they really piss you about you are entitled to ask them to leave within 24hrs eg threatening behaviour (under which circumstances call gardai)
Ultimately if this is your home, the work accomodation wont necessarily be there for ever? or would they? and even if it is, is it suitable? longterm.
The selling route isnt necessarily the best idea, we all hope prices come back to at least what we paid for them but if you sell now you will definitely take a loss, if you sell and need to rent in the future 100% of the funds you input will be gone!
Also it may be more difficult to get loans in the future so buying might not be a feasable option.