Newsgroups: uk.misc
From: des@inmos.co.uk (David Shepherd)
Subject: Re: letting property
X-Newsreader: TIN [version 1.1 PL8]
Date: Mon, 21 Dec 92 17:18:25 GMT

T.I.Morley@lut.ac.uk wrote:
: I am thinking about renting out a flat which I own in London.
: I have been forced to move away to get a new job following redundancy.
: It's not that I really want to become a landlord, but funnily enough
: no one wants to buy the place at the moment!

: Never having been in this position before I don't have much idea about 
: the legal or tax position. Any information would be welcomed, including
: where I should go for definitive answers on the tax position. I've been
: in touch with the tax office. They sent me a leaflet that didn't say very
: much!

: In particular:

: Do I have to pay income tax on the rental income?

yes ... there is an exemption of about #65 per week but that only applies
if you are still living in the property

: If so can I deduct the cost of the mortgage interest that I am paying
: from the income before working out the tax?

don't think so

: Can I deduct anything else?

yes ... all "reasonable" expenses can be deducted ... e.g. buildings
insurance, any bills standing charges that you pay. any maintenance
on the building.

: Can I still get tax relief on the first 30,000 pounds of the mortgage?
: (I know I can't if I buy another place, but assuming I live in rented
: accomodation myself.)

think so

: Is it likely to affect the cost of my mortgage? I'm with the Abbey National
: and I've heard suggestions that they charge more if the property is being
: rented out rather than lived in by the mortgage holder.

you are under an obligation to inform your mortgagor that you will no
longer resident and are letting out the property ... also you will
probably have to  inform any insurance companies involved with
buildings cover and contents (assuming you're leavning funiture etc
there).

from what i've heard mortgage companies do often add a premium to the
mortgage if you renr out a property - i think an additional 1% is
typical. they justify this on the grounds that having the property
rented out affects the value of the property as (i) tenants don't look
after a property as well an owner and (ii) if they have to repossess
they have the hassle of getting rid of tenants.

finally, don't attempt to draw up your own tenancy agreement ... it may
well be worth getting a solicitor involved as if you get the agreement
wrong your tenants become protected tenants and you cannot get rid of
them. when she was a student my wife was in a group of people renting
a house who's landlord decided he wanted to sell up and asked them
to leave. unfortunately for him they were doing a postgraduate diploma
in housing, told him the lease was invalid and offered to leave if
he gave them #1000 compensation for the general hassle of having
to move - the landlord had made the mistake of taking the standard 
lease that britol univ (i think) gave out and added a bunch of his
own clauses on the end!

: Tim Morley (T.I.Morley@lut.ac.uk)

--
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david shepherd: des@inmos.co.uk                     tel: 0454-616616 x 625
                inmos ltd, 1000 aztec west, almondsbury, bristol, bs12 4sq
                1992: celebrate the quincentenary of columbus getting lost
Newsgroups: uk.misc,soc.culture.british