Can you own a house and rent another in the UK?

Yes, it is possible to own a house and rent another in the UK. In fact, many people choose to do this as a way to build wealth and generate a passive income stream.

In this article, we’ll explore the various options for owning and renting out property in the UK, and the benefits and considerations of doing so. Here at Aventine Property, we offer deal sourcing services- from initial research to property completion.

Option 1: Buy-to-Let Properties

One of the most common ways to own a house and rent another in the UK is through buy-to-let properties. A buy-to-let property is a property that you purchase specifically for the purpose of renting it out to tenants.

When you purchase a buy-to-let property, you typically need to put down a deposit of at least 25% of the property’s value, and take out a buy-to-let mortgage to cover the rest. The rental income from the property is then used to pay off the mortgage, cover any maintenance costs, and generate a profit.

Benefits of owning a buy-to-let property:

  • A buy-to-let property can generate a steady stream of rental income, which can provide a passive income stream for the owner.
  • Property values in the UK have historically increased over time, so there is potential for capital appreciation.
  • Buy-to-let properties can provide a tax-efficient way of generating income, with a range of allowable deductions available, such as mortgage interest, maintenance costs, and letting agent fees.

Considerations of owning a buy-to-let property:

  • Owning a rental property requires a significant investment of time and money. Landlords are responsible for maintenance and repairs, and must ensure that the property meets certain safety standards and regulations.
  • The rental market can be unpredictable, and there is no guarantee that the property will be occupied at all times. This means that landlords need to be prepared for periods of vacancy and have the financial means to cover the mortgage and other expenses during these times.
  • The UK government has introduced a range of regulations in recent years that make it more difficult and expensive to be a landlord, such as the requirement for an Energy Performance Certificate (EPC) and changes to tax allowances.

Option 2: House Hacking

Another way to own a house and rent another in the UK is through a strategy known as house hacking. House hacking involves purchasing a property that has additional space, such as a basement or spare room, and renting out that space to generate income.

For example, a homeowner could purchase a three-bedroom house and rent out two of the bedrooms to tenants, while living in the third bedroom themselves. This can provide a way to generate income while still having the security of owning a property.

Benefits of house hacking:

  • House hacking can provide a way to generate additional income without having to purchase an additional property.
  • The homeowner has greater control over who they rent to, and can choose tenants who they feel comfortable sharing a living space with.
  • House hacking can provide an opportunity to learn about property management and investing without taking on the same level of risk as a buy-to-let property.

Considerations of house hacking:

  • Sharing a living space with tenants can be challenging, particularly if the homeowner is not used to having roommates.
  • The homeowner may need to make modifications to the property, such as installing a separate entrance, to make the rental space more attractive to tenants.
  • There may be additional regulations and safety standards that need to be met if the property is being used as a rental. Read more here about house hacking.

Option 3: Renting Out a Second Property

A third option for owning a house and renting another in the UK is to rent out a second property that is not your primary residence. For example, a homeowner could purchase a second property as an investment and rent it out to tenants.

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