[shubb]

I've been thinking about this lately because I want to rent out my flat and move abroad.

It turns out that, if I take into account my mortage, building charges, and expected empty time between tenants the minimum I can charge for rent is... actually kind of similar to the market rent.

It would seem like there is a floor to London rents, and it is related to the mortage payment, which is related to the value. If the value was 50% lower, then landlords renting at the current level would be undercut.

[dragandj]

I understand why you think that is the minimum. But, let's say that your mortgage is 100, building charges 10, and expected empty time cost another ten, 120 in total. How is charging 0 (not being able to rent it because no one is willing to match your minimum) better than, say, renting it for 110? I assume that you already own the property, so you have no choice of directing that mortgage to other investment opportunities.

[motohagiography]

Do you pay income tax on the rental income as well? This would add about %30-45 to your mortgage payment breakeven as well, no?

If your mortgage payment is $1000/mo, you need that in after-tax dollars in addition to gap months and maintenance. This pushes rents up for single property landlords in the top marginal rate, or am I missing something.

[jnwatson]

You only pay income tax on your net profit (in the US at least).

[motohagiography]

Net expenses, but the equity in the property seems like income (as you can tell iana landlord).

Income taxes likely contribute a significant percentage of the difference between mortgage payments an rent prices. For a REIT, this is different, but for an individual owner renting out a second property and paying income taxes on the rent income, would this not create a significant difference?

[rusk]

This is all predicated on the idea that somebody else should pay your mortgage for you no doubt ...

[Nasrudith]

Well if they rent it out without paying for their mortgage the renter will be evicted as well.

[rusk]

Yes, but I just wanted to be clear that’s what we’re talking about. The expectation that you should be able to claim the capital gains that somebody else has paid the maintenance on.

[tom_]

Rental value sets the sale value, not the other way around!