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Your opinion please - Sell or Let?

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Wanderfree
Wanderfree Posts: 42 Forumite
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in House buying, renting & selling
I only bought my house (first time buyer) a year ago. Big changes in personal circumstances now mean I need to relocate to another city. At first I thought I'd just get permission to let my house from my mortgage provider and let it out for a bit. However, I'm aware there are new rules on letting out property that make make it costly and possibly even leave me out of pocket if I take this route. Googling leads me to lots of articles on how this is the case for people getting buy to let mortgages but I'm not clear on whether the same new rules would apply to someone in my situation who hasn't started off with a buy to let mortgage. I'm also mindful that taking on responsibility of being a landlord is a fair bit of work.
I'm continuing to research but am interested in your opinions on what route you might choose in the same circumstances - let or sell? Also what additional things do you reckon I should consider when making a decision? Some facts:
My monthly mortgage repayment is £585 including interest (2.39%). If I get permission to let I believe an additional 1% will be applied to my interest rate. My property would let for £700 pcm.
My property has been valued at £165k if I choose to put it on the market. I bought it for £155k.
Thanks :)
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  • Wanderfree
    Wanderfree Posts: 42 Forumite
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    Thanks Penitent. Useful questions.
  • ellie27
    ellie27 Posts: 1,097 Forumite
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    So, if you let it out it might just about cover the mortgage each month? I would definitely sell!
  • Niv
    Niv Posts: 2,471 Forumite
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    From the sound of it, there is not much return in letting it, you will be quite a distance from the property (so reliant on letting agents) and you currently have little to no landlord experience/knowledge : therefore I would sell.
    YNWA

    Target: Mortgage free by 58.
  • pascal22p
    pascal22p Posts: 28 Forumite
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    I was in the same position last year. Here is the list I went through in no particular order:

    - cost for getting the house ready for rent. Mine had quite a few things to do (new boiler, new floor...)

    - No emotional attachment to the house. It's a business and a pile of brick.

    - how attractive is the house. Mine is 3 a bed and there is not many in the area, close to a school, potentially plenty of possible tenants.

    - What kind of tenants it would attract. As a 3 bed in a small village, a family and was happy to rent out to a family.

    - good letting agent. I was lucky my partner new one. Leaving 2hours away from property, it was very important to me.

    - Profit? Time to use a spreadsheet.
    rent minus management (10%+VAT), minus insurance (£25/m) and other fixed costs if any
    to be compared to mortgage interest and total mortgage.
    Take into account repairs + voids
    In your case, £591 rent after expenses vs £585 mortgage very likely to increase for buy to let. Once the income tax added it will be worse.
    My case is £500 rent after expenses vs £400 mortgage. Leaving me with £100 cash per month for repairs or else plus the capital repayment in the house.
    Also, what I did is calculate the profit from rent vs equity compared to the interest I would get by investing the result of a sell.
    - Remortgage to buy to let. Something to take into account. I did do that before renting the house. I should have done, not many lenders, higher interests and most of them don't like you if you don't own the house you are leaving in.

    - Risk assessment. What could go wrong and can I face them?


    In my experience, so far it has been stress free. I just keep contact with letting agent via email. They send me quotes for repairs when needed. The only hassle is the re-mortgage and will be more costly than expected.
  • dimbo61
    dimbo61 Posts: 13,720 Forumite
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    Are you going to be renting in the new city you are moving too ?
    Are you in a fixed period with your current lender ?
    Is the property in a good area for renting and in good condition ?
    You could try renting for one or two years while you see what happens with your work.
    When your current deal runs out then consider is the renting game/ being a Landlord worth it ?
  • foxy-stoat
    foxy-stoat Posts: 6,879 Forumite
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    Sell it, there's not enough profit to make it worth while with all the risks.
  • Wanderfree
    Wanderfree Posts: 42 Forumite
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    Thanks Pascal22p - this is super helpful. I've begun a spreadsheet so will build on it based on the stuff you've covered in your response
  • Wanderfree
    Wanderfree Posts: 42 Forumite
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    dimbo61 wrote: »
    Are you going to be renting in the new city you are moving too ?
    Are you in a fixed period with your current lender ?
    Is the property in a good area for renting and in good condition ?
    You could try renting for one or two years while you see what happens with your work.
    When your current deal runs out then consider is the renting game/ being a Landlord worth it ?

    Hi dimbo61
    thanks for your thoughts - really helpful. In response to your questions:
    Yes i'm in a fixed period - ERC would be circa £2.5k
    I will be renting in the new city.
    My property is in good condition and it will rent quickly.

    Yes, I'm considering renting it out just for a year. This would take me to the end of my current fixed interest deal so I could sell without ERC at that time.
  • Fuzzyness
    Fuzzyness Posts: 635 Forumite
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    i'd sell. i became a landlord in similar circumstances i've not enjoyed the experience at all. if you're in it for the long term then it may be worth it but if you're only looking for a stop gap I'd sell.
  • Wanderfree
    Wanderfree Posts: 42 Forumite
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    Fuzzyness wrote: »
    i'd sell. i became a landlord in similar circumstances i've not enjoyed the experience at all. if you're in it for the long term then it may be worth it but if you're only looking for a stop gap I'd sell.

    Hi Fuzzyness - thanks for your response. Would you mind sharing what in particular you didn't enjoy about the experience?
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