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  • FIRST POST
    • ak102
    • By ak102 14th Mar 17, 2:15 PM
    • 38Posts
    • 5Thanks
    ak102
    Your opinion please - Sell or Let?
    • #1
    • 14th Mar 17, 2:15 PM
    Your opinion please - Sell or Let? 14th Mar 17 at 2:15 PM
    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
Page 1
    • Penitent
    • By Penitent 14th Mar 17, 2:26 PM
    • 1,075 Posts
    • 2,922 Thanks
    Penitent
    • #2
    • 14th Mar 17, 2:26 PM
    • #2
    • 14th Mar 17, 2:26 PM
    Are you prepared to take on the duties and responsibilities of a landlord? Are you financially able to withstand void periods? Are you comfortable with either managing a property long distance or leaving it in the hands of an estate agent?

    As far as I'm aware, consent to let is not a permanent solution and is typically offered for x number of months (so it's better suited for someone who is moving away for six months but plans to come back and resume living in the property), so you may need a BTL mortgage rather than consent to let if this is long term.

    Personally, I'd just sell, but I have absolutely no compulsion to become a landlord.
    • ak102
    • By ak102 14th Mar 17, 2:32 PM
    • 38 Posts
    • 5 Thanks
    ak102
    • #3
    • 14th Mar 17, 2:32 PM
    • #3
    • 14th Mar 17, 2:32 PM
    Thanks Penitent. Useful questions.
    • ellie27
    • By ellie27 14th Mar 17, 2:35 PM
    • 1,084 Posts
    • 719 Thanks
    ellie27
    • #4
    • 14th Mar 17, 2:35 PM
    • #4
    • 14th Mar 17, 2:35 PM
    So, if you let it out it might just about cover the mortgage each month? I would definitely sell!
    • Niv
    • By Niv 14th Mar 17, 2:38 PM
    • 1,475 Posts
    • 1,299 Thanks
    Niv
    • #5
    • 14th Mar 17, 2:38 PM
    • #5
    • 14th Mar 17, 2:38 PM
    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

    Mortgage free by 58.
    • pascal22p
    • By pascal22p 14th Mar 17, 3:33 PM
    • 25 Posts
    • 12 Thanks
    pascal22p
    • #6
    • 14th Mar 17, 3:33 PM
    • #6
    • 14th Mar 17, 3:33 PM
    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
    • By dimbo61 14th Mar 17, 3:49 PM
    • 9,380 Posts
    • 5,091 Thanks
    dimbo61
    • #7
    • 14th Mar 17, 3:49 PM
    • #7
    • 14th Mar 17, 3:49 PM
    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
    • By foxy-stoat 14th Mar 17, 4:12 PM
    • 1,563 Posts
    • 859 Thanks
    foxy-stoat
    • #8
    • 14th Mar 17, 4:12 PM
    • #8
    • 14th Mar 17, 4:12 PM
    Sell it, there's not enough profit to make it worth while with all the risks.
    • ak102
    • By ak102 14th Mar 17, 4:36 PM
    • 38 Posts
    • 5 Thanks
    ak102
    • #9
    • 14th Mar 17, 4:36 PM
    • #9
    • 14th Mar 17, 4:36 PM
    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
    • ak102
    • By ak102 14th Mar 17, 4:41 PM
    • 38 Posts
    • 5 Thanks
    ak102
    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 ?
    Originally posted by dimbo61
    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
    • By Fuzzyness 14th Mar 17, 4:51 PM
    • 612 Posts
    • 457 Thanks
    Fuzzyness
    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.
    • ak102
    • By ak102 14th Mar 17, 4:55 PM
    • 38 Posts
    • 5 Thanks
    ak102
    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.
    Originally posted by Fuzzyness
    Hi Fuzzyness - thanks for your response. Would you mind sharing what in particular you didn't enjoy about the experience?
    • cashbackproblems
    • By cashbackproblems 14th Mar 17, 4:56 PM
    • 1,640 Posts
    • 630 Thanks
    cashbackproblems
    I would also sell unless you plan to return to that city fairly soon, otherwise it doesn't seem worth it. You can use that cash to buy where your working.


    You can have problem tenants and court fees if they don't leave, you will probably be out of pocket as you have to factor in agent fees (usually 10%), cost of repairs, landlord insurance and as a landlord you will have tax returns to fill in annually.
    • Cakeguts
    • By Cakeguts 14th Mar 17, 8:06 PM
    • 2,485 Posts
    • 3,217 Thanks
    Cakeguts
    Not every house lets easily. You may think that you could get 700pcm but unless you can get that for every month without any gaps you are going to find yourself paying the mortgage without any rent coming in at some time. You cannot assume that just because you liked the house enough to buy it that any tenants will like it enough to rent it.

    If you get a problem tenant and they don't pay the rent how are you going to pay the mortgage and the rent on the place in the town you are moving to. You might have to do this for 6 months can you afford it?

    The simplest option is to sell it.
    • loveyourmoney
    • By loveyourmoney 15th Mar 17, 5:16 PM
    • 74 Posts
    • 15 Thanks
    loveyourmoney
    I'll throw my tuppence worth in - doesn't it depend where the house is located though? I am in a similar ish situation myself. What if the house is in a very desirable area - might it not be worth keeping for the amount it will go up in value?
    In it to win it!
    • Cakeguts
    • By Cakeguts 15th Mar 17, 6:18 PM
    • 2,485 Posts
    • 3,217 Thanks
    Cakeguts
    I'll throw my tuppence worth in - doesn't it depend where the house is located though? I am in a similar ish situation myself. What if the house is in a very desirable area - might it not be worth keeping for the amount it will go up in value?
    Originally posted by loveyourmoney
    What happens if the house is in a desirable area and you get a problem tenant who doesn't pay the rent? This means that you will still have to pay the mortgage and for repairs but have no money coming in as rent. You can only keep the house if you can afford the mortgage payments and the rent on the current home from your salary. The fact that the house has risen in value doesn't help you to pay the mortgage payments if you aren't getting any rent.
    • ak102
    • By ak102 21st Mar 17, 10:27 PM
    • 38 Posts
    • 5 Thanks
    ak102
    Thanks everyone for the responses - they really helped. I've decided to sell
    • Frugal Wells
    • By Frugal Wells 21st Mar 17, 11:41 PM
    • 9 Posts
    • 19 Thanks
    Frugal Wells
    If it was my money I would probably sell but it's hard giving up property.
    You could use the money to buy a more suitable rental property if that were something you were interested in.
    • dimbo61
    • By dimbo61 23rd Mar 17, 8:28 AM
    • 9,380 Posts
    • 5,091 Thanks
    dimbo61
    I would try renting for at least a year and wait till your fixed deal has finished.
    Your tenants may love the property and want to buy off you.
    They will have a home to live in and you will get rent until the day you sell !
    • Fuzzyness
    • By Fuzzyness 23rd Mar 17, 10:03 AM
    • 612 Posts
    • 457 Thanks
    Fuzzyness
    Hi Fuzzyness - thanks for your response. Would you mind sharing what in particular you didn't enjoy about the experience?
    Originally posted by ak102
    getting phone calls from the tenants informing me that things weren't working and then having to organise someone to go round and fix it. i was 260 miles away from my house so it wasn't like i could just pop round and have a look myself. it always filled me with dread getting one of these calls as i wanted to keep my tenants happy but knew in doing so there would be a cost and hassle factor involved.
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