To sell or to let my flat. That is the question

Tweeky

I have about 80k in equity on my flat and am thinking of moving whilst it's a buyers market.

With that in mind do you think I'm better off.

Taking some cash out of the flat for a deposit on somewhere else and renting it out. Will get approx £700/750 PCM in Rent. My intention would be to keep for quite a while unless prices go silly high again then I would probably sell up to pay out large chunk of 2nd mortgage

Or

Selling it, but in doing so realising I won't get the 80k in equity as the market isn't great for sellers.

Or

Do nothing and sit it out a bit and see if the prices go down further(Note this last option will probably result in me having to buy a new kitchen as the missus has been pricing them up ! )

Also in regards to tax how does this work on Rental incomes. My friend told me that you don't want to earn any income on your rented flats as you'll have to pay tax on them. That to me sounds a bit nutty as if I'm not earning anything now while Interest rates are at their lowest in history then I will be making a significant loss once things get better and the rates go up and I would expect go up rather unpleasantly sharply!. Or could I perhaps make say 10% profit but pay this straight into the Mortgage without incurring tax? I'm guessing not as it's still income. I'm a hgher rate tax earner at the moment.

I'm sure some or all of the above has been covered numerous times in the past but I couldn't find after a quick search so any help would be greatly appreciated.

Mutton_Geoff

I couldn't find after a quick search so any help would be greatly appreciated

Try another search there are dozens if not hundreds of threads on this exact topic. There are also plenty of websites where you'll find advice on the basic structure of letting & taxation.

QTPie

I think it is a very personal decision, really.

We were trying to sell, but having difficulty (well a nasty gazundering put a veryy bad taste in my mouth...) and were considering renting out instead. We were going to release capital, rent for a while and then buy again when we found the right property. The intention was to release as much capital as possible so that the rent just covered the mortgage repayments and agency fees etc. We would then sell it when the market rose again (and it would be easier and more profitable to sell).

HOWEVER we are now under offer to sell again (to a cash investment buyer), so hopefully that will go through...

I think that, if you could rent it out for longer term (5/7/10 years) then hanging onto the house and renting it out (instead of selling it) is probably a great way to go: ideally you would buy something good in a "buyers market", then sell your old property at a better price and with a lot less hassle in a "sellers market". BUT selling NOW has the followng advantages:
- we will release quite a lot more equity by selling rather than renting out (we would have needed to retain 40% equity in our house to cover an interest only mortgage - that is almost £170k equity that would have been left in this house). So if we didn't sell we would have less equity to sink into the next house. Because we want the next house to last for about 30 years, that is a problem...
- less financial risk: you always risk having periods when the house is not rented out and who knows how long it will take for it to become a sellers' market again.
- less hassle: at the end of the day, you still have another house to maintain (hassle-wise and financially).
- ease of sale: our house is only 5 years old and "immaculate". If we rented it out for 5/7/10 years, then it is unlikely to be as immaculate by then! So probably have to redecorate, recarpet and goodness only knows what to make it at it's most attractive to sell...

If our current sale falls through, then we are still considering renting it out, BUT the least hassle and least risk and the easiest option (for buying the next place) is to sell now...

I think it is a good thing to do in some circumstances, but not others... you need to work out what is right for you, your property and do a lot of sums...

QT

penguine

There are a lot of people looking to let their property at the moment because they're having trouble selling. I have heard that many estate agents' letting departments are now turning away would-be landlords as they already have too many properties on their books. Also rents are falling in many places.

So in short, unless you have always had an ambition to be an amateur landlord, it's probably not a good idea.