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Sell house to tenants? Or not ...?
Wordsmith
Posts: 1,164 Forumite
Background:
I have two houses in the UK, both of which I let out while I live abroad.
One house is worth about 100K and has a 75K (interest only) mortgage on it – the tenant is brilliant and the rent covers the mortgage. The tenant has been in the property for three years and I believe intends to stay long term.
The other house is worth 155K and has a 127K (repayment) mortgage on it. Again the tenants are absolutely brilliant, but in this case the rent does not cover the mortgage – at the moment I add £100 to the rental income, but not so long ago I was adding more like £300 every month.
The property I have abroad has no mortgage on it, but it is not habitable (I live reasonably comfortably in a mobile home on the site). I have £44,000 worth of debts on credit cards/unsecured loans. I would sell the property abroad to pay off these debts, but from the market here I believe I would have very little prospect of selling it on in its current state – it is perhaps “worth” 50K and is not mortgageable. I cannot at the moment afford to do any work on it.
The tenants in the 155K house are interested in buying it. They had it valued at 160K, but have said that they will not offer this much for it. I have had it valued at 155K. Realistically, I doubt I could get over 155K for it.
Pros for selling the property:
1. I have a ready buyer (they have already found out that they will be able to get a mortgage) and costs will be minimum – I will have to give the letting agent one month’s rent as a “fee”, but obviously will not have estate agent costs. I haven’t yet looked at how much legal fees will be.
2. The proceeds from the sale will help to reduce my unsecured debts, but will not clear them by a long way. It will, however, remove a big debt (the mortgage) from around my neck. I am far from flush and the debts are a worry.
3. The tenants I believe would be long-term if they didn’t buy, because I know they love the house and the area. However, if they did move out, I have the worry of the mortgage while the property is empty. And I worry that now they know they can get a mortgage they may want to buy and will move anyway.
4. I will not have to worry about possible future bills, e.g. a new boiler (a real possibility).
5. I am self-employed and in today’s climate have the worry of no pay, or taking a long time to get my money. I have been OK so far, but this is a risk that I need to factor in because I am afraid that there may be a point at which I will struggle to contribute to the mortgage.
Cons for selling the property:
1. If I ever want to return to the UK, I will never, ever, be able to afford a similar house again. It is an ex council house and so not particularly attractive, but I love it and it has a big garden. I doubt that now I would even be able to start again with house buying in the UK - I have spent years getting to this point and don't want to lose it.
2. Although I would still have the smaller house, this would not be suitable for me to live in full time at any point as it was bought purely as an investment and is not suitable for my needs.
3. The houses are in lieu of a pension as I have no other provision.
4. Purely emotional, and therefore I know should not even be entering into the equation … but, I just don’t want to get rid of the house.
Sorry for the long post, but that’s the background. What would you good peeps advise? Sell, or not sell?
I have two houses in the UK, both of which I let out while I live abroad.
One house is worth about 100K and has a 75K (interest only) mortgage on it – the tenant is brilliant and the rent covers the mortgage. The tenant has been in the property for three years and I believe intends to stay long term.
The other house is worth 155K and has a 127K (repayment) mortgage on it. Again the tenants are absolutely brilliant, but in this case the rent does not cover the mortgage – at the moment I add £100 to the rental income, but not so long ago I was adding more like £300 every month.
The property I have abroad has no mortgage on it, but it is not habitable (I live reasonably comfortably in a mobile home on the site). I have £44,000 worth of debts on credit cards/unsecured loans. I would sell the property abroad to pay off these debts, but from the market here I believe I would have very little prospect of selling it on in its current state – it is perhaps “worth” 50K and is not mortgageable. I cannot at the moment afford to do any work on it.
The tenants in the 155K house are interested in buying it. They had it valued at 160K, but have said that they will not offer this much for it. I have had it valued at 155K. Realistically, I doubt I could get over 155K for it.
Pros for selling the property:
1. I have a ready buyer (they have already found out that they will be able to get a mortgage) and costs will be minimum – I will have to give the letting agent one month’s rent as a “fee”, but obviously will not have estate agent costs. I haven’t yet looked at how much legal fees will be.
2. The proceeds from the sale will help to reduce my unsecured debts, but will not clear them by a long way. It will, however, remove a big debt (the mortgage) from around my neck. I am far from flush and the debts are a worry.
3. The tenants I believe would be long-term if they didn’t buy, because I know they love the house and the area. However, if they did move out, I have the worry of the mortgage while the property is empty. And I worry that now they know they can get a mortgage they may want to buy and will move anyway.
4. I will not have to worry about possible future bills, e.g. a new boiler (a real possibility).
5. I am self-employed and in today’s climate have the worry of no pay, or taking a long time to get my money. I have been OK so far, but this is a risk that I need to factor in because I am afraid that there may be a point at which I will struggle to contribute to the mortgage.
Cons for selling the property:
1. If I ever want to return to the UK, I will never, ever, be able to afford a similar house again. It is an ex council house and so not particularly attractive, but I love it and it has a big garden. I doubt that now I would even be able to start again with house buying in the UK - I have spent years getting to this point and don't want to lose it.
2. Although I would still have the smaller house, this would not be suitable for me to live in full time at any point as it was bought purely as an investment and is not suitable for my needs.
3. The houses are in lieu of a pension as I have no other provision.
4. Purely emotional, and therefore I know should not even be entering into the equation … but, I just don’t want to get rid of the house.
Sorry for the long post, but that’s the background. What would you good peeps advise? Sell, or not sell?
"Green pastures are before me,
Which yet I have not seen;"
I'd love to be a good example - instead, I am a horrible warning.
Which yet I have not seen;"
I'd love to be a good example - instead, I am a horrible warning.
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