Should we let out our home or sell it?

Faz

Hi everyone..

Thought I'd post a topic here to see if anyone can offer any advice (on behalf of my dad!)

We have bought a home for £270k, with a mortgage of £240k, which we will be living in.

Our previous property, is a 4-bedroomed mid-terrace house, worth approx £125k. We have £30k mortgage left on this to pay off (currently interest only).

We are debating whether to sell this off or rent it.

I suggested to my dad that we rent this property out, to 4 different people. There is a hospital close-by, and a few nurses rent homes in the area. I'm sure if we put adverts up in the hospital, we could find 4 nurses who would want to house-share, essentially meaning we'd earn much more this way than letting the property out to a family for example? If we wanted to, in the future, we could sell the house if its value increases to £150k+

My dad is leaning towards selling the property, then with the £95k left over after paying the mortgage, to buy 4/5 terraced properties with high mortgages, let them out, and once their values increase substantially, sell them off at profits.

Do you have any suggestions or ideas? I suppose the main aim is to provide investment for the future, mainly for my parents who should be retiring within 10 years.

p.s. I say it's a 4-bedroomed, but this includes an attic-2-bedroom conversion. We didn't get planning permission for this, so I presume we have to do this properly before we let or sell the house in order to class it as 4 bedroomed?


Any advice or input is much appreciated :cool:

MortgageMamma

Hi there. Not an expert on this but I'm happy to tell you what I know. All rented properties now have to registered with the local authority, especially houses of multiple occupation which I think yours wouold be if you rented it. look into this on this http://www.rla.org.uk (residential landlords associatoin) they will give you more information. As for planning permission, this will affect the sale or let of your property, and as far as I'm aware (and anyone correct me if im wrong) councils will seldom grant planning permission after the works been done. If your property will be house of multiple occupation I think the council will need to inspect your property. The site ive linked for you should answer most of your questions.

Lisa

toucanspeed

Depends what part of the country you're in (the rental house). If you are like me then sell, I think the markets going down in the south. If you are thinking long term 10yrs then this shouldn't really worry you.
Capital gains wioll be due on the house when you sell it if you don't live in it withing 6 months of selling (if it's value goes up from now - get it valued)
Planning permission is not needed if the conversion has been done 6 yrs (I think)

IMHO. If YOU think the market is going to rise then keep it and maybe invest more BTL. If you think the market is going to fall (where you are) the sell and play the stock matket.

UK_Landlord_2

why not remortgage the property you have and buy additionally, sounds to me like you are just going to pay more agents fee than you need to?

re: licensing, it depends on your local council, where i am licences are only required for 5 bed, 3 storey properties, check with your local council.

BobProperty

Faz wrote:

...My dad is leaning towards selling the property, then with the £95k left over after paying the mortgage, to buy 4/5 terraced properties with high mortgages, let them out, and once their values increase substantially, sell them off at profits.... the main aim is to provide investment for the future, mainly for my parents who should be retiring within 10 years....

I think you will find mixed opinions on that happening inside 10 years. I for one think you will be lucky if it does. What would you do if the timescale was more like 15-20 years? What will you do if interest rates go up?

Alleycat

I don't know too much about the pros and cons of your options re selling and buying etc, but with regard to letting out the current property to several different people, there are some new regulations coming into force in May.

Basically if the property is let out to more than one household it is classed as an HMO - House of Multiple Occupancy. In May, any property that covers three or more storeys with five or more separate occupants it will need to be licenced and there are some quite strict guidelines covering this. In your case you should be fine as there are only 4 bedrooms.

I reckon that it would be far more sensible in the current housing uncertainty to rent out the current property rather than buying several new properties as the expense of legal fees, solicitors etc involved in purchasing multiple properties would be pretty expensive. There would also be less work involved in managing just one property with repairs, finding tenants etc.