to sell or rent??

Kernowkid_2

Hi,
This is a also bit of an investing question really, but next year I'll be moving abroad for a while (2-5yrs) and I had thought that I'd just rent out my flat. But then I thought maybe just sell the flat!?

If I rent the mortgage would be covered with about £400-£600 left over. Cool! But I'll be paying:
- mortgage interest
- probably some kind of letting insurance?
- letting management fees
- other fees that crop up with owning/letting a flat like general maintenance.

Also I'll have the stress of covering the mortgage if the flat is not let for any period.

If I just sell the flat I'll pay off the mortgage and have roughly £200,000 to invest (something low risk as this is cash to buy a house with when back in blighty!).

So really it's down to whether £200,000 just accumulating interest would be a better investment than keeping the cash tied up in a property which is then let out.

Will (London) property prices rise at a healthy rate? I kinda think it'll be slow and steady for a few years.

I wonder if anyone has any thoughts?

g_attrill

It's probably a dilemma of whether the hassle of selling and then rebuying later is more than the hassle of letting it. £400+ is quite a surplus (most people are happy to break even!), so if it were me I would hold onto it, even if prices remain static. You could pay a letting agent to handle everything, so you don't get calls abroad asking to sort out a plumber

Another thing - you will need to pay UK taxes on this income but given you will not be resident it might complicate things a bit (you might be liable for income tax on it wherever you are resident) but it should be pretty common and not too tricky to sort out, just paperwork.

jamesd

You'd also need to check what your lender charges for permission to let. Adding 1% to the interest rate wouldn't be unusual.

getmore4less

If you are definately coming back to the UK then having a property insulates you from fluctuations good or bad.

So the important thing is that it is at least cash flow neutral(also include opportunity loss of not investing the equity elsewhere) in the UK so rent in £ cover expences in £

Do you have people in the UK that can look after your interests?
How often will you be returning to the UK to check up?

The other angle is the job and the renumeration structure are you protected from exchange rate fluctution, will you have good surpluss/expences/allowances.

Will you need or want to invest in the place you are working.
Might you end up never comeing back(happens a lot)

JasX

If you like the place, its close to decent transport links and you might have use of it in future i'd be leaning towards holding on to it.

Kernowkid_2

Thanks for all your comments. I should have mentioned that I'm gonna sell the flat anyway. Selling before I go feels the best, hassle free option. I think the housing market will (maybe) be a bit healthier in 2-5 yrs time but with interest rates, letting agent management fees etc nibbling away at any returns I'm sure that a lump sum of cash invested wisely would do a lot better.
Thanks