Rent or sell... thoughts?

saver6

Me and hubby are moving abroad for a year as an irresistable opportunity has arisen, and would prefer to keep our house as something to come back to, so our first firm decision is to rent through a full management agency. We know enough about what we need to do/provide/account for, and frankly, the sums are working out a bit... iffy. Basically, rental income will be less than all costs, so we would definitely have to feed back a couple of hundred quid each month to cover the loss. Luckily, where we're going has much higher earning potential, along with a fab exchange rate that will work completely in our favour. It also means we don't feel like we'll be "starting again" when we get back, so to speak. That's the upside of renting it out.

The down side is that we are probably wanna move to a bigger house when we return to the UK after a year or so, but the house currently has no meaningful equity now, and probably won't in a year or two's time either (although is not in negative equity by any means). And of course, it'll take longer to sell than rent, and we don't want to leave the country until one or the other is complete (and we are desperate to go asap as the opportunity is slipping away...)

But I can't help thinking that renting out is so risky, even if we do use a management agency... Before we decided to go, we'd spent a bit on doing the house up really nice as at the time, it was for "us". But seeing as we did spend money on it, we don't want someone to go and ruin it all if we then want to live in it again later on.

But is the financial loss of renting each month really worth it or should we just sell and get rid of the baggage and attempt to build up a scary-sounding deposit while we're away for a new house, which I can't see as a real possibility at this point (not until I'm there in any case). Anyone else ever been in the same position and how did you decide what to do?

CloudCuckooLand

Depends in part on what early repayment charges may be involved in your mortgage.

You plan to move to a bigger house in the future, have great earning potential abroad, but at the same time see saving a deposit as scary? How would you go about that purchase if you didn't have the overseas opportunity?

Also, if you cannot save a deposit while having great earning potential, then what chance is there to do so if you have to give some of your earning potential over to subsidising the rent?

Is there a particular factor that makes the rent not match the mortgage? Suppose you had a void period (empty of tenant) - would your finances cope?

Sell. Take the equity. Add to it, with your great earning potential.

As long as there is not a massive ERC on the mortgage.

Rainmaker_uk

If it is in a desirable/rentable area then I would rent it out.

There is a possibility that if you move and sell that you might never be able to afford the size of house you are in now - let alone increase the size. This could be the case if/when house prices rise. We know people that this has happened to.

For the sake of a couple of hundred quid which is paying off your asset anyway - I would keep hold.

mlz1413

If you do rent then look into the guaranteed schemes as this will at least reduce the risk of voids. But do ensure with any letting company that you read and understand the T&C's - don't just read the brochures.

Is the work aboard only a year? If so I would keep the current home so at least you do have somewhere to live when you come back.

If the work could be for longer or you might want to travel somewhere afterwards then I'd sell so you don't have the committent of rental agreements / maintenance problems etc.

The deposit / extra money for a bigger house should be the same regardless of if you own or not. If prices continue downwards then you will be better off in a years time.

saver6

CloudCuckooLand - the only reason saving for a deposit would be scary is that we would need to save a good £20k over the space of a year to get anything like a decent rate on a new mortgage. Earning potential is good, but probably wouldn't stretch to that!

Seeing the above in writing certainly seems to suggest that selling will do us no favours right now anyway, whether we were staying or not! I guess we'll be stuck with the house and will have to entrust the agency to get a good tenant in, but then at least we'll have somewhere to live when we get back.

Besides, and I can't believe I've forgotten this before now, but yes, we would have to pay an ERC, although I do know that the mortgage is portable (I insisted on it). We have a house, we're paying the mortgage, so I guess paying a couple of hundred quid to sub it isn't the worse thing against the risk of potentially not getting a decent deposit together later on. I suspected that's what we would have done anyway, but I needed a sanity check!

seraphina

Have you checked your lender will give consent to let? If the rent won't cover the mortgage it might be unlikely.

saver6

seraphina wrote: »

Have you checked your lender will give consent to let? If the rent won't cover the mortgage it might be unlikely.

Already done
Was the first thing I made sure to do!

BitterAndTwisted

Letting out your own home when you have no experience of being a landlord and have little control over the agent's vetting process would be a HUGE risk. And please, do not for one moment rely on the fact that you could get your tenants out of the property in the very same week or month that you need to move back in. This is not a certainty by any stretch of the imagination.

If you do decide to go ahead and let your home you should join a landlords association before you do anything else. You should also be aware of the tax-implications for receiving rental income as that could mean you may be contributing a bit more to the shortfall than you anticipate.

saver6

BitterAndTwisted wrote: »

Letting out your own home when you have no experience of being a landlord and have little control over the agent's vetting process would be a HUGE risk. And please, do not for one moment rely on the fact that you could get your tenants out of the property in the very same week or month that you need to move back in. This is not a certainty by any stretch of the imagination.

If you do decide to go ahead and let your home you should join a landlords association before you do anything else. You should also be aware of the tax-implications for receiving rental income as that could mean you may be contributing a bit more to the shortfall than you anticipate.

All of that's already been considered - temp accomodation should we need it on return has been arranged, tax, all has been accounted for. Although we are fairly flexible exactly when we come back, so we can give required notice and time the return to the date if we wanted.

I didn't realise I should join an association though - I figured that as we are going through an experienced agency, they'd be pretty savvy on all the stuff that an association would bring. But if you think we should in any case, then I'll certainly go do that. Any advice from "real life" landlords as opposed to accidental landlords will always be greatfully received!

huangdi

hi

thought i would share my tuppence worth as im in a similar predicament. Me and my wife want to move abroad in about 5 months. We have a flat in the UK at around 80LTV (has lost about 15% of value).
i have looked into renting out as the income from that will cause us to breakeven when considering the mortgage and letting fees。
However, i really want to sell the property (its been up for sale for 5 months already, with no viewings and ive taken off 12% already!).
i am very wary of letting out my house as i would not be in the UK, and the hassle if things went wrong would not be worth it. (do you not have to have a registered UK address to let out?)

either way, its a big decision. other factors also come into it such as whether you actually want to return to the house. I have no love for the area i currently reside, so do not wish to ever come back there!

as house prices are believed to be stagnating for the next year, i really want to just leave the house behind and not worry about it from the other side of the world!

i would only consider renting if there was money to be made from it.

BitterAndTwisted

saver6 wrote: »

I didn't realise I should join an association though - I figured that as we are going through an experienced agency, they'd be pretty savvy on all the stuff that an association would bring. But if you think we should in any case, then I'll certainly go do that. Any advice from "real life" landlords as opposed to accidental landlords will always be greatfully received!

Please do not be under any illusions that what might appear to be experienced and reliable letting agents would necessarily know anything about the multitude of LL&T legislation than I do (and that's not much as I'm not a landlord). As has been said on this forum many, many times an agent needs no specialist knowledge or professional qualifications to set up in business and the first any landlord or tenant knows about this is when some serious problems crops up.

Also, in law, the final responsibility for anything to do with your property will always lie with you as the agent is just that, acting on your behalf. This is one of the many compelling reasons to joing a landlords association. Another one is that once a member legal advice can be available and you might be in need of this should anything go wrong and you are thousands of miles away.

There are a number of professional landlords who post on this forum regularly, some of whom might contribute some advice to this thread ere long.