Help! My house is sitting empty and I have no money left :o(

JayneWright

Hi everyone,

I moved up to Scotland four years ago, I kept my property in Gateshead as a back up in case we wanted to move back. I have been renting it out since we moved. I have had two lots of tenants, after the first ones left my house was empty for four months whilst the agency found a new tenant. Paying the mortgage wiped out all my savings at the time. My most recent tenants left in March and the house is still sitting empty. I have just got married and all my savings paid for that - which means I am paying two mortgages out of my monthly income and this is crippling me.

There seems to be no interest in the property and I can't go on much longer in this situation. I am thinking of selling the house - but here's my problem;

I bought the house ten years ago for £40,000 and borrowed £25,000 on the mortgage renovate it. I had to move to Scotland for work reasons and before I left, the house was valued at £130,000. Now it is valued at £85,000. I feel sick to the stomach that it has lost so much money, but I'm still prepared to sell. However, I'm at a loss as to the whole Capital Gains Tax. Do I need to pay it? Is there a way of getting out of it if I sign the house over to my husband? And if I do that...how do I go about it? I doubt he would get approved for the mortgage.

I'm stuck between a rock and a hard place.

MX5huggy

If you lived in the house, which it seems you did, no CGT is due.

beedeedee

Well whilst you are deciding - could you not drastically reduce the rent say for a 3 month let? At least there would be some money coming in temporarily........

JayneWright

MX5huggy wrote: »

If you lived in the house, which it seems you did, no CGT is due.

Thanks,Huggy. I heard that because I haven't lived there in over three years they class it as a second home, meaning I would have to pay it. There's very little info on the HMRC site that helps me, hence the posting. I didn't buy the house as an investment, which the government see it as now. I've been kinda stuck with it!!

Seanymph

and hang onto the fact that you haven't 'lost' money - you've actually increased your investment substantially over that time, even at £85,000. The drop in the market from peak isn't real money - because you didn't sell it then - it's just figures on paper.

You haven't actually 'lost' anything.

moesasji

I can't advise on the CGT, however seeing that you have extended periods in which you can't find tenants I would say your rent is too high compared to the competition. Do your own research in case you haven't done so, i.e. don't trust the agent on their word. Keep in mind that the periods in which it is empty is can be equivalent to 100s of pounds lower monthly rent.

The problem of too high rent is is probably particularly true now that many tenants feel the pressure on their disposable income due to inflation. I for example seriously need to soon look at cheaper accommodation (by 20%) or more, which was easily affordable 3 years ago but now leaves little remaining.

ps) You only make money when you sell so in that sense you haven't lost actual money. You just did not sell at the "right" time in the cycle.

JayneWright

beedeedee wrote: »

Well whilst you are deciding - could you not drastically reduce the rent say for a 3 month let? At least there would be some money coming in temporarily........

I have reduced it already beedeedee - the least amount of time I can rent it out through the agency is six months.

They are happy to help me sell and have suggested the auction route...

jamie11

JayneWright wrote: »

Hi everyone,

I moved up to Scotland four years ago, I kept my property in Gateshead as a back up in case we wanted to move back. I have been renting it out since we moved. I have had two lots of tenants, after the first ones left my house was empty for four months whilst the agency found a new tenant. Paying the mortgage wiped out all my savings at the time. My most recent tenants left in March and the house is still sitting empty. I have just got married and all my savings paid for that - which means I am paying two mortgages out of my monthly income and this is crippling me.

There seems to be no interest in the property and I can't go on much longer in this situation. I am thinking of selling the house - but here's my problem;

I bought the house ten years ago for £40,000 and borrowed £25,000 on the mortgage renovate it. I had to move to Scotland for work reasons and before I left, the house was valued at £130,000. Now it is valued at £85,000. I feel sick to the stomach that it has lost so much money, but I'm still prepared to sell. However, I'm at a loss as to the whole Capital Gains Tax. Do I need to pay it? Is there a way of getting out of it if I sign the house over to my husband? And if I do that...how do I go about it? I doubt he would get approved for the mortgage.

I'm stuck between a rock and a hard place.

I would not worry about CGT in your position.

If you want it let out quickly then be more pro active, go back there if you can and camp out in it so you are instantly available for renters to view it, put out local ads in newspapers and shop windows, engage more agents to push the property. Do not neglect to do all the checks on applicants as normal. If the price is not right compared to others in the area then you will struggle to find a renter, so compare all the local properties and then grit your teeth and beat their prices. Make your place the best value for money in the area.

It's a lot better to lose a fiver a week for a couple of years than to have voids for three or four months. Hang in there, things will get better.

If you can't actually be there then instruct the agent that you are going multiple and do so and work out a price at which it will be snapped up. Do not automatically rule out LHA tenants, most are as good as a working tenant, it's a very few that cause problems, but do get a solid guarantor and have the guarantee signed as a deed. Guarantors should be credit checked as well as the tenant.

LittleMrsThrifty

JayneWright wrote: »

I have reduced it already beedeedee - the least amount of time I can rent it out through the agency is six months.

They are happy to help me sell and have suggested the auction route...

For a fee, presumably. They're not doing you a favour, they are offering you their services at a cost.

Seanymph

I read the HMRC website and thought it was fairly straightforward;

the important bit for you is that you get private relief on the property after you move out for only three years;

Absences as you've moved out of your home

You may still get the full relief even if you didn't live in your home all of the time that you owned it. The final 36 months (three years) that you own it will be treated as if you lived there, even if you didn't, as long as the property has been your only or main home at some time during the time that you owned it.

As you have been living there for four years then by my reading CGT falls due on the property in Gateshead.

poppysarah

JayneWright wrote: »

I bought the house ten years ago for £40,000 and borrowed £25,000 on the mortgage renovate it. I had to move to Scotland for work reasons and before I left, the house was valued at £130,000. Now it is valued at £85,000. I feel sick to the stomach that it has lost so much money,

Let me make you feel SO much better then.

You spent 65k on a house and have presumably paid off 10 years of mortgage.

Your house is now worth 85k.

Well done. You've actually made £20k.

You have lost NOTHING.