Sell or let our house? Dilemma

yumyums

Last year we moved to a new area and bought a house. Unfortunately, things haven't worked out here when it comes to jobs. We have now both found jobs in a new area that is too far to commute to but I'm having trouble deciding what to do about our house.

We intend to rent in the new area before buying to get to know the area, make sure we're settled in our jobs, etc. Can't decide what to do about our current house though. It's a 3 bedroomed house and we have owned it for just under a year. We're in the fortunate position of not having a mortgage on the house.

As we originally expected to be living here for quite some time we have spent a bit of money doing the house up. I know with the market being the way it is, we're unlikely to get the money we spent back if we did sell. I'm willing to make a little bit of a loss but don't want to lose huge amounts of money.

If we did rent it out, I'm assuming it would have to be long term (at least a year?) which would mean we wouldn't be able to start looking for a place to buy for at least this length of time.

If we put it on the market straight away then I would worry about the house being empty & the fact that we still need to pay the bills on this house (standing charges, insurance etc) on top of bills and rent in the new house.

We haven't yet been to see an estate agent for a valuation or details of rental figures but intend to do this very soon. I don't really think there is much of a market for 3 bed rentals in this area, however.

In hindsight I wish we hadn't rushed into buying this house in an unfamiliar area in the first place, but we live and learn I guess!

Does anyone have any suggestions or points I haven't considered? I figured discussing it on here might help me come to a decision.

Thanks in advance

Yorkie1

Renting the property out is not to be undertaken lightly. There are lots of legal responsibilities - see G_M's usual post here: http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12

As you don't have a mortgage you don't have to worry about consent to let / buy to let deals, nor about how you cover void periods in the way that someone with a mortgage would have to, so that's one less thing to consider.

But you will need to consider how you will cope with your house being let out to others. Will you use a letting agent or manage it yourself? How will you credit check the Ts? Do you have the financial backing to repair damage caused by Ts?

If you decide to sell, I'd advise against trying to do so with Ts in situ. They have a right to quiet enjoyment, and many Ts will not appreciate having to put up with viewings. It also complicates matters because you have to get them out before exchange of contracts - and you won't know whether they will go when you give them notice or will make you evict them - all taking time (and money) and risking your buyer getting hacked off.

If you leave it empty pending sale, check your insurance. It will almost certainly have clauses about not leaving the property unoccupied for a certain period.

poppysarah

yumyums wrote: »

If we did rent it out, I'm assuming it would have to be long term (at least a year?) which would mean we wouldn't be able to start looking for a place to buy for at least this length of time.

Does anyone have any suggestions or points I haven't considered? I figured discussing it on here might help me come to a decision.

If you are thinking long term as being a year then I suggest you have another think.

DannyboyMidlands

Also remember that being mortgage free might land you with a sizeable tax bill. Lots of the rent you receive will be considered profit.

GAH

Before jumping to far ahead, get your valuations for both sale and rental first.

When you get your sales appraisals, make sure your ask for an honest valuation (even if it offends).

Then you can start making your mind up from there on in. But personally I don't see the sales market recovering anytime soon, so it could be better for you to take a hit on price now, as i don't think a lot will change in a year or two, and if that was your plan then prices could well be less.

You may get a lot of negatives here about being a landlord, but that is people just making you aware of the pitfulls (as agents never will), but if you are happy to overcome these then there is also no reason why you shouldn't be a Landlord (at least you don not have a mortgage to service)

yumyums

poppysarah wrote: »

If you are thinking long term as being a year then I suggest you have another think.

This is why I was asking on here. I'm not knowledgeable about these things. I wasn't sure if long term was a year but I was thinking that I couldn't imagine anyone wanting to rent a whole house for less than a year.

If we did rent, we would go through an agent and have them manage it for us.

Dannyboy - I hadn't thought about the tax implications so thanks for that info. Another thing for me to consider.

Maybe I should have put a poll in this thread. Would be interesting to know what others would do if they were in this situation. Sell?

DannyboyMidlands

My feeling is that it's a big hassle just to rent it out for a year or two. What happens if prices are even lower when you eventually decide to sell it? Or it's been smashed up?

poppysarah

yumyums wrote: »

This is why I was asking on here. I'm not knowledgeable about these things. I wasn't sure if long term was a year but I was thinking that I couldn't imagine anyone wanting to rent a whole house for less than a year.

If we did rent, we would go through an agent and have them manage it for us.

Dannyboy - I hadn't thought about the tax implications so thanks for that info. Another thing for me to consider.

Maybe I should have put a poll in this thread. Would be interesting to know what others would do if they were in this situation. Sell?

tax
legal responsibilities
time and effort.

You would be a landlord.

And whilst someone might not want to rent for less than a year you could find yourself with tenants that don't stop long but trash your house.

It's a serious business being a landlord. Don't be one unless you are sure it's a proper decision.

And if you said long term to a tenant they might think you weren't going to sell for many many years.

sonastin

If you rent it out on an Assured Shorthold Tenancy which most tenancies are(assuming its in England/Wales) you can't evict your tenant in the first 6 months. After that, its down to whatever agreement you've come up with - you could set the term as 12 months from the beginning in which case you are stuck for a whole year. Or you could start with a 6 month fixed term and either renew with another 6 months or just let the tenancy roll over onto a periodic tenancy, when you can give them 2 months notice or the tenant can give you 1 months notice.

If you are going down the LL route, you need to learn all this stuff! Reading G_M's post and numerous threads on here will help you to do that.

Compare the investment potential of being a LL (taking into account the obligations you take on) with just liquidating the asset now and decide what makes the best financial sense. My instinct would lean towards the income from renting but it does depend on the numbers for the area where the property is.

Jeffrey_Shaw

sonastin wrote: »

If you rent it out on an Assured Shorthold Tenancy which most tenancies are(assuming its in England/Wales) you can't evict your tenant in the first 6 months.

Not so. L [landlord] can use s.8 of the Housing Act 1988 at any time, if there are applicable grounds.
But, I agree, L cannot use s.21 (or a Break Clause) within an AST's first six months.

yumyums

Thanks for all the replies everyone. They've certainly given me a lot to think about.
If we were to put the house on the market and move out, would there be any CGT liability once sold given that we've only lived in the house for less than a year?