To Sell or Let?

Skinto_7

Hi Folks,

Quick summary of my situation is, i owned my own flat which me and the other half stayed in, we saw a house we loved that was on for a rediculously low price and bought the house while still having the flat. (we had deposit and got mortgage without to much hassle even though i had the flat mortgage)

The intention was that we would then sell the flat once the house was secured and we had moved in.

I have now had a few estate agents out and the honest ones have gave me realistic values of what they would sell it for, basically enough to cover the mortgage with nothing left over, this would also mean having to pay roughly £1000 upfront to get my house on the market plus the mortgage for the months it is on sale.

Although i have never hankered to be a landlord, i am now thinking i may aswell just rent the flat out instead of selling, this would reduce any upfront payments aswell as hopefully negating the lose of my initial deposit.

What are peoples thoughts, if you were in my position would you try and rent it out or sell?

I know being a LL isnt easy and i would obviously look into all the regualtions and standards i would require to meet before doing it, however right now it seems slightly better option than paying a grand to get my flat on the market, paying the mortgage while it sits their and if im lucky enough to sell losing the full initial deposit i had put down.

So to Sell or let?

ps does anyone know how likely Nationwide are to agree to me letting my flat if i do it, the LTV isnt going to be enough for a BTL mortgage and this could obviously decide for me if they say no :-)

Werdnal

Firstly, is it a leasehold flat? If so, would your lease allow letting?

BTL/Consent to let applications are taken on an individual basis. Just because someone else got consent to let from your lender, might not guarantee you would get the same. Lender will usually up the % payments, add an annual set up fee and can even dictate who you let to (no benefit tenants) and how much rent you can charge!

Then you need to take into account the additional hassle, costs and worry of letting. There is a good post here:

http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12

To get your teeth into!

I assume you are also aware of the need to declare your rental income for tax?

IMO becoming a LL is something you make a conscious decision to do - not feel forced into because you cannot sell. It can be rewarding, it can work well, but on the downside, just read a few of the nightmare posts here and you will get the drift of how it can all go t!ts up pretty quickly!

DannyboyMidlands

What would it sell for?

What would be the monthly rent?

cattie

When you say £1k up front to get the flat on the market, do you mean the ea will charge you before even selling the property?

GDB2222

Basically, you are assuming that house prices will go up enough to let you get your deposit back. I am pretty sure that will happen one day, given that we have inflation ticking away at around 3% pa. But it could take 20 years, or it could happen next year. Who knows for sure?

The first question you should ask yourself is whether the rent will cover the mortgage interest, with a decent margin over of say 30-50%? If not, you are likely to have to chip in from time to time to pay the mortgage.

G_M

So basically if you sell, you
a) walk away with nothing (possibly down £1000) but
b) get shot of the hastl/responsibility

So now you ned to do a detailed budget for letting. See my post (thanks for the link werdnal) and make sure you include ALL costs including tax etc etc and use REALISTIC rental income projections.

Are you making or losing money?

Now factor in the hastle, stress, time (even if you use a managing agent).

Only then can you decide.

Skinto_7

Thanks Werdnal,

Its freehold so no issues with letting.

I apprecaite each case will be looked at on an individula basis however was just wondering if anyone had dealt with nationwide and had any expierances, this might indicate whether they more open to things like this than not.

The fee to set it up is minimal from Nationwide and they charge an additional 1.5% for letting consent, so im comfortable with the costs, And as i say against what i would lose if i sell seems very favourable.

I am aware that any profit i make will be taxed and once i make a decsion one way or the other, there may be a question in relation what i can offset against income :-)

I will have a read of the link you have posted thanks.

I know if i was to go down the route of becoming a LL, it would involve some hard work alot of research and a proper plan put in place to manage the process, all of which i would do before commiting to this.

I apologies if my first post sounded a bit flipant and as if i thought that is easy just to decide to become a LL, i dont for one second think this, was just curious as to whether with my current situation and the way the market is just now if people thought it was better to go down that route or not.

Skinto_7

GDB2222 wrote: »

Basically, you are assuming that house prices will go up enough to let you get your deposit back. I am pretty sure that will happen one day, given that we have inflation ticking away at around 3% pa. But it could take 20 years, or it could happen next year. Who knows for sure?

The first question you should ask yourself is whether the rent will cover the mortgage interest, with a decent margin over of say 30-50%? If not, you are likely to have to chip in from time to time to pay the mortgage.

Its not even so much that my flat goes back up in value, as you say this is uncertain, however by renting it out i will be reducing what i owe on it, so providing that the market doesnt crash again, i would still be building up equity if the price was to remain relatively stable.

As i say based on likely rental income v what my payments would be with increased nationwide rate, is houdl be covering the payments and insurance etc.

Ontop of this i would obviously set aside a contigency fund for any maintenance costs etc that come.

Skinto_7

cattie wrote: »

When you say £1k up front to get the flat on the market, do you mean the ea will charge you before even selling the property?

Once i have paid for the home report, advertising costs (which all EA's i have seen so far have insisted they wont waive in favour of an overall %fee on completion) and VAT i am not getting much change from a £1k

Skinto_7

DannyboyMidlands wrote: »

What would it sell for?

What would be the monthly rent?

Looking round about the £60k mark for a sale.

And £375 pm for rent

Skinto_7

G_M wrote: »

So basically if you sell, you
a) walk away with nothing (possibly down £1000) but
b) get shot of the hastl/responsibility

So now you ned to do a detailed budget for letting. See my post (thanks for the link werdnal) and make sure you include ALL costs including tax etc etc and use REALISTIC rental income projections.

Are you making or losing money?

Now factor in the hastle, stress, time (even if you use a managing agent).

Only then can you decide.

Thanks G_M, looks like ive got a bit of reading to do and a bit thinking aswell.