Moving to Spain - Should I sell or rent out?

gary_prior

I have a dilemma which I hope you could give me some advice on. I know there isn’t really a definite answer to this, but wanted the views of the experts

I have taken a job in Spain and hence will soon be moving out there from the UK, although I don’t see this as a long term move, so I am thinking of returning to the UK after 2 - 4 years.

I presently own a house in the UK, which I have a mortgage on. This mortgage is a discount mortgage and hence I am tied into the company until Dec.

Initially I will be renting a place to live in Spain, but may buy out there once I have settled.

I was intending to rent my house out here, but I have since carried out some calculations and research as detailed–

1. The mortgage company will allow me to rent the house for up to 2 years without changing the mortgage, but once the discount period finishes in Dec, their policy states that I would have to stay on their variable mortgage whist I am renting out the house.
2. I need to rent the house on a fully managed basis, as I don’t have anyone in the UK who will be able to look after the house in my absence.
3. I will receive rent for the property, but after deductions (management fee, mortgage, House insurance and maintenance allowance) I will be losing £150per month until Dec then after Dec, I will lose £250 (if the mortgage interest rates stay the same as they are now!!!). Therefore over 12 month I will lose £2200.. once again depending on interest rates.

My worries on renting-
1. Losing a lot of money.
2. House prices will not rise and hence losing even more money!

So I have thought about selling the house now and putting the money into a bank account as detailed –
1. The house is worth approx £165,000
2. I will spend £3700 to sell it (that’s the mortgage early repayment fee, Estate agents fee, and solicitor)
3. I then will have approx £60,000 to invest, but no property

My worries on selling –
1. Not having property in the UK and hence not having an investment if house prices go up.
2. Off the property ladder.
3. The cost of the mortgage early repayment fee is a lot!
4. £60,000 isn’t much to invest really.. How much will i earn on that in a bank or some sort of investment?..will my house earn more?

So that’s my dilemma.. Should I sell or rent at a big loss, but hope house prices go up?

Thanks.. sorry it a long post!!! But I needed to give as much detail as I could.

garysletters

well, lots of questions, and it all depends on two things.
a) your personal financial outlook/income, and
b) your mortgage.

Firstly, what tie ins do you have with the mortgage. If your tie ins end in December along with your discount, then I can't see why you can't then remortgage onto a buy to let mortgage??? I'm sure a mortgage company cant penalise you for moving mortgage after your tie in period ends! or am I wrong (someone correct me if I am, I really dont understand that bit)

Secondly, you have allowed a maintenence allowance in your workings out. I dont know how acurate this will be, and neither will you, but losing £150 a month till december would be just over £1,000. If you are still registered as Uk resident for tax reasons, this loss may be tax deductible against your earnings? and if not, it will certainly be deductible against the next years rent profit (presuming you remortgage onto a better deal, but that will be tough too).
do you not know anyone that could move in and just cover your mortgage without needing a letting agent?
Is your current mortgage portable?
If so, maybe you could buy a smaller , more profitable house. But this may be too much hassle for you.

with such a seemingly small redemption penalty to pay, I'm sure a lot of people would just sell up and hope prices drop.

Natelle_2

I believe you would be wrong to sell you UK property at the time of your move to Spain.

1. As it is a new job you are going to you will need time to settle in the new position and new type of life style and therefore it would be rash to consider selling your UK base until you're sure the new life is for you. Don't sell off your possible retreat route.

2. You say that to sell the property will cost in fees ect £3500 at the time of sale.

3. You have calculated that if you rent out you will loose £1000 in six months.

Rent out your UK property on an initial term of Assured Shorthold Tenancy of 6 months. This tenancy can be allowed to continue after the initial period of six months if it suits you needs.

This action would give you time to settle in your new life, at a loss of only £1000 rather than £3500 (paid to agents, solicitor and mortgage company), whilst still leaving your options open in the next few months. It would also allow you to judge better which way you feel the property market values will go and by what percentage.

At a latter review date you will have a much better picture of your future.

Hope this helps in your decision making process.

pingo_2

we were in a similar situation - but have decided to sell everything and take a leap of faith and go and live in the sun. (i know it snows and rains as well)
the cost of living is so much less in spain. the people are friendly (if you make an effort with the language!!)
you are only travelling this way ONCE (unless you believe in reincarnation??)
Life's an journey with lots of ups and downs - you have to take the downs with the ups and go for it.
england isn't the only place where you can be happy. the roads are 'horrendous' :eek: everything is EXPENSIVE everything moves at one million miles an hour.
Chill out (or hot out) in sunny spain. :cool:
Good luck - and Adios!! :j