Sell or let?

DatabaseError

After a horrendous time with our neighbours we left our home and now rent a house in a nearby town.
We are paying £500pcm for a 3 bed house.
Our own house has about £40k outstanding, costing £240/month and had just been visited by an estate agent
He says he'd list the house at £80k, expecting £75. To let he'd expect £450-500pcm.

I'm currently unemployed, wife works at tesco with an income ~£12kpa. I expect to do some temping work when I get the kids back into schools, and expect to recommence a summer job that I've had for 14 years, I should earn about £20k between April and September.

Current finances are in the black, but I expect that to change pretty soon (before xmas) as we can't really afford both. Bank can change to interest only, but that would only be a £100/month saving, mortgage holiday not a possibility.

We don't really want any further association with the house, but we're prepared to make a smart financial, rather than emotional decision.

So, the question is which should we do? To let the house we'd need a little work, painting and fixing one small plumbing issue, but nothing serious.

We understand a letting agent would charge 10%, and are happy to pay that to keep distance between ourselves and the house/tenant.

If we let (and inform our mortgage company, Irish bank) could we then use that income towards a second mortgage on another property?

What would you do?

We don't really want any further association with the house

DannyboyMidlands

I'd sell it.

It doesn't sound like your finances are strong enough to cover void periods, maintenance etc.

Also, if the neighbours are that bad are you ever going to have any tenants sticking it out past the initial 6 month (or whatever) tenancy agreement? Or are you gonna have a string of unhappy T's asking for early release from the contract?

DatabaseError

the neighbour trouble was personal, no reason to believe others would have the same problems, plus if the tenant were happy to sit around all day smoking dope and drinking special brew they'd soon become best of friends

BitterAndTwisted

If it was me in your situation I'd sell it. From what you have described you really don't have the financial reserves necessary to become a landlord anyway at the moment.

Flog it. Bank the money and buy again elsewhere once your employment issues are more secure if you want to. Be happy.

Werdnal

Its all very well you wanting to use the rental income to fund a mortgage on another house to live in, but tax man will want his share, plus you will still be paying the original mortgage (no doubt with increased premium if you get consent to let), plus LL insurance, plus repairs and maintenance, plus 10% agent fees (+VAT!) - don't think the figures add up myself!

I assume with kids, you also get some benefits - WFTC, CTC etc, as you are not working and wife on low income - rental income would affect them as you have to declare it, regardless on what you intend to spend it on!

I suspect you won't be much better off, and have the added hassle of a letting property to support aswell!

DatabaseError

thanks, looking a bit clearer now, I was seeing £500 out, best part of £500 in, but really hadn't considered the extra costs. I guess now we have to hope for a quick sale

franklee

DatabaseError wrote: »

if the tenant were happy to sit around all day smoking dope and drinking special brew they'd soon become best of friends

Such a tenant wouldn't pass referencing would they?

DatabaseError wrote: »

I was seeing £500 out, best part of £500 in, but really hadn't considered the extra costs.

You'd be surprised how many people think that way. Apart from the costs already mentioned there's also the risk of getting a bad tenant especially if money is tight. What if you got one that doesn't pay the rent which is worse than a void as you'd still have to do essential repairs.

Fire_Fox

Sell the house, you cannot delegate all your legal responsibilities to the letting agent - if you have them do all repairs and maintenance you will pay through the nose. You also need money set aside in case of an emergency, you can't just not repair a tenanted property because you are broke.