sell up my leasehold and go private rental?

skater_kat

looking for some opinions and advice on my situation and what i should do longer term about my housing:

i have no dependants. i have good credit but no employment at the moment, my income is around 750ish pcm.

i own a leasehold flat which was bought just before the financial crisis of 08. there is 85 years left on the lease. there is approx 30-40k equity in the flat. it is currently let out by me at a profit of c.£375 pcm.

for the last year, i have been living in private rented flat, which is expensive (just under 1000pcm) but is much nicer place and has a garden etc. the only way i can afford to live here is because the rental income from the flat i own subsidises the rent on the nice flat. it works out cheaper for us to live here than what it cost before in the (less nice) leasehold flat, whilst still paying down the mortgage.

i am trying to decide what to do with my leasehold flat. honestly i can't see myself moving back in there, but on the other hand it is nice to know i have a "back up", should i get served notice to leave the nice flat.

being in private rental gives no security of how long i can stay, which worries me - but this place we are in now is a much nicer place to live. at the moment everything is fine how it is, but i am aware that things may change, we could get asked to leave and also my leasehold flat is nearing the dreaded 80 year mark.

i don't have 15k or so to throw at a new lease, so really i suppose i would need to sell the flat before it reaches the 80 year mark.

also i would not be able to get a mortgage again in the next few years, so i worry about stepping 'off' the ladder.

however if i sold the flat, i could clear my debts (circa 8k) - but then anything left would be frittered away by being spent on the private sector rent within five years or so, as it would not be that affordable anymore.

i'm not sure whether to keep the flat on in the longer term or to just sell it now before interest rates go up etc etc.

skater_kat

bumping up hope for some advice

Pixie5740

Do you ever see yourself having enough money to extend the lease? My understanding of the leasehold situation is that the less time left on the lease the more expensive it becomes to extend whilst the value of the property drops. Therefore in the future it's going to cost you a lot more than £15,000. Might be better to cut your losses now and sell up.

The £375 "profit" that your currently making, how is that being calculated? Is it being declared to HMRC or is there a chance they might chase you for unpaid taxes further compounding your financial issues.

You might also want to look at capital gains tax which might be applicable if/when you sell.

turtleneck

do what my friend does, sell the leasehold flat, carry on renting privately, live in the now, don't worry about the future.

bouicca21

It might be worth exploring the possibility of extending the lease but leaving ground rent provisions in place. This can be way cheaper than going down the statutory route.

turtleneck

how about selling the leasehold flat , getting your 40k out of it, using that 40k to buy somewhere else you would like to live.. then theres no worry about being kicked out?

pinkshoes

Could you rent somewhere cheaper and save up to pay for renewing the lease?

Lots of lenders won't lend on short leases, so you would limit your buyers.

If you sell, then the cash from the sale will be eaten up paying your rent, given your rent is more than your income, so you will then end up with no cash and a rent you can't afford, forcing you to move somewhere cheaper.

I think you need to find a way to extend the lease.

skater_kat

Thanks for all the thoughts added here.

The rental money is after HMRC deductions so the 375 is what i get in my pocket after expenses and tax.

I do have debts and no savings, trying to clear my debts but find myself living month to month on what comes in without putting anything away.

Last time i enquired about a lease extension I was required to pay approx £1500 up front before finding out the value of the actual lease value needed! (so i didnt do it) so i am only guessing at possible figures.

cfcboy

Wow, this is exactly the same situation im in (barring my leasehold is empty at the moment). We moved out of a leasehold flat (73 years remaining) to be in a lovely new bungalow with great garden and quiet area, we all love it and lifes really great. My mortgage is only £500 but the place im renting is £1000

I too decided to sell the leashold preoperty but im struggling to find a buyer, im now into my 2nd month without having a a firm offer and having to pay both a mortgage and rent is stinging a bit now. Ive got 4 weeks left with my EA so if nothings done in September I will be privately renting. Ive been quoted a rental income of £900 pcm so hopefully make a decent amount of profit (£350 ish after fees etc). The lease extnesion was quoted at £10k so ive had to drop my value by around the same figure but still not getitng bites even though its at a really good price, im hoping its just part of the August quiet period.

Still a tad worried the boiler might fail or the sub let might get a bit messy but i dont think ive got much choice at the moment unless i sell within the next 4 weeks.