Time to sell my flat and quit BTL?

turtleneck

Morning all,

I have a two bedroom flat which is now empty (was let until recently). My original plan about 10 years ago was to have one property rented out then save up to buy somewhere to live myself. In between time living at parents or lodging at a friends house. This was with the idea of not having to work forever and having an income so I could get away with only working part time.

However, it has not really gone to plan as I have not been able to buy a second property due to price rises and the fact my property is a leasehold and has not gone up in value as the lease is now well below 80 years. I have found remortgaging difficult with a low lease so can't easily release any equity.

I now find I'm in my 30s and have this flat which is somewhere I don't really want to live, it was bought to rent out not live in (two bedrooms get more rent than one).

While it is comfortable at the parents I know I should really have my own place, I have tried living in my two bedroom a while back and found I only used one room most of the time.

A local estate agent has said they can sell the property for me and give the buyer the option of a new lease in the process so I can get the full market price minus the extension cost.

My views have also changed and I now see buy to let as something that maybe should be done later on as a possible retirement income, not before having your own place to live in.

So, should I sell up now and get my equity out to buy somewhere else for myself?

With a one bedroom I think I could find somewhere with a long lease or freehold so I shouldn't have to increase my mortgage requirements. I would also consider renting for the short term to have time to find the right property and not be in a chain.

The figures are as follows:
Current property value as is: £145000
With lease extended: £175000
Cost of lease extension: £20000
Current mortgage: £60000

I would love to hear any views and advice on this!

Pixie5740

The income from one BTL is unlikely to be enough for you to start working part time and you can't, at this moment in time, buy any more BTL properties.

I see from your previous post that you are in your early 30s and have been pondering about what to do for a while now.

Sell the flat, you're currently not getting any income from it and the shorter the lease gets the more expensive it becomes to extend. Cut your losses now whilst you still can and go and buy a flat somewhere you would like to live.

princeofpounds

It is fairly pointless trapping capital in a BTL when you don't have your own place anyway. You are paying tax on the income, possible letting agent fees, you have possible exposure to capital gains tax etc, dealing with tenant risk etc. Really inefficient.

If you don't want to live there, sell it.

The agent is not 'giving the buyer the option of a new lease'. YOU will almost certianly need to extend the lease so buyers can get a mortgage on the property, otherwise you are just largely restricted to cash buyers and you will take a discount on your pricing.

Frankly you should never have let it get below 80 years as now you will have to pay marriage value, but it still shouldn't be too expensive to get it done. Plus the longer you wait, the faster the cost accelerates.

Hoploz

Maybe if you lived there for a while you could avoid cgt.

booksurr

Hoploz wrote: »

Maybe if you lived there for a while you could avoid cgt.

too simple

if the property was purchased more than 18 months ago then he cannot "avoid" CGT

turtleneck

The agent said that the lease can be extended via the solicitors as part of the sale. So the new owner will get a new lease, and I will get full market value minus the extension cost and solicitors fees. I have seen other properties marketed this way so I know it has been done before.

Also, how can I be charged capital gains tax on the only one property I own, I thought this tax was only applicable to second properties?

Pixie5740

The property is not your main residence so Capital Gains Tax could be liable when you sell the flat. It's got nothing to do with the number of properties you own.

MisterB1959

turtleneck wrote: »

The figures are as follows:
Current property value as is: £145000
With lease extended: £175000
Cost of lease extension: £20000
Current mortgage: £60000

I would love to hear any views and advice on this!

the cost of the lease extension seems high, but may be correct of course. there is an 'accepted' way of calculating the actual cost and you can always go to the ombudsman who will use that calculation to determine a 'fair' price.


I wouldn't accept the agents offer to arrange it all !!!

booksurr

turtleneck wrote: »

Also, how can I be charged capital gains tax on the only one property I own, I thought this tax was only applicable to second properties?

you are totally wrong, it is no longer your main home and moreover has been previously let out and is therefore now an investment property and so liable to CGT in just the same was as any other investment would be

the fact you only own one property is irrelevant, the exemption would be because you live there as your main/only home, not because you only own one home.

It is perfectly possible to own one property and be liable for CGT on it because you live in rented accommodation elsewhere