Sell or Continue to rent it out?

SimpleMind

[FONT=&quot]I bought a flat in 2004 which I moved out from into a house in 2011 when I got married. I decided to rent out the flat and have continued to do so since 2011 through a private agency.

I'm currently in a fixed rate repayment mortgage until 2020. The rent I get covers the mortgage payments and the leasehold/agency fees, and I make about a £20 profit a month (excluding the mortgage interest charge).

I'm now considering whether I should sell the flat or keep renting it out. What are your thoughts - should I sell when the fixed rate mortgage comes to an end or continue to rent it out.

Reason to sell:
1. I work full time so I use an agency to fully manage the property.
2. I hate completing tax returns,
3. I worry about when the next issues/repairs on the flat (even though I've only had a few),
4. I worry about the flat and how well its being looked after, and how that will affect the property value.
5. I don't have children so I will not be passing the property on as an inheritance.

Reason to keep:
1. It'll provide me with a regular earning when I retire (?) in addition to my pension
2. I'd have to pay CGT on the sale.

Thoughts please - Sell or Keep?[/FONT]

AnotherJoe

Sounds like a lot of hassle for £20 a month !
Can't see prices rising much over the next year or two.
Tax and legal changes will only be to the detriment of landlords.
Peace of mind has a value.
Sell it.

AdrianC

SimpleMind wrote: »

[FONT=&quot]I bought a flat in 2004 which I moved out from into a house in 2011 when I got married.

Reason to sell:
5. I don't have children so I will not be passing the property on as an inheritance.

Reason to keep:
1. It'll provide me with a regular earning when I retire (?) in addition to my pension[/FONT]

You married in 2011, and haven't got kids - yet? - and are thinking about retirement and death.

How old are you?

Meanwhile, you seem to have forgotten to tell us some minor but very relevant detail - capital growth and value since you bought it, how the equity relates to the mortgage on your current home, any other assets and investments you may have...

SimpleMind

Okay

Don't / Won't be having kids.
Yes thought of retirement i.e point 2 in my Keep reason Have an Er scheme I contribute to.
On death - all goes to husband, if he dies it goes to charity.

Between 40 and 50 years old (have to keep some secrets )

I'd have to pay CGT. Property bought for about 130K, worth about 180K today, mortgage approx 100K

enough?

AdrianC

So that's half your mortgage paid off, straight away. Seems a good trade-off for £20 amonth, doesn't it?

SimpleMind

It does kinda look after itself financially but no so sure it will do going forward, especially with the new tax which will start coming in from April 2017 which will remove landlords’ ability to deduct the cost of their mortgage interest from their rental income when they calculate a profit on which to pay.

This and the changes which puts the costs of inventory etc onto the landlord.. only just introduced this year, makes it less appealing proposition.

The worry is not so good.... and do have to do this for the next 15/20 years more!! makes it even less appealing

do you rent property out yourself?

flora48

In the same situation myself, to sell or continue renting.

I own outright a house which gives profit of around £6k, very useful income I know but I wonder whether to sell and give the kids some money now instead of waiting for their inheritance. Then hope I don't cark it before the 7 years is up. Seriously tempted to sell but have now idea how the sales market is likely to be in the near future.

AdrianC

SimpleMind wrote: »

especially with the new tax which will start coming in from April 2017 which will remove landlords’ ability to deduct the cost of their mortgage interest from their rental income when they calculate a profit

That's not the case.

Mortgage interest will still be deductible, but only at base rate income tax - so a higher rate tax payer will pay some tax on that portion of their rental income.

AnotherJoe

SimpleMind wrote: »

It does kinda look after itself financially but no so sure it will do going forward, especially with the new tax which will start coming in from April 2017 which will remove landlords’ ability to deduct the cost of their mortgage interest from their rental income when they calculate a profit on which to pay.

This and the changes which puts the costs of inventory etc onto the landlord.. only just introduced this year, makes it less appealing proposition.

The worry is not so good.... and do have to do this for the next 15/20 years more!! makes it even less appealing

do you rent property out yourself?

Not sure that was addressed to me, but I was and had a real sense of relief when it was sold. Plus getting rid of the tax burden was a great feeling.

Take the hit on CGT, put the money in your pension and mortgage (many people here are focussed on getting rid of mortgages at all costs but pension can be a far better investment.)

Or even if you pay off half the mortgage with it all as someone else suggested, the released monthly payments would most likely be best employed going into a pension, could let you retire years earlier.

monkeyman1974

It's making you more than £20 per month, as it is funding capital repayment. You should record a valuation from your move out date (for CGT purposes). Look into s24, as this is very likely to increase your tax, and may result in a net monthly deficit.

SimpleMind

Adrian C - yes you're right in the detail but it's not good if you just tip into the higher rate. I was wondering if you actually rent property similar to me?

AnotherJoe - Yes, the sense of relief is what I think I would benefit most from... I'm a natural born worrier...from the tax burden to whether I'm acting as a good landlord, or that the property is being cared for.