Renting selling empty

Mike-issa

Hi
I have a query and I wonder if any one can advise:
I bought a house 3 years ago (270000) and lived in it since (mortgage 30 years)
I am moving out for one year (after which I am not sure what would happen)
also after 4 years I might have to move out completely so there is a bit of uncertainty.

what is the best option with regards to the house?
should I sell it, rent it or keep it empty?
If I keep it empty I still have to pay council tax and daily running costs for electricity and gas
if I rent it, due to my other income, my tax rate is 40% and the house might be rented out for around a 1000 pounds (before agency fee)
If I sell it, I am not prepared yet to buy a another house and I am need to sell again after 4 years.
If I leave it empty and sell it in the future will that reflect on capital gain tax?

what are your thoughts?

ellie27

Can't really help, but regarding the council tax...... some councils you pay no council tax if the property is empty - our last council you were exempt for up to 6 months max if it was empty.

I wouldnt sell if I was just moving out for a year......... however there is a lot of uncertainty in your post so if there is a chance you might never live in this house again maybe just sell up and go now would be easier. That way you are free to do what you want.

In the time that you are not in the house I assume you have somewhere else to live, guaranteed..... you will not have to rely on your own house to stay in during that time?

Good luck

AnotherJoe

I think given that house prices aren't appreciating at the moment and the hassle of managing a rental from abroad plus the issues leaving a house empty, I'd sell up.

00ec25

only you know your own circumstances and what "fate" awaits you in 1 or 4 years time.

each council has discretion to make their own rules regarding what discounts are given for unoccupied properties. However, be careful with your word use: in council tax "empty" means the property has no furnishings and is incapable of being occupied. After 2 years a council can apply a premium rate of tax to an empty home. A property which is still furnished but one where its owner has a main home elsewhere is a second home, not an empty home, and few, if any, councils give discounts on second homes these days.

the decision to let it or not should not be based on the fact you will have to pay a bit of income tax on the profit you make. Either you want to be a landlord or you do not, Using an agency will not remove all the stresses you have as a LL, nor protect you if you do not know or educate yourself on what being a LL entails

for capital gains tax, it is a tax on a gain and is not 100%. Therefore again do not base a decision on the fact a part of your profit will be "lost" to tax, the CGT rate is not 100% after all, at worst it will be 28% for a higher rate taxpayer. Moreover, as you would have lived there, a % of your ownership period will be exempt represented by the period you actually occupied it as your main residence plus the final 18 months of your ownership (irrespective of whether you live in it or not for the last 18). You will get a personal allowance (distinct from your income tax one) and, if let, you will also get a letting relief. naturally tax being tax there are a lot of other rules around things which depend on your exact circumstances (eg. why you are "absent") but in broad terms a gain has to be massive before you end up paying CGT on a property you once lived in.

AdrianC

If you rent it, and want to move back in in one year, you may well find it's not that simple. You can give the tenant two month's notice, but they may decide to string you out and force you to take legal action to recover possession. You may well then find the property is not habitable.

Finding a tenant who is happy to be moved on after a short tenancy is also likely to be harder - so you are likely to lose rent at the start of the period.

Let's say you get 8-10mo of rent out of the year. From that, subtract all the costs of rental - agency fees, tenant finding fees, gas safety, any repairs or cleaning, mortgage fees for consent to let. How much are you left with, after tax? How much do you value that real-world income against the hassle factor of potentially not being able to move back in?

saajan_12

Mike-issa wrote: »

If I keep it empty I still have to pay council tax and daily running costs for electricity and gas - - plus insurance plus repairs / maintenance for an empty property (longer for problems to develop, more chance of theft/vandalism)

if I rent it, due to my other income, my tax rate is 40% and the house might be rented out for around a 1000 pounds (before agency fee) - so consider the net income rather than gross, but the sheer fact you pay tax shouldn't be the decider.
* Net income = (Rent - repair costs - agent fees )*60% - Mortgage interest * 80% (slightly lower mortgage in first few years as changes come in)
* Remember rental voids, tenant vetting
* Landlord obligations (deposit protection, gas/elec safety, repairs on time etc)


If I sell it, I am not prepared yet to buy a another house and I am need to sell again after 4 years.- only you know how likely you are to come back, and whether renting in your area is cost effective. You could sell and invest the money, using the returns to offset some rent but without the costs of a property.

There are many other considerations such as whether you can and want to fulfil the obligations of a LL (ultimately you are still responsible even if you pay an agent who messes up.)

Selling would be the most clean cut, but only you know how likely you are to need the place (or somewhere similar) in a years time, and hence whether keeping it would be better than selling and buying another /renting.

Mike-issa

Thank you all for the helpful reply
I gathered the following:
keeping the property as a second home for now might be the right option accepting the higher risks of burglary etc.. until after a year when It will become more clearer to me what to do (sell)
Letting for one year only is not worth it due to multiple factors (landlord responsibilities, finding the right tenants costs encountered, etc..)
Selling might be the right option if after one year I found my self not going back

out of interest, as a landlord, how much time would you spare for your landlord duties if you have only one property to let?
thank you again for the insight especially into the capital gain tax.

saajan_12

Mike-issa wrote: »

out of interest, as a landlord, how much time would you spare for your landlord duties if you have only one property to let?l

The point is there isn't really a *typical* amount of time as it all depends on how good the property / rental market / tenant is.

Advertising: engaging agent, taking pictures, tenant viewings-> depending on rental market, 2-4 hours a week for 2 days - 2 months

Tenant vetting/move in: checking references, running credit checks, correspondence to obtain this info, inventory, gas safety checks, letting tenant in -> depending how much you engage an agent and how complex the references are, 2-10 hours

During tenancy: If no repairs / call outs / late payments then -> 5 seconds per month to check rent
If significant repairs to investigate and call tradespeople for, replacement furnishings to purchase, neighbour complaints, unnecessary call outs, late payments.... -> who knows?

Mike-issa

Thank you Saajan-12 I think I will skip letting for the time being
Empty property it is.
Is an empty property different from second home though?
Because I am still planning to spend couple of days a month (up to 6) in it?