Do I sell my BTL?

saver03

We bought an apartment to rent out to my mum as she needed somewhere to live and we thought it would be a sound investment with no risk as she would be the perfect tenant. However, my mum for some unknown reason has moved out and we were planning on selling but after a few months there haven't been many viewings and no offers have been made. We can't afford to be paying out £500 a month indefinitely so we thought we would get a tenant and have an estate agent manage it. But since then a man who owns a few of the apartments in the building has said he would be willing to buy it, it's for less than we had it valued at but more than we paid for it, so we have been tempted. He says he can't do anything for a few months but if we get a tenant in he would still buy it. So we are still going ahead with our plan to rent it out and the estate agents are sorting that as I type.

But now I am thinking do we keep it and I am not sure what to do.

We paid £65k for it and the man has offered us £75k so I am thinking if there is profit to be made on £75k surely we are in a stronger position having paid less.

We want the money out of the apartment so we can move into our forever home. If we sell at £75k we would get £30k. But if we keep it and remortgage we would get £20k. But then we would have £200 after the mortgage and other bills have been paid.

Downside being that we would need to pay an extra £7500 in stamp duty on our forever home as it would be a 2nd property.

And I also worry about what kind of tenant we would get in and how they would treat the apartment.

I'm very back and fourth about this so I would really appreciate some logical advice.

chris_aaaaa

To put it simply - sell.

It sounds like you have one BTL, it has an appreciable LTV and there was no mention of holding in a ltd company.

As you bought a place for your mum, I guess you earn something non-trivial, possibly with kids.


The government has decided to retrospectively tax people like you (and me) out of the market.

The tax relief you had for the mortgage is being phased out meaning you could end up paying mortgage and tax amounting to more than the rent. (A bit worse for you, if you are remortgaging beyond the original purchase price, you cannot claim the interest on that bit anyway). (Google section 24)

For good measure the rent is treated as income, so if you get child benefit, that is at risk.


Add to all that there is a good deal of legislative risk, if it is just a couple of months rent it is not worth risking screwing up the paperwork, I know you have an agent, do you trust them to get it right, any mistake they make is your problem?


On the plus side, at least you do not have the unpleasant task of evicting people.

getmore4less

Sounds like you don't want to be landlords.


What is is it up for sale at?
If more than £75k drop it to £75k

What rent will it get?

silvercar

He says he can't do anything for a few months but if we get a tenant in he would still buy it.

Hmm. Are you sure he isn't planning on selling one of his apartments and doesn't want your place on the market at the same time?

SmashedAvacado

put it on the sales and the rental market now and see what happens? If you get a good rental offer from a good tenant that might help you decide. Similarly if you get a buyer at more than £75k then that might be better, but if your other buyer comes back, then you havent lost out in the meantime.

Comms69

saver03 wrote: »

We bought an apartment to rent out to my mum as she needed somewhere to live and we thought it would be a sound investment with no risk as she would be the perfect tenant. However, my mum for some unknown reason has moved out and we were planning on selling but after a few months there haven't been many viewings and no offers have been made. We can't afford to be paying out £500 a month indefinitely so we thought we would get a tenant and have an estate agent manage it. But since then a man who owns a few of the apartments in the building has said he would be willing to buy it, it's for less than we had it valued at but more than we paid for it, so we have been tempted. He says he can't do anything for a few months but if we get a tenant in he would still buy it. So we are still going ahead with our plan to rent it out and the estate agents are sorting that as I type.

But now I am thinking do we keep it and I am not sure what to do.

We paid £65k for it and the man has offered us £75k so I am thinking if there is profit to be made on £75k surely we are in a stronger position having paid less.

We want the money out of the apartment so we can move into our forever home. If we sell at £75k we would get £30k. But if we keep it and remortgage we would get £20k. But then we would have £200 after the mortgage and other bills have been paid. - If you cant afford £500 a month now, why would you afford £600+ next month??!!

Downside being that we would need to pay an extra £7500 in stamp duty on our forever home as it would be a 2nd property.

And I also worry about what kind of tenant we would get in and how they would treat the apartment.

I'm very back and fourth about this so I would really appreciate some logical advice.

Sell, you are not landlord material

saver03

Comms69 I am not sure why you think I would be paying £600+ next month?

At the moment with the mortgage, service charge, council tax and energy bills it's costing us around £500 a month.

If we rented it out we obviously wouldn't be paying the bills just the mortgage and service charge and then the estate agent fees so they would all be covered by the rent and then we would be left with £200 a month.

Comms69

saver03 wrote: »

Comms69 I am not sure why you think I would be paying £600+ next month? - because the tenant stops paying rent?

At the moment with the mortgage, service charge, council tax and energy bills it's costing us around £500 a month.

If we rented it out we obviously wouldn't be paying the bills just the mortgage and service charge and then the estate agent fees so they would all be covered by the rent and then we would be left with £200 a month.

Yes, but you're assuming your tenant will pay the rent...

saver03

Comms69 wrote: »

Yes, but you're assuming your tenant will pay the rent...

Yes this is indeed my main concern, that's why we want to go through an estate agent to manage it all. But I do realise that this is not a foolproof plan.

BarleyGB

Having a BTL is a second home, this means if you buy another house (your 'forever home') while you have a second home, youll pay a 3% stamp duty premium.

For a £250,000 house, normal stamp duty is £2500, with the 3% premium its £10,000

For a £500,000 house, normal stamp duty is £15000, with the 3% premium its £30,000

Could be another consideration re keeping BTL

Comms69

saver03 wrote: »

Yes this is indeed my main concern, that's why we want to go through an estate agent to manage it all. But I do realise that this is not a foolproof plan.

Letting agents do not have any special qualifications. I could start a lettings business today, and the only mandatory condition is I join an arbitration scheme.


In effect if you can afford 4 months of missed rent payments, and several thousand for renovations; fair enough. If not don't touch it.


- Also remember that you are personally liable, even with an agent, for any breaches of the law.