Sell or let?

RichieHall

I’m in a bit of an unusual situation here, our primary residence is rented, but subsidised by my employer and we own (about £50k left on the mortgage) a 2nd home which the wife lived in 3/4 days a week for work, her job has now changed and she’s now home full time.

I have about 3 years left on my contract when I can walk away with a nice lump sum and about £10k/year pension, so in 3 years time we need to buy our forever home, buying where we are isn’t really an option as we will probably not settle here.

So the choice we have is either to sell the house and release just shy of £50k put it a ‘high’ interest account and use it as a deposit + my lump sum. Or let the house out for 3 years and then sell?

Current mortgage is £327/month on a fixed deal and expected rental would be £400 to £450 / month. Any advice?

Choccygirl123

I think your situation is down to timing. You don't want to finish your current employment and not have new house/mortgage in place. It would be easier to sell your current home now so chain free when the time is right. make sure you let the tax man now it's your primary residence for tax purposes and that you live in work-associated housing located away, due to employment. Might have more replies if you post in the Forces section....that's if it applies?

bouicca21

I'd go for renting it out (after making sure you understand the legal requirements of being a landlord and can comply with them, plus the tax implications) as I would be worried about the possibility of an unexpected property bubble that would render money in the bank insufficient. Been caught out that way before ...

AlexMac

I'm also in favour of selling in your circumstances. That's not a massive rent, and even in the unlikely scenario that the £4k pa mortgage is "interest only", the tax relief on interest and the few quid in other operating expenses would mean that after tax, the net income wouldn't even cover the mortgage.

Add in the need to do immediate repairs or replacements if the boiler fails or the white goods die, and the slight danger of a dodgy tenant or voids and it hardly seems worthwhile? And unless you live in an area where house prices are rising faster than the currently glacial national average, Capital appreciation won't be a factor? (even though I don't share Bouicca's fear of the kind of slump of 1987 and 2007-8 or the boom years in between in the next 3 years)

My two little BTL flats are a goldmine, and I wouldn't ever sell 'em, but then local rents average over a grand a month each. And I'm in it for the long run, having owned them for donkeys years, in an area where where housing price rises have been stratospheric.

00ec25

your guess as to what the house price rise or fall over the next 3 years will be is as accurate as your prediction of the winner of the 3:30 race - entirely a gamble.

what other investments/savings do you have to fund your retirement?
50k is nothing unless you are looking at a dirt cheap place up north in a poor area?

how do you intend to fund the short fall on the mortgage for the "forever" home?

why do you want to be landlords for only the next 3 years? What are your financial projections for that period? Have you allowed for capital gains tax on the sale of the property given it is not the marital main home ?