To rent out again or sell

lucylou32

Long story, so thanks in advance for reading..

In 2002 I purchased a leasehold (108yrs left I think) ground floor 2 bed flat for £79k (and spent thousands renovating it), in 2014 I remortgaged and rented it out, using some of the equity as a deposit on buying a house with my partner. I used an online agency for all the legal stuff, but I interviewed and chose the tenants myself. They’ve been there 5 yrs now, but have just given noticed, because unfortunately (its a housing association building with 8 flats in it, only the ground 2 are private) the housing association have moved in a tenant that my tenants think is potentially dangerous and certainly disruptive.

Both the police and HA have been informed of activities.

My dilemma. I’ve enjoyed being a landlord, have had no real problems with the flat or tenants, and would ideally like to continue. However, it wouldn’t feel ethical to rent to someone else with tenant X still in the building, plus, who’s to say the next tenant HA put I. won’t be just as bad (or that my new tenants will be as great) so I’m thinking that selling is my only option (its been valued at circa £200k), and investing the equity in another property, that is freehold, and in a nice neighbourhood. But, I keep reading about capital gains tax, which I don’t entirely understand, but it seems I won’t have to pay much on the flat, because I lived there, but I would have to pay a significant amount if I purchased and later sold a BTL property. Any thoughts, ideas or suggestions are grateful welcomed.

jonnygee2

However, it wouldn’t feel ethical to rent to someone else with tenant X still in the building

How is it more ethical to sell a property to someone than to rent it to someone? Someone has to live there. If it's not going to be you it will have to be someone else.

selling is my only option (its been valued at circa £200k), and investing the equity in another property, that is freehold, and in a nice neighbourhood

Selling a property and buying a new one will incur selling costs, buying costs, and stamp duty. It's unlikely to work out financially unless the new house has a much higher yield, which isn't likely either because if the potential rent was higher and it was a natural choice for BTL it would probably sell for more too.

Some properties are slightly more suited to renting out, so maybe with some research it will just about work, but most likely will leave you short.

Selling up and investing the money in equities is an option. But of course you are probably infected with the apparently incurable British delusion 'stock market bad, BTL good'. If not, consider that.

Techno

Why don't you contact the housing association and see if they would be interested in purchasing it?

lucylou32

I did think of this, I spoke to 2 representatives who said it was possible and they’d put me through to the buying team, finally got through and they said they don’t do that... so I’ve emailed the head of the HA for clarification and to point out the situation the owners are now in, due to the unsavoury tenants upstairs.. but 6 working days have passed and no response.. I do plan to chase it up. Thanks for the reminder