In agony over selling or sticking with sole BTL

GDB2222

You can agree a higher rent without a new tenancy. That might encourage the tenant to buy!

I would not stick the property on the market in a panic. You should not let the tax tail wag the dog.

dimbo61

Do you sell or keep ?
Where else will you earn that amount of money each month plus capital growth ?
The garden is a jungle so employ a gardener to come and sort the garden once a month.
Increase the rent by a small amount but tell your tenant you now have a Gardner to look after the garden.

Crashy_Time

mrsmumbles wrote: »

Yearly rent, on paper is £7500. If I keep it, this could rise over the next few years to 14400 or thereabouts. But if we have a juicy global meltdown, this would not be happening....

Don`t see it happening even without a meltdown TBH, wages would need to rise a LOT and interest rates would probably be forced up in that scenario as well meaning you are just paying more on your debt and losing tenants to cheaper mortgage free landlords. The worst case for you would be voids due to no more FOM, interest rate rises due to a run on the pound due to Brexit and the government deciding to make life even harder for small landlords to appease the "priced out" vote.

chucknorris

mrsmumbles wrote: »

Any final thoughts gladly welcome. Please be gentle. I am going to crawl in a corner and email my accountant. Just keen to see how other BTL landlords squared it. Am aware I am a but too fond of the flat and it is time to let it go, but it will be a wrench. Then again, so is losing 40 plus grand.

Don't forget that you do not actually lose '£40 plus grand', you only lose the CGT relief on that, so £11.2k plus (if you are a higher rate tax payer) and £8k plus (if you are a basic rate tax payer).

Also where you would invest the equity from the sale isn't exactly great either, equities can also crash, bonds can fall if interest rates rise, and there is also a lot of theory that bonds are no longer the safe haven that they once were from a stock market crash. Cash of course is guaranteed to lose money after tax and inflation. There is no doubt in my mind that my money was better invested in property from a strictly financial point of view. It was for lifestyle reasons that I sold most of my property, but you do not seem to have those same motivations, so you might be better sticking with property.

EDIT: Anyway, the main point is that 'what's done is done', there probably isn't enough time to sell (exchange) before the end of the tax year, so there is also no point in giving yourself a hard time over it. Worry about things that you can do, not things that are no longer within your control.

getmore4less

mortgage £375 a month.
Mortgage size £122k

3.69% if interest only that is very tight gearing for a 4% gross yield.

1% rate drop would cover a £1k fee in the first year

there are rates under 2% on 5 year fixes

if repayment what rate and term?

mrsmumbles

dimbo61 wrote: »

Do you sell or keep ?
Where else will you earn that amount of money each month plus capital growth ?
The garden is a jungle so employ a gardener to come and sort the garden once a month.
Increase the rent by a small amount but tell your tenant you now have a Gardner to look after the garden.

Well this is it...called the lender today, just to double check and number crunch. I am on an interest and small repayment (they gave me the option back when I set it up to combine the two and it's £100 a month I put in as I don't want it all interest and liked the idea of modest chipping away whilst keeping the bulk of it on interest only.
Me again...Please can you wise ones give me your four penn'orth
on the numbers? have exact ones now.
Figures are: actual BTL interest is £197.75 per month at the base rate plus their interest, so 2.24% plus 1.49%, so 3.73%?
the repayment bit is £125.47
Total is a bill of £323.22 pcm with the rent each month at £1025, if we are being exact. And £123 K left on the BTL mortgage. If I kept the flat I could see fixing the rent next November ar £1200/1150 for three years as I suspect rent rises will sneak in...so there is the chance to add more savings. I will probably stop paying the repayments soon and start building a tactical side savings pot, if I decide to not sell.
Is this a good deal and worth keeping? Do most of you think it is still a bit meh for serious investors? I know that for me, i can save more for retirement this way than in any ISA or current account on the market that I have seen.
It looks good, to my basic and myopic eyes, but there is an emotional tie which i am getting over quite quickly now (1) and I am so torn. The effort of running the company, dealing with apathetic and awkward gits and doing all the admin for all 4 of the freeholders is taking its toll, the tax breaks end soon and I suspect more crud will be flung at us soon. But to me it seems a brilliant pension vehicle. Also the estate agents all think (surprise!) that it should fetch a good price. Then again, if interests rate stay low for a few more years, if i had to, I could pay the debt all off. But that would raise my tax bill on self-assessment! Need a gin.:(:eek:

mrsmumbles

Last bit of info: it's two lots of savings I would lose out on as I qualify for the 40K lettings relief and currently a longer period of PRR relief and the other deductions. I am currently a basic rate taxpayer and likely to remain so for the next few years due to health. Which does mean i have had more time to manage the building but also means freeholders take the mick. A present, the whole block looks great and very sellable.

mrsmumbles

AdrianC wrote: »

That kind of emotional attachment is never particularly compatible with letting - now imagine the tenant was awful...
That is a very sharp point, thanks

So £135k of capital growth across 15 years.

Yes, pretty much. although it could go for about 292K...more 'meh' one sold for 285, mine is nicer and better condition with extra office room, so that would be growth around 140 K over 15-16 years (if sell this year) Which is not bad for a 7K deposit on a mortgage nobody thought was any good at the time (A First Direct offset, what a fab product it has been.) Have switched to a BTL lender now and out of fixed deal. Which is fine as theirs was astronomical: for 3 years the rent was £795 and the interest was £965, so that went well. All changed when base rate kicked in after 3 years.

Crashy_Time

Best to get a sale in the bag before doing the mental calcs on how much profit you have made IMO, that is another form of emotional attachment that is no good in investment, it may cause you to turn down genuine buyers offering lower than you might like.

mrsmumbles

Yes that is true but if it doesn’t sell for the right amount I would do better to keep renting anyway. Just hoping someone will see it, love it and pay what it is worth.