Selling BTL Property. Should reinvest in BTL or Shares?

Techiescot

Hi


I am selling a couple of rental properties on the south coast (one has £30K equity and the other has no equity.) I live in Scotland and they are too much hassle at the moment.


My question is:
Should I reinvest in rental properties in Scotland (cheaper and nearer to me so perhaps easier to manage the agents etc But I would need another BTL mortgage to fund it.


OR


Find a different vehicle for the £30K?



I don't need income from it but am looking to invest in the future and might need income when I retire.



I am a single mother to 2 young adults. Age 59. No pension. Keeping 1 BTL which has £80K equity.


I note the MSE Buy To Let guide has been removed .



Many thanks for any help given.

tom9980

Techiescot wrote: »

Hi


I am selling a couple of rental properties on the south coast (one has £30K equity and the other has no equity.) I live in Scotland and they are too much hassle at the moment.


My question is:
Should I reinvest in rental properties in Scotland (cheaper and nearer to me so perhaps easier to manage the agents etc But I would need another BTL mortgage to fund it.


OR


Find a different vehicle for the £30K?



I don't need income from it but am looking to invest in the future and might need income when I retire.



I am a single mother to 2 young adults. Age 59. No pension. Keeping 1 BTL which has £80K equity.


I note the MSE Buy To Let guide has been removed .



Many thanks for any help given.

No pension? You have missed out big time on pension contributions from your employer and the government, this was a massive mistake and at 59 very hard to rectify. You should however start a pension ASAP before April to benefit. BTL is simply no longer viable in the current climate for the vast majority of people.

I suggest you go to the pension sub forum for advice.

AdrianC

Why not put the £30k equity into the remaining let, and pay down the mortgage? £110k equity in it...

[Deleted User]

What hassle are you experiencing at the moment with your BTL?

If you sell both BTL properties that's two lots of marketing and selling costs and two lots of potential CGT in the one tax year. I know one property has no equity but it doesn't necessarily follow that there hasn't been a capital gain since you purchased it.

You will then having the buying costs if you purchase more BTL and you'll need to pay the extra 4% additional dwelling supplement on the LBTT of any further purchases.

Each of these things will take a chunk out of that £30k equity. It maybe that selling one as AdrianC has suggested and paying down the mortgage on the remaining BTL is one of your better options. I take it the BTL mortgages are interest only so is there a plan in place to repay the capital at the end of the mortgage term?

Techiescot

The BTL (keeping) has 10 years to run. I aim to overpay to clear that by the end. I originally had an endowment to cover the 67K original mortgage but that is now only going to pay out £36K. Mortgage is currently 106K



Pension: Worked overseas and should have invested in a private pension but travelled a lot. Didn't worry about it then but am worrying a little now. I work for myself so don't have an employer per se though it is a limited company. I will look at the Pensions forum.


The Property was trashed by the tenant and she didn't pay any rent for a year. Had to get her evicted in the end. Both BTL that I am wanting to sell have high service charge and leasehold charges. The BTL I am keeping is freehold.


I thought LBTT didn't kick in until property was over a certain value.


I was thinking that 10 years of someone else paying a mortgage might accrue some equity.

[Deleted User]

Techiescot wrote: »

The BTL (keeping) has 10 years to run. I aim to overpay to clear that by the end. I originally had an endowment to cover the 67K original mortgage but that is now only going to pay out £36K. Mortgage is currently 106K



Pension: Worked overseas and should have invested in a private pension but travelled a lot. Didn't worry about it then but am worrying a little now. I work for myself so don't have an employer per se though it is a limited company. I will look at the Pensions forum.


The Property was trashed by the tenant and she didn't pay any rent for a year. Had to get her evicted in the end. Both BTL that I am wanting to sell have high service charge and leasehold charges. The BTL I am keeping is freehold.


I thought LBTT didn't kick in until property was over a certain value.


I was thinking that 10 years of someone else paying a mortgage might accrue some equity.

The additional dwelling supplement kicks in one you spend £40,000.

bluenose1

I would ask this question on the pension forum if I were you.
I would imagine at 59 you will find it difficult to build up more pension provision than you would get with pension credit from age 67 if you had finished work. The thing to bear in mind is Pension Credit is means tested so I would take advice before deciding what to do.
You may be entitled to a free Pension chat with Pensionwise which is a Government Advisory service.
Have you checked your entitlement to State Retirement Pension? You may have credits from getting child benefit etc.

steampowered

It is impossible to answer the question you have asked in isolation because the answer depends on knowing what your tax position is, how much debt you have on these properties, what other savings you have and what your state pension position is.

Are you a starter rate or basic rate tax payer? If so, investing in a pension can be extremely tax efficient, as you get an instant 20% top-up from the government, which you'll be able to access in pretty short order.

I wouldn't have thought £30k would buy you much in terms of BTL property. Leveraging yourself up to the eyeballs with mortgage debt is a high risk thing to do if you don't have other income sources sufficient to weather non-payment of rent or increases in interest rate; you would also be facing additional rate stamp duty.

Techiescot

Thank you everyone for your insights.


I am going to put my BTL ideas on hold. Still selling at least one of them though and definitely keeping one.


I am off over to the pensions board to see what information I can mine from their experts.


All the best for 2020 everyone


:beer:

Crashy_Time

https://www.lettingagenttoday.co.uk/breaking-news/2019/10/landlords-urged-to-prepare-for-last-straw-in-maintaining-profitability