What's the best financial act for an outright owned home that may not be needed sell/rent..etc?

Slithery

me1000uk said:
Great point, noted and if I decide to use an agency will see what the situation is with that.

They won't tell you what the situation is, the contract will likely state that they will get all of the work done for you and then you just have to pay their made up bill. That's what you get for going 'full management'.

Thrugelmir

How long is left on the lease of the flat? 
What's the service charge like? Is there a sinking fund in place? 

Ramouth

It seems to me that letting your flat is high risk for low reward.  House prices can go down as well as up.  All the improvements you have made could be ruined.  You could also end up having to go to court to get the place back.

Have you looked at investing the money in a property fund instead?  I’m no investment expert but would think it would spread your risk while still being property if you think prices are going to keep rising.  

Or if you actually want to keep the money safe, invest as cash into premium bonds and whatever series of high interest current accounts and regular savers you can find.

me1000uk

Thrugelmir said:

How long is left on the lease of the flat? 
What's the service charge like? Is there a sinking fund in place? 

I don't think there's a time limit on the lease. (Scotland system). 
Service charge is around 50 odd per month. 
Don't know what a sinking fund is I'm afraid

theoretica

me1000uk said:

So assume rent is 550/month, = 6600. Say to be super conservative the agent takes 20% all in, you have 5280. 
Is it then not safe to assume 4500 profit per year (taking into account surprise costs), plus increase in property value.

How long have you owned the flat?  Over that time how much in total have you spent on it, and appliances?    An average spend of £780 a year seems optimistically low to me.

me1000uk

theoretica said:

me1000uk said:

So assume rent is 550/month, = 6600. Say to be super conservative the agent takes 20% all in, you have 5280. 
Is it then not safe to assume 4500 profit per year (taking into account surprise costs), plus increase in property value.

How long have you owned the flat?  Over that time how much in total have you spent on it, and appliances?    An average spend of £780 a year seems optimistically low to me.

Recently decorated and appliances are new under warranty. 

user1977

me1000uk said:

Thrugelmir said:

How long is left on the lease of the flat? 
What's the service charge like? Is there a sinking fund in place? 

I don't think there's a time limit on the lease. (Scotland system). 
Service charge is around 50 odd per month. 
Don't know what a sinking fund is I'm afraid

Flats aren't leasehold in Scotland.

A sinking fund would be the factors stashing money away for future expenditure - it's pretty rare in Scotland.

theoretica

me1000uk said:

theoretica said:

me1000uk said:

So assume rent is 550/month, = 6600. Say to be super conservative the agent takes 20% all in, you have 5280. 
Is it then not safe to assume 4500 profit per year (taking into account surprise costs), plus increase in property value.

How long have you owned the flat?  Over that time how much in total have you spent on it, and appliances?    An average spend of £780 a year seems optimistically low to me.

Recently decorated and appliances are new under warranty. 

Yes - and how much did it cost to get it to that stage?  You were talking about renting it out for 7 years and I doubt the warranties are that long and it won't be recently decorated by then - or only because you redecorated it again.  Are you confident the building won't have any big bills in that time - how's the roof? 

Calculating rental yields on the basis of running your flat down from its current state to tatty and old is not a realistic calculation.

me1000uk

theoretica said:

me1000uk said:

theoretica said:

me1000uk said:

So assume rent is 550/month, = 6600. Say to be super conservative the agent takes 20% all in, you have 5280. 
Is it then not safe to assume 4500 profit per year (taking into account surprise costs), plus increase in property value.

How long have you owned the flat?  Over that time how much in total have you spent on it, and appliances?    An average spend of £780 a year seems optimistically low to me.

Recently decorated and appliances are new under warranty. 

Yes - and how much did it cost to get it to that stage?  You were talking about renting it out for 7 years and I doubt the warranties are that long and it won't be recently decorated by then - or only because you redecorated it again.  Are you confident the building won't have any big bills in that time - how's the roof? 

Calculating rental yields on the basis of running your flat down from its current state to tatty and old is not a realistic calculation.

Thanks for your response. I can't tell you about the roof I'm afraid but if I had the option to view the flat and was a tenant I would rent it without thinking twice. When I bought it it was significantly less than the valuation (if that means anything) and it was at 'low' point price wise. This was before works was done on it, so hopefully from a capital perspective it will go up. In terms of 'maintenance' or unexpected costs I can only guess. I've been in the flat a relatively short time as the pandemic scrambled everything and our plans/circumstances changed.
Any calculation refinements are appreciated. Cheers. 

lr1277

As a former landlord, I offer the following suggestions/ideas.

1) How emotionally attached are you to your flat? Given that it has been your home for sometime, this might be the case. In which case, how would you feel if your tenant didn't treat it the way you would.  Is that feelig worse than the feeling of loss if you were to sell it now? When investing in property to let out, the advice I have read is not to buy somewhere you would want to live, but buy somewhere that is desirable to tenants. So close to shops, ametnities, rail/buses/main roads etc. Maybe close to a hospital/university so you can rent to staff (and not necessarily students). Does the flat come with an allocated parking space? I ask because where would you or any workmen park when visiting the flat? Just a thought.

2) If you decide to let it out, I would suggest getting (and paying for) an inventory agent to document the property before the tenant moves in. Then in the contract, make it a condition that the tenant uses an inventory agent to document the property when they leave.

Two points: a) Get the letting agent to recommend an inventory agent, so there is a good chance the tenant will use the same inventory agent on leaving. b) In London at least, I was told, properties have to be redecorated every 2 or 3 years to be considered in good decorative order. Admittedly told to me by an inventory agent.

3) You may have seen some threads on here about deposits not being returned. As the landlord, you are responsible for returning the deposit. It doesn't matter what scheme (if any) you put the money into, it is still your responsibility. Even if the letting agent messes up.

From my experience, I rented to a foreign student in 2014 for a 2 year contract. From 2015 I wanted to sell because the prices were very high. the tenant had been a pain and my circumstances were such that I could have used the money, but I couldn't get out of the contract easily. Then the student renewed for a further year. So I got the flat back in 2017. By which time prices had started to fall. I put in on the market whilst it was empty and didn't let it out again. The flat was on the market for 10 months, with many price reductions, before I got my first offer.Just eome thoughts.