To sell my house or rent it out

wintius_maximus

Quick question.

I am living away from my primary residence due to work and we have come to a point where we either continue renting it out or sell it. What are peoples opinions, should we walk away with the equity now whilst the market is at a high and with potential interest rate rises on the horizon or should we continue to rent it out?

Thoughts please!

Thank you

MaryNB

I presume by "continue to rent it" you mean continue to own it and start letting it.

Read these from the sticky at the top of this forum.

Post 7: New landlords (1):advice & information :see links in next post

Post 8: New landlords (2): Essential links for further information


Can you afford the mortgage repayments if they stop paying rent? Will you be getting a letting agency? Will it be a fully managed let?

You need an EPC (rated minimum E), EICR, GSC (if there's gas), HMO license if 5 or more unrelated people are sharing (3 or more for certain councils) amongst other things. Even a small HMO (3 or more sharing forming more than once household) that doesn't require a licence affects things.

Will you be getting a consent to let? (Only temporary, maybe a year at the discretion of your lender). Or do you need a BTL mortgage? BTL mortgage requires you to have a deposit of 25% (or 25% equity in your property).

Do you intend to move back in at some stage? 

canaldumidi

wintius_maximus said:

I am living away from my primary residence due to work and we have come to a point where we either continue renting it out or sell it. What are peoples opinions, should we walk away with the equity now whilst the market is at a high and with potential interest rate rises on the horizon or should we continue to rent it out?

How long is the existing tenants' fixed term? How long do you anticipate it would take to evict them? Or would you sell with the tenants in situ?

Stubod

..way to little info to advise either way...eg mortgage v rent income, income expectations, retirement plans and when,  other money available, pension status, investments, savings, debt.... to name a few?

wintius_maximus

i know this needs more info but not comfortable sharing too much detail in an open forum. However;

rental income just covers the mortgage
current tenants about to leave, thus the reason for us asking the question

we honestly dont know about moving back into it as the work situation is quite changeable and we are currently living 200 miles away from this house

we simply wanted to garner opinions on whether if you had a house with equity now and you have to make the decision would you continue to just cover the mortgage with rent or cash in whilst the market is red hot and the interest rates havent started to rise

[Deleted User]

Sell it. Becoming a landlord is a major responsibility and deprives someone else of the opportunity to buy their own home.

GrumpyDil

When you say just covers is that just covers the interest or covers the interest + capital repayment as that is an important distinction.

Although to be honest there are less risky ways to make money so in your position, unless I had a clear intention to return to the house, I would come down on the selling it side. 

warwick2001

[Deleted User] said:

Sell it. Becoming a landlord is a major responsibility and deprives someone else of the opportunity to buy their own home.

They already are landlords. The current tenants are about to leave.

The OP is asking should they either get new tenants, or sell the house.

wintius_maximus

GrumpyDil said:

When you say just covers is that just covers the interest or covers the interest + capital repayment as that is an important distinction.

Although to be honest there are less risky ways to make money so in your position, unless I had a clear intention to return to the house, I would come down on the selling it side. 

covers the interest and the capital....

GrumpyDil

So you are making a profit which is clearing the capital. I trust you are declaring this correctly to HMRC and paying tax on the profit. 

I do still stick with my original point that I would probably sell the house

canaldumidi

wintius_maximus said:

rental income just covers the mortgage
current tenants about to leave, thus the reason for us asking the question

So even assuming it covers both interest and capital repayments, you are losing money: tax, gas/electric inspections, insurance, void, refurb costs, etc etc. and that ignores the risk factors like next tenants defaulting/causing damage.

The equity could be invested in more secure and far more liquid products which involve far less work or stress.

And depending on other unknowns, could benefit from generous tax concenssions.