sell or let?

jonbill

Hi, thanks for reading and any info or advice on my question.
I live in Northampton, but work in Manchester, and I bought a flat in Salford a few years ago to stay in during the week for work. 
I'm leaving my job in a few months, and I have to decide to sell the flat or let it. (Or maybe sell it and buy to let in Northampton).
Are there any obvious reasons to prefer one over another?

The flat's worth a bit more now than when I bought it - so am I right there'll be capital gains to pay?
I'm not keen on a lot of faff dealing with tenant issues, especially 140 miles away. Can I hope to have no faff, and let the letting agency look after it all?
If I sell the flat in Salford, and buy to let in Northampton, is there a way to get out of the capital gains?

does it come down to appetite for income vs cash in the bank?

thanks for all input.

Jon

MaryNB

A letting agent can look after it but you'll have to see if it's financially worth it after paying their fee. You need to be aware of all your responsibilities as a landlord. You'll still be held liable if something goes wrong. You can assign tasks to the letting agency but not responsibilities. 

Can you afford the mortgage if the tenants stop paying rent? Evictions can take many months.

jonbill

Thanks @MaryNB. There's no mortgage, so that bits not a concern. I'll have to investigate all those responsibilities. I rather fancy income with no hassle. 

sammyjammy

If you've been living in it there is no capital gains to pay, I would sell it, its probably near or there abouts the top of the market and being a landlord is a tough job with alot of risks.  Do you own property in Northampton?

jonbill

Thanks, I'm leaning that way. I do own my house in Northampton - I've been spending the weekends in the house in Northampton with the family and the working week in Salford.  HRMC could probably argue that Northampton is my main home - are there any clear rules for deciding which is 'main home'?

Markneath

Would it rent well?

I have a btl business on the side of my main job its worked well for me but there are recent tax changes which are pushing me to offload the btl’s. 

Basically if your close to or a higher rate tax payer then it might not be worth it. 

p00hsticks

sammyjammy said:

If you've been living in it there is no capital gains to pay, I would sell it, its probably near or there abouts the top of the market and being a landlord is a tough job with alot of risks.  Do you own property in Northampton?

As I understand it the OP can only have one property at a time as their Principal Private Residence (PPR) which is exempt from CGT- so one or other of the houses they own, either the one in Salford or the one in Northampton, whichever isn't nominated as such - will be potentially liable for at least some CGT when they come to sell.

In the circumstances the OP describes, where they are genuinely splitting their time between the two, I'm not sure which HMRC would consider as the main one, although the OP mentions family in one post - if that is spouse and children and they are only living in one of the properties then that would probably swing the balance in favour of the Norhampton one (a married couple can only have one PPR between them).  

p00hsticks

jonbill said:

Thanks, I'm leaning that way. I do own my house in Northampton - I've been spending the weekends in the house in Northampton with the family and the working week in Salford.  HRMC could probably argue that Northampton is my main home - are there any clear rules for deciding which is 'main home'?

I think that when you split your time between properties it comes down to practicalities -for example

• What address is shown on your driving licence ?
• Where are you registered to vote ?
• What address do HMRC have for you ?
• What address does your bank have for you ?
• Presumably you pay utility bills and council tax in both - does the conucil tax bill indicate that either property is a second home ?  

And as I said above, a married couple can only have one PPR between them - so if the family you refer to includes a spouse, I susect that HMRC would consider where they live as being the main home.

Ath_Wat

jonbill said:

Hi, thanks for reading and any info or advice on my question.
I live in Northampton, but work in Manchester, and I bought a flat in Salford a few years ago to stay in during the week for work. 
I'm leaving my job in a few months, and I have to decide to sell the flat or let it. (Or maybe sell it and buy to let in Northampton).
Are there any obvious reasons to prefer one over another?

The flat's worth a bit more now than when I bought it - so am I right there'll be capital gains to pay?
I'm not keen on a lot of faff dealing with tenant issues, especially 140 miles away. Can I hope to have no faff, and let the letting agency look after it all?
If I sell the flat in Salford, and buy to let in Northampton, is there a way to get out of the capital gains?

does it come down to appetite for income vs cash in the bank?

I think it's safe to say that no, if you enter into the lettings business, you cannot hope to have no faff.

jonbill

Thanks everyone. Sell sounds like the right decision. 

canaldumidi

Your comments about faff make it clear that letting theflat in Salford would be mistake. If you continue to consider it, read these:

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

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

Post 9: Letting agents: how should a landlord select or sack?

Re Capital Gains Tax, I think p00sticks is right, though remember when calculating the liablity you can deduct any capital investment (eg if you added an extension at the back), the selling costs, and of course your annual CGT allowance.