Moving into military quarters - sell or rent our house?

CharlieT130

I'm looking for some general advice from the internets hive mind on what to do in our situation. The title pretty much says it all, which is that at some point in the next 12 months we will be moving into military quarters and we are debating what to do with our current property. I will provide the details of our specific situation below.

• Our current property is worth ~£300k (Zoopla estimate is £310- £338k, but I know that's mostly bobbins)
• Mortgage is ~£90k with monthly payments of £380. We are also over paying another £400, which in theory means it will be paid off in 10 years if we maintain this
• Mortgage fixed term is through to 2025 as we originally thought we'd be staying longer in this area. However, our mortgage provider is signed up to the Armed Forces Covenant, meaning that Consent to Let must be granted, as far as I understand it
• Military quarter will be ~£300 per month paid directly from partners wage. We can pay this without making changes to our mortgage overpayment
• Partner is contracted through to 2039, with an option to extend for another 10 years upon next promotion. We are planning to remain in quarters for the duration (unless we absolutely hate it or decide we really want to stay in a specific area!)
• Estimated rental income (gross) is £1,300 pcm. There are no similar properties (5 bed detached) on the rental market in my town, but I have found a 3 bed detached bungalow advertised for £1,300 so I'm basing it on this. We would want a full service letting agent to manage the property without our input (as far as possible)

Goals

• We're not looking for profit, we just want the house to pay for itself and build equity to facilitate a future purchase. The plan to price sensibly and try to get a long term tenant
• We want to be able to buy our final retirement home in 15-20 years time. We're currently in a relatively low house price area so we will be supplementing the house value with investments as we will probably want to buy elsewhere

I've found some very helpful posts on the requirements of being a landlord and will be doing a lot more research and budget planning. We're also aware that there will be tax implications on any profits (BiL is a tax accountant) and upon final sale value, unless we move back in for a bit in 20 years.

We are nervous about becoming landlords, but I guess the only alternative would be to sell and invest in the stock market. Would CGT be payable if we do that?

All advice and thoughts welcome

ReadingTim

I would enquire from your current lender what obtaining consent to let would entail, as this might make the decision for you.  

jonnydeppiwish!

You should be able to get 2 years consent to let as standard on posting, most mortgage providers accept that the move is a probability.

Can you sell and buy where you’re being based? I know some of the places can be pricey (Brize/Cotswolds) etc.

Did your partner take an LSAP to help purchase the house?

Given the mortgage payment and potential income, you could easily see a tidy profit even if totally managed.

It’ll come down to whether you’d be happy having someone else live in your house.

Good luck btw, I did 20 years 😉 

sjc502

I don't have any real advise to add other than if you decide to rent, please do not refer to yourself as "accidental landlord."

Jude57

Why not speak to an independent financial adviser about the potential of investing your capital over a long period? Bear in mind that no portfolio is immune from decrease in value and that you may, for reasons beyond your control, need to release capital immediately, which would affect what investments might be best for you. It's vital that you and your partner understand the potential risks. You could also check the Investments board for information on how to find an IFA in your area.

I'd recommend you speak to someone from SSAFA about being a Pad spouse. It can be quite cliquey with a strict hierarchy - generally based on the serving partner's rank and, in my experience, the lower the rank the more snobbish the spouse is! There's also the possibility that you may have to leave MQ at very short notice. I mean within days or at best, a few weeks. If your serving partner is seriously injured or killed, or if your relationship ends, unfortunately the Army doesn't give much lasting support to widowed or ex-partners. Also consider how you'd cope if your partner is deployed for months at a time, or on extended exercise overseas. You'll have to cope with being alone in a fairly restricted living situation (you'll be aware that there are limits to what you can do with MQ decor-wise) away from your family and friends and although there's support from Welfare Officers, it's not unlimited and there's a certain attitude of 'suck it up, buttercup' prevalent too. The attitude being because your spouse has it worse than you in your comfy MQ.

If you or your partner have any serving friends with experience of MQ, pump them for information on the realities. Most people who don't have to live in MQ can't wait to get out but there are those who tolerate it pretty well if they have a long-term plan, as you seem to.

CharlieT130

ReadingTim said:

I would enquire from your current lender what obtaining consent to let would entail, as this might make the decision for you.  

Thanks, but not sure how this would influence our decision given Consent to Let is guaranteed with no financial disadvantage? I have spoken to them though.

jonnydeppiwish! said:

You should be able to get 2 years consent to let as standard on posting, most mortgage providers accept that the move is a probability.

Yep, mortgage provider has confirmed that the 12 month maximum is waived and two years sees us through to the end of the fixed term.

jonnydeppiwish! said:

Can you sell and buy where you’re being based? I know some of the places can be pricey (Brize/Cotswolds) etc.

The move is likely to High Wycombe for 12 months with another potential move after that (subject to promotion) so don't want to buy there due to house prices and the short term nature of it. It was also really stressful buying and selling last time as the military movers couldn't wrap their heads around the fact we had no control over the completion date, as opposed to a fixed march out date. We ended up with four days between exchange and completion and ended up paying out of pocket for it. Appreciate that's a luxury other house buyers don't get, but we also don't get a choice when or where we move!

jonnydeppiwish! said:

Did your partner take an LSAP to help purchase the house?

Nope, so nothing to pay back there

jonnydeppiwish! said:

It’ll come down to whether you’d be happy having someone else live in your house.

Good luck btw, I did 20 years 😉 

Yeah we'd be happy to have other people living here. We like the house, but the location isn't for us long term. We've purposely not spent a ton on it since we knew it wasn't going to be forever. Thank you for the best wishes - military quarters is going to be a new experience for us

sjc502 said:

I don't have any real advise to add other than if you decide to rent, please do not refer to yourself as "accidental landlord."

Nothing accidental about planning ahead and doing the research

ReadingTim

CharlieT130 said:

ReadingTim said:

I would enquire from your current lender what obtaining consent to let would entail, as this might make the decision for you.  

Thanks, but not sure how this would influence our decision given Consent to Let is guaranteed with no financial disadvantage? I have spoken to them though.

Sorry, I mis-read this as you must seek it, rather than the lender must grant it.  

CharlieT130

Jude57 said:

Why not speak to an independent financial adviser about the potential of investing your capital over a long period? Bear in mind that no portfolio is immune from decrease in value and that you may, for reasons beyond your control, need to release capital immediately, which would affect what investments might be best for you. It's vital that you and your partner understand the potential risks. You could also check the Investments board for information on how to find an IFA in your area.

We're already talking with an IFA regarding our investment strategy and have got the ball rolling with ~£15k of investments to be drip fed monthly. It's still very new for us so we'd rather take it slowly, see how the find perform and figure out our comfort / risk levels before putting £200k into stocks.

Jude57 said:

I'd recommend you speak to someone from SSAFA about being a Pad spouse. It can be quite cliquey with a strict hierarchy - generally based on the serving partner's rank and, in my experience, the lower the rank the more snobbish the spouse is! There's also the possibility that you may have to leave MQ at very short notice. I mean within days or at best, a few weeks. If your serving partner is seriously injured or killed, or if your relationship ends, unfortunately the Army doesn't give much lasting support to widowed or ex-partners. Also consider how you'd cope if your partner is deployed for months at a time, or on extended exercise overseas. You'll have to cope with being alone in a fairly restricted living situation (you'll be aware that there are limits to what you can do with MQ decor-wise) away from your family and friends and although there's support from Welfare Officers, it's not unlimited and there's a certain attitude of 'suck it up, buttercup' prevalent too. The attitude being because your spouse has it worse than you in your comfy MQ.

If you or your partner have any serving friends with experience of MQ, pump them for information on the realities. Most people who don't have to live in MQ can't wait to get out but there are those who tolerate it pretty well if they have a long-term plan, as you seem to.

Good advice, thanks. The pad spouse / cliquey thing is interesting so thanks for the heads up. We currently live out and are not involved with military life as a couple, other than the odd dinner. I suspect we won't 'fit in', but we'll give it a go and see what happens. I work full time and from what I've seen a lot of organised events are during the day so I probably can't get too involved anyway.

Thankfully partner is not front line so the risk of injury or worse is low (driving is more dangerous). It's RAF not Army if that makes a difference? Financially speaking, I'm not worried as my salary makes up about 60% of our joint income and my company are really flexible about how and where I work.

We've done two four month OOAs (deployments), including one in the deepest pandemic, which was... tough. I do know what to expect though and am hoping that being closer to military life will make it a bit easier.

unforeseen

High Wycombe? When I was posted there I turned down 3 quarters as they were so bad. In the end I managed to get PMC to post me back to Bentley Priory. 

Getting_greyer

Just to add, there's been a scheme pilot that has recently finished called Future Accommodation Model, or something like that.  

The actual policy goes live this year I believe. One of the options looked at is enabling personnel to rent locally in the private sector with a subsidy so basically cost is about the same as SFA.  Might be a potential option to look at if living on the patch doesn't suit. 

YoungBlueEyes

When I was a military wife (many moons ago), the wives were very cliquey depending on husband's rank. If they don't want you at the outset they won't want you at all. As you're working full time that'll hopefully not affect you.

One thing I would say though - if you have or are planning to have children, check out boarding schools. Nobody I ever knew put their kids into the local school because leaving at short notice and the constant upheaval is best avoided. So factor that into your financial calculations

Judging by your username your partner does the same thing my ex did. S/he'll move around fairly often and you won't always be able to go with them. Are you ok with long periods on your own?