Time to sell rental property

Mutton_Geoff

Hoenir said:

A key question. Majority of BTL's are interest only mortgages. Pre GFC the gain came from capital appreciation of the property rather than generating a decent net after tax profit once all costs were factored in. 

And a lot of amateur/accidental landlords have standard residential repayment mortgages on their lets either with CTL (consent to let) or haven't bother telling the lender.

Without knowing facts it's hard to say but we don't know if the place the OP is in now belongs to their partner or jointly. They could have owned a property, met partner, moved into their place, had kids, not enough room now?

Sometimes new posters don't even come back to review the replies they received   

MEM62

Mutton_Geoff said:

MEM62 said:

sticking as much as I could into my pension and ISA kept it way from the tax man  

Pension contributions are tax free on the way in, but taxed on the way out. ISAs are contributed from your net (taxed) income, but tax free on withdrawal, so neither wrapper keeps it away from the tax man 

@Mutton_Geoff   I paid a very nice lump sum into my pension and it had an immediate 25% boost courtesy of HMRC - along with a nice tax refund for the rest of my salary that fell into the 40% bracket when I did my tax return.  Whilst it may be taxed at 20% on the way out, in addition to the boost already provided by the tax man, it will grow free of any tax until I choose to take it.  The contribution to my ISA was not net of income tax as there is no income tax on the sale of property.  Again, the returns are tax free and, in this case, is not subject to tax when I take it out either.  

How much more 'kept away from the tax man' do you want?      

theartfullodger

Between a day (including completion) and never.

advicerequired2024

Albermarle said:

Stubod said:

I would sell it now while it is empty.....would be a no brainer for me....

On the other hand if it is not empty ( it is not clear) then they will need to plan well ahead to sell it 'tenant free'. Unless they sell to another landlord maybe.

Apologies, yes it is empty, I am contemplating whether to get a new tenant in for a year then sell when closer to buying a new place with my partner who owns her own property

Olinda99

there are supposed to be interest rate reductions over the next 12 months which I suppose means mortgages will be cheaper which I suppose means house prices may increase over that period 

however to offset this labour will probably pass the renter rights bill within the next 12 months and they will ban section 21 - possibly even for existing contracts and yes you will be able to evict if you want to sell but that will probably mean section 8 which may well mean a long delay in the courts

Tucosalamanca

MEM62 said:

advicerequired2024 said:

Should I keep renting out my 1 bed flat until we are ready to put the wheels in motion to move or should I sell now and keep the money in savings until we are ready.

The problem with BTL's is that they are not tax-efficient.  Add to that the other on-going costs/ fees and, as you have already discovered, the fact that a bad tenant can cost you and you can see why many landlords are selling up.  Sold my flat last years and the money is working much better for me elsewhere (sticking as much as I could into my pension and ISA kept it way from the tax man) and I don't have the hassle of being a landlord.  

This should almost be a sticky post.

It's a theme that pops up on an almost daily basis and yet so few seem to grasp the concept.

BTL has risk, regulatory burden and taxation (potentially substantial bills).

Money can be put into ISA and pensions with risk to suit the investor, long established regulations that are unlikely to change much (imo) and taxation that is far less harsh (and possibly even beneficial).

I have no idea why people would choose to become (or stay) landlords in the current environment.
For the most part it doesn't make good financial sense....

Stubod

...sell...sell....sell....!!!!

RHemmings

Hoenir said:

Mutton_Geoff said:

advicerequired2024 said:

Hi, 

I have a 1 bedroom flat which I rent out, doesn't make any money but keeps the mortgage covered. Last tenant was a nightmare and the property needed lots of work to get it back to a decent standard.

I live with my partner nearby in a lovely home but is getting to be too small with kids getting bigger each day so we would like to upgrade however this wont be happening for a year or two.

Should I keep renting out my 1 bed flat until we are ready to put the wheels in motion to move or should I sell now and keep the money in savings until we are ready.

Thanks 

If it "covers the mortgage" and that mortgage is a repayment loan (rather than interest only) then surely you are making money?

A key question. Majority of BTL's are interest only mortgages. Pre GFC the gain came from capital appreciation of the property rather than generating a decent net after tax profit once all costs were factored in. 

I wonder how many mortgaged BTL properties there are where the bank is making more profit out of the property than the landlord is. 

ButterCheese

I would definately sell the flat first, as others have said.  One less thing to worry about.

Albermarle

advicerequired2024 said:

Albermarle said:

Stubod said:

I would sell it now while it is empty.....would be a no brainer for me....

On the other hand if it is not empty ( it is not clear) then they will need to plan well ahead to sell it 'tenant free'. Unless they sell to another landlord maybe.

Apologies, yes it is empty, I am contemplating whether to get a new tenant in for a year then sell when closer to buying a new place with my partner who owns her own property

Most buyers will not finalise a deal until the tenant is out. So if you have a tenant for a year, it could take 6 months to get them out, if they did not want to go, and would be a lot of hassle. Much easier to sell it empty.