Deciding to sell or re-let

FlorayG

I know I have to make my own decision here but I find it helps to see what other people would do.
I have a rental property with a BTL interest only mortgage, £45k equity, £850pcm rent. I reckon my profit ( after all regular outgoings and tax but not counting any work I might have to do in it) is about £260 a month. My tenant has advised me she's looking to move on in the spring so it will be empty.
My mind is going back and forth between sell and re-let when she goes and every day my decision is final and then changes next day 
It's a very small terrace with a nice garden but it's also about 400 years old and does have the problems you would expect with a stone cottage that age. Also the kitchen and exterior doors need replacing. The roof, happily, is very sound.
Available rentals are like hen's teeth in this area; currently there are only apartments available, no houses under £1200 a month and all large properties. On the other hand, because it's so small, it will be at the bottom of the sale prices for houses so would probably sell very quickly too.
My current tenant is absolutely perfect and I think I'm worrying that a new one would not be so good and might complain a lot about things that are just normal in a 400 year old property. I could spend money on it to get it really nice to re-let but it would still be tiny and 400 years old after that.
I'm just going round and round. My mortgage is up for renegotiation in November 2025

Bigphil1474

What will you do with the £45k equity? Even though it's interest only mortgage, your equity will still grow as the  property price increases so it's worth considering whether having the cash or the property will make you the greater return. Obviously, if you have something to spend the money on, you sell, but personally I'd keep it in the property.

Do you mean the rent can go up when you get a new tenant? If so, might be worth considering a repayment mortgage, when you change. It will cost more each month but your equity should climb quicker.

You really need a spreadsheet if it's about the economics, if hassle and faffing come into it, it'll be more of a personal decision. My choice would be - keep the property. If you are making over £3k profit a year, you can use that to cover the cost of the immediate repairs. 

Hoenir

FlorayG said:

I reckon my profit ( after all regular outgoings and tax but not counting any work I might have to do in it) is about £260 a month.

My mortgage is up for renegotiation in November 2025

How much are putting aside for for future property maintenance and refurbishment ? 

Mortgages aren't negotiated. What products is your current lender offering today. What are the fees. At today's interest rates would this impact future profitability. 

ReadySteadyPop

Bigphil1474 said:

What will you do with the £45k equity? Even though it's interest only mortgage, your equity will still grow as the  property price increases so it's worth considering whether having the cash or the property will make you the greater return. Obviously, if you have something to spend the money on, you sell, but personally I'd keep it in the property.

Do you mean the rent can go up when you get a new tenant? If so, might be worth considering a repayment mortgage, when you change. It will cost more each month but your equity should climb quicker.

You really need a spreadsheet if it's about the economics, if hassle and faffing come into it, it'll be more of a personal decision. My choice would be - keep the property. If you are making over £3k profit a year, you can use that to cover the cost of the immediate repairs. 

With the moves we are now seeing in gilt markets I wouldn`t expect the value to increase, and I would expect the mortgage to be much more expensive in November so sell now, ask the tenant if she will allow viewings before move out day.

FlorayG

Hoenir said:

FlorayG said:

I reckon my profit ( after all regular outgoings and tax but not counting any work I might have to do in it) is about £260 a month.

My mortgage is up for renegotiation in November 2025

How much are putting aside for for future property maintenance and refurbishment ? 

All of it, really - I put it in a savings account, I never spend any of it

FlorayG

ReadySteadyPop said:

Bigphil1474 said:

What will you do with the £45k equity? Even though it's interest only mortgage, your equity will still grow as the  property price increases so it's worth considering whether having the cash or the property will make you the greater return. Obviously, if you have something to spend the money on, you sell, but personally I'd keep it in the property.

Do you mean the rent can go up when you get a new tenant? If so, might be worth considering a repayment mortgage, when you change. It will cost more each month but your equity should climb quicker.

You really need a spreadsheet if it's about the economics, if hassle and faffing come into it, it'll be more of a personal decision. My choice would be - keep the property. If you are making over £3k profit a year, you can use that to cover the cost of the immediate repairs. 

 November so sell now ask the tenant if she will allow viewings before move out day.

She would but the reason she's moving is because she has too much STUFF so it wont be very nice to view until it's empty, I already had an agent visit he said not to market until empty

ReadySteadyPop

FlorayG said:

ReadySteadyPop said:

Bigphil1474 said:

What will you do with the £45k equity? Even though it's interest only mortgage, your equity will still grow as the  property price increases so it's worth considering whether having the cash or the property will make you the greater return. Obviously, if you have something to spend the money on, you sell, but personally I'd keep it in the property.

Do you mean the rent can go up when you get a new tenant? If so, might be worth considering a repayment mortgage, when you change. It will cost more each month but your equity should climb quicker.

You really need a spreadsheet if it's about the economics, if hassle and faffing come into it, it'll be more of a personal decision. My choice would be - keep the property. If you are making over £3k profit a year, you can use that to cover the cost of the immediate repairs. 

 November so sell now ask the tenant if she will allow viewings before move out day.

She would but the reason she's moving is because she has too much STUFF so it wont be very nice to view until it's empty, I already had an agent visit he said not to market until empty

Fair point, but if someone is really interested and the tenant doesn`t mind I wouldn`t discourage them from viewing, even if there is some clutter lying around, buyers are looking at price/size/location so a few boxes shouldn`t put them off?

caprikid1

"With the moves we are now seeing in gilt markets I wouldn`t expect the value to increase, and I would expect the mortgage to be much more expensive in November so sell now, ask the tenant if she will allow viewings before move out day."

Where is the evidence for this ? With the way 2,3,5 year fixeds are being priced the entire banking market seems to think rates will come down by November or at least no go up. 5 Year fixeds are currently cheaper than 2 year in many cases.

ReadySteadyPop

caprikid1 said:

"With the moves we are now seeing in gilt markets I wouldn`t expect the value to increase, and I would expect the mortgage to be much more expensive in November so sell now, ask the tenant if she will allow viewings before move out day."

Where is the evidence for this ? With the way 2,3,5 year fixeds are being priced the entire banking market seems to think rates will come down by November or at least no go up. 5 Year fixeds are currently cheaper than 2 year in many cases.

"banking market" - They are selling a product, they want you signed up before rates rise, they won`t likely get you to sign up if they broadcast that rates are likely to rise and house prices - the amount of mortgage debt you need to take on -  will fall?

Remember all the articles early last year in the media about "6 rate cuts this Year" etc.? How many people will be regretting following that advice now after the news today on UK gilt yields hitting 1998 levels?

Stubod

..I would take the opportunity to sell it. Not a good time to be a Landlord IMHO...??

FlorayG

I think discussing mortgage rates in November 2025 is like guessing the length of a piece of string. Who knows what the markets will do? New USA President, war in Ukraine on or off, Labour government here seemingly digging even deeper the hole the last government started...this isn't a 'thing' I'm going to consider until the time comes (if I'm lucky, my tenant will give notice just six months before I need to remortgage and that might make my decision for me)