Deciding to sell or re-let

FlorayG

Stubod said:

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

Are you, or have you been until recently, a landlord?

subjecttocontract

* £260 a month income after expenses is 7% before tax...5.6% after tax (20%) or 4.2% (40%).
* If you sell, assuming you have no CGT to pay on £45K equity, you can probably get 4.7% fixed.
* What that doesn't take into account is any increase in property value going forward.
* One thing that would concern me is how to meet the minimum EPC rating on a 400 year old property ?

Tucosalamanca

Yield on the property, potential for growth and tax implications would be the main considerations for me.
What are the compelling reasons to retain BTL?
What could you earn if your resources were deployed elsewhere, how would putting the money into pensions compare? That would be my starting point...

Hoenir

Hence my earlier question. Rates have moved significantly upwards over the past few years. Plenty of residential motgage holders coming off 1% rate products in 2025. Incurring sizable increase in monthly outgoing as a result. Whatever the BOE does this year. As the days of rock bottom are well and truly over. With many struggling to understand why. 

FlorayG

subjecttocontract said:

* £260 a month income after expenses is 7% before tax...5.6% after tax (20%) or 4.2% (40%).
* If you sell, assuming you have no CGT to pay on £45K equity, you can probably get 4.7% fixed.
* What that doesn't take into account is any increase in property value going forward.
* One thing that would concern me is how to meet the minimum EPC rating on a 400 year old property ?

No, that's profit. I deducted tax. So 7%? I never could figure out how to work that out please tell me. Is it as simple as percentage of my equity or do I factor in other 'house' things?
EPC is band D, currently fine;if it has to go up to C as 'they' are considering then I will have to sell but I don't think they will do that in the end because it would mean too many private rentals go off the market and the majority of private homes over 20 years old are D or lower
I assume I don't pay CGT on my original investment? Only on any increase?
@Hoenir the 1.5% rate sailed for me last year, I'm already paying 4.75%

FlorayG

Tucosalamanca said:

Yield on the property, potential for growth and tax implications would be the main considerations for me.
What are the compelling reasons to retain BTL?
What could you earn if your resources were deployed elsewhere, how would putting the money into pensions compare? That would be my starting point...

I don't know much about pensions I will freely admit but I'm already over state pension age ( although still working full-time) so would that even be worth while?
BTL gives me a regular income from an investment that at the worst isn't going to be ever worth less than I paid for it. Of course it was easy money in 2021 when I bought, not quite so easy now with more to pay on mortgage ( I already put up the rent to market rate because of that) if I have to replace the kitchen and exterior doors this year that will possibly wipe out the year's profit, but also increase the value of the house

subjecttocontract

FlorayG said:

subjecttocontract said:

* £260 a month income after expenses is 7% before tax...5.6% after tax (20%) or 4.2% (40%).
* If you sell, assuming you have no CGT to pay on £45K equity, you can probably get 4.7% fixed.
* What that doesn't take into account is any increase in property value going forward.
* One thing that would concern me is how to meet the minimum EPC rating on a 400 year old property ?

No, that's profit. I deducted tax. So 7%? I never could figure out how to work that out please tell me. Is it as simple as percentage of my equity or do I factor in other 'house' things?
EPC is band D, currently fine;if it has to go up to C as 'they' are considering then I will have to sell but I don't think they will do that in the end because it would mean too many private rentals go off the market and the majority of private homes over 20 years old are D or lower
I assume I don't pay CGT on my original investment? Only on any increase?
@Hoenir the 1.5% rate sailed for me last year, I'm already paying 4.75%

* 7% is your profit after expenses on your £45K of equity.
* If your property cannot be brought up to the new EPC rating or if the cost of work to achieve it is to expensive, at the very least you will reduce your sales market cos no other landlord is likely to buy it.
* CGT is selling price minus buying price, buying & selling costs, capital expenditure, personal CGT allowance X the marginal rate. If you owe CGT it will reduce your £45K equity and you will have less to save/invest.

Stubod

FlorayG said:

Stubod said:

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

Are you, or have you been until recently, a landlord?

..yep........

FlorayG

subjecttocontract said:

FlorayG said:

subjecttocontract said:

* £260 a month income after expenses is 7% before tax...5.6% after tax (20%) or 4.2% (40%).
* If you sell, assuming you have no CGT to pay on £45K equity, you can probably get 4.7% fixed.
* What that doesn't take into account is any increase in property value going forward.
* One thing that would concern me is how to meet the minimum EPC rating on a 400 year old property ?

No, that's profit. I deducted tax. So 7%? I never could figure out how to work that out please tell me. Is it as simple as percentage of my equity or do I factor in other 'house' things?
EPC is band D, currently fine;if it has to go up to C as 'they' are considering then I will have to sell but I don't think they will do that in the end because it would mean too many private rentals go off the market and the majority of private homes over 20 years old are D or lower
I assume I don't pay CGT on my original investment? Only on any increase?
@Hoenir the 1.5% rate sailed for me last year, I'm already paying 4.75%

* CGT is selling price minus buying price, buying & selling costs, capital expenditure, personal CGT allowance X the marginal rate. If you owe CGT it will reduce your £45K equity and you will have less to save/invest.

how would I work out ' personal CGT allowance X the marginal rate.'?

subjecttocontract

FlorayG said:

subjecttocontract said:

FlorayG said:

subjecttocontract said:

* £260 a month income after expenses is 7% before tax...5.6% after tax (20%) or 4.2% (40%).
* If you sell, assuming you have no CGT to pay on £45K equity, you can probably get 4.7% fixed.
* What that doesn't take into account is any increase in property value going forward.
* One thing that would concern me is how to meet the minimum EPC rating on a 400 year old property ?

No, that's profit. I deducted tax. So 7%? I never could figure out how to work that out please tell me. Is it as simple as percentage of my equity or do I factor in other 'house' things?
EPC is band D, currently fine;if it has to go up to C as 'they' are considering then I will have to sell but I don't think they will do that in the end because it would mean too many private rentals go off the market and the majority of private homes over 20 years old are D or lower
I assume I don't pay CGT on my original investment? Only on any increase?
@Hoenir the 1.5% rate sailed for me last year, I'm already paying 4.75%

* CGT is selling price minus buying price, buying & selling costs, capital expenditure, personal CGT allowance X the marginal rate. If you owe CGT it will reduce your £45K equity and you will have less to save/invest.

how would I work out ' personal CGT allowance X the marginal rate.'?

That's usually quite straightforward, at least it has been in my case. I've sold numerous rental properties over the last few years and paid enormous sums of CGT. There is a separate self assessment form to complete with the details or you can just provide the info to an accountant to do for you.
My post was really a quick summary that applies to most people. Start by subtracting the buying price from the selling price. Then deduct your buying & selling costs, any capital expenditure you incurred during your ownership period, deduct your personal CGT allowance (£3000). The result is added to your other income to determine how much tax is due at either 18% or 24%.