BTL - Sell or Let

carrotwool

Approximately seven years ago, my wife and I bought a two-bedroom flat in London as a buy-to-let investment. Since then, the property’s value has risen by about 20%. However, the prospect of any further rise is low and is likely to take a very long time.

The fixed term on our interest-only mortgage ended over two years ago. At which point, we attempted to sell the property but were unsuccessful due to several challenges:

• The area isn’t desirable.
• Market conditions were unfavourable, with interested buyers encountering lender issues related to valuations - despite the valuation being reasonable.

Uncertain about how to proceed, we decided to rent the property exclusively on Airbnb while figuring out our next steps. Over two years have passed since then ☹

Managing the Airbnb has been challenging, as we don’t live close to the property. Frequent weekly visits, hours spent cleaning and preparing the place for each booking has been a significant effort with little reward.

Since the fixed term ended, the mortgage has reverted to a standard variable rate currently 7.49%, monthly payments of £1,175.

The property generates approximately £1,650 per month on Airbnb, but we are responsible for covering all bills and expenses.

After completing our recent self-assessment tax forms, we calculated that the property generated approximately £1,000 in annual profit after mortgage payments, down from approximately £2,000 the previous year.

Admittedly, I have been burying my head in the sand regarding this situation.

Our Options

I see two potential paths for us:

1. Sell the Property:
2. Fix the Mortgage and Let on an Assured Shorthold Tenancy (AST): Refinancing the mortgage to a fixed rate and renting on an AST would generate approximately £1,700 per month, providing a more stable and less labour-intensive income.

Personal and Financial Context

I am 42, married, with two children. We live in our own home with a repayment mortgage. My salary is £45-50k, and my wife has been out of work for the past two years due to illness. We receive no benefits other than child benefit.

While the monthly income from an AST would be helpful, I wonder if the capital tied up in this investment could be better utilised elsewhere.

Advice

What would you do in this situation, and why please?

 TIA

pramsay13

I have some BTL properties but in your shoes I would probably sell and invest the money as it can be a lot of extra work for not a lot of profit as you have discovered. 
I"m not sure why you've allowed it to revert to the standard variable rate when you can easily get 4.5% or 5% mortgages even on 1 or 2 year deals if you're not wanting to fix longer term. 
It's unusual for an air BnB property to generate the same rental income as a long term let unless it's often sitting empty. 
Although a long term rental will get you a steady income with less work, what happens if the tenant stops paying. Can you cover an extra £1000 for 6 months? What happens if they trash the place, do you have a few thousand to cover repairs? 

Stubod

...sell it.....IMHO...

Markmywords

sell it. How much cash have you tied up in it?

Olinda99

sell it - btl has had its day for the small investor

That said I think flats are a bit out of favour at the moment so it may take some time to sell

 this is because of continually Rising service charges, ground rent increases, the claddng problems etc etc - people are a bit wary