To Let or Sell, that is the question.

seven-day-weekend · 10 October 2019 at 7:10AM

My model tenant has just announced that she will be leaving us as she is buying a house. She has not yet given formal notice.

While we are sad to see her go, we have wished her well.

Now....given that there are talks of granting three-year minimum tenancies, the fact that there now only a few grounds for eviction, and John McDonnell's crazy idea of extending Right To Buy to private tenants, my husband and I have to decide whether to sell or relet.

Our flat is on a new estate. It was built in 2014, we have owned it since 2016. It is in an excellent state of repair. It is eminently lettable, but will also sell. We have no mortgage on it.

We are pensioners and this supplements our income. We have other savings so do not particularly need the capital from a sale.

Given the above constraints, what advice can you give us regarding whether to let or sell? I hasten to add we have never evicted anyone, but the thought of not being able to, should we want the flat back for any reason (not just to sell or live in), bothers us a bit.

Any suggestions from you knowledgeable people?

getmore4less · 10 October 2019 at 7:57AM

Depends a bit on where you see the future.

If you look at the zero sum game of exiting the world with just enough to bury you then you need to realise capital assets at some point and start spending.

Assuming you have a home, also mortgage free, is that the last one or is there another move on the cards.

Might it be time to cash in and park yourselves in the rest of life home?

If the plan is to pass on wealth maybe do that now if you have enough assets to see you through.

You then have the CGT/IHT issues to factor in.

seven-day-weekend · 10 October 2019 at 8:06AM

We have our forever home, a freehold bungalow which is paid for (the rental flat is also paid for), and more than adequate savings.

We have already started to pass wealth onto our son.

We don't actually need the capital, the income is far more useful to us (although we would not struggle to manage without it).

I don't think there would be much in a capital gain, if lucky we would make £15k on the sale.

seven-day-weekend · 10 October 2019 at 8:17AM

Another option is to do Air BnB but I will have to take advice on how that works as I am not familiar with it. I have a friend who has done it for years who I can ask. Not sure how suitable my property is for this, though.

need_an_answer · 10 October 2019 at 8:34AM

You may need to read your lease regarding Airbnb,many now don't allow it.The newer the build the less likely it consent will be granted.
All my leasehold properties have clauses written one way or the other to class it as breach of lease.

Airbnb is on the face of it an attractive proposition but in effect are you willing and in the position to want or be able to commit the time to what essentially is running a serviced apartment with possibly daily housekeeping visits.

Your in a very secure position and I cant advise best way forward other than use the property in a way as to get enjoyment from it...to me that might not be via Airbnb.

AdrianC · 10 October 2019 at 8:54AM

seven-day-weekend wrote: »

Now....given that there are talks of granting three-year minimum tenancies, the fact that there now only a few grounds for eviction, and John McDonnell's crazy idea of extending Right To Buy to private tenants, my husband and I have to decide whether to sell or relet.

Yup.

So the question is what's going to happen in the short-to-medium future politically...
I dunno about yours, but my crystal ball's been a bit unreliable on that front in the last few years.

Our flat is on a new estate. It was built in 2014, we have owned it since 2016. It is in an excellent state of repair. It is eminently lettable, but will also sell.

Exactly the type of market that's got a bit of a glut because of competition from new builds (with incentives) and landlords like you either selling up or simply not buying.

We have no mortgage on it.

We are pensioners and this supplements our income. We have other savings so do not particularly need the capital from a sale.

Equally, you don't need it sat empty and costing you empty-property CT, you don't need a bad tenant, and you don't need to watch the value fall. So it's all about what you think the market's going to do.

Cakeguts · 10 October 2019 at 9:14AM

I think it might depend on how much money the flat is worth. If it is in the £500k range then you are risking a lot of money to carry on letting it. On the other hand if it is around £100k or under then most of the silly political ideas currently going round on private rentals are not going to make so much difference in terms of possible loss of cash if you continue to let it.

I have been thinking about this in terms of the old rent acts and you certainly wouldn't want to own a £500k property if we get the rent act type tenancies back because of the reduction in value of the property when you can only sell to another landlord.

onwards&upwards · 10 October 2019 at 9:22AM

I don’t think you need to worry about the potential changes that are concerning you for at least a couple of years. We’ve got to get through Brexit, at least one GE maybe two and then a period of time while things settle in the post Brexit fallout, as well as the time it takes for any new housing legislation to pass and even then the rules never change immediately.

If you are happy letting it (which it sounds like you are) I think it would be completely safe to start a 12 month term soon and then let it go periodic after that.

You could go to the savings and investments board though to see what your options might be with the capital should you sell.

Retired_Mortgage_Adviser · 10 October 2019 at 9:43AM

From an investment point of view -

1. What did you pay for the flat (including stamp duty or other buying costs)?
2. What is the current profit per month (rent less service charge, ground rent, other expenses)?

For example, if you got the flat for 150k and you are currently achieving a profit of £350/month (before tax), that's a 2.80% return on investment. Can you get 2.8% elsewhere with a similar amount of risk?

Personally, if the flat is giving a decent return on investment, has proved easy to let and maintain and I had no use for lump sum cash, I'd just let it out again.

Basing a decision like this on pie-in-the-sky policies by Labour/Tories in the current turbulent times would not be something I myself would do.

seven-day-weekend · 10 October 2019 at 11:29AM

Retired_Mortgage_Adviser wrote: »

From an investment point of view -

1. What did you pay for the flat (including stamp duty or other buying costs)? £85k paid, no Stamp Duty, can't remember selling costs, possibly about £1.5k
2. What is the current profit per month (rent less service charge, ground rent, other expenses)? About £440 pcm before tax

For example, if you got the flat for 150k and you are currently achieving a profit of £350/month (before tax), that's a 2.80% return on investment. Can you get 2.8% elsewhere with a similar amount of risk?

Personally, if the flat is giving a decent return on investment, has proved easy to let and maintain and I had no use for lump sum cash, I'd just let it out again.

Basing a decision like this on pie-in-the-sky policies by Labour/Tories in the current turbulent times would not be something I myself would do.

See my answers in blue above and thanks for your reply.

seven-day-weekend · 10 October 2019 at 11:33AM

Thanks to everyone for their reply.

I think we have decided against AirBnB, for the reasons mentioned above, and others.

We are going to enquire about alternative investments, although my husband is not keen.

However, I have been somewhat re-assured by the replies on this thread and we may possibly rent it out again, on a short initial tenancy which can then go periodic.

PLEASE READ BEFORE POSTING

To Let or Sell, that is the question.

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free