In agony over selling or sticking with sole BTL

Ok. So I will also see an accountant about this but I would really appreciate any words of wisdom from seasoned landlords and moneysavers out there.

Basically I have rented out a flat I bought as my first home back in 2004. I resided there until August 30th 2008 and it has rented out since then until now. First three years up to Aug 2011 were at a massive loss...yes, I was an accidental landlord who had to learn a bucketload about buy to let very quickly and somehow did quite well. I have a reliable tenant. Very few void periods. So far the rented out time is 11 years, I lived there 4.

The flat has a share of the freehold and I am a director of a dormant company...it means sorting out block insurance on the building each year and completing the annual return for CH, updating info, helping with admin when other freeholders sell on. It is unpaid and voluntary. When i lived there and neighbours helped me and shared the director role, all was fine.

Sadly the flats are now more buy to let with one owner occupier director who does a bit but is not really doing much so far to help. Another freeholder who is not director is useless and never maintains his shared sections of staircase or garden. To be honest, he is offensive and hard to deal with and I may need to take action to get back costs incurred clearing his section of a garden path he refused to maintain. He really is useless and does that whole ‘attack rather than sort out your own shortcomings’ thing...loves to criticise my admin of simple and always completed Company tasks whilst refusing to be a director himself (none of us want him to anyway!)

I am facing having to get the company to enforce the claim for the clearing work as he essentially breached his lease where maintaining grounds is stipulated. Or I could do it personally and not involve the company. It is all solvable but is casting a shadow over the rental and starting to become a hassle. He will keep his flat, he says, for about four more years.

Long term, the flats are a great investment...nice design, surrounded by gardens each freeholder is meant to maintain, private parking, warm and well insulated, Surrey location. BUT. I worry that things will deteriorate with Mr Freaky Freeholder.

Then there is the CGT issue and the April 2020 deadline for getting PRR and Lettings relief. I really am worried as this is essentially a good investment rent and I cannot work anymore since heart surgery, so getting another BTL mortgage is not gonna happen for me. My tenant is happy, I have recently refurbed the grounds and interior, it is near to my main home. I have £120K left to pay on a very nice flat with its own share of freehold which should sell for around £299K. I worked out last year that there would be no capital gain. This may well change after April.

My question is: if my other half and I sold up our main home in say two years, moved back into the flat and then sold a year later, would we escape CGT as it would indeed be our main home? Long term, being the Director is a pain, although I am good at it and have held things together for over a decade. We wanted to gradually release our assets by downsizing then moving into my old flat, then selling that and moving to Devon or somewhere. My tenant is on an old AST which has been statutory periodic since March 2016. I may well be wrong, but does this entitle me to serve a section 21 as they have the older AST contract rolling over, or do they also have security of tenure?

I have emailed the tenant asking them about how long to wish to stay on...she said as long as possible and was happy to stay on the old AST as it gives us flexibility on each side. In my ideal situation, I want to hang on to the flat, gradually pay down the BTL mortgage on it until I own it, eventually move back in, then dispose of it as a normal sale.

But now an irritating freeholder who is not my main concern but is a hit and could worsen things over time, this blooming Brexit uncertainty, section 21 going and uncertainty over whether this affects my right to move back in later, the fact my mortgage is on a variable rate and I won’t pass the tests for another and the impending end of tax breaks is making me wonder whether to sell.

It is quite a lot to ponder! I love the flat and don’t really want to sell...but nor do I want to lose a 40k payout for HMRC, selling before a huge drop, lose the right to move back in, see mortgage interest relief goes entirely (although plan to pay that down a bit)...gulp.