Should I let out my Flat?

PField · 16 June 2017 at 3:06PM

Hi, I have just bought a house and moved in with my partner. We paid the additional stamp duty when buying our new place. I was planning in letting my old flat out, but after reading about being a landlord and all it entails. I am thinking I should keep it empty or an pied a tere for when we visit London.
It's a 2 bed flat in Balam South London, near the tube/rail station. Is it worth letting out these days.

Thanks

aneary · 16 June 2017 at 3:11PM

Is there a large amount of equity in the flat?

There are lots of suggestions that the market is about to crash in London (only suggestions not fact) so it might be worth selling now.

G_M · 16 June 2017 at 3:17PM

Well with the changes in tax regime letting it out will be less profitable than it was in years gone by.

But it will almost certainly be more profitable than leaving it empty!

KILL_BILL · 16 June 2017 at 8:08PM

balham is an upcoming place as its just down the road from clapham common which is a hub for entertainment

depending on condition you could epect to get about £1500.00 pcm plus

Marvel1 · 16 June 2017 at 9:10PM

PField wrote: »

I was planning in letting my old flat out, but after reading about being a landlord and all it entails.

This is usually the advice I give when people ask this, after reading only you can decide.

00ec25 · 16 June 2017 at 9:58PM

only you can answer your question as only you know the FULL FACTS of your financial and personal situation

income from letting v undoubted work involved in being a LL + uncertainty as to voids and unexpected costs

compared to

selling (whilst there is still time to avoid CGT) and using the moeny to pay down your mortgage and therefore have a +ve cash flow for the foreseeable future

without facts and figures your question is meaningless

PField · 17 June 2017 at 12:29AM

Thanks for the replies.
I have owned the flat since 1998 and it's now paid off completely so is not costing me anything. council tax is £500 odd a year only. It's a maisonette with one other flat above and I own a share of the freehold with the lady above, so there is no service charge or maintenance, as there are no common parts other than the front door.

I am definitely not selling it, it's getting harder and harder to afford to buy a property now, more people renting, less owner occupiers. I was able to buy as a graduate but I don't think I would be able to if I graduated now. So I rather just keep it for my kids and as I have lived there so long, I am attached to it.

I reckon it will let for £1400 a month. I will probably have to use an agent and I am a higher rate tax payer so the rent received after agents fees and income tax is not very much. Also I will probablly have to renovate it to get good quality tenants. Hence the question if it was worth all the hassle letting out? Is £600 in the pocket worth the trouble and worry and the responsibilities? Or shall I just keep it empty and use it when we visit London? It will only be costing me council tax.

saajan_12 · 19 June 2017 at 1:23PM

If you think being a LL will entail too much from now, it's probably not right for you as with any small business, there's always more issues / legalities / heartache to deal with when you actually get stuck in than you expect.

However letting it will almost certainly be more profitable than leaving it empty, even after paying a reputable agent to manage most of it and solicitors to ensure you've met the legalities.

Note owning the property will incur Capital Gains Tax for the period you don't live there (minus final 18 months) and the council tax may increase to a premium amount if the property is left empty for an extended period.

Even if you're not directly spending much on it, there is an opportunity cost: Your capital is currently invested in the house but not returning anything. Instead, you could sell and
-> Recover Stamp Duty on your recent purchase (if the flat was your main home and you do this within 3 years of the purchase of your current main home)
-> Pay little-no Capital Gains Tax if you lived there during most of your ownership
-> Invest the capital elsewhere with a similar growth/return profile as property so it grows in line with property prices.
-> When your children are ready, liquidate your investment and purchase a property for them in a location that suits them. If house prices have changed, so has the investment so you haven't lost your buying power. You would be a true chain free cash buyer (no property to sell & no mortgage) so should be in a very strong position.

Caz3121 · 19 June 2017 at 2:25PM

PField wrote: »

Or shall I just keep it empty and use it when we visit London?

how often would you be visiting? many house insurance policies require the property not to be left unoccupied for over 30 days

00ec25 · 19 June 2017 at 2:38PM

leaving it empty makes no financial sense whatsoever for the opportunity costs mentioned by sajaan

I sympathise with your reluctance to give up a "London" property because of the history of capital appreciation for such, but using it as a pied a terre is only sensible if that is a necessary part of your life plan or lifestyle required because of work.

I accept that as a mortgage free property the running costs will be small if you do not let it, but why incur those costs at all if you can get rental income to cover them anyway? With no mortgage to "worry" about, the worst case will be 40% tax on the net profit so it would indeed leave you around £600 post tax. If that is not "worth doing" then you have too much money to start with and should give it way to charity

one correction - the empty rate council tax only applies if the property is unfurnished and unoccupied for more than 2 years. You intend to use it as a "second home" ie retained furnished and (occasionally) occupied. I think Balham falls into Wandsworth council so you will be charged the full normal rate council tax as they do not give a discount for second homes

PField · 21 June 2017 at 12:25PM

Thanks for the replies. After having a think we have decided to keep it empty and use it as a base if we need to or if we work late or have a night out in London. We both work near Clapham Junction and have just moved to a house near Gatwick. With strikes on Sothern Rail, we wouldn't have to worry about getting back home either.

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Should I let out my Flat?

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