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    • agentcooper
    • By agentcooper 8th Apr 18, 12:43 PM
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    agentcooper
    Give up buy to let to keep family home?
    • #1
    • 8th Apr 18, 12:43 PM
    Give up buy to let to keep family home? 8th Apr 18 at 12:43 PM
    Any advice on the below greatly appreciated.

    I have a family home which I bought with my ex. She has now moved out into rented accommodation and the plan was to sell the house and split the proceeds. However, it has now occurred to me that its a nice house in a good location and it might be worthwhile keeping it (buying her out). In order to do this, I'd need to sell a flat I own and currently rent out. I'm not sure if this is a good move or not. My question: should I sell the flat in order to keep the house...or just sell the house, downside to a new one and keep the flat?

    The numbers:

    HOUSE
    *Was bought for 320K with mortgage of 220K, 40K from me and 60K from ex..
    *Now worth approx 450K. Mortgage remaining = 180K.
    *So I think my ex's share is worth about 145K. (450K value minus 180K mortgage = 270K, she gets 145 I get 125)

    FLAT
    *Was bought for 225K with mortgage of 135K and deposit of 90K..
    *Now worth approx 290K. Mortgage remaining = 110K.
    *Rental income currently makes a small profit after mortgage and other costs but I have to pay tax on the rental income.

    So, if I sell the flat, I'll get 180K minus capital gains which I think will leave me with about 165K. I could use this to buy my ex out.

    PROS - I would then have no service charges, no dealing with tenants and letting agents and I wouldn't pay tax on the rental income.

    CONS - I no longer have a rental property to bring in money when I'm older (but I could buy another one in a few years)

    Any advice on my best course of action? I'm sure I'm missing something obvious! Thank you in advance, Coop.
Page 1
    • agentcooper
    • By agentcooper 9th Apr 18, 8:07 AM
    • 7 Posts
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    agentcooper
    • #2
    • 9th Apr 18, 8:07 AM
    • #2
    • 9th Apr 18, 8:07 AM
    anyone able to help please?
    • AnotherJoe
    • By AnotherJoe 9th Apr 18, 8:39 AM
    • 10,629 Posts
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    AnotherJoe
    • #3
    • 9th Apr 18, 8:39 AM
    • #3
    • 9th Apr 18, 8:39 AM
    Why is having a rental property "to bring in income when retired" the best way to accomplish that, and if you are finding it a hassle managing tenants now why would you want that in retirement?
    • agentcooper
    • By agentcooper 9th Apr 18, 12:58 PM
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    agentcooper
    • #4
    • 9th Apr 18, 12:58 PM
    • #4
    • 9th Apr 18, 12:58 PM
    "Why is having a rental property "to bring in income when retired" the best way to accomplish that,"

    I didn't say it was. Very happy to hear suggestions that are better! I'm asking for advice on whether it is more prudent to hold on to a buy to let property or sell it to buy out my partner on our family home. If you, or anyone else on the forum, can offer any advice on that, it would be much appreciated.
    • dimbo61
    • By dimbo61 9th Apr 18, 1:41 PM
    • 10,019 Posts
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    dimbo61
    • #5
    • 9th Apr 18, 1:41 PM
    • #5
    • 9th Apr 18, 1:41 PM
    Where are you going to live if you sell the family home ?
    Where will your EX live ?
    Any kids ?
    Not going to rent a property yourself while owning another property
    • MortgageMamma
    • By MortgageMamma 9th Apr 18, 2:26 PM
    • 6,201 Posts
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    MortgageMamma
    • #6
    • 9th Apr 18, 2:26 PM
    • #6
    • 9th Apr 18, 2:26 PM
    Well you've obviously put some love and money into your family home, and are clearly wishing you could keep hold of it.


    I would look at this another way. What is your heart telling you to do? can you continue to love your family home or will it just remind you of your ex? What about future partners? would you expect them to live there or go off and buy something else to keep them happy?


    Which scenario are you going to lose the most? Most people put more investment into their homes than rental properties.


    Are you familiar with the tax changes to buy to lets?


    You could always sell the buy to let but retain just enough to have a deposit for another one. Or save to buy another one at some point in the future.
    I am a Mortgage Adviser

    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • agentcooper
    • By agentcooper 9th Apr 18, 4:39 PM
    • 7 Posts
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    agentcooper
    • #7
    • 9th Apr 18, 4:39 PM
    • #7
    • 9th Apr 18, 4:39 PM
    @dimbo61 thank you for the reply.

    If I sell the family home I will buy another property, using my share of the proceeds. I'm definitely not renting. However, this property will be smaller and in poorer location than my current house.

    So my choice is:
    a) own two smaller, cheaper properties, one of which is a buy to let
    b) own one bigger, more expensive property

    My ex has already moved out and into rented accommodation.
    • agentcooper
    • By agentcooper 9th Apr 18, 4:47 PM
    • 7 Posts
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    agentcooper
    • #8
    • 9th Apr 18, 4:47 PM
    • #8
    • 9th Apr 18, 4:47 PM
    @MortgageMamma thank you very much for the reply!

    I have no worries about the house reminding me of my ex...at least not now it's tidied up! :-)

    I'm vaguely familiar with the tax changes to buy to lets, basically there's more tax to pay from now and buy to lets are less attractive, does that cover it? Is a buy to let still a great option, or should I look to sell it in any case and invest the money elsewhere?
    • AnotherJoe
    • By AnotherJoe 9th Apr 18, 5:22 PM
    • 10,629 Posts
    • 12,178 Thanks
    AnotherJoe
    • #9
    • 9th Apr 18, 5:22 PM
    • #9
    • 9th Apr 18, 5:22 PM
    "Why is having a rental property "to bring in income when retired" the best way to accomplish that,"

    I didn't say it was. Very happy to hear suggestions that are better! I'm asking for advice on whether it is more prudent to hold on to a buy to let property or sell it to buy out my partner on our family home. If you, or anyone else on the forum, can offer any advice on that, it would be much appreciated.
    Originally posted by agentcooper
    Investments in the stock markets, either in a pension, or outside it. There's a huge range to choose from at varying levels of risk (unlike a house which is at that one level of risk) and your money is very "liquid" (eg you can get it within minutes to hours) plus its distributed, eg its not in one particular asset (the house) which is very difficult (and expensive) to release money from,egt generally all or nothing (eg sell it).

    Put it this way, if you had that money as cash woudl you look to go into the letting business with all the legal and other implications (as government progressively makes it less o fa paying proposition and adds extra laws) , or would you do something else with the money?
    • agentcooper
    • By agentcooper 9th Apr 18, 5:35 PM
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    agentcooper
    Thanks @AnotherJoe

    I've always been wary of stock market investments simply due to my own lack of knowledge and the worry that if I'm badly advised, I could lose out.

    I guess my logic has previously been that a BTL, once mortgage is paid off, provides a good monthly pension income and I wasn't sure there was an alternative that would lead to a similar level of income. Where would I find out about the best alternatives to BTL?
    • AnotherJoe
    • By AnotherJoe 9th Apr 18, 7:20 PM
    • 10,629 Posts
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    AnotherJoe
    Start with Monevator.

    A stock market investment is in theory no different to a house, except its more spread out, theres far more choice. Yes prices can fall, just like house prices and rise (just like house prices) and if you decide the area you bought your house in is looking dodgy its much harder to get out of than selling a few poorly performing funds. Its a bit like instead of being a landlord owning one house, you own 0.1% of a thousand so if one tenants defaults its not the end of the world. You can also have a bit of rental houses in say Japan and Germany and Switzerland and USA , rather than plumping for just the UK and your one house and hoping that the UK and the area your one house is in and the economy of that area, and your specific tenant, all do well.

    There isn't an analogy (without bending over backwards) in the stockmarket to a tenant who will default on your whole income stream (yes some parts can go bad but not all of it) , smash the place up, need legal help to evict and be impossible to recover the money from. Its like a stock market investment where all your money is in a single share.

    Investments also dont need gutters cleaning out, roof mending, nor does your stock broker call you up at 3am and say there's a leak or the central heating doesn't work.

    There also isnt a steadily increasing set of legal requirements (some with large penalties) nor a focus on lowering the amount of money a landlord can make.
    Last edited by AnotherJoe; 09-04-2018 at 7:23 PM.
    • agentcooper
    • By agentcooper 9th Apr 18, 7:23 PM
    • 7 Posts
    • 0 Thanks
    agentcooper
    Thanks AnotherJoe, much appreciated. I'll check out Monevator.
    • MortgageMamma
    • By MortgageMamma 11th Apr 18, 9:40 PM
    • 6,201 Posts
    • 3,060 Thanks
    MortgageMamma
    AnotherJoe


    I absolutely LOVE the way you've compared stock markets to buy to lets, I've actually smiled my way through it.
    I am a Mortgage Adviser

    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • MortgageMamma
    • By MortgageMamma 11th Apr 18, 9:41 PM
    • 6,201 Posts
    • 3,060 Thanks
    MortgageMamma
    Agentcooper


    Just in case you need further info on taxation of buy to lets, here is a starting point https://www.gov.uk/government/news/changes-to-tax-relief-for-residential-landlords
    I am a Mortgage Adviser

    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • bike saving expert
    • By bike saving expert 11th Apr 18, 10:26 PM
    • 77 Posts
    • 13 Thanks
    bike saving expert
    you could try re-mortgaging the buy to let and perhaps the resi as well in order to raise additional money you could possibly raise 100k on just the buy to let then you got another 45k to find.

    The resi may be more difficult to re mortgage as now in your sole name but doesn't look impossible more information probably needed to say whether it could be done or not but yeah see an ifa regarding detail.
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