Selling or Renting WWSTWD?
I know there’s been various threads on this already but finding them is difficult so here we are. I’m also aware that someone will be along to tell me that we should just sell and let someone else get on the housing ladder and that buy-to-let landlords are **** etc etc.
We currently live in a 3 bed terraced, we bought it from MrsMatt’s granny went she into care. We have since re-wired/re-plumbed/re-decorated it. 7 years on and with another small person we have now outgrown it so we need somewhere a bit bigger and we would like a garden.
Most obvious option is just to sell and move house. We have quite a bit of equity in the house so it’s a healthy deposit which would mean relatively small mortgage payments.
Other option is to re-mortgage onto a buy-to-let mortgage to get a deposit and rent it out. We are not looking to make a huge amount of profit on the monthly rental, but we would have the value of the house which we could sell further down the line (20 yrs). This option would give us a smaller deposit for buying another house though so our mortgage payments would be higher.
So, has anyone else done similar and how did it work out for you?Posted 3 days ago
I think if are prepared to maintain 2 houses and can afford not to sell it may be worth keeping. We sold my wifes first flat in Hithergreen for about 50k. Now worth 500k because we happend to look on the other day! We couldn’t afford to keep it at the time but kind of wish we had.
That said we did have a rental property we sold earlier this year. Mortgage on current house will not be paid off <2 years which is a very nice feeling and gives use options to reduce hours, retire sooner.
I think I’m saying there is not right answer here you and your partner just need to work out priorities 🙂Posted 3 days ago
If you can let it at a touch below market rent, the sums work out for you on 9 months rent a year ( to allow you some slack) and you are prepared to make it a good home for someone then go for it IMOPosted 3 days ago
From a personal point of view I couldn’t be arsed dealing with a rental property.
Some people like to be busy though! 🙂Posted 3 days ago
First house I bought with the future Mrs_D was in a poor area. Eventually the neighbour from hell led us to buying a second house in a good area, and we moved into that. Still here 23 years later.
We rented out the first house – first few tenants were good to ok, but then we got a bad one. When we finally got him out, the house was in a right state. Carpets were full of dog sh*t & stunk of dog urine. Kitchen was covered in mouse droppings. The door to the master bedroom was only half a door.
We had it stripped out & deep cleaned, then fitted new carpets & put it up for sale. Just as the credit crunch arrived.
We did eventually sell it at auction but it had by that point lost about 1/3 of its peak market value.
If you can keep the original house & afford to buy a second one to live in, yes, rent the first one out but beware the bad tenant..Posted 3 days ago
I’d try and hold onto it if you can. If it is a good renter and the numbers add up then long term it should work out much better for you. If you are a good landlord then it’ll work out nicely for your potential tenants too.
I wish we’d held onto the wife’s flat when we moved in together. Didn’t really consider it very much and the numbers sounded scary but now it would be making enough to pay the mortgage on the new house or be sold and pay the mortgage off completely.Posted 3 days ago
Rent mine out had 2 good tenants for 10yrs
Its rented cheap as I haven’t put the rates up as I’d rather them stay and be happy
It was empty for 3monthd after 1st Tennant left as i got it tanked and plastered.
When this chap goes I’ll get a kitchen inPosted 3 days ago
If you can afford it, rent it out. Forget about making money short term. I’d save any rent you make for possible disasters then sell it off in 20 odd years when you’ve paid it off. If you behave like a normal person and treat a rental as someone’s home in my experience very little hassle involved. If you get a disaster tenant such is life, carry on. Nice to have a house to sell when you can’t be arsed with work in the future.Posted 3 days ago
Legislation and taxation has tightened up for landlords in recent years, and a lot of what were termed “accidental landlords” with just one property like this were deciding it was too much aggro and selling up – or they were 1-2 years ago here in the East Midlands when I was involved in monitoring the private rental sector. That’s with or without using an agent, with or without getting a nightmare tenant.
Personally, sell it, bigger equity, smaller mortgage that you can either pay off quicker and/or afford without both of you having to work full time so you can be around for the kids more. Worked perfectly for us, with a bit of belt-tightening, mortgage free by late 40s.Posted 3 days ago
You have no crystal ball on property prices, neither do I.
Right now they are high….I wouldn’t gamble on seeing the rises in my lifetime that my parents saw.
Don’t underestimate the costs in terms of your time and money of cleaning up after poor tenants, new kitchens boilers bathrooms, void periods etc.
You could sell and invest the money, if you choose wisely your gains will outstrip any property price rises and little effort in your part.
No point in paying off a mortgage when rates are rock bottom 1.3%, share in and support that covid economic recovery….
If you have the money invested it is liquid – you can get it anytime. If the money is in a house, you have to sell that house which may be difficult as it was circa 2008. Of course stock markets could crash at the time you need the cash…. but at least you can get it.
I would flog it right now as prices are high, but not if you are just gonna pay off your mortgage…you need to make the money work for you. You can pay the mortgage off when your gains fall below mortgage rates.
IANAFA.Posted 3 days ago
Plus lets not forget the small time landlord is well in the sights of the chancellor. These landlords are very visible to everyone and impact lots of voters. I expect there is more shots to be fired at them, so the goverment don’t have to tax their wealthy mates.Posted 3 days ago
to do quick sums, you realistically need a ~30% deposit to get a btl mortgage. Remember also that you’ll pay another 3% stamp duty on the new house, tax (if you’re a higher rate payer) on 20% of the income (before you pay any mortgage off) and if you want it managed its another 10% (not including actual costs – ie when they get you a plumber the plumber’s costs are passed onto you).
I did it for 5 years and got out. Was massively profitable. paid little tax as it was in my wife’s name, and the CGT was within the tax breaks that have since been removed. Was an additional stress in the back of my mind, although never really went wrong. My view is that governments will continue to make it worse and worse for landlords (as they have in the past). I wouldn’t get back into it.Posted 3 days ago
I’d take a look at the regs and hoops you need to negotiate along the way. Contracts, energy surveys, deposits, gas and electrical certs etc really aren’t onerous unless your house is a death trap/shack. It doesn’t need to be up to today’s latest regs, just safe and heatable. In Scotland and some bits of the rest, you need to be licenced, where I am it varies from postcode to postcode, and is another cost. Insurance isn’t cheap, and I wouldn’t dream of being without it. If someone else is finding tenants, managing it, and taking care of repairs, that’s where your profit will go.
All that said, a couple of dozen people live in my rentals, and I believe they are happy to do so. More than half wouldn’t be in a position to buy the same house if it were on the market, even in an unfashionable northern town. CGT doesn’t bother me, though IHT might bother my kids later on, I’m not planning to sell. I’m content doing the small time landlord thing, having learned and got used to the regs etc over the years as they have come in, but I’m less sure if I’d want to jump in starting from scratch, unless I knew the endgame to the so-called squeeze on landlords. Our profits have paid our kids’ way through Uni and should be a decent pension fairly soon. All the houses I’d be happy to live in myself, and we’ve earmarked the one to downsize to eventually.Posted 3 days ago
There is no war or squeeze on landlords. Letting regs in England and in Scotland to some extent hugely favour the landlords. Its utterly disgusting the minimums landlords have to do and that no one has security of tenure.
I speak as a landlordPosted 3 days ago
@5lab – we aren’t buying, it’s the house we live in now with a view to converting it to a rental. Looking at the income tax side of things it would have to be in the wife’s name as she only works part time.
@midlifecrashes – yeah I know there’s a lot of hoops to jump through. We rented for the best part of 10 years prior to buying this and we have experience of both good and bad landlords/properties.
With regards profit I’m not hugely fussed, as long as I can stick some to one side for repairs as they crop up that’s fine. I’m looking at the end game of what I can pocket when it comes to no longer wanting to work. Admittedly I could do as Mr MoreCashThanDash says and take the equity and have lower mortgage repayments on the new house. Thinking about it I don’t think we are financially ina position to get a mortgage paid off in that short a space of time (10yrs – I’m 40 next year).Posted 3 days ago
we aren’t buying,
You are buying a new house though, and if you keep your old one you pay 3% more stamp duty on the new gaffPosted 3 days ago
Gotcha, didn’t figure that one out.Posted 3 days ago
Me and the misses are in a similar position but we are having fun and games with doing a lease extension that will make us liable to capital gains tax due to the delay between the buying the lease hold of the building and the extension of the lease (long story). We either sell and take a price hit if we sell now if we make new owner liable, or we take that liability even when we might not be the future owners. The issue is we haven’t got a confirmed price if any to pay. Anyway, we have planned to keep the flat on as it’s not the time to sell to first time buyers because of covid. If we sell within 3 year you can claim second stamp duty back, if everything goes well with renting we won’t sell till retirement time in 25-30 years time. Happy to do long term rental without price rises every few years if the tenants are good tenants (house prices rising will be more than enough for us).Posted 3 days ago
If it meets current regs in eicr and epc I would keep it. I think the min epc is going up to c at some time so if it doesn’t meet it I d sell at current prices.
It’s a long term investment though, ticking over at c3% with little involvement it’s a keeper. Any less it’s not worth the hassle.Posted 3 days ago
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