Rented out old house - sell or refinance?

[trowelhead]

Hello all!

I have a quandary i've been going over in my head for a while, looking for some advice please...

I bought a house in June 2016 to live in - bought on a two year fix

Moved in and just did not like the area at all - so much so that moved out, moved into a rented flat in an area i liked, got consent to let and rented my house out to some very good tenants (an older couple who for whatever reason do not want to buy and intend to stay for long term)

My problem is as follows.

I am happy in rented accom. for now. And i'm young ish so happy to have that lifestyle and flexibility

However i'm looking to eventually buy a place in my preferred area in next 12-24 months, ideally somewhere i can add some value.

If i keep this house let out i will pay the increased stamp duty surcharge, making stamp on a £300k purchase jump from £5000 to £14000.

Also, i have about £60-70k tied up in this house now, and the rental yield is not great (around 5% as did not buy with a view to rent) - ideally if i buy another place i would need as much of that capital back as possible.

I need to wait until the 2 year fix expires June 2018 (ERC is £5k if sell before then)

Then refinance to a BTL product at max LTV possible to try and pull some money out for when i want to buy again, stomach the increased SD, or just sell the place in June. I would not feel great about displacing the tenants however.

Typing it out, it actually seems pretty clear what i should do - but i think the fact the tenants are so good and hassle free tempts me to keep it, i feel bad making them move on when they are keen to stay long term.


What do you all think?

[xjay1337]

The classic landlord conundrum.

Ruin someone else's home for your financial gain, or not?

I joke.

I would probably issue them with 12-15 months notice if you intend on selling it. Giving them plenty of time to find another place.

I wouldn't normally suggest such a long time but for older people it may be harder for them to move etc.
If they were younger I would probably say not to worry about the extra notice too much.
Or perhaps offer them the sale at a small discount to account for the fact you'd have an easy sale.

[trowelhead]

xjay1337 said:

The classic landlord conundrum.

Ruin someone else's home for your financial gain, or not?

I joke.

I would probably issue them with 12-15 months notice if you intend on selling it. Giving them plenty of time to find another place.

I wouldn't normally suggest such a long time but for older people it may be harder for them to move etc.
If they were younger I would probably say not to worry about the extra notice too much.
Or perhaps offer them the sale at a small discount to account for the fact you'd have an easy sale.

When i say older - we are talking 50s, still in work - just to clarify.

And definitely no financial gain to be had ha ha just plenty of lost transaction fees.

[Dan-Fresh]

if your not looking at buying for 12-24 months then you've got time to decide. I would probably remortgage in june then give them plenty of notice when you think you could be looking to move.
Just make sure your next mortgage doesn't have any erc's.