rent or sell

[C-Cup]

I'm moving to London in 6 weeks and need to decide whether to a) sell my house b) rent it out
So what do I need to know about renting...

Are there any things my house needs before it can be rented ?? Smoke alarms and the like ?
I have certifcates for electrical work work I've had carried out, but not things that were done before.
Do electrical items need PAT testing ??

If a letting agency looks after it any ideas how much they charge ?? (I'd prefer to have a vague a idea before I call one)

My Mortgage still has remption penalties on it until Mar 08. Has had any experience of Abbey I'm wondering whether speaking to them now and telling them what I'm planning if they are liable to allow me to let it under the under mortgage until March or if I will have to change it straight away.

If anyone knows any good web sites feel free to point me in their direction.

[johnfm]

If you can rent it, keep it. It will more than likely appreciate, some, if not all your interest will be covered by the rent (minus expenses such as agents fees at 10%-15% + VAT and maintenance). But, if there is a redemption penalty, and it is in a rentable area, its probably a no brainer to keep it.

[David_s]

johnfm said:

If you can rent it, keep it. It will more than likely appreciate, some, if not all your interest will be covered by the rent (minus expenses such as agents fees at 10%-15% + VAT and maintenance). But, if there is a redemption penalty, and it is in a rentable area, its probably a no brainer to keep it.

I disagree with almost all of that. The days of significant capital appreciation and rent returns excess of mortgage costs plus agents fees are long gone in most areas. If there are redemption penalties then maybe keep it, but I would sell.

[Carrera2]

David_s said:

johnfm said:

If you can rent it, keep it. It will more than likely appreciate, some, if not all your interest will be covered by the rent (minus expenses such as agents fees at 10%-15% + VAT and maintenance). But, if there is a redemption penalty, and it is in a rentable area, its probably a no brainer to keep it.

I disagree with almost all of that. The days of significant capital appreciation and rent returns excess of mortgage costs plus agents fees are long gone in most areas. If there are redemption penalties then maybe keep it, but I would sell.

I'd disagree with you. :P From fag packet maths, I'd have 'made' money on my house/flat comfortably regardless of rental income over the last couple of years.

[jo strummer]

David_s said:

johnfm said:

If you can rent it, keep it. It will more than likely appreciate, some, if not all your interest will be covered by the rent (minus expenses such as agents fees at 10%-15% + VAT and maintenance). But, if there is a redemption penalty, and it is in a rentable area, its probably a no brainer to keep it.

I disagree with almost all of that. The days of significant capital appreciation and rent returns excess of mortgage costs plus agents fees are long gone in most areas. If there are redemption penalties then maybe keep it, but I would sell.

You are joking aren't you, keep it, does anyone seriously believe this is the high point for capital appreciation in property from here on in? If in doubt hold.

[Maxf]

Buy in London if you can! London is rapidly becomming it's own market, seperate from the rest of the UK. Foreign money and short supply are keeping prices very bouyant - and likely to remain so for the foreseable future, IMO.

[C-Cup]

hmm quick calcs

letting agents charge 15% +vat
house is empty 6 weeks a year
house prices only go up 1%

I break even

but sell now its empty 6 months ish before sale finanlised plus remption penalties £3k loss

Renting it out does seem to add up

Next question if it stays let and i decide to keep it long term does the outstanding mortgage get netting off what I will be able to borrow in the new house

Edited by C-Cup on Wednesday 30th May 17:45

[C-Cup]

Maxf said:

Buy in London if you can! London is rapidly becomming it's own market, seperate from the rest of the UK. Foreign money and short supply are keeping prices very bouyant - and likely to remain so for the foreseable future, IMO.

If we could buy in london we would - but we just wont have the cash to cover stamp duty and deposits, and with never having really been there let alone lived there I'd rather rent for at least 6 months so that we dont end up somewhere we hate. Location is a bit of an issue as I will be working in Hounslow and my other half in Canary Wharf, but thats a whole different thread!!

[David_s]

Maxf said:

Buy in London if you can! London is rapidly becomming it's own market, seperate from the rest of the UK. Foreign money and short supply are keeping prices very bouyant - and likely to remain so for the foreseable future, IMO.

I've got a flat in London that has been rented out for the last ten years. When I bought it, for £60,000, I could get £600 per month and thought there was a good chance of it going up in value. Ten years later it is worth £165,000 but the best rent I can get is £700 per month. The return wouldn't cover mortgage and fees (although I've never used an agent), and the chances of significant further capital appreciation are slim to none.

The days of huge money from buy to lets is over, the smart money is going out and the financially illiterate piling in. I'm selling, you make your own mind up.

[C-Cup]

To be honest I had noticed there appears to be a disconnect between London house prices and rentals charged. Another reason we are renting initially, we can actually live in a nicer house for less money per month (even if you look at interest only mortgages in comparison)

I guess I'm not thinking of renting to get rich quick and retire early, house is the wrong type. It's more so that I dont have to pay a mortgage here and rent in London for the first 6 months after I move. Once the redemption penalty period is over the whole situation can be reassessed.

I more wondered how easy it would be to rent it out i.e. what I'd have to do if anything before I could rent it out.

[Maxf]

You seriously don't think your London flat will ever be worth more than £165k? 27% in the last year was being reported by Knight Frank! Sure, yours might not have gone up, yet, but as people get priced out of previously 'poverty' areas like Balham, Brixton etc prices of flats further out should increase.

I'd have thought you'd be in a decent position having bought at 60k - its the mugs buying now at 200k trying to buy-to-let who are going to get burned. Your £8,400pa return is pretty hot on a £60k outlay!

[David_s]

Maxf said:

You seriously don't think your London flat will ever be worth more than £165k? 27% in the last year was being reported by Knight Frank! Sure, yours might not have gone up, yet, but as people get priced out of previously 'poverty' areas like Balham, Brixton etc prices of flats further out should increase.

I'd have thought you'd be in a decent position having bought at 60k - its the mugs buying now at 200k trying to buy-to-let who are going to get burned. Your £8,400pa return is pretty hot on a £60k outlay!

It's no longer a return on a £60k investment, it's a return on the £165k it is currently worth. Think of it this way, I am currently in the process of taking out a large mortgage which could be reduced by the value of the flat if I sold. So, if I get a mortgage at a rate of about 6% the cost of borrowing the extra £165k that I wouldn't have to borrow if I sold the flat would be slightly less than £10k, if I only get £8400 for my flat I am out of pocket, and if the place is damaged or un-let I lose even more. So I would be betting on an increase in property values to make good the loss, and I don't think it is going to happen, there aren't sufficient people in the 2 bed flat market who can afford more than £165k. Better off taking the £100k capital gain and the £80k odd rent and move on to a market with better potential. As I said before, I am selling.

[David_s]

C-Cup said:

To be honest I had noticed there appears to be a disconnect between London house prices and rentals charged. Another reason we are renting initially, we can actually live in a nicer house for less money per month (even if you look at interest only mortgages in comparison)

I guess I'm not thinking of renting to get rich quick and retire early, house is the wrong type. It's more so that I dont have to pay a mortgage here and rent in London for the first 6 months after I move. Once the redemption penalty period is over the whole situation can be reassessed.

I more wondered how easy it would be to rent it out i.e. what I'd have to do if anything before I could rent it out.

There are certain things you have to do, a carbon monoxide check is one, but I don't think they are hugely onerous (I don't do much else...).

Agents are a bit like banks, they give you an umbrella in the dry and take it back when it rains, I've never bothered with one.

Letting for 6 months is a bit risky too, there won't be a huge return, not many people want such short lets, and any damage/excessive wear and tear could wipe out your 'profit'. Also, you are supposed to let your lender know what you are doing, I wouldn't though.

[Piglet]

IIRC any soft furnishings need to be "fire resistant", you need a certificate for the electrics and a certificate for the gas.

As a short term scenario it might work out for you assuming your existing mortgage co will give you consent to rent (or you choose not to tell them?).

[ACEparts_com]

Sell. Capital gains are like poker chips - worthless until you cash them in. No good looking back in a few years saying you had a great big pile of them.....

[Maxf]

Piglet said:

IIRC any soft furnishings need to be "fire resistant", you need a certificate for the electrics and a certificate for the gas.

As a short term scenario it might work out for you assuming your existing mortgage co will give you consent to rent (or you choose not to tell them?).

You only need gas - not electric certs. Landlord's insurance is a must.

[scotal]

C-Cup said:

I'm moving to London in 6 weeks and need to decide whether to a) sell my house b) rent it out
So what do I need to know about renting...

Are there any things my house needs before it can be rented ?? Smoke alarms and the like ?
I have certifcates for electrical work work I've had carried out, but not things that were done before.
Do electrical items need PAT testing ??

If a letting agency looks after it any ideas how much they charge ?? (I'd prefer to have a vague a idea before I call one)

My Mortgage still has remption penalties on it until Mar 08. Has had any experience of Abbey I'm wondering whether speaking to them now and telling them what I'm planning if they are liable to allow me to let it under the under mortgage until March or if I will have to change it straight away.

If anyone knows any good web sites feel free to point me in their direction.

First I'd have a trot round local agents see what they offer for what %age of the rent achieved. if you have rented locally, or know of anyone who does ask around about what the agents are like. (10-15% seems to be normal at mom.)
Second find out what rent they are likely to achieve, if the house is a drain on your finances, you may be better off selling. (Remember that as this is your primary resisdence you have 3 years from when you move out to sellwithout a CGT liability.)
Third is there someone who will remain local who can keep an eye on your place while there are tenants in it. You need to be able to trust these people implicitly (Don't assume the agents will.)
If you move to London and you and the o/h hate it, do you want to keep a place that you can return to?
Best way to find out Abbey's letting policy is to phone and ask, I can't remember it off the top of my head. I spend time on the phone to them most days, I'll ask you like.
You can get ballpark figures on rents in your area from the likes of rightmove.co.uk.

[C-Cup]

First I'd have a trot round local agents see what they offer for what %age of the rent achieved. if you have rented locally, or know of anyone who does ask around about what the agents are like. (10-15% seems to be normal at mom.)
Second find out what rent they are likely to achieve, if the house is a drain on your finances, you may be better off selling. (Remember that as this is your primary resisdence you have 3 years from when you move out to sellwithout a CGT liability.)
Third is there someone who will remain local who can keep an eye on your place while there are tenants in it. You need to be able to trust these people implicitly (Don't assume the agents will.)
If you move to London and you and the o/h hate it, do you want to keep a place that you can return to?
Best way to find out Abbey's letting policy is to phone and ask, I can't remember it off the top of my head. I spend time on the phone to them most days, I'll ask you like.
You can get ballpark figures on rents in your area from the likes of rightmove.co.uk.


[/quote]


I've checked rightmove and know roughly what rental can be achieved.

I will call round a few letting agents to see what they have to offer. My parents will still be in Nottingham so I can ask them to keep an eye on the place for me. With them still being here I will be back visiting.

I guess one of my reasons for considering keeping it is as a bit of a safety net. If London doesnt work out its nice to know there's somewhere to go home too.

If you wouldn't mind asking Abbey about their policy on letting it would be appreciated. I don't really want to ask myself as I don't really want them to say a flat no and then know I'm thinking about it.

Thanks

[johnfm]

David_s said:

Maxf said:

You seriously don't think your London flat will ever be worth more than £165k? 27% in the last year was being reported by Knight Frank! Sure, yours might not have gone up, yet, but as people get priced out of previously 'poverty' areas like Balham, Brixton etc prices of flats further out should increase.

I'd have thought you'd be in a decent position having bought at 60k - its the mugs buying now at 200k trying to buy-to-let who are going to get burned. Your £8,400pa return is pretty hot on a £60k outlay!

It's no longer a return on a £60k investment, it's a return on the £165k it is currently worth. Think of it this way, I am currently in the process of taking out a large mortgage which could be reduced by the value of the flat if I sold. So, if I get a mortgage at a rate of about 6% the cost of borrowing the extra £165k that I wouldn't have to borrow if I sold the flat would be slightly less than £10k, if I only get £8400 for my flat I am out of pocket, and if the place is damaged or un-let I lose even more. So I would be betting on an increase in property values to make good the loss, and I don't think it is going to happen, there aren't sufficient people in the 2 bed flat market who can afford more than £165k. Better off taking the £100k capital gain and the £80k odd rent and move on to a market with better potential. As I said before, I am selling.

The OP already owns the property. If he had posted "I am thinking of buying a place to rent out' I would have suggested a different route.

Unless the property is in a really crap area or he DESPERATELY needs the cash out - I would always err on the side of keeping freehold.

Just my 0.02

[scotal]

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