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If you had a buy-to-let, would you sell it to get a bigger main house?

(36 Posts)
Falcon1 Mon 28-Nov-16 12:00:51

I'll probably get flamed for having two properties, but anyway, would appreciate some views on the following:

My DH and I own a small family home in the South East, plus a flat in London (I bought it to live in 10 years ago when my parents died) which we rent out. Now we have two DDs, we're really keen to move to a bigger family home. Our jobs mean we want to stay within commuting distance of London so up-sizing is very expensive! We could afford a slightly bigger house in a nicer area if we don't sell the flat. Or a forever family home if we do. It sounds like a no-brainer, but I'm so worried about my children's future hopes of getting on the property ladder, paying for uni etc, plus the rubbish pension my DH and I will get. The flat has always seemed like a security against those concerns. So, my question is, is it worth selling the buy-to-let to get a lovely home? Or would that be financially stupid?

atticusclaw2 Mon 28-Nov-16 12:02:04

I'd sell it.

PestoSwimissimos Mon 28-Nov-16 12:03:07

I'd keep it.

DowntonDiva Mon 28-Nov-16 12:04:06

If it were me I would sell (I'm actually doing something similar)

Kiwi32 Mon 28-Nov-16 12:04:57

I'd be inclined to keep it. Is there any way you can remortgage and release some equity to boost your deposit for a family home?

QuestionableMouse Mon 28-Nov-16 12:05:44

Rather than selling, can you get it to earn more?

Kiwi32 Mon 28-Nov-16 12:06:55

Or another idea- as the second property is in London and therefore I'm assuming high value, could you sell it and buy a less expensive rental property elsewhere and still put some money towards a move for your family?

SquirrelPaws Mon 28-Nov-16 12:08:09

I would keep it if you can. London is usually good at riding storms in the property market, so it'll grow faster and further than your family home outside London. It's a lovely little nest egg for the future if you can meet your needs now.

Falcon1 Mon 28-Nov-16 12:48:47

Kiwi, we would take equity out of the flat to put towards a new house if we could but we don't have enough - we remortgaged to buy our current home. We've got around 250k, which sounds a lot but due to new buy to let tax rules you have to have a large deposit to remortgage.

Kiwi32 Mon 28-Nov-16 13:50:26

Ah I see. I suppose the other thing to bear in mind if you bought an alternative rental would be new stamp duty costs...

I suppose it depends what you want it for in the future.. potential accommodation for your children? A nest egg to cash in for your own retirement (could possibly achieve the same thing by downsizing from big family home later) Or something to pass on? Also how hard it is working for you as an investment-do you get decent rental income from it and is it income you need? Does rental income allow any extras like travel etc and does that enrich your lives more than a big house would?

Falcon1 Mon 28-Nov-16 14:06:30

Thanks Kiwi. To answer your questions:

We had no fixed plans for the flat, but I like the idea of it being somewhere the kids can live relatively cheaply when they leave home, and we could sell it at a later date to provide them with deposits for a house, plus help fund our retirement.

It is working pretty well as an investment at the moment. We make about £8k profit per year (before tax), but this is going to get substantially less from 2017 due to the new tax rules on buy to lets.

specialsubject Mon 28-Nov-16 14:46:20

I would keep it. You need income. That is the reason for btl. There is no other way to get income if you are already maxed out with work.

BabyGanoush Mon 28-Nov-16 14:54:36

How small is your current home? Can you extend with money from rental?

AppleMagic Mon 28-Nov-16 14:59:40

I would sell mine in a flash, I hate being an accidental landlord whilst we are temporarily living abroad and can't wait to move back and buy a proper family home.

But our house is in the SW, if I had property in London id be much more tempted to keep it as an investment.

Kiwi32 Mon 28-Nov-16 15:16:49

In that case I think in your situation I would keep it. Once you put the money all in one pot you may struggle to raise such significant funds as the flat allows again. It may be that by making a couple of moves to slightly bigger houses over time you could still achieve your 'forever home' and have kept your flat. Good luck with your decision!

Falcon1 Mon 28-Nov-16 15:33:19

Thanks Kiwi, I think keeping it sounds like the sensible option, it's just a case of, do we keep something to fund something we might want in 20 years time, or do we sell to fund something we want now. The cost of stamp duty means we don't want to have to keep moving - it's so expensive!

BabyGanoush - we have extended our current home as much as possible - out and upwards. It's now a 4 bed but designed to be a 2 bed so feels pretty cramped. However, the real problem is that it's on a busy street we're desperate to move from and the schools nearby aren't great.

My DH is keen to sell the flat, but having made some stupid financial decisions in the past (I inherited my parents' money in my early 20s....), I'm very anxious about it.

WalterWhitesNipple Mon 28-Nov-16 15:39:37

I'd keep it. In the state of the economy it would be a good safety net.

Poptart27 Mon 28-Nov-16 16:07:00

Keep it. We've kept ours (we have 2 and DH has 7) and it's giving DH an income and our family a second income as I work FT and he stays home. Without it we'd be screwed. I remember years ago trying to convince DH to sell for the same reason and he said no way in case of the exact situation we are in now.

Falcon1 Mon 28-Nov-16 19:29:34

Poptart, this is what I'm afraid of - not having it as a safety net.

Most people are saying to keep the flat. But if it means buying a house you don't like that much/is too small/isn't in the best area - would you all still keep it?

titchy Mon 28-Nov-16 22:24:56

Your OP said you could buy a slightly bigger house in a nicer area without selling the flat - that sounds ideal doesn't it? A slightly bigger house can also be extended a few years down the line and you get to keep the flat, your dcs can benefit from it and it finds your retirement.

If you were stuck in a one bed with two kids I'd say different, but you're in a reasonable sized house now, and able to move to one in a better location. You're hardly struggling!

Araminta99 Fri 02-Dec-16 13:05:25

Keep it. Properties in london are like gold dust. In a year of selling you will have lost so much money as its value goes up.

Suzietwo Tue 06-Dec-16 21:58:45

I sold mine 2 years ago

Best thing I ever did.

Suzietwo Tue 06-Dec-16 21:59:03

Ok maybe not the best thing ever but you get the point!

Applesauce29 Sat 10-Dec-16 19:47:24

Sell it, minismise future moving costs (stamp duty etc), and enjoy your dream home!

Why move twice and pay extra tax, plus the extra 3% stamp duty as it would be a second property? The property market could change drastically in 20 years. It's already at unsustainable levels in terms of multiples of salary in London - that can't last forever!

Oly5 Mon 12-Dec-16 08:20:45

Keep it! I'm desperate to get a buy to let as a pension pot

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