What should we with our house?(8 Posts)
At the moment we live in a three-bedroom semi, in a town where property prices are very high and rising. This summer, we will be moving into accommodation supplied by an employer. If all goes well, we will be in their housing for the rest of our working lives -- perhaps another 15 years or so. Eventually we will want a house of our own to retire to, but we are not very attached to this one.
The obvious thing to do would be to keep this house and rent it out while we're not living here. That would cover our mortgage fairly comfortably. The thing is, though, that if you were actually to buy a house as an investment, you wouldn't pick this one. The third bedroom is tiny, the kitchen is small and there's a huge garden to keep up.
The amount outstanding on our mortgage probably represents about two-fifths of the current value of the house. If we sold the house we could maybe pay that off and buy a smaller two or three-bed house in a less nice area, without a mortgage. We'd get less rental income, but not that much less (the difference would probably be £2-300 a month), and none of it would be going to the building society.
Alternatively, if we were able to keep our existing mortgage or borrow a little more, we could perhaps buy a four-bed house that would rent for £3-400 more than our current house. Given low interest rates and mortgage interest tax relief, would that actually be a better option? Or maybe we should look into buying in a completely different town? I have no idea. I never expected or wanted to become a property investor, but don't want to risk not owning a house at all, in case we find ourselves up the creek at retirement.
Curses. I mean what should we do with our house, obviously.
the obvious course is to sell it and buy the one you want to move into. BUT consider:
- Buy to let mortgage relief is falling and will probably disappear
- stamp duty rise coming in April
- interest rates may not be low forever
- landlord'ing: hassle, tax, costs, insurances, legislation, risk of destruction, maintenance etc etc
not a 'don't', but get informed.
I would stick with the current property and rent it out, and only buy a different house when you need/want one to live in. The tax relief rules are changing drastically. You are not "wasting" money on estate agent fees etc. Your employment plans may not be as expected.
I wouldn't sell it immediately tbh. I'd get someone in to rent it until you settle into your new job, decide if you like it and have a think about what type of house and where you would like to live on retirement.
All of the options sound feasible but will you want a 4bed house when you retire or will that be a stop gap house bought purely for rental purposes?
Anyway, there is no need at present to rush into anything as long as the rental for your current house would cover your mortgage and the market is strong.
From experience, I'd keep the current house and rent it out. No employment is certain and it's your security. If you don't intend to live in the house again then just rent it out until you're absolutely ready to sell to buy your final property.
If in doubt, do nowt.
I agree with the other posters - keep your current house for at least 12 months (possibly even 2 years whilst you gain full mployment rights protection) then consider your options. Also probably lowest cost option.
You might want to take some advice on capital gains tax. The last 18 months before selling are always exempt, so you have some time after moving out in which to sell and not incur CGT, even if you aren't living there. www.gov.uk/tax-sell-home/absence-from-home
However after that, there will be CGT on any future sale, but it will be reduced for the period you were living there.
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