And it just keeps on coming..

[Daphnedaydream]

We have had a significant streak of bad luck financially and it just seems to keep on coming.

We have another property which we rent out. We were unintentional landlords (couldn't sell our house, desperately needed to move and were fortunate enough to scrape a 10% deposit on another property) and had the same tenant for 12 years. We never raised the rent, we figured she was a single mum, the mortgage was being covered as well as basic costs such as gas certificate and we felt that was the right thing to do. We thought we had a decent relationship with the tenant but we when she left the property at the beginning of the year we had to spend £10 000+ putting it right (damage to boiler casing resulting in a new boiler, lots of damp where washing had been dried indoors - Found out that she never put the heating on but instead ran the tumble dryer but yeh vent had fallen off at the back). Our stupid mistake but meant that we wiped out our savings and work planned on our own house can not get done which includes no new windows so we have another freezing winter ahead. Meanwhile the rental property also needs repair still and will suck up any spare cash. DH has always been reluctant to sell (considers it part our pension which is poor as we have been self-employed for a long time and whilst we do have a private pension, it's not as much as if we'd have been employed) but is coming around to it although the market is now crap and we'd have to evict the new tenant which also feels shitty.

Car suspension went last week. £500 bill.

Washing machine broke down at the weekend. Hoping it might be under warranty but awaiting the engineer if not another £500 and no washing machine for a while.

Dog has destroyed carpet in our living room - pulled at a corner by the door and has caused a huge rip. It looks like someone has taken a pair of scissors to it (about 1.5 m long and 50 cm across). The room is massive (37 meters square) so even the cheapest carpets are around £1500 all in.

Coming to the end of our fixed mortgage deal and need to remortgage. Monthly payments will increase by £300 per month.

It just seems constant. Everything is going up but no matter what I seem to do to generate extra income, we are never better off as costs just keep rising. We are so fortunate to be able to absorb this but it's only just manageable and we have very little left in savings should it all go wrong.

Just feeling very low about it all today.

Oh dear, it sounds as if being self-employed isn't enough to cover your outgoings. So either see if you can find a job to run alongside your self-employment, or find a way to reduce your outgoings, which might include selling.
How long has the tenant got left to run on her contract? You'd need to give appropriate notice and there are new regulations coming in very soon so you'd need to check that as well. It's not a great time to be selling, and you'd need to think about how you'd cover the mortgage in the time between the tenant vacating and a sale completing. You could find yourself with an empty property for several months.
I think in your position I'd find extra work short term, but look at selling once the current tenants contract expires, and in the meantime check out the new regulations.

I've found the extra work. I've got a side hustle which brings me in around £300 per month. I have also gone back to employment which starts after Christmas. Sadly this won't make much difference financially to us as it will end up tipping one of us into a higher tax bracket so we will lose any child benefit, as well as increased student loan repayments and 40% tax.

Honestly - You need to sell that second property and bang it in your pensions.

You can put more in than you think its ypu gross earnings each over 4 years minis any contributions in that time

Ie. you made 50k pa every year and no pension contributions at all... you can pay in 200k total and you will get tax relief which will help offset the CGT

You need to sell the rental. You can't afford to be landlords by the sounds of things. Assume you have equity in that property? Could pay some off existing mortgage to bring down that cost.
If one of you is paying higher tax bracket rate then you're earning well enough.

I'd really like to do this. Issue is being able to. We're coming to the end of our mortgage deal which means we would go onto their SVR which will add another 200 onto the mortgage. If we evict the tenants then we won't have that being paid for us so we'll be £600 a month down every month and the market is bad anyway so it could be a long time before it sells. I'm not sure how long we'd be able to absorb the cost for.

In that case i'd sell, and put the let-properties equity against your current house.

What do you mean?

Your house:
Mortgage value: 500k
Current equity of £75k
Meaning mortgage needed: £425k

Rental:
Lets say you Sell for 300k.... minus fees and expenses your £300k house yields £200k equity (money once mortgage is repaid)

You now have 200k profit from rental.
lets assume post tax its £150k.
you can add that 150k to your house so your equity now increases to £225k and mortgage needed reduces of 275k

This will lower monthly mortgage payments on primary residence

Ah okay! Thank you for taking the time to explain.

Can't you sell with the tenant in situ?