To wonder what’s right to do with a second home

[PatienceHeatherstone]

We are about to move into tied housing, for nominal rent, which is clearly an enormous privilege in many ways. It’s also risky in the sense that it is absolutely tied to the job, and so will be available to us at longest until retirement.

We already have a mortgage on a house in the area, and we have to decide what to do with it. Owning a ‘second home’ was never a position we expected to be in. I see maybe three choices:

The ‘right’ choices seem to be

a) Sell the house! Owning a second home is grotesque and immoral! The problem with this is that it actually leaves us not owning a home at all. What will happen when we have to leave the tied housing? How can we ensure that the equity from the house sale will hold its value enough to buy a suitable property when we need one, if it isn’t invested in property in the meantime?

b) Rent the house out to a long-term tenant. It can be a much needed family home. This appeals a lot. The problem is that it is difficult to see how we can make the house meet the new EPC standards for rental properties. Even harder to see where the money would come from to make all these upgrades.

The ‘wrong’ choice seems to be

c) Market the house as a short term let / holiday home. This would be by far the easiest option, the most likely to cover the mortgage payments and ensure that we could have access to the house if we suddenly needed to live there again. But it’s taking away a house that a family could live in.

YABU: it’s obvious that you should rent the house long term. If you can’t afford to make the necessary upgrades to energy efficiency, you can’t afford to be a good landlord and you should sell it asap. Just be thankful you have another home to go to and figure out future accommodation when you need to.

YANBU: there are some very perverse incentives in the housing market that aren’t your fault. Do what you can that is cost effective to ensure you can keep a foot on the property ladder. Be fair and upright in your business practices and know you did your best.

Could you sell and buy a smaller newer property to rent out?

Whatever you do stay in the property market otherwise you will be homeless on retirement.

As to what you do with the house - well that will be dependent on where you live and the local rental market.

If the house thats tied to the job is in the same area as the house you already own do you have to take the tied house?

If you can't afford to do the work needed to rent it out long term, how will you afford the work needed to bring it up to standard as a holiday/short term rental?

Rent the house out and deal with upgrades actually not too onerous and if it's not at a decent standsrd a seller will knock you down anyway

Rent it out.
But check everything out about being a landlord and remember you might be upset if they destroy it.

We also live in tied accommodation (dh is a vicar). The house we owned before he trained wasn’t really suited to being let out so we sold it and bought something new to rent out.

I see your point about it feeling wrong to own property but we wanted the reassurance that we had somewhere to go if something happened to dh. We don’t charge as much rent as we could to reduce our guilt somewhat.

Just be aware that the tax implications of owning and renting a house when you live in tied accommodation are different - it is considered your primary residence still, but this confuses banks no end, NatWest are fairly good at understanding!

You don't own two homes though. You own one and you rent the other.

Don't fall into a trap of thinking you own 2.

The other option (which is not a good option BTW) is to let it lie empty.

Just visit and maintain.

Well, I don’t really see this as ‘owning a second home’ in the usual sense because you only ‘own’ one property. The other one is entirely dependant on the job. If you get made redundant in the recession that’s almost certainly on its way you’d be homeless. So I think you’d be absolutely insane to sell it.

It’s a shame that you can’t afford to make the energy efficiency upgrades. But if you really can’t, then that only leaves one option - AirBnB/holiday letting (assuming the property is in that sort of area). But be aware that short term letting/holiday letting isn’t a bed of roses.

Holiday home

You could get fired at any point and need your home back

(You don't have a second home)

This is a very good point. I know some people who’ve recently bought a house to market as a holiday let and even though the house is in pretty good decorative nick they’ve still had to spend thousands and thousand furnishing it and bringing it up to scratch.

A You don't need two houses.

If you or your spouse are, say, a vicar, you might in exactly this position. You would be given specialist advice on how to plan for the future given much of your life would be in tied housing.

And it would be a bit rich to say that a vicar shouldn't have a good investment plan for retirement and is automatically bad for having a second home.

Don't get off the property ladder. Honestly, worry more about what's right for you and your family than what's the 'moral' thing to do. You don't have a second home, you only own one home, which you will need in the future. You are just living elsewhere for a time.

If holiday home is the easiest and most flexible option then do that.

I've been in your position. We had an agent who did the tenant finding for our own home and we managed it ourselves. We knew when I finished the tied job that we'd never return to it and so we said if they ever wanted to buy it they could. When we were ready to move from the tied job and sell the house they bought it and we've bought another house.

As a PP, you don’t own two houses, you have one you are buying with a mortgage and another you are going to rent as tied to employer, I don’t see a huge moral dilemma here at all, either rent it out but you will need permission from the bank to do so, or holiday let if in an area that is attractive to tourists or just leave it empty, but ensure you change your home insurance to a suitable policy, as standard home insurance won’t cover you in these circumstances.