To want to improve our lifestyle today and sell the property?

[preparingforthepileon]

I have NC for this because I am including a fair bit of financial info and I also think I am going to get a fair amount of stick. I am aware we are in a privileged position but I think these decisions of 'jam today vs jam tomorrow' are pretty ubiquitous and not income / wealth dependant (within reason) so I am hoping for some useful advice (and a different perspective) as well as the expected abuse

I work and my DP doesn't. I earn about 140-150k a year and he used to earn the same. We have two small kids. We don't live in london anymore but have a flat there which we used to live in. It's been valued at £1.35m and we have a £625k mortgage on it. At current interest rates it doesn't really generate any income once we have maintained it, paid the agent etc. but has appreciated in value a fair bit since we bought it.

The mortgage on our PPR is about £470k / 2.5k a month and I put everything over 100k into a pension so my take-home is about 5.5k.

We can just about manage (we don't have any car loans) on my salary with the current situation but it's tight.

I think we should sell the flat in London, pay off our current mortgage and invest the rest. That would give us a great standard of living now, even though only one of us is working. He thinks we should try and hang onto it. I am not a spendthrift but I am more 'jam today' and he is more 'jam tomorrow'.

Just to add we are both in our 40's (him late, me 40). He has about 500k in a pension, I have about 200k (I've only been contributing to mine for a few years) but we also have about 900k in other investments.

So my view is our situation is good and we should enjoy the lifestyle a bit more now.

What do you think? (hard hat on)

Am i being unreasonable to want to sell the property?

Sorry - I should have included;

Household bills - 500
Nursery - 400
Food - 600
Cars (insurance / maintenance) - about 250
Travel (to london once a week) - 400

That's a little over 2k then petrol, activities, trips, meal out, buying clothes or equipment for the kids easily eats up the rest.

Isn’t the 900k generating an extra three grand a month?

If your DH is not working to take care of the children why do you have nursery costs?

I do contribute a lot to my pension but the loss of personal allowance between 100-125k makes it a marginal rate of 60%. I also don't have a big pension as I started late so see this as a good way to get it up to speed.

He's not working primarily to be with the kids but also managing a bit of renovation.

Other costs -

Household bills - 500
Nursery - 400
Food - 600
Cars (insurance / maintenance) - about 250
Travel (to london once a week) - 400
That's a little over 2k then petrol, activities, trips, meal out, buying clothes or equipment for the kids easily eats up the rest.

They don't have a lot of time in nursery but we do it because there are two of them and quality time with both of them together can be hard to achieve. They benefit a lot from having one on one time with him and I also think they benefit from the time spent in nursery too.

Why do you have a nursery bill when your husband isn't working?

Sorry - I should have said. The 900k is not liquid and doesn't generate in income. I don't want to go into details. I included it because I appreciate our broader financial situation is relevant but from a cash flow / liquidity perspective it can be ignored.

They don't have a lot of time in nursery but we do it because there are two of them and quality time with both of them together can be hard to achieve. They benefit a lot from having one on one time with him and I also think they benefit from the time spent in nursery too.

Can you get any of it as cash and invest that to make an income?

Absolutely I’d sell in your position - your current position is very unbalanced. Relatively frugal living with plenty of cash in the bank so to speak.

with the assets you have (pension, investments and presumably equity in your PPR) you’ve got jam tomorrow and if you continue with your pension contributions for the next 15-20 years it’ll increase.

live a bit now.

You have lot already in savings then that could be liquidated say for augmentation of pensions ? Or some point in the future if you lose your job?

i am all for a thin serving of jam now and a thin serving tomorrow and it does seem that you have lots of savings - jam - and some concrete ideas of what you would like to spend some of your savings ( eg the flat ) on

at the end of the day you need to have the same ideas of overall balance - DH and me have a joint budget - a monthly limit for normal living and specified long planned big ticket items from savings ( big holiday next year hopefully- abroad- maybes long haul ) . Funnily enough we got our camper van a decade ago out of that savings budget even though most savings were kept back for our retirement

he needs to explain why he’s reluctant to use some of the “savings” for special things now

If it helps OP, I have been a LL for over 20 years and have been selling / preparing to sell over the last five so while I don't know anything about your specific property or situation I don't think the numbers add up anymore when it comes to BTL.

Why don't you book in an hour with a financial advisor to lay it all out. As you say, the tax on exit will be an absolute bitch the longer you hang onto it.

What is the rental income for the flat, and how much does the mortgage payment on it cost? If you did want to keep a foot in the property market then I might be tempted to sell the existing flat while CGT would be relatively small (due to ratio of years lived in to years rented out), then buy a flat outright from the capital released from it, so no mortgage to service on the rental property. I would also buy it in your husband’s name, and he can manage it, thereby saving agents fees and reducing the tax liability from the rental income.. obvs may be worth investing capital released from sale of original flat elsewhere, and/or paying off the residential mortgage…

We could, but we both agree that is less attractive than selling the flat.

Sell it.

Are you sure he's going to walk back into a job when he wants to?

I'm not as high as earner as you but am a senior professional who has given up on trying to get a promotion, and am hearing the job market is so bleak I'm beginning to feel grateful I have a job in the first place...

We do need to be more organised. Pre-kids we were both earning a lot and we had lower outgoings so although we are happy with a fairly simple life day to day we really didn't have to worry about the outgoings because we were saving a lot without trying. Since then we've used our savings to buy our current home, taken out another mortgage and only one of us works!

Better budgeting anf organisation around money is a good idea regardless of the flat situation.

I would absolutely sell! Well, dependant on the Budget, I suppose. Being mortgage free is the absolute dream of my life - I can't imagine how free-ing and less stressful it would feel. At the moment all the financial pressure is on you and your job - I am the same as a single mother and I find it very anxiety inducing, even when things appear stable. I know I'm only a pay-check / work eff-up / losing my job away from disaster. Being mortgage free would give you so much more financial freedom - to enjoy now (jam today) or giving you the ability to tighten your belts if needed (jam tmrw).

Also, property in London isn't what it once was - I reckon you've had the best years of value increasing. And with the capital gain increasing... and it's not actually making money for you anyway. Plus the hassle/stress of managing it, even if just dealing with an agency - what if things go wrong / there's a flood etc etc. I'd get rid and feel happy and free!

For what it's worth, I am not too far off what you earn as a single income household, in the South East, with half the mortgage but with full time nursery and a car loan, so similar-ish, and yes, it is tight. Your finances are clearly overall much better than mine (so great to be focusing on your pension!) but that doesn't mean much day-to-day. So I get it. If I had the option to free myself up a bit financially it would make a big difference. I say do it.

I think in many ways it'd be better for all of us if he doesn't have to go back to work to be honest. His job is stressful and he doesn't enjoy it. He's very practical and he's great with the kids. I, on the other hand, enjoy my job and it's less demanding.

Really good point @airportfloor about the job market - I'm hearing such horror stories. Adds to my point about the stress on the one job - if you can reduce that stress by not having a mortgage, meaning either/both of you could earn less or go part time in future, then I'd definitely do it.

I can't really get my head around having £900k tied up in very illiquid assets that generates no income - what is it - a share of a family business or something?

I don't think it is the best market to sell. Tou should speak to some agenta and get a feel for the market. Lot's of property on at the moment in our area. Your area might be different. But selling at the right time is crucial for maximising the value from the property.

I would agree with your main premises that you should have more fun/experiences when you are in your financial position. You can plan and plan and suddenly life has slipped by. Nobody's saying you shouldn't think about future but even selling the flat doesn't compromise your 900k invested, both your pension provisions, your current family house or your good income. It also reduces your tax liability on future gains, reduces, any potential hassle that can come when you are a landlord. You recognise you are in a privileged position. The least you can do for us not in that position, is enjoy a bit of it.😁

Thank you for your advice. I am not a naturally anxious person but i do occasionally get a bit stressed about it.

I think you're probably right about London property but even if we kept it and did keep appreciating...what's it all for if you can't use it to make your life better? That's my view anyway 😂

Yes.

The current market is a big reason he doesn't want to sell. I'm not advocating a fire sale but I don't think it would come to that. We'd wait until after the budget before we did anything.