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?

I am at the other end of parenting to you. Having somewhere for student and young professional children to live in London would be an amazing opportunity for them. It will make internships and work experience so much easier to access.
Seriously consider holding on to the flat and selling once your very young children are in their late 20s.

Seriously consider holding on to the flat and selling once your very young children are in their late 20s.

I initially read that as "Seriously consider holding on to the flat and selling one of your very young children" 😂I may have been tempted at 4am the other day when the youngest decided it was time to get up...

I love the thought of keeping a flat in London for us as we get older and also the kids. This is certainly a consideration. I think something a bit smaller and less valuable might be a compromise but the SDLT is a killer (additional rate for us) so even trading down is expensive.

None of us are promised a tomorrow as they say.

I’d also sell now and buy the camper van to start enjoying your lives. Invest the rest to provide an additional income that you can use for recreation. The capital will still be there and can be added to once your partner returns to work. I would use some of the capital to pay off some of your existing mortgage but not all of it ‘just in case’.

Also legalise your relationship as soon as you can.

So am I right in understanding that you both agree time home is time (and money) well spent/not earned and that the issue is that you place different values on money spent on day to day spending?

I think the crux of the matter is that he is happy at home and not earning or selling property and you're working, earning and not feeling happy but he is unwilling to make any sort of change that means spending money or going back to work to contribute money.

He needs to compromise - either work and contribute financially or sell and contribute financially. Because you essentially have a happy SAHP and an unhappy working parent. Him being happy shouldn't come at the cost of you being unhappy. Nor should he be happy with that.

One slightly off topic comment..... if he or you are concerned about your investments/financial future YOU REALLY NEED TO GET MARRIED!!!!

If the worst happens and one of you passed away suddenly now most would go to the tax man! Just get a quick register office wedding and sort that bit please 🙏

So am I right in understanding that you both agree time home is time (and money) well spent/not earned and that the issue is that you place different values on money spent on day to day spending?

Yes that's correct. It was a joint decision for him to give up work and I am happy with the situation. He is happy not having spare cash for more meals out etc. because he places less value on those things whereas I feel like we should give ourselves a bit more spending money now, even though ultimately we will be slightly worse off in the long run (but still fine, in my view).

Something I am conscious of is not to downrate his view on finances because he is not working. That wouldn't be fair, given it was a joint decision for him to quit. This is how many SAHPs (usually women) become disenfranchised in relationships when they don't work.

I think we will compromise but compromise still means selling the flat (given we obviously can't sell part of it!) but we could agree to a smallish uplift in monthly spending and keep most of the money 'working'.

I know! It's stupid, we're stupid. We'll get it sorted 😅

In your financial position, I would sell, but I would sell very sensibly. A freehold flat located in a good area in London must be like hens teeth.

That will help. Remember they’ve also reduced the amount of time you could claim at the end. It used to be 18 months but I think it’s less than that now.

Id sell the property, get a good accountant, pay whatever CGT you owe then pay off your debts.

Good luck op!

Not sure how much cgt you would have to pay but it seems mad to keep hold of the property when you could have a much better life if you sold it. How come you don’t rent it out?

It is rented out but interest rates where they are, maintenance costs and tax on the income means it doesn't really add anything significant to our income.

Thank you, it's 9 months now unfortunately!

I would definitely sell. We are also 'accidental landlords' with a property let out that we used to live in. But if the situation happened now we would just sell, we only hang on to it as we have had an amazing tenant for 15 years. The government will make things harder and more expensive for landlords, and find more ways to tax you, that's my opinion anyway. They're also giving more and more rights to potentially problematic renters and making it harder to get them out of your property. It's just too risky. If the flat has already appreciated a fair bit then you have had a win anyway. Personally I think there are much safer investments which are less hassle. So my opinion is sell, get a financial advisor, pay your current mortgage off.

Definitely get professional advice but it seems crazy to hold on to something that could one day become a noose around your neck get the money now life is to short live now your lives could become so much better.

London market especially flats is tanking. I’d get it on the market but expect it to take a while to sell. The situation will only get worse in London so I’d do it now.

@User94816 out of interest what trusts would make 10% income? I’d like to invest!

I would try and save the London flat for when the kids were bigger for them to live in

Why?

The decision would be based on so many variables that mean it would be a really bloody stupid thing to do.

The kids may not want to live in London
The kids may not want to share, which leads to....
The kids may fight over who "gets" the flat
The tax and in costs of maintaining ownership means that they are currently breaking even. Any increase in either would mean it was actively costing them money
There is no guarantee that any potential increase in value would cover the sunk costs in the flat, in fact on current figures they are looking at a net loss if they dont sell soon due to CGT

Jam tomorrow often ends in "Bread and Butter today, Bread tomorrow" due to mankinds greatest weakness...."maybe".

ETA my favourite quote from my favourite author

“And this was known as that greatest of treasures, which is Hope. It was a good way of getting poorer really very quickly, and staying poor. It could be you. But it wouldn't be.”
― Terry Pratchett

I’d sell now. The Renter’s Reform Act will make it much more difficult to be a landlord when it becomes law . If you have to get a court order to evict the tenant, this could add considerable delay into the selling process for the flat unless you sell with a sitting tenant which will probably mean the sale takes longer and you don’t get the same money for it.

DH and I have just decided to sell off our investment properties - we had intended to keep them forever, but we’ve had excellent growth in a very short space of time. We are going to enjoy the full income that we work so hard for, but we will invest in other things and take advantage of better opportunities. So, I am all for selling the property!

You'd need to speak to a Financial Adviser to get more personalised advice, but you can invest up to £20K a year (at present!) 'tax free' into an ISA. Some high street banks offer them, but I personally recommend Vanguard. If you aren't super confident, you can choose a 'managed' Isa. You don't get taxed on the income you make from them (provided you only invest 20K a year) and I think you can have other funds where you can take out up to 3K a year on top, again without capital gains tax.

My Vanguard ISA is up about 17% this year (and whilst investments can go up or down, if you're keeping your funds in there for a long time (5 years for instance) it should increase somewhere between 8 and 12% per year (and this compounds).

Ok Thankyou