Should I Sell My Rental Properties?

[KennDodd]

Was going to name change for this but cant be bothered.
I have always felt a little bit uncomfortable owning them. I have small mortgages still on them. Thinking of selling for ethical reasons, they're domestic properties just the kind first time buyers would buy. If I do sell, I would then have about £300,000. Im nearly 50, dont earn much and have no pension.

Do you like then? Do you like being a landlord?
If you have lost interest in being a landlord then time to look for something else.

What Would I Do...
I would sell one and pay off the mortgage on the others with the proceeds. If not enough I would sell two.

If I did not like being a landlord anymore then I would sell the rest, possibly over a period of time. I would maximise the amount going into a pension scheme and using ISA allowance.

In your situation I may want to reduce the amount of work I did so I may want to pull some money out as cash so I can spend it (though money in an ISA can be easily taken out again - but could lose money due to selling assets at a low point).

You mention ethics, so you need to consider what has changed in your viewpoint and does that mean you no longer want to be a landlord at all or want to make a gradual retreat from that market.

I would sit down with a financial planner and talk about your risk profile, what your short term and long term objectives are. It may well cost £300-500 but given a portfolio of £300,000 that is money well spent in my view. Professional advice costs.

It troubles me ethically because I know I'm pushing prices up for first time buyers. I've had them for about 18/21 years, did have ambitions to be a big landlord but then thought it wasn't right, not with these sort of properties so didn't buy anymore. I have three, two of them have tenants we inherited so thinking about it those properties I can't really sell as it would risk making tenants homeless. The other has a tenant who's been there for about four years. All are very easy to manage (at the moment).

I need an income in retirement as I will only have state pension and husband will have small private pension. Did have the idea that I could sell and put the money into student lets (have no issue with that) but I think that's a lot of management or commercial property although I don't think that's so good long term.

It troubles me ethically because I know I'm pushing prices up for first time buyers.

Nice idea, but what if the buyers are going to BTL too? In that case, you've achieved nothing, but jeopardised your own retirement planning. Unless you can have some legal stipulation that the buyer has to live in it themselves?

I think you're overthinking this. You don't have a pension. BTL properties will give you that. If you sell now, your tenants might have to move. They are good tenants - let them stay. If you sell, you will not change the fact there aren't enough properties for first time buyers. A landlord might buy your properties and not treat his tenants as well as you do.

You have an income for retirement. As long as you maintain them and keep the rent reasonable then you are providing a service.
Why not ask the tenants if they are interested in buying?

You answer your own question you are nearly 50 with no pension.
You provide housing for people nothing to be ashamed of.
If you want to test the water ask them if they can buy from you and they say they can't then you are going to leave these people worse of.

I would ask the tenants if they are interested in buying the properties, if they aren’t and you sell them then you’re making them have to move and potentially just selling on to another buy to let investor. If you have good tenants who perhaps are saving for a deposit or happy to rent from you long term then charging them a reasonable rent to allow them to save for deposit and being a good landlord in terms of repairs and maintenance is a reasonably ethical approach to being a landlord in my opinion!

I second the advice to get professional advice.
If you sell all in one go then it sounds like you might have a big Capital Gains Tax bill.
If you re-invest in student lets then you will probably be liable to the additional Stamp Duty.

What's your net profit % (income after deductions and taxation) divided by (current equity)?

Really don't do anything at the moment. Post Brexit it might be a really bad idea to have £300k in either cash or the stock market.

You sound like you have a pretty good tennant set up, (I have similar). Honestly? I'd stick with it. Don't throw away your future security, many of the people bitching about landlords do not have strong ethical objections. They are simply envious and would love to be in your position.

Op salve your conscious by being a brilliant landlord and wait till brexit is over

I would not sell. A lot of suitable property is being bought up by foreign investment funds who don't care about the tenant of the community. Surely you can do a better job?
You are quite vulnerable with no pension and a nest egg of £300K will not give much of a return (at best 3%).

Stay away from student lets. You fall under HMO often and the wear and tear can be significant. It's definitely not an easy life!

How much is the rent on them? Could a couple live in one renting it and still manage to save towards a deposit of their own?

For me, BTL becomes unethical when young people are paying the (large) mortgages of those that have, and they are forking out a lot more a month than the mortgage would cost them themselves if only they could get 10-20K together.

Market is probably going to drop soon. Now is a good time to sell.

Thing is, you’re currently providing a stable home for your long-term tenants, and it sucks when your landlord sells your home! I think if I were you I might wait and as and when a tenant gives notice then consider selling. Or you could ask the tenants if they would be interested in buying the property? Being a decent landlord is a good thing to do, don’t feel guilty!

you will have to pay extra tax -so you wont profit as much as you think

Just a point to note, if you do ask your existing tenants if they're interested in buying, and they're not, or are unable, they might think you're planning to sell one way or another. This might make them uncertain about the security of their home, and they may decide to move before they can be turfed out.

I'd keep hold of the properties, tbh.