What would you you do with this buy to let?

[PandoraRocks]

I have been renting out a buy to let property for the last 12 years. 4 tenants in that time, two were ok and two were nightmares.
The Welsh government have changed the rules and made it much harder for landlords now as well. I have spent money on a new kitchen and bathroom and am not keen to have the house trashed again by tenants.

I have thought about Airbnb but again the Welsh government are doing their best to ruin this sector with new rules aiming to get rid of second homes.
My property has on street parking but only on one side as the road is really narrow. Cars tend to speed and there have been a few minor accidents/lost wing mirrors etc. Everyone living nearby competes for spaces and half the time I can't park outside my own house. So maybe not ideal for Airbnb.

Should I bite the bullet and sell? The house is semi detached, 3 bedrooms. I have a 63k interest only mortgage due to end in Aug 2025. Then there's Capital Gains Tax to pay, an early repayment charge on the mortgage, fees etc. If the house is worth say 150k (estate agent coming to value it this week) then I suppose I'd have enough for a deposit on a new property. I don't know if I'd get a new BTL mortgage at my age - 60.

I have no private pension so this was to be my extra income. I'm not sure what to do with the balance after selling - buy another property for Airbnb, convert my large garage into an Airbnb annexe or something else.

If you sold your BTL property, could you claim Business Asset Rollover Relief so you defer the CGT?

Personally I'd say it doesn't really sound sensible to sell this one just to buy another buy to let in the same area - as you say there'd be a load of costs entailed in doing this with no guarantee of increased income. And doing short term lets/AirBnB is always going to be a lot more hassle than normal/long term rentals with if anything a lot more potential for the house to get damaged, so personally I'd avoid that unless you really can make a lot more money from it once you take into account all costs (I know obviously rent is higher with short term lets but unless you are in a very popular area you'd have to count on lots of empty periods esp over winter?). What was your plan about the interest only mortgage when you bought the place- did you expect to have the cash available to pay off at that stage (and do you still?) or was the idea always to sell at the end of the mortgage term so your question really is is it worth getting out now a year earlier than planned and what should you do with the capital now?

I don't know the answer to your question on CGT I'm afraid, you'd have to ask an accountant. I do know the easiest way to not pay CGT is to live there yourself as your main residence, or to set up a company to manage the assets (you then pay corporation tax rather than CGT).

But basically only you know whether it's worth it to you to carry on letting the house, obviously if you're finding it a major stress for very little profit then it doesn't seem worthwhile continuing. Whereas if it's a moderate hassle but you can reasonably expect a very good return over time, far outstripping what you'd get in a lower-effort investment option for the same capital investment like a private pension or annuity then of course worthwhile trying to find a way to carry on? The 'trashing' I'd try and not get too worked up about, yes it's a pain but I think you have to always budget a fair amount for maintenance and repairs as a landlord, far more so than you would for your own house (and not just because tenants can't be expected to take care of the place as you would although this is true, but also tenants can't be expected to put up with e.g. a broken boiler for a few weeks while you shop around for best deal to replace, you either have to proactively replace while it's still working during a void period or be prepared to have to pay above the odds to replace as an emergency if it goes). Sometimes you get lucky and all goes well and you'd don't need to spend as much as you thought, sometimes you're unlucky and everything breaks at once or you get bad tenants who do more damage than fair wear and tear but that is the dice you roll as a landlord....

If you had £87K in cash now, and saw this house on the market - would you choose to take out a £63K mortgage and buy it, with all its associated issues?

If not - sell.

As to what to do with the cash - have you worked out the percentage return after all costs, including mortgage payments, that you are receiving on your investment in the Buy to Let?

Do you have a financial advisor? Your bank should have one with whom you can discuss the situation in full.

Go online and do the CGT calculator. It may be that you owe less CGT than you may imagine. You can offset costs to acquire/dispose and the improvemenrs youve done etc as well. There's a threshold and if you are a lower rate taxpayer then it may not be that much to pay.

It sounds like the hassle is not worth it for you for rental. And it makes no sense to dispose and buy another given costs of acquisition. You can have unscrupulous tenants in any location and so perhaps you're better off selling the property and putting the proceeds into a investment fund or bonds to give you a long term yield to support your pension. For this you'd really need some financial advice

Mortgage ending next year - sell it then

www.gov.uk/tax-sell-property/work-out-your-gain

Work out your capital gain first. Use the HMRC Calculator above.