To sell London flat for school fees/house extension?

[sulkysukey]

Looking for some opinions about what other people would do in our situation...

We live rurally in a lovely home in the SW - it's not perfect yet and we've just got planning permission to make some great changes/extend - it will be pretty pricey but worth it.

Our local state secondary has been getting worse over the years so we might end up considering private school for our 2 kids.

We can't really afford any of this, but we have a 1 bed flat in London. We have a deep emotional connection to this flat and it brings in about £11,000/year. We don't earn loads, so this regular income helps with day to day bills/the odd holiday etc..

So to sell or not sell the flat?! Everyone says we'd be mad to sell a London property (it's nearly doubled in value since we bought it in 2007 for £215,000). We always thought the kids might rent it (family rates!) when they inevitably move to London when they're grown... It's obviously a great investment which ideally we'd hold on to. If we sell it we might regret using the cash for the "luxury" of an extension (and possibly private school) in the future.

Any advice? Thanks!

Don't sell it. Having gone through the stress of worrying about crap secondary schools and thinking of private, it's just not worth it.

Paying for private is a constant stress and the costs are always more than you think.

You could pay for a tutor instead if they need it but remember that schools can and do change...one day they're "the worst" the next they're excellent.

Keep the flat it's an amazing thing to have.

Don't sell it.

Could you do an equity release?

I would never sell my London flat. We have had some really lean periods where the money would have come in handy, but we clung on to it. It now pays university fees and will provide our children with an income when they leave home.

Is there a private school you have looked at, and would like them to go to? If you haven’t looked, I’d do the research and go to some open days.

Assuming there is one you like, I’d sell the flat. Although it would be nice to have for the future, the dc may not want to live in London, and I wouldn’t put off doing something beneficial with the money in the present.

A London flat is a fantastic thing to have, but so is being able to live comfortably.

Don't sell it. Could you do an equity release instead to get some of the cash out for the extension? If your kids do move to London for work then they will save thousands in rent vs paying private rent. Which in turn will allow them to save for their own place. Huge knock on effect. Seriously don't sell.

Ok this is great to hear - thank you for your replies! Yes, I'm planning on looking around a few private schools, but considering the fees only a couple of them have outcomes that would justify the fees and hassle (the local state is a short walk away, the privates would involve at least a half hour drive each way...).
We might be able to equity-release to at least start off our home improvements and get it done bit by bit over the next few years.
Really helpful to hear these opinions - thank you

Do you rent it out? Could that be an option?

Blondie yep the £11,000/yr is from renting it out.

£11K a year only? In London?

Yep Persimmon, around that (after agent management fees/maintenance co. fees/tax etc. taken off).

I am in lreland so not familiar with the UK system . Bit here l see that while going to a private school has advantages at the end of the day children perform on who they are and not on what school provides. If they are of regular intelligence, coming from a home interested in education and do some work they will perform fine at a middle of the road school.
Getting yourselves into financial difficulties will affect everyone and private schools have a way of cleaning you out unless you can do it comfortably. If you are dependent on that 11,000 now you are not in that category. All the driving etc will affect family life and your own careers so l wouldn't take it on.
I would go with local school, tutor if needed, French college, etc and hold onto London property. It will help for university and be a pension later.

Don’t sell it from what you written.
You already describe your home as ‘lovely’ and the extension as ‘luxury’. Sounds as though you may just not be able to afford luxury and need to ‘settle’ for a lovely home (how lucky already!).
If you pour all your money into an extension (and fees) you can’t afford, what then? You’ll be sitting in a house you can’t really afford to live in with 11k less income than now and no investment/lifetime income for the future. i get that it may be very tempting but it sounds as disastrous mistake to me.
Good luck op.

“the privates would involve at least a half hour drive each way...).”

Two hours driving a day to to drop off and pick up? Think of the petrol costs, too.

That’s mad, if you don’t have to do it.

Keep your investment flat. You will probably never be able to buy a second property again. Or gain £165k worth of income over the next 15 years while it holds its capital value.

Don't sell it. Intelligent kids with good home support can do well in not so good state schools. Possibly not as well, depends what the issues in the school are. But yes a bit of private tutoring in year 11 can help massively, Dd got a 2 in her English gcse mock so we started once a week tutoring and she came out with an 8.

Wise words everyone thank you, much appreciated. I think (as nearly everyone's said) it makes sense to hang on the flat.

I wouldn't have to do the private school runs myself (there are coaches/taxi shares) but I know the value of walking to and from school, local friends, ease of getting to extra curricular stuff etc. etc.

Thanks again for the words of wisdom.

Have you looked into the possibility of being eligible for a bursary at the private schools? If you have a modest income, it could well be possible you'd qualify. I'd definitely hang on to the flat. If you sold it, you could well have to pay capital gains tax.

I wouldn’t sell the flat.

If you’re considering a school move anyway, what if you were to just move to a better state school catchment into a house that didn’t require a pricey extension? Would that be an option? Might be a bit of a bigger mortgage but probably easier financially than paying 20-30k/year/kid in fees and extras?

Thanks for the replies. We're definitely happy with our house/location so wouldn't move. We'd weirdly have to live in a pretty miserable town to be in the best state catchment vs lovely countryside where we are now. The house def doesn't need the extension, it's just a long term plan to make it really perfect, but we're more than fine in it as we are.
The complicating factor is really just the value of London property - if we sold the flat we could put aside £200K for house/schools and still have the best part of £200K left (enough to potentially even buy another investment place out of London). But we're all emotionally tied to the flat, it gives ok returns but it's value will likely increase even more in the future... and we'd prob never be able to "get back into the London market" in the future.
I know it's a very privileged position to be in anyway - thanks for all your advice.

Have you looked at tax payable on the sale of the London flat? CTG is 18 or 28% depending on your income. If you were to buy another property elsewhere, you'd need to factor in the additional stamp duty etc.

I also don't think you'd have a chance to do an extension + pay 2 sets of school fees for 200k. What you could do is keep the flat and reinvest the rent money (for example through your ISAs) to build up a pot for the extension or school fees. But obv that would require you to curb your current spending.

You could remortgage.

Or what about moving to an area with better secondary schools.

Or even back to London which has a lot of excellent schools and is where you think your dc will end up anyway.

Remortgage & release up to 75% of your property value (minus mortgage if existing currently). You may not make much rent if you so this (as your mortgage may go up) but it will give you the cash you need now.

Selling may not attract CGT if you've lived in that property previously.

Sell THAT flat and buy another in another area?

This is a great flat. A third bedroom so you will likely still clear that 11k. It's not salubrious but the area is very desirable - 14 minutes into Charing Cross

Even if you spent £20k on new boiler/decoration you'd still have £150k clear to buy an extension/pay for school fees

That flat is genuinely in a good area

Thank you all - some really great financial advice and yes, the tax/stamp duty etc. could well make it impossible to reinvest any leftover in property. We def wouldn't move - we're all so happy where we are, it's literally just the schools thing that is something we'll have to tackle in the next couple of years. I think we have some guilt about being privately educated and possibly not giving our DCs the same, although tbh our local school has better grounds and facilities than my inner London private did. Def not selling for now!

Hang on to the flat - very hard to sell in London in the current market and £11K a year supplementing your income is not to be sneezed at.

Ooh Laurie very interesting - food for thought!