Sell house or rent?

[chillipopcorn1]

Hi all
My husband and I have got job offers abroad and will be moving in the summer. This will be hugely positively for us financially as we will be able to live off one salary and send one (roughly £36k) home.
Currently we own our house with a 280k mortgage and about 30k unsecured debts between us.
We are unsure whether to rent out the house (rent would not quite cover our mortgage costs leaving us out by about £200 a month), or sell it and clear debts and start our savings.
It is a two year contract with possibility to extend and we are currently planning on being away for possibly 4 years.
I am worried about coming off the housing ladder and not being able to get back on. But equally worried about keeping a declining asset and the hassle of renting!
Any advice on what you would do? Current valuations suggest we could clear debts and mortgage and have about £70k savings left. We are about 40 years old with primary aged children. Help! We are rubbish financially (hence debt) and really want to sort ourselves out for the future.

The decision to sell your house or rent it out can depend on several factors, including your financial goals, current housing market conditions, and personal circumstances. Here are some things to consider:

Financial goals: Consider your short-term and long-term financial goals. If you need a lump sum of cash for a down payment on a new home, paying off debt, or other expenses, selling your house may be the better option. However, if you're looking for a steady stream of passive income, renting your property could be a better choice.

Housing market conditions: Take into account the current housing market conditions in your area. If the market is hot and you could get a good return on your investment by selling your home, it may be a good time to put it on the market. On the other hand, if the market is slow or if there's a lot of competition, you may have trouble selling your property at a good price.

Personal circumstances: Consider your personal circumstances, such as your job, family, and future plans. If you're planning on moving to a new city or if you need to free up some time to focus on other things, selling your house may be the better choice. However, if you plan on returning to the area in the future or if you have a sentimental attachment to the property, renting it out may be a better option.

Ultimately, the decision to sell your house or rent it out depends on your individual circumstances and financial goals. Consider all the factors involved and weigh the pros and cons before making a decision. You may also want to consult with a real estate professional or financial advisor to help you make an informed decision.

Could you sell the house and buy one for the same amount somewhere where it would fetch better rent ? Maybe in a town centre, or in commuter belt area, walking distance to good schools ..? Location is important for rental value. Even if it’s smaller than you personally want but it’s an idea for staying on the housing ladder.

Work out a price at which you'd prefer the money, and put it on the market at that price. If someone offers it, sell. If no-one offers it, then rent it out.

Remember, rent is subject to income tax so you'd only get 80% of the rental value at best. Factor in voids, redecorating after every couple of years/tenants, insurances, agents fees and safety certifications etc., plus a sensible risk premium for the fact that a tenant might stop paying and you'd need to evict them, and the rental income really isn't that attractive. And you're still on the hook for the mortgage

Whereas paying off the mortgage, clearing unsecured debts (presumably at a fairly high interest rate), and having £70k left over means you could fill up an ISA each, (if you're nimble you might even be able to use your allowances for the 22/23 tax year before April, and put the rest into the 23/24 allowance, and then top up the maximum on each ISA whilst working abroad for the next 4 years) and you'll have £210k to put down as a deposit when you come back ... you'll be sorted!

If you are overseas you would have to rent house out with an agent. They charge approximately 20 percent of rental. Why would rent not cover mortgage cost? Mortgages payments are usually cheaper than renting a house.

You could sell your house and buy a house in cheap area up North. In University cities rents remain high as demand is higher and supply lower. You could buy something for £100k in somewhere like Hull and rent for £600 pcm mortgage would be in region of £450. If you sold your house and cleared your debt you could put large chunk into house in Hull so remaining mortgage might be as low as £200 pcm. Stuff money into ISA's.

Thank you for thoughtful and detailed responses. Rent not covering mortgage is due to having to remortgage recently at a much increased rate (thanks Lizz Truss!). Hearing about the pitfalls and downsides to renting out a property is really helpful. We live in a desirable area but our property, whilst charming and full of character, is not an easy rent (old Victorian terrace!). Thanks all

We are terrible with money too. We had a similar dilemma when we moved abroad in 2008. However, the crash happened and the buyers for our UK home pulled out. We decided to rent it out and raise a BTL mortgage to buy a property in the country we moved to. Being a landlord was a learning curve! However, financially it was the best thing that could have happened to us as we now own two mortgage free properties. Debt isn’t always bad debt. Me and DH are terrible over spenders and the forced ‘good debt’ that we took on has served us well. Everyone’s attitude to money is different. We are learning now to budget better and live within our means more because we want to retire at 55 years and we know we can’t keep taking on debt because we will be living on a fixed income. I know once you are off the property ladder it’s hard to get back on. Living in another country and having thousands in the bank is also tempting. You could always just sell your current UK property and buy a smaller UK property to rent out so you remain on the property market in the UK and don’t have the temptation of 70k sitting in the bank to spend. Good luck in your new adventure and jobs 🤞🍾

It's always best to own a property

What do you mean by send one wage home?
Is that to support someone else or to save for your own future

Sending one wage home means one of our salaries would be sent back to the UK to save/clear debts. Living in the UK at the moment we are over spending every month and not saving anything so this will be a game changer! Really interesting to hear viewpoints from similar people. Maybe it's worth the short term pain of renting (certification, tarting up the house a bit, allllllll the admin) if we can then overpay the mortgage and ride out the dip in house prices.

I would definitely keep a foothold in the UK housing market and do t underestimate how tempting it is to spend in a new country we just travelled all the time so spent more! Sounds like you both need to get a hold on your overspending which I k own is hard as we are still trying to budget better. Some people just have a knack for it like weight loss neither me or DH are good with that either we are just not disciplined people but that doesn’t mean we can’t get to be more disciplined if we work at it. How exciting for your family though. Enjoy your new life abroad.

Typos!

If you can afford to send one wage home for savings, I would keep the house and rent it. Would be crazy to get rid and then try and buy again in future. Keep, rent it out, use the money you’re sending back to overpay the mortgage and pay the shortfall and clear the mortgage quicker.

I lived abroad (France) for fifteen years. We met a lot of other Brits who had sold their houses and bought in France , but when they wanted to return to England, were devastated at the difference in house prices . Many had to settle for a small house in a less desirable area. ( When we sold our last house in France - in a very desirable area- we got more or less what we paid for it seven years before, not counting the various substantial updates we had done). In the same time our English house had increased by about a third in value, in line with the local market.

I know you are not planning on buying abroad, but there is no reason to believe that the UK housing market will collapse or even stagnate while you are away. Renting out your house will keep you in the market. If you decide not to return, you will have an asset.