Sell or let flat....can't decide.

[Maximum25W]

DH has a new job and we are moving out of London to the Midlands with our two DCs. We currently own a 2 bed flat and don't know what to do. The two obvious options are these:

1. Sell the flat now, bank the equity whilst we rent a place near to his new work and when we have settled and know the area well buy a lovely family house. The equity we take would (hopefully!) enable us to buy our dream home. Our budget for this would be £400-450k

1. Let the flat out now and rent a place near to his new work. This would then give us further options in 1-2 years time - either sell the flat when we are ready to buy a house (this may be more hassle than it would be now because it may be tenanted and we may be liable for CGT) or keep letting the flat long term in which case we would only have a budget of around £200k for a house (based on our current savings of £20k and DH's salary and 1-2 years future savings). We could conceivably get a 3 bed with this but would compromise significantly on location, size, parking etc etc.

We have worked so hard to buy our current flat and its very unlikely that we will ever be able to get such an asset again (yes, I know, I know it's wrong to see property as an asset but, let's face it, that is the way things sadly are in this country) Some family members managed to buy a house whilst holding on to their first property (albeit years ago when mortgages were a lot easier to get) and they have advised exploring every option before letting our flat go. I can see their point - years down the line I don't want to regret it. I have been thinking hard about future situations in which this may the case and the two that spring to mind are if our DCs are loaded with debt after Uni and are denied opportunities in London because they can't afford to live here or in our old age if we have awful pensions (we can't assume we'll have the benefits our parents have in old age). Neither of us have great pensions at the moment because of career changes and both of us have suffered from ill health at different points which may affect earning potential in the future.

I know this is an enviable dilemma to have (but please know we have worked very hard and made considerable sacrifices to achieve it). I would be interested to know other people's thoughts, whether anyone has done something similar or thought about it.

Warwickshire is lovely. You won't want to go back to the smoke after living there.

It is all about level of certainty for me - are you absolutely convinced you'll want to stay in the Midlands or is this a trial run for you? Do you know exactly where you'd want to buy in the Midlands? If not, it might be worth renting for a while.

I rented out my flat when I moved in with DH and got short term permission to let it out on my residential mortgage. We then sold DH's flat, bought a doer upper house and remortgaged my old flat to release equity to do up the house. This might be a possibility for you.

In summary, I wouldn't go all out to keep it if it stopped me buying the family home I wanted but I wouldn't jump to conclusions too quickly either

There is nothing wrong with considering it an asset as long as you are prepared for teh value to move in both directions

Senua - that's good. We're really excited but also apprehensive as neither of us know the area. I'm actually from the Midlands, just not the area we'll be moving to.

I echo the sentiment about Warwickshire - we have family who live there. It's lovely and I'd consider living there myself.

We are in a similar position to you and rented the house out. Cost us a fortune in extra costs, redecoration, insurance mortgage and council tax when it's been empty, gas certificates, agents fees, tax on income. We only broke even after renting the house out for 4 months. We then make a profit just but if the tenants leave we are back to empty house, possible need to decorate.... I think you don't have enough profit margin for the extra costs and you may have to subsidise your flat. Think it through carefully!!

I wouldn't sell a London flat! God, no. Short-term you'll have expenses, but long-term you'll make a HUGE profit.

Keep!!! No brainer wish i'd kept, mine, wish i'd kept mine

I don't think you should keep it in case you move back to London - I think you should keep it because it will give you the best yield on your capital sum in years to come.

Sell the Flat. London prices are falling now, even in places like Hackney. Even the Bank of England have acknowledged this, and they are worried.

They may not fall alot, but better to get out on a high, than wait until everyone else scrambles for the exit. There is an oversupply of new apartments being built in London.

Don't sell your london flat, unless you're 100% sure you're not coming back to London, ever.

Even if the prices go down, historically, it will go up again. We've been through lows before but, long term, london property remains a shrewd investment. Our house went up by 100k in the last year. My in laws regularly have people put letters through their door, asking to buy their house. This has been happening over the last decade with increasing frequency.

So many replies, and a real split, thank you. I guess worse case scenario would be renting it out for 2 years, then in 2017 finding ourselves in negative equity, can't rent it out because of oversupply of flats and not being able to pay the mortgage either because interest rates have risen. Things would have to be dire indeed but of course these things can and do happen....still considering the options.

there is an even worst case that you get wrong 'uns in who don't pay rent and wreck the place, so make sure you have insurances to cover all that.

Keep the London flat. We moved out of London five years ago and kept our flat, which has since more than doubled in value. We manage the rental ourselves, and we've never had more than three days between tenants, and so far, all tenants have been excellent. It's really very little trouble to manage the rental – we have to do the odd day trip to London to supervise plumbers etc, but for the income it's very little work. We know that if we sold we'd never get back into London (and I dream of moving back one day).

I would only take my foot off the London property ladder if I was absolutely certain I would never want to get back on

Absolutely keep it. Even if prices go down, you have a tenant paying the mortgage. Ideal if your DC decide to attend Uni in London, or you want to retire back there, or even move back.

We are in similar position, moving for work, house only owned for 18mths, would lose too much of our equity on closing costs. We are going to lease it out. Make sure you factor in being able to pay the mortgage and your rent if it's not tenanted, build up a maintenance fund, landlord insurance, and any other costs, into your budget.

Housepicturesqueclub - that's completely incorrect. London property is rising. Where is your evidence for it falling?

I wonder if HousePicturesqueClub also posts on HPC - house price crash.

I know nothing about this tbh but my gut reaction is to hold on to the London flat for the short term, at least for a year or so until you get the feel for where you are going to live, if you will mis London too much etc.

I have just done this. Kept london flat and bought small house in hertfordshire. I did feel a bit sad at some of the compromises with the house but now we are here, it is fab. Having even a small garden makes a huge difference.
We are managing the property ourselves. We spent a month and a few grand doing the place up. Have found good local trades And a reliable handyman (we have him on a retainer, tenants can use him for 2 days per year. If stuff needs fixing, then he will do that with materials at our expense, if they want extra stuff done like put up shelves, then they pay for materials and any time over the 2 days). The boiler is on a contract. All appliances are new.
The deciding factor fr me is that my oh will not have a pension. Having the flat provides that additional bit of security. I would decommend it.

Id permanently let you flat out and keep it as a pension

I'd look at areas to buy? Where's your Dh's work? Bewdley or Worcester are cheap and offer lots. Suspect you maybe able to train in

I don't think Housepicturesqueclub is wrong. All three of the estate agents who came to value our flat for sale said that prices have dropped slightly since this time last year (when, by all accounts, things were absolutely crazy - open days, sealed bids, offers well over asking price)

Box - DH's job will be in Coventry but we would probably not look to buy in Coventry itself.

Prices have dropped a bit I have just bought a flat to renovate and got a substantial reduction as last years madness has ended Not London though but popular SE city