WWYD regarding rental property?

[witsender]

I can't decide! Bought flat in 2007 just before market crash. Moved in with now DH in 2008 and it has been rented out since to the same couple.

It is on a standard variable rate at the mo as I stopped work with kids, mortgage company know. Street is popular, but now very studenty.

On the one hand I want to sell and get what little equity is in it to put into the home we live in, and it would be one thing less on my mind.

On the other, I want to keep it...try to get it on a better rate and keep it long term in the hope of rental income being an income for me in retirement.

Or curve ball...sell it and reinvest teeny bit of equity in something more purpose built for letting...flat in a block, better returns etc.

I don't know if anyone would buy it as a home given the now studenty area, but inknow BTL markets have dropped since the tax changes.

I've been puzzling over this for aaaaages...any opinions?

How would you cope if you had a void period? If that would be a stretch then I would go for peace of mind and sell, if you believe it will sell. You'd need to plan for this and make sure you could cover mortgage repayments during the sale period if your tenants up and left. Without knowing the figures though it's difficult to say - that would be my gut feeling about it.

Why sell if you don't really need to? I wouldn't.

If you sold now and bought again, you would have to pay an extra 3% stamp duty on the next purchase which, if you are in an expensive part of the country, could be substantial. What are your long-term predictions for the area it is in? Will it improve? Are there any plans for new transport hubs or regeneration locally? What are your personal plans? Do you expect to return to work at some point in the short to medium term future which might make the equity in the flat less urgent?

BTW, I'd speak to a mortgage broker about getting you away from the SVR mortgage - if it's been let out pretty consistently, it shouldn't be a problem to get a BTL mortgage at a better rate.

I'd see an IFA before deciding. There may be implications for capital gains tax if you sell. It's all so individual, depending on how much equity you have, income etc. And the forthcoming tax changes may mean it is not financially viable to continue letting it out.