Sell or rent our flat?

[MatchaMama9]

Hey all, need some advice. Accepted an offer for 400k for our one bedroom flat in Bow, then all of a sudden buyer’s telling us that his mortgage conditions have changed and now he can only afford to offer 385k max. Pre-Brexit we were told we can expect 420k, it’s a gorgeous flat in Bow Quarter and we have spent a lot of time and care in renovations.

Should we rent it out to weather this shit economy storm, or accept the much lower offer? We have moved home to Melbourne and are hoping to buy as soon as possible as currently we are just renting here.

Without the money from the flat we can just scrape by to buy within the area we want to buy in, perhaps slightly further out or getting a slightly more run down place.

Just hate taking too big a blow to what we hoped would be a decent investment/ lovely piece of London that we get to own.

Thoughts?

are you fully aware of all the legal responsibilities and pitfalls of being a landlord? Do you have a trusted agent given you are on the opposite side of the planet? Do the costs stack up with all the insurances? Are you able to cope if it gets trashed?

Take the lower offer & enjoy the freedom that money gives you. Increased landlord regulation & tax in the UK. Prices are coming down in London and I think this is set to increase. Any recovery is likely to take a long time. We've just bought our first home, skipped many rungs to get a 3 bed semi in SW London. Fully expecting to face negative equity in the near future but couldn't face renting anymore. We negotiated down hard. 26% less than an identical house had gone for March 2016. Forget pre brexit valuation.

Why can’t you remarked it for 400 again?

I'd take the money & run.

It sounds like you are still quite emotionally invested in your ex-home & I think you would struggle with the concept of tenants potentially trashing it, having it messy etc.

Can you put it back on the market? Unless the mortgage valuation has come back at £385k it's not your concern if this buyer can't afford it. The next buyer may be able to afford it. Unless you don't mind giving away £15,000.

I'd sell it. The market's not going to improve anytime soon.

Thanks for the insight, mums. The problem with putting it back on the market is that it has taken awhile to find a buyer that met our minimum price. And in the meantime the market may worsen. I think we will sell it, definitely hard to think of having to deal with the flat getting wrecked by tenants !

I’d definitely rent it out, it’s going to go up in price in the future as it’s a prime location and holding on to it will give you a nice income to supplement your pension.

I’d sell and take the hit for the sake of £15000. I wouldn’t want to be involved in letting a property from half way round the world.

It's a 3% drop, which in thevscheemebof things is tiny. Landlord from round the world is expensive - you need to pay for full management.
What happens if you tell him you can't go below 390?

Can you meet in the middle and sell for £7.5k less? If not I'd sell for £15k less if the buyer is ready to exchange pretty much immediately and isn't going to mess you around further. It's not that much in the grand scheme of a £400k property and the London market is unpredictable right now.

I have recently been in exactly the same position as you.

We have decided to rent our house out. We had 'sold' (chain collapsed) twice for 475k. Now the house wouldn't get more than 440k.

So we are renting it out, which pays for our housing costs where we are moving to.

You should sell. Prices have doubled in Bow since 2009ish so hopefully you are still sitting on a fantastic return. Brexit will be an economic hit whatever happens and the market is only going to stay flat or slow down more in the near term.

Remember when making decisions of this sort that you also have to take a view on exchange rate changes. I'm not up to date with the $Aus/£UK rates currently but if it looks likely to go against you in the next couple of years that could have a greater adverse effect than changes in the property market.

Overseas management can be increasingly tricky. Even getting proper buildings insurance! So if you decide renting it out looks sensible check everything first. You may very well be better off getting on the property ladder in Melbourne any way you can. Good luck.

Are you planning on coming back, at all?

I ask this because we paid £280k for a home in 2000 and sold it to move abroad in 2005. We presumed that we wouldn't be coming back, but we did.

The house we bought abroad didn't increase in price, whereas the house we sold for £355k here is now worth about £850k.

Being a landlord is not terribly complicated. We have been and still are a landlord (just not on a property that has increased like the house we sold). I have a friend who is also a landlord who manages it for me with a shared diary of annual visits and maintenance and a lovely local property maintenance man who my tenants can call anytime they have a problem.

Some letting agents are good, some are not but when looking at the 'can I cover my costs' situation you need to factor in coming back to a housing market that has increased in price, or not.

Rent it out and wait til the market improves and the pound regains strength against the dollar. My brother is doing this. His house in London is fully managed so he has so issues to worry about. I would speak to an accountant re tax implications too

Lots of people go overseas and rent out their property. Do not get emotionally tangled up with the property . Use your head not your heart when dealing with property. Before you do anything do your sums. Seeing an accountant is the first step.
I doubt that we will see the spectacular increases in property prices that we have seen in the last few decades and yes there will be more regulatory matters for landlords to deal with but you would be employing an agent who will do this. I think the issue for most people renting out from overseas is whether they will return to live in the UK again or, at least want to keep their options open.

I'd sell it - the London market is unlikely to pick-up for a while and the changes to tax relief for landlords are making it increasingly hard to make decent profits from rental income. If you factor in the hassle factor of managing it from abroad you may live to regret not selling now.

Never rent out, it's a NIGHTMARE!

I’d sell the market is not looking good & Im not sure what’s going to improve it.

It really depends where you are in London. It’s not all doom and gloom. Location and supply is everything. I would try and negotiate but I suspect the buyer’s income is now being queried.

Looking at Rightmove, there are loads of 1 beds for sale for around £400,000 in this area, so over supply will affect prices. Take the money if you need to move on. If you might want to come back, hang on to it but prepare for spending money on it when you come back. Many tenants don’t take much care of your property. You must no longer think of it as a home.

No we aren’t coming back... and we are wanting to buy ASAP in Melbourne....

Again thanks all for the insight! Very useful to bounce this off all of you!

In 20 years time this flat will be worth a lot of money and you will DESPAIR that you sold it. If you can keep it you would be crazy to sell. Get a good agent - wince when they tell you how much they'll charge - make sure that they send you inspection reports. Put a yearly reminder in to make sure you keep your insurance.