Sell flat and move, or keep flat and rent. Advice needed please.

[iddybiddymum]

I am just wondering whether anyone has been in the same position.
We recently purchased a flat and renovated it. However in that time, I fell pregnant and had a baby.

The flat was never a forever home and we need to move as baby + flat = mess!

Currently our mortgage is reasonable (only 1 income at the moment).

We were thinking of either selling the flat and getting somewhere bigger or is there any possible way to keep the flat, rent it out and purchase somewhere else?

A mortgage advisor said that you can't release any equity in the property to purchase a second home.

Has anyone been through anything similar please?

I would hold tight for a bit. A baby doesn't take up much room so moving isn't urgent.

Seek advice...Brexit will affect prices too.

This is true. Just wondered whether it would be a silly move to sell a flat with a low mortgage?
Nothing will happen until after Brexit anyway as sales seem to have slowed down.

You'd need a new BTL mortgage on the current flat if you want to rent it out. Is there enough equity in it for you to be able to raise the deposit on a new flat? Your problem is likely to be raising the deposit on a new home ( unless you've got savings).

Apparently you can't release any equity from the flat to purchase another property unless the amount is significant ( which it isn't) , and with 30k savings that honestly probably wouldn't get you a lot nowadays!
As I suppose that would be eaten up with stamp duty and solicitor fees.

It would be a dream to try and keep
The flat to rent it out but I think unless you strike lucky and bought at the right time - the property game is quite hard !

And it's very much hit and miss with tenants anyway. You can't guarantee getting good ones. I had a flat empty for a year after the tenant moved out without telling anyone. (Don't ask!) It's just stress that you don't need.

How old is the baby? Are you anticipating a problem or living in the mess now?
We were always ‘a room behind’ a baby in a one bed flat, 3 in a 2 bedder and honestly life was easier in the flats- everything on one level, clutter free, toddlers could potter about without the worry of stair gates or going to the loo on another level. I’d definitely streamline your stuff and stay put.

I lived in a flat with DH and two DDs and my DDs were 7 and 10...they shared a room. Yes it was cramped but we actually liked that flat. We had good neighbours and it was in a nice area.

You need to put some figures in if you want actual advice op... the releasing equity is not true and when changed to a btl mortgage will need a minimum 25% equity left in the flat
Your new purchase will attract an extra 3% stamp duty
With tax changes in btl if you are or if the rent pushes you into the higher tax paying bracket then it isn't easy to make money
Why do you want to keep the flat?

Don’t complicate your life financially, emotionally and practically by becoming a landlord. The new tax system and regulations for BTL make it v hard to turn a profit. Enjoy and focus on your little family......much prefer a Sat am at the park or mooching around in the garden digging worms that on a call out for a blocked toilet, tenant moving out, tenant not paying rent, tenant burnt the work surface, heating not working etc etc

You will need to pay the 3% additional stamp duty on your second home, which has to be paid by cash (you cannot borrow it), also income tax on the profit you make from renting out the flat (I know a lot of amateur landlords evade tax, but I will not advise that), and if you rent the flat out more than 18 months (I think) you will be liable to some Capital Gain Tax when you sell your flat, as it will be considered as an investment property.

How small is the flat? I live in a flat with DH, and DDs age 8 & 10. It's fine.

Thank you for all the advice - it really is food for thought!

If you keep it, what proportion of your wealth will be invested in domestic property, and what proportion in other assets?