Should I sell?

[kenhomsbestwok]

Own a property in Mitcham (next road is Tooting and it's near Tooting mainline station, and about 15 mins walk from Tooting Broadway tube) which I bought to live in in 2003 with a 100% mortgage. Ended up moving away offshore in 2004 but kept property and rented it out. It's obviously gone up in value in that time.

Government are slowly eroding the BTL "perks" which ultimately doesn't make any difference to me as I will get a credit from tax office here so won't end up paying any more tax than I do now.

However, my managing agents closed down (without bothering to tell me/tenants) recently and took my tenant's deposit (which I've now had to pay out of my own pocket into the relevant protection scheme) and I do not really like the idea of using other agents as feel this is happening to a lot of them and think I might end up being owed money which it is just not worth trying to chase (i.e. throwing good money after bad). I can't manage from here as work FT and have a child.

Also, property needs work and likely to need significant work soon (i.e. new boiler, roof works etc).

We are also looking to upsize where we live so the extra funds would come in handy.

Just thinking might be best to hoof it off but also a bit scared because it's kind of my pension. I mean, I will invest most of it (bar what we need for new house) but I just always thought property was a good bet and not sure what to do.

Any words of advice? (first world problem I know!)

Get a reliable estate agent to sell it (big name like winkworth). They are unlikely to go under. Or sell - I’d sell but if that’s your pension then be sure you invest the equity well. Also remember capital gains tax.

If it has been your pension plan then it might be unwise to spend too much of the wealth accumulated. Have you got other pension savings?

Yes, have a work pension which pay 12.5% into each month but have only had that since end 2016. We would probably only put 100k max into new house which should leave round 200k to invest.

I also have the option to double my salary in a few years time when kids out the way if I go back into doing what I worked as previously so know I could make the cash back if I needed to.

But it still scares me, to sell a property.

Rental yields are pretty rubbish in London so when you consider the value of your property and the rent you get less fees etc it probably isn't the best investment.

The only downside of selling it, is the CGT. However, the proceeds of the sale could be invested into a SIPP, ISAs etc. With money in good funds, you could be growing your pot nicely.

Thanks JoJo - yes, that’s what my DH is also saying. Plus if I sell now, I’m only liable for CGT on the gain since April 2015 when they brought in the change and should still get lettings relief etc if I sell before next April, so another reason to sell now

Surely the CGT will be payable if you sell now or in 10 years time - so sort of irrelevant?

Sounds like significant costly repairs are due and if you do have the cash flow to hand and the trade contacts to remedy these swiftly and costs effectively then I would shift it sooner rather than later.

Yeah it will be but they are phasing out a number of other reliefs (lettings relief and PPR) which would lower my CGT bill. Plus, in 10 years, say the value had increased a lot, that also means more CGT (though I know this also means more profit for me).

We do have the cash to do repairs but just aren’t anywhere nearby on the ground (we are a flight away) to keep an eye

Why are you only liable for cgt from 2015? If you have rented it out since 2004 you will be liable for 15 years cgt out of the 16 years you have owned it... plus 18 months letting relief... so about 80% of the gain by my rough calculation

Yep only since 2015 as I live offshore. So they are only able to sting you for CGT from the date they changed the rules for non-residents which was April 2015

OP, I don't know why you're even thinking about keeping the place, then.

I suppose because you always think investment in property is sound but we live in a place with no CGT or inheritance tax so it does now make sense to get out of UK

You could try and chase up the deposit through these links:
england.shelter.org.uk/housing_advice/tenancy_deposits/check_if_your_tenancy_deposit_is_protected

If you trace it and the tenant agrees (if you are still in touch) you can get it returned.

Tried all that but thank you!

Basically the deposit was never registered and the agent pocketed it. I’ve written to them and they’re saying it was previous agents responsibility (who they took over from). I’ve no idea of the mechanics of the previous agency sale but suspect it was back of a fag packet so only way is through court and it’s just riddled with legal problems (I’m a lawyer) and not worth it so I’ve had to pay it into one of the schemes out my own pocket to ensure I’m complying with my duties under the law

And when I say I’ve written to them, they basically shut up shop and not responding to emails/phone cut off. I then “followed” the company on companies house and got notification they were listed for strike off so wrote to the registers addres of company (no reply) and that of the director (who is now a director elsewhere). He rang me saying they had been screwed by the previous agents re a number of these deposits and that he had emails saying he’d told me about the deposit never having been registered. I’ve asked him to send those (knowing full well they don’t exist as if have been all over that at the time). That was 3 weeks ago and surprisingly they’ve not appeared. So anyway the strike off action is halted for now but there really is little point chasing it