Main breadwinner dilemma - should I sell second home?

[Sleeples]

Hi!
Forgive my incredibly first world problem.
I’m married with two DD. I own a flat in an increasingly trendy area of London - it has 140 years on the lease. It’s bought entirely with cash, no mortgage.
I used to live there with my family but we’ve moved out of town and I still own the flat. It’s currently empty.
On top of my mortgage for the house we now live in, I’m in 50k of loans. I can afford all the payments.
I’m working FT and am the main breadwinner. My husband’s work is reliable but while I earn £55k a year he’s on less and is self employed.
Now we’re sending DD1 to nursery which is about £70 a day and will be four days a week. A lot of this is because when his work does come, we have struggled with the juggling act. I can’t afford this alone but he has said his salary could help.
I never wanted to be a landlord but I wanted to keep the flat so my DD have somewhere to live in London one day if needed.
But should I just sell to get out of this slight money squeeze?
It’s a one bed flat - worth about £240k…

@CheddarGorgeous yes I’m torn between keep the asset and do I really want an extra thing to think about - landlording! if it was rented, I’d ask the agent to do everything, and I think that’s about 10 percent or something..

You can't claim the interest back on a BTL mortgage anymore...

@KRoo22 we did actually have a mortgage arranged on the flat to raise some money, but now I’m sort of loathe to get into more debt. I get you have to somehow pay to keep an asset, but is it ridiculous being in debt to do so.

In your position I would be looking for a 3rd party lettings organisation which would take on the property for an agreed period (probably timed for when your eldest reaxhes university age) and let them deal with doing it up, organising the gas safety etc and generally being the landlord for the best part of 2 decades. You don't need the hassle of being an amateur landlord but obviously (as you've already indicated you agree) leaving it empty would be inappropriate. Totally understand your hope of being able to give your DD the opportunity when the time comes and if you sell now you may not be able to buy something equivalent when the time comes.

@KRoo22 should say mortgage was arranged but then we decided otherwise and used more (all!) savings instead for new house.

I would try my very hardest to keep your flat (it's a great asset and security for you if it's in your name), rent it out and reduce all other costs as far as possible to service your existing loans.

Find a good agent to manage the rental and you’ll have a passive income. If you think you’ll get £1200 a month you can pay £500 off your debt each month.

It would top up your loan repayments and decrease the loan quicker.

An extra £6000 paying off the debt has to be a bonus

You’ll claim agents fees and maintenance against tax

@SnoopsCaliforniaRoll by security do you mean in the event of separation? It is in my name and so is the house.

@Dreamtheimpossibledream

You can't claim the interest back on a BTL mortgage anymore...

Apologies, you are quite right, there's a tax credit instead.

[quote Sleeples]@SnoopsCaliforniaRoll by security do you mean in the event of separation? It is in my name and so is the house.[/quote]

If you are married they will all be marital assets.

Owning empty property needs to become illegal or incur huge taxes.

While you worry about how much money you have, there are over 250,000 people who have no home in the UK.

And you own a flat. Which you keep empty.

Can you not see how awful that is?

There are roughly the same number of empty homes (which have been empty for over 6 months) as homeless people. This is purely caused by people's extreme greed.

@Skittles98 I get what you’re saying but you clearly haven’t read this thread.

I just think it's crazy to take on debt in the current climate. Next yr is going to get tougher for most with the higher NI, increased inflation & likely higher interest rates. I would be trying to pay off most of my debt asap.

@Skittles98

Owning empty property needs to become illegal or incur huge taxes.

While you worry about how much money you have, there are over 250,000 people who have no home in the UK.

And you own a flat. Which you keep empty.

Can you not see how awful that is?

There are roughly the same number of empty homes (which have been empty for over 6 months) as homeless people. This is purely caused by people's extreme greed.

Calm down. OP is not responsible for the national housing crisis. It's her flat to do with what she sees fit.

Sorry your OP does read like the only 2 options you are considering are selling or leaving empty until your daughters grow up in case they want to use it. Glad to hear that’s not the case.

Your husband would absolutely have a claim on all assets in the event of divorce though, unless you specifically took care of that legally in any other way - especially as it sounds like he has “sacrificed career” for childcare?

[quote Sleeples]@SnoopsCaliforniaRoll by security do you mean in the event of separation? It is in my name and so is the house.[/quote]
Yes, I did but I do acknowledge as a PP said that - in the event of divorce - it may be considered a marital asset so the value would need to be shared in that event.

Being a landlord obviously comes with responsibility but if you do not want the stress of doing it yourself, do consider a fully managed service via an estate agent (costs will vary, but say approx 10% + VAT of the monthly rent). They will manage any repairs, checks (eg electrical testing) etc, ask for your approval before any works are undertaken and subsequently take the funds from your rental income.

Financially, you’re probably better off keeping the flat as a long term income generating asset.

The answer from an emotional well-being perspective may be different. You have significant debt, 2 young dc and childcare costs looming.

I found being a landlord (1 flat) stressful and not particularly lucrative. It was actually a relief when I sold it and put the money into our house. However you don’t have a mortgage, so the loss of tax relief on interest payments wouldn’t affect you.

It’s ok to prioritise your well being if that’s how you feel.

I know someone who had a 'fully managed service' and it was crap every bit as much trouble but with a middle man

@Donotgogentle thanks for this / did you manage your property yourself or was it an agent? From what ppl are saying a good agent could reduce the stress involved?

@TopCatsTopHat that would be a nightmare, paying for it and then it failing

An alternative would be to remortgage your residential property to consolidate the £50k loan. That will be a lower interest rate than either the loan or a buy-to-let mortgage.

Tbh, I think your asset isn't an asset at the moment. Maybe it would be in the future but right now you're in a do-er upper with a chunk of debt you weren't expecting and a parent who would like to work but can't until childcare is sorted.
I'd just sell the flat, imagine if you tie yourself in knots avoiding selling it and then neither of your girls want to use it, or you get squatters have a nightmare getting them out.
In your shoes, if just simplify things and sell. It'd be nice not to need to think about it but there would be a lot of pluses to getting your hands on that money!

For renting the flat check out Openrent - they have a lot of services you can use including listing your flat online, doing viewings etc and it's much cheaper than using an agent. It's how I rented out my London flat despite not having time to get up there to do anything to it. You can also book rent collection, gas safety etc through them.

[quote Sleeples]@Donotgogentle thanks for this / did you manage your property yourself or was it an agent? From what ppl are saying a good agent could reduce the stress involved?[/quote]
I managed it myself. I was an accidental and amateur landlord as it was a flat I used to live in before meeting DH.

Sell the flat, pay off your £50k debt
Invest £100k long term for your dds and use the rest to pay down your mortgage. Childcare will be much more affordable with no monthly loan repayments and a lower mortgage.

£100k invested now will pay for several years of renting in London age 18 for your kids.