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…

Why are you £50k in debt? Is your husbands business actually making a distributble profit after tax (and all expenses), or are you putting personal money in or subsidising it otherwise e.g. paying all household bills.

I would keep that flat and rent it out as you may need it.

I'd keep the flat but definitely get it rented out. I manage my own but in your position I'd get an agent to at least do the initial let so all the checks are done if you don't know what meeds doing.

Re the debt I don't understand why you didn't use some of the savings to clear this and then the rest plus a mortgage to buy the new place?

As you've said you can afford the loan repayments I suppose there's no rush to clear it but I'd be looking at mortgaging either the flat or your house to pay it off, unless it's somehow interest free?

@PicsInRed I pay for pretty much everything

@mercimacherie the debt came after buying new doer upper house which went over budget. Loans are a bank loan and two interest free credit card loans..

Honestly I'd sell I think.

Don’t sell the flat. Ever. Take out a buy to let mortgage in it to clear your debt.

@FFSFFSFFS why do you think so? Just curious as I’m worried about regretting selling it - but not really sure why. Yes it’s an asset for the kids - but if they say they don’t want it, I’ll sell it and pay so much tax

I think I’m also inclined to sell for another reason. DDs share a room atm - and I think that may become an issue as they get older? If we have the money ready and need to move house (God forbid, after this experience I never want to but must be realistic) then is that a good thing?

I think that’s a different issue really. You may be able to secure the mortgage to buy a bigger property. Or you may need to sell your flat at the time to get enough equity together. That issue is not imminent.

You’re right to think through the capital gains position after the flat won’t have been your principal residence for several years.

Because it’s an amazing asset that will continue to increase in value and you are unlikely to invest the money in something that performs better. Instead the money will be spent here and there and will be gone and in then years time when it’s worth £500k you will be so regretful. And then even more so in twenty years time….yes you will
Eventually pay tax if you eventually sell - but it will still be an amazing investment. Property is a brilliant strong long term investment. Honestly I think you would be insane to sell. Keeping it will go a long way to long term financial security. There will be a level of hassle in renting it - but we’ll worth it. And as I said you can still take some
Money of with a buy to let mortgage.

Sell it. Why bother creating extra hassle and stress over this because it's an asset and because maybe one day it could be useful, just clear your debt and enjoy life. You are already a homeowner anyway. If this flat were the only property you owned my answer would be different.

@Snig

Many would love to know where to invest £100k with that type of return, so tell us?

How much Capital Gains Tax would you have to pay if you sold it? How much interest are you paying on your debts? £50k debt is grim particularly if it's been racked up on a fixer upper which is likely to be too small. Do you and your husband both have good pension funds and disability insurance? Do you have a fund to deal with repairs/upgrading needed to the London flat. I think you need to sit down at the weekend with lots of strong sweet tea and review both your finances,set out your five or ten year plan and see how the London flat fits in. Even post tax & costs,the London flat should be clearing you enough in rent to pay half the nursery costs.

Don't sell it! I sold a London flat 10 years ago for £250k and it's now worth double that. The house I bought outside London has not doubled in price. Gutted!

It's your nest egg and your DD's. Don't squander it.

Remortgaging sounds like a good idea.

How about renting it out as a holiday let through someone like Sykes Country Cottages or other similar organisation, with full management? You wouldn't get as much money but it wiuld be, relatively hassle free.

In some places the council will lease properties from private ownership for a set period, they look after maintenance and pay you directly. Friends did it and then t was hassle free.

@howmanyhats

Me too except it's 4x !

You sound stretched and like you're struggling to tie all the ends together. Presumably you're also still paying bills and council tax on this empty property.

Sell the flat, sell the house you're presently living in and then buy one property which is going to work longterm for your family. If you have any money left after that, you could consider investing in a BTL that needs zero work done and can just be managed by an agent.

Honestly, this is bonkers. You're asset-rich but stuck in a doer-upper and not enjoying your DC's childhood due to money worries.

I wanted to keep the flat so my DD have somewhere to live in London one day if needed.
Hmm. One flat, two DD. How does that work?

You only have the flat accidentally and you are holding on to it for sentimental reasons. How do you know that your DD will value property above anything else they could do with the money. And how do you know that they will want to live in London?

Sell it, clear debts and invest the rest of the money in something that can, ultimately, be split 50/50.

@gilderx thanks but not sure I’m not enjoying DCs childhoods. And no I’m not selling my house now. We’ve only just moved in and I’m pretty happy with it for at least a good few years. Our office can be converted back into a bedroom, I was just putting it out there.

Get it rented.

My brother became an accidental landlord when his house wouldn't sell. So he rents it out, he isnt interested in profit. Just enough to cover the mortgage plus around £50 a month for any repairs that arise.

Its a win win. His tenants benefit from rent based on a very low, mid 2000s mortgage. And his dd will benefit one day with a fully paid for house she can either sell or live in.

Id rent it

Why isn’t your husband paying childcare…??

Are you really working as a team?

Presumably if you sell it now you wouldn't have Capital Gains but would if it becomes a rental.

Also the rules regarding rental properties, things like EPCs, gas and electric safety certificates are being made tighter every year.

So it may need money spending on it to bring it up to spec. More than just some magnolia and cheap carpet.

@howmuchmningistoomuch he’s been doing the childcare and doing work where possible. All money he earns goes to the house and family. Yes we’re working as a team