Sell up or get a lodger?

[Knackerednow2019]

Hi wonder if anyone could offer advice on the following:

I need to get a place in London because the travel and the cost of travel from my house in Newcastle is crippling. I have a lovely 3 bed and nice neighbours. My kids have moved out and I live alone.

so I’m wondering what to do. would it make more financial sense to buy something small for when I’m working (literally a bed sit) so I don’t have to sell up but remortgage my existing property (no house move, hurrah) even though I will have to pay 12k tax for having a second home, or to sell up and buy something bigger in London? I don’t really have friends or a commitment to Newcastle though I like it.

I am totally stuck on this as I see pros and cons both sides. Either option will be tight financially but at least a London bolt hole is an investment?

the emotional stuff I can sort through (neighbours etc) but what about the money side of things? Which makes more financial sense? Either way I’m looking at a mortgage or a remortgage that is just about affordable; if I get a lodger for my 3 bed I wil be able to offset that a little (but that’s also offset by the second home stamp duty surcharge).

anyone have experience of making this decision? Or can recommend financial advisors that are inexpensive?

thanks

If you don’t have any particular ties to Newcastle and need to be in London regularly for work, I would move to an area much closer to London but not actually London to make it more affordable so you could afford a house.

You may not enjoy living in a tiny flat in London and there are lots of potential problems attached to becoming an “accidental Landlord”. There are lots of regulations and you always have the risk of someone not paying the rent or trashing your property. It appears that it’s a long, hard process to evict tenants (rightly so).

What would your budget be if you were buying in London? Property there is crazy expensive so the proceeds of your current house might not buy you much.

How much London house would you get for the price of your Newcastle one? You might want to look on the outskirts and the commute might be shorter but still an hour or more...

If you have a lodger you technically need to be living there too, but it sounds like you would use that to subsidize a bedsit in London, so how much time would you actually spend in Newcastle?

No I’d have to get a mortgage as well as the house sale. Which would be hard but just about doable. I have lived in London before but the house prices are nuts

Haha good question. I probably wouldn’t spend any time in Newcastle. Unless my kids wanted to visit. Which they don’t do more than once every three months… they could visit me in London if I was able to find a flat big enough with the proceeds of the house plus a mortgage

Yeah, sounds fun! Do it! I'd get a 1 bed flat in London rather than a bedsit though, as easier to get a mortgage on

If your kids live in Newcastle I would think about places on the train line from Newcastle to London and maybe buy in Hertfordshire which is close to London but also convenient for the train to Newcastle.

How long do you have to go until retirement and where do you want to be then? I would only factor that in though if I wanted the option of not having to move again relatively soon.

Otherwise I would move altogether. Are there no inviting work options in Newcastle?

I'd get a place in easy commutable distance to London and get a lodger. You can get £7,500 a year tax free under the rent a room scheme. There are lots of places near London which have such good connections you can be in central London almost as quickly as if you were living there. Plus property will be considerably cheaper.

id sell and buy somewhere commutable to London. Somewhere you want to be long term that you can put roots down and make friends, follow hobbies

where do your kids live? If settled, it might be handy to be nearer them

I would buy something as close to work as possible but that is still nice. it would help if we knew what your budget would be if you sold up your current home. I would probably not make the move unless I could at least afford a 1 bedroom place (but preferably 2) in a nice part of London. I wouldn't choose to buy in a commuter town as you are neither here nor there then.

You really don't want to live in a bedsit or studio in London after having a house...Also remember that flats in London come with high service charges and the usual issues with leases, ground rents and so on.

I would instead look at somewhere closer to London but more affordable than the city itself.

Also consider finding a job that offers hybrid/WFH so you don't have to commute too often.

Also I would consider where you kids live now so you live somewhere where you can easily travel to visit them.

That’s such a good question because the thought of remortgaging is daunting at 55! But I love my job and I don’t want to leave it :)

That’s interesting and I didn’t know about the rent a room scheme thanks

@Twiglets1 nah, lodgers don't really have rights at all, OP shouldn't worry about that.

I concur. Please don't buy a bedsit in London. You have to have a certain mentality to be able to survive that, and it's really depressing to do as an adult. A tiny studio made me very ill after two years.

If you tell us what you think you will make from your Newcastle home, we can suggest commutable and affordable locations. You might be best buying a two bed and renting out a room. Rent is crazy expensive in London and is only going one way for the foreseeable future. So, rent a bigger place so you have a bit more space and get a lodger to help cover the cost.

I suppose getting a better paid job or one that lets you WFH is something you already considered?

It seems that lodgers have far fewer rights than tenants?

Almost non existent rights I am afraid. You have the right for your LL not to enter your room and I think that might be as good as it gets.

Go to London! Research good areas and find a nice garden flat, depending on your budget. At 55 you're still young! Socialise with work friends, try new hobbies, volunteer and find your crowd. It sounds like an exciting new chapter of your life.

If you can bear a one hour commute into St Pancras I’d look at Canterbury , you should be able to afford a house there if you sell in Newcastle. I agree buying in London would translate into a real drop in terms of space and area.

Does your employer have offices in Newcastle?
Have you considered changing jobs to stay where you are?
Where have your kids settled? Are they likely to be back (University years etc)?
Have you weighed up losing Single Adult discount on your council tax with earnings from letting out a room? Look at how much you can earn tax free.

I’d make sure you’re very clear on the differences between lodgers and tenants, especially if you get one for your house in Newcastle.

Agree re Canterbury, it's lovely. High Wycombe though is very commutable ( as are loads of places - 25 mins into Marylebone) and I would guess loads cheaper than London.

I think without a more detailed budget it's very difficult to say what would work best.

Could you rent out your Newcastle house and rent somewhere tiny in/near London for a year, using the Newcastle rent plus some of the travel costs to fund it? Basically hedge your bets!

Whereabouts in London is your job/nearest tube?