Housing dilemma after relationship split - WWYD?

[herethereandeverywhatnow]

I’m in the early stages of a relationship split (short version: 13 years, 2 children, not married). We have had the family home valued and based on the percentage share I own I’d get probably around £150k out as a deposit.
i also have a BTL house which is completely mine, it currently brings in £1500 gross a month (but higher rate tax payer so it’s about 7k profit a year). Its got a small mortgage so about £250k equity.
i was planning to sell the BTL to give me a 400k deposit which in my area would give me a realistic amount to buy a Victorian conversion, probably ticking the boxes of what I need (3 bed and a garden), but I might have to make compromises or stretch the budget. The flats I like seem to be about £750k, and unless the family home sells at the top end I would probably have a buying power of a little under that.
Ive seen an ex LA flat listed (actually used to rent there as a young professional) which isn’t quite in my preferred location, but has 3 beds, garden, newly renovated, and just listed at 550k. It’s also closer to the tube which might be important when the children are older (currently still at primary school and we cycle everywhere so not really relevant right now).
So doing the maths I could potentially buy that and not sell my BTL, letting me keep the monthly income. But it’s not the kind of flat I’d aspire to as it’s in an estate/not in the nice leafy streets, though has more internal space than I’d have and for WAY less money. On the face of it, would you sell the BTL and get a nicer place, or keep it (and the income) and buyer a cheaper flat?

Newly renovated, means you can move it and won’t have any maintenance surprises. Keeping your BTL you’ll get the capital growth as well and have a bit of a safety net.

Id do this for now, and then in three or four years make the big life decisions.

Is your BTL fully compliant already with all the changes coming in under the Renters Rights Bill (eg. EPC C or above), or will you have to invest in upgrades?

Go for the ex LA property OP .
They usually have an excellent history and are more spacious .

Yes, it’s all compliant (I use an agent and actually there’s a new contract in place recently). I know some people will say “you won’t necessarily be able to sell the BTL as the tenants might refuse to leave” but I can give them notice in 3 months time based on their contract break clause, and if I have issues after that would have to manage it as and when. Of course if I do bank on selling it and have major issues I would have to readjust my plans anyway!

Is the ex LA flat in an area you would feel
safe living in and walking around in? Do you like the area ? If so then I would go for it. You won’t be looking at the outside of the house it’s the inside and location that are most important.

I would buy the ex LA flat and see how you get on, then consider exiting the BTL property anyway and topping up pension, ISAs, junior ISAs et

@Fallenoutthewardrobe yes that’s what I’m thinking - the owners have only had it 5 years and have done a total overhaul. I really like having the safety net of the BTL so being able to buy somewhere now (and stop wasting so much money on rent) but still keep that is the dream scenario!

This is the big question really, and one nobody here can answer!! It’s not about how it looks but about the area. We’re in London so each nice area is cheek by jowl with a less nice bit - so it’s not like some places where the decision would be so clear. The flat I’ve rented temporarily since separating is in an area close to where we lived before that it turns out I really like - it’s a collection of really nice streets with lovely Victorian houses and loads of trees etc and I’ve been dreaming of buying here, but the flat I’ve seen (which is also really near here, just not in the same network of streets) is really in a much better spot transport wise, and keeping my other house for the income/capital growth would be such a massive win. I think I’ve just talked myself into it 🤪

I would re-mortgage the BTL to get you over the line rather than sell it.

This is what I did when I bought my last but one house - works out very well, and means you don't lose that investment.

Oh, and I'd take that flat you've seen (after normal due diligence) because who knows what fallout from the split there'll be, AND, it's potentially a good BTL in the future if you want to move on elsewhere after a few years.

@UpsideDownChairsI’m hoping I would have enough of a deposit from the family house sale to not need to remortgage the BTL, but it’s another option. And yes I also had the same
thought that the flat I’ve seen would make a great BTL itself in the future if I’m in a position to do that!
Really need to view it now before I get ahead of myself! But having lived in one of the same flats (in the identical block it’s next to) I feel like I know it pretty well and there shouldn’t be any big surprises.

The second stamp duty alone would have me selling th BTL then buying my home and then thinking about another btl later . I wouldn’t be prioritising something that only makes me £7k per year over where me and my kids live.

Can you live in the buy to let?

I’d check out the building estate it’s in. At different times of day. Depending on area they’re usually ok a bit noisier but I think a lot of the unsafe / rough behaviour has largely died out.

and they’re often in decent places close to transport as back when they were built being by the tube was undesirable. How things have changed 😅

keep your BTL and get the exLA

@MellowPinkDeerit’s more about the ongoing equity that it would bring as yes after tax the income is small now I’m
paying higher rate tax. I’m absolutely prepared to sell it to get a home for me and my children as I thought I didn’t have any other option, but if there’s a way I could potentially keep it it’s interesting to consider!
@summersolsticesoon
it’s not in the same city (is in my hometown) and I’m really not prepared to uproot the children, take them
away from their dad, all their friends - plus I would have to find a new job etc etc (lose London salary) so it would be a simple solution in principal, but this definitely isn’t any option for us.

@beAsensible1 yes it’s many years ago I lived there when I was a 20 Something having lots of nights out and stumbling back from the tube! It’s not a huge estate and is just off a busy-ish road, which I usually find makes you feel safer to know there are people around.
its the noise and security I have in mind,
so I will go and view the flat but if it’s as nice as it looks in the photos and I’m interested in buying it i can also go and check it out in the evenings/weekend etc to get more of a feel for it as you suggest.

My sister bought an ex council flat in a nice area of London and now trying to sell. She chose it for the reasons you are considering too - space, cheaper compared to houses, not ideal in terms of it being in a council block but no safety issues. The problem she is facing now when trying to sell is that the flat has not appreciated in value at all despite her doing extensive work to it and making it really nice and comfortable. If she had bought a house (a bit further out) or slightly smaller, the house would have given her at least 100-130K in appreciation 12+ years down the line. She is now priced out of buying a slightly bigger house in the same area. If all this is not a consideration to you and all you want is a home to live in long term then go for the flat. I’d just be careful in case you are hoping to build equity or trying to move/sell further down the line.

I would be tempted to keep the buy to let as a safety net and buy the LA flat as it’s bigger and newly renovated. As you say you have lived there before so there should be no nasty surprises.

I’d go for putting all the money together and getting a house in the best possible area. Location location etc

it will go up in value and you get to live in the nicest home for you and your kids. When they move on you could rethink again?

I'd never sell my BTL unless I was in dire straights - as capital gains makes it very much less inviting to do so (even though I lived in it for a few years, it's spent longer rented out than as my main home)

Keeping it (it's paid off) means I've always got this piggy bank sitting there that I could re-mortgage if needed, live in if needed, or in extreme circumstances, sell. I'd never sell it just to get a bigger/nicer house right now TBH. All without risking my main residence.

If the ex LA flat is in the right area for the target secondary school for your children, I would choose that.

This is definitely food for thought @Pigletin and something i hadn’t really considered. I’m assuming the flat wouldn’t appreciate much in value also because it’s been renovated, so perhaps is at the top of its price bracket for that type of property anyway - so I need to have a good think about how long I might stay for (which again I’ve got a vague idea but not really thought about fully).

I would definitely consider the fact that flats (and especially ex council flats) will not appreciate as much as a house and if the future value of the property is of any consideration, I would always go for a house if you are able to afford it.

it will probably be noisier than your average terrace, but unless you have weird neighbours it won't be too bad. lively on the weekend sproabaly but in a good way.

Id scope it out on a Saturday around 12 -2 as thats when people are moving about. especially with good weather you can get vibe of how partyish the neighbour might be.

i rented an ex-LA in a fashionable london borough for years and it was great, quite communal, it bit scruffy around the edges, but the buildings and grounds get cleaned multiple times a week and the cleaners reported any work or issue with the building with regularity.

there was the occasional crackhead wandering about but thats london in general and there everywhere in the leafy part of central London where i am now. and its extremely bloody spenny

I’m going to view it on a weekday lunchtime but if interested I think a Saturday lunchtime viewing (or just wander round the immediate area) when the sun is shining is the best way to gauge as you say @beAsensible1!
sadly a house is totally out of the question @Pigletin but larger/nicer flats likely to be better in terms of future value, I agree. Lots to think about!