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?

If you are planning on selling your BTL, consider living in it for a period of time.

I think the absolute key thing is getting somewhere now where you can stay for the rest of your kids’ education. So that means enough space, good schools, safe and not a huge mortgage that will cripple you as the kids get older and probably more expensive.

Personally I would really seriously consider moving out a little further and getting a house. I used to live in an area of London where flats were £750k and if you went 2/3 stops on the tube, or 1 on the train you could get houses for the same price. I know the temptation is to try to keep your community but if your kids are still primary age you’ve got time to create a new one!

This is though a personal choice as I know I would not have been happy in a 3 bed flat with my kids- I have 2 boys and they are just too loud, take up too much space and need the outdoors. So only you can tell, but if you can’t visualise yourself there when they are teenagers/ back from uni, I’d think again.

I would view any property when the neighbours are likely to be home. Then you can judge the standard of sound insulation, identify parking issues, cooking smells and any rubbish storage issues; two days before the bin men are due.

I’d sell the BTL and put all the money into somewhere I preferred to live. Just less hassle all round. The profit on the BTL is not worth the headache of being a landlord.

Just to update, I’ve been to see the flat and it’s really great - has been done so nicely and it feels like loads of space, lots of built in storage, it really feels like a home (and more like a house than a flat).
The most likely issue now I think is that my recently ex partner might not want to get the former family home on the market as quickly as I would like, and this flat is likely to get snapped up as it feels like very good value. I’m debating if putting an offer in would be crazy if I’ve got an agreement in principal but no mortgage in place yet, and not got the FMH on the market yet (though in theory it could be within the month). Something to ponder, that’s for sure!

The absolute best long-term financial decision I have made in my life is to buy a home slightly below my means and to stay here even as my means have increased.

If this particular property meets all your needs including safety and access to schools, then I would choose it. It may not be what you imagined, but not overextending yourself will open up things like activities for the children, travel, and saving for retirement.

If you are upfront about your situation then I don’t see that it hurts to put in an offer/indication of interest. Is there any option to borrow a deposit from family to be repaid when the FMH sells?

@Ponderingwindowthat is such a helpful perspective, thank you - I think we did the opposite of that with our family home and have felt the pain of it for the last 6 years.
@SheilaFentiman that might actually be an option, as someone in my family recently had an inheritance that they haven’t done anything with yet… and it being relatively short term it could work. Also if something went wrong and the FMH didn’t sell I could then sell my BTL anyway so the family member wasn’t out of pocket… I hadn’t really thought of that so thank you!

Update to add: I just asked about the lease and it’s only 90 years left, and service charge is v high (almost £3k a year). So these might be deal breakers…I thought there had to be a catch!! Still possibly worth doing the sums though.

There’s research been done recently about how houses in London have appreciated considerably more in value than flats in the last decade.
Even with the CGT hit I would be selling the BTL and buying a house even if it meant having to compromise on the area.

One think to bear in mind is that some sellers won’t even want to hear about an offer from someone who is not proceedable. I would advise you to get your ducks in a row with putting your existing property on the market before doing viewings. It will save you some heartache if you happen to fall in love with a property. AIP will not be enough, it’s whether you can move on with the purchase. In London in particular it’s highly unlikely the estate agent will pass on your offer to the sellers and paint it in a good light due to you not being ready to actually start the buying process.

Don't forget you will have to pay CGT if you sell your buy to let currently ... perhaps move into it then sell it later to avoid?

OP cannot do this as she, the kids and their dad are currently in London and the BTL is not.

I wouldn't pay a lot for an ex council flat. But the most important thing is not to rush quickly into a decision you might regret.

That’s interesting as I didn’t know this… but unfortunately Houses are out of my price range unless I move to a completely different area (nothing under a million around here …) and this is a compromise I’m not prepared to make, after the children have already had so much upheaval.