Sell flat and buy bigger house or not?

[FemWoman]

I have a huge dilemma and I am starting to lose sleep over it as the decision here is mine.

I inherited the flat I grew up in a few years back and just sort of accepted it is there and forgot about it. The value has gone up significantly but the flat is in horrible condition and can't be rented out for example. It is not in the UK.

I have 2 options:

One: Sell the flat and buy a bigger house. We currently live in a 3 bed house with the 3rd bedroom being a box room. I have DC 5 and 11 and they now need more space.

We also work from home, dont have an office space so work from our bedrooms. Kitchen is also relatively small and the dining space is quite tiny. We, however, somehow live in this house so can manage.

Two: Keep the flat as the value will increase and it is an asset that I dont want to necessarily spend on a new house and keep saving and when we have the money get a new house (will take us maybe 3 years)

I just have this nagging feeling the flat will appreciate quicker than a house we buy and it is a bad move to sell it. Equally, obviously I really want more space for my family so I'm super thorn.

I want to make a sound investment decision here and I can't, can you share some opinions and experience please?

Well - what’s the long term plan with the flat? As it is, it’s sitting there and presumably slowly getting less and less habitable, ie harder and harder to eventually sell/let?

Not necessarily. It has been empty for 25 years and appreciated greatly.

I may need to do some minor work on it to make sure the windows are sealed and no damage is done, but I'm not too worried it will depreciate. It is a quality build that will last for many more years.

But yes it will take some money on yearly basis for basic maintenance.

Sell the flat and get a bigger house for your family.

But if you don't sell it - what's the plan? Sell eventually, at x value? Live there? Holiday there? Gift to DC?

Past performance is never a great measure to use when accessing the future growth potential of an asset. I'm fairly confident that putting the money into more residential property in the UK is almost certain to loose money in the short term, plus you may need to pay capital gains on it here in addition to the selling costs in that country. You might be better just sitting on it but without a location to go on nobody can give you their thoughts really.

Keep it as an asset and use it when we need the money - dc education, buy them a property etc.

This is my concern. The value of this flat is expected to grow about 5 to 10% a year in the current market. In London where we will be buying the house we buy is extremely unlikely to grow in value 5 to 10%. Our mortgage is at 4% so even putting it towards our mortgage wont bring the same return.

As always these are just estimations and forecasts what next year will look like noone knows for sure.

What I know is that since 2023 the value of this property has grown appx 15%. This is huge increase in 2 years. It is in a market where the mortgages are still at 2% and people buy like there is no tomorrow.

As a comparison in 2 years our house in London has remained with the same price ...

I think having a better quality of life now would make me sell. It's not just about the monetary value.

Renovate the flat, rent it out and use the rent money towards a bigger mortgage.

You can also sell the flat and invest the money! If it’s an empty flat, maintenance costs might soon pile up.

Why would you leave a flat empty basically rotting away.

The that will be degrading on a daily basis. Youre turning an appreciating asset into a depreciating asset due to lack of maintenance.

It’s difficult to know how much it will cost to get it into wind and watertight condition. Can you get quotes?

It’s old so will presumably need rewired. Not sure if it’s in a hot and dry country or a damp country like the uk, as the roof will be in better condition in the former and need replaced after a life of around what 35 years in a country like the uk that gets rain a lot. So that’s more money.

Youd need to find out how much it would cost to do it up. That’s what makes people the most money. Doeruppers. So youd want to do that to maximise profit before sale or you using it.

What you shouldn’t do is just leave it crumbling. That’s your money crumbling. So if it’s depreciating at a rate of 5% a year for lack of maintenance but appreciating 10% then it’s actually appreciating 5% ?

If you don’t have the time or money to do it up it’s just falling to bits in your watch and you might do well to get rid of it.

That's one of the ideas. Some people say renting out is very risky due to tenants being disrespectful to the property and doing damage.

Another concern is that we need to put a lot of money to make it habitable so for a while the money will go towards returning this investment and not our mortgage.

Two thoughts.

1: Nobody has mentioned tax yet. Although your flat is appreciating, when you eventually sell it you will have to pay UK Capital Gains tax on the profit. Maybe also in the country the flat is located. If you sell now and buy a bigger house in the UK, any future gains will be tax free, because that house will (presumably) be your main residence. So selling and upsizing is probably the more tax efficient choice.

2: Is there not something a teensy bit selfish about leaving a flat empty in an area that clearly has a shortage of housing? If you were renting it out there would be no issue. But deliberately leaving a flat empty where there are thousands of local people desperate for somewhere to live would make me feel very uncomfortable.

Thanks all for your opinions and ideas. I will ultimately need to make a decision and live with it.

I appreciate the people that say to just buy a new house. I sort of feel for my happiness and my family's happiness this would be important.

I appreciate this may no be sound investment wise, but I guess it is not all about money but also about some comfort and ultimately the place you live you spend the majority of your time in so it is important to be a good space.

Where in the world are you and what are the rules and laws there?

Its hard to answer otherwise as we can only go off how it is where we live, like you say 'you just forgot about it', you couldn't really do that here in the UK as you have to pay tax (often double) on empty and secondary houses + flats would have lease fees, also empty houses need public liability insurance and are at risk of degrading and thus devaluing (damp and broken pipes being common issues). So here it would absolutely make sense to sell but due to the issues the current market here means flats aren't worth anywhere near as much as houses.

I'm assuming from what you said you don't have any form of taxes/fees on this flat?

Whats the law on squatters in your country? I know in some places if you get them they are impossible to evict.

Looking ahead your tiny 5 year old will be a teen and the size of an adult. My children are 22 and 19. The 22 year old graduated from uni last year and is living at home whilst aggressively saving for a house. He will be here for another 3 years. Both my sons are 6 foot. A box room would be very small for them and all their things.

I say sell the flat and invest in your family now. Think long term re property and what it can offer you. We chose this house because it gave us a massive playroom. That playroom then became 2 rooms that they used as their homework/gaming space. Ds1 works from home in one of those rooms.

My flat in London has gone down sadly due to changes in tax laws making landlords not want flats like mine, and insurance being so expensive recently that service charge has shot up extortionately. I would never have predicted this. I would always err on the side of getting rid of a flat unless you're making money off it each month as there is so much out of your control.

If you are managing in your current house, I would leave the other as an investment.
Once the kids have left school, have them rent it from you, or sell it to launch them into their own homes.
Large homes are only useful for a small number of years.

A foreign property which is in too poor a condition to rent is going to be a pain sooner or later.
A bigger house for your family now makes much more sense. One of the kids can move out of the box room, and you might even get a dedicated office, if you get a 4 bedroom house.

Have the kids grow up in a house too small for them then kick them out and force them to move country away from everything they know and PAY you rent to live in a run down flat that doesn't meet the rental requirements to be habitable?

On what planet is that logical, thats some shitty ass backwards exploitative capitalist 'parenting'.