Selling my BTL flat - would you refurb?

[SouthWestisBest]

I own a flat that I purchased back in 1995 before I got married - I moved out in 2002 when I got married and kept it to let out. We purchased our marital home that year (moved twice since)

Anyways, we have been very lucky with tenants and in the 24 year period, we’ve only had 3 tenants! The most recent tenant moved in 2011 and left in February this year as they relocated to another part of the country. I’ve decided now that I want to sell it and bank the proceeds from the sale to enable me to take phased retirement and go part time!

I’m just debating whether it’s worth selling the property as it is or spending £15k to renovate it - bearing in mind there is a ceiling price with flats!

The property was last refurbished in late 2010 - new kitchen, bathroom and new carpet/ flooring and decor throughout! I plan to replace flooring as it’s work and re-paint but is it worth changing the kitchen and bathroom!

I purchased the property for £29k, 31 years ago and had it valued last week for £215k. EA reckons with a new kitchen and bathroom it wouldn’t increase much as there is a ceiling value with flats. I own the freehold…

any advice?

I wouldn’t bother with the kitchen or bathroom - the new owner will put their own stamp on the property and have their design what they want..

As for flooring - I wouldn’t spend much on this - see if you can get some cheap remnants from a carpet/flooring shop.

Also - the kitchen and bathroom was only replaced just over 15 years ago - unless it was cheap and it’s falling apart now - there should be some life left in it!

Don't replace anything! Yes it will be priced in, but the new owner (likely an excitable FTB couple..) will want to put their stamp on it - we moved last year into our final family home, which was quite dated with kitchen/bathroom needing attention, and I'm so glad previous owner didn't do anything, as we're planning major remodel and would've had to properly wrestle with pulling out a new kitchen!

As with others, dont bother with a new kitchen and bathroom.
I sold my first flat in similar circumstances, after being a rental for 20 years.
I did repaint it (just off white simple job), new lino tiles in bathroom (were very worn & small area), new toilet seat and that was pretty much it. It was likely (and was) bought by a first time buyer, so while perfectly liveable, they would want to put their own stamp on it.

Please don't do this.

Doing something up, let's face it, on a 'cheap as possible' basis, to chase a few extra quid, for the new owner to rip it out 6 months later is just a waste of time and money.

Just do the simpler/cheaper jobs like the flooring & painting. Leave the bigger jobs for the new owners who will probably prefer to choose their own kitchen & bathroom. Just make sure it’s reflected in the price that the internal condition isn’t great.

I didn’t renovate when I sold my rental, it’s just not worth it.

I expect you know about capital gains tax but it really stings.

I agree with pp that you shouldn't do kitchen and bathroom. I probably wouldn't even bother doing the carpet or painting personally.
But just to say I wouldn't put much store in what the agent has said. They don't want you to do work as they want it on their books asap and sellers who haven't refurbed are more likely to take an offer than if they've spent time and money doing it up.

I wouldn't bother with kitchen and bathroom. I might put some new lino down in the bathroom and give everything a fresh coat of paint but that would be all. Depending on level of wear and my likely market, I might not even bother with flooring. Whoever buys it will want to put their stamp on it. If a developer buys it, they will put new kitchen, bathroom and floors in so they can market it as "newly furnished" for more rent. If a couple buy it they will want flooring, kitchen and bathroom to their own taste.

How fast are flats selling in the area?
If you want it sold quickly, some new carpets might help.
If you don’t care how long it takes then don’t do anything.

Things have changed though. People on here saying first time buyers want to put there stamp on it aren’t taking into account how difficult it is to get work done now, and how much it costs. Young professionals can’t afford to have no bathroom for a month, or no kitchen and prices are so much now it’s daunting for them. Places that are refurbed and ready to go are the only things selling at the moment.

Houses that need modernising in my area are hanging around (part of the reason i'm not upsizing is those properties are all I can afford but I can't afford the reno costs) but flat prices here have been pretty stagnant here for 10 years. It's only really the flats with outside space which sell quickly. A 15 yo kitchen should be ok and as long as the bathroom is usable then I think you're better off just getting rid rather than moderinising and hoping for another £20k

I hope you've kept records of all th expenses you had on the flat over the years. Agency fees and costs for replacing things as you're going to have a CGT bill that's a bit eye watering(the gain is £186k so £30k CGT after the £3k allowance. You will get residence relief for the time you lived there (1995-2002) and for last 9 months. You have to pay the CGT within 3 months of selling.

Provided the kitchen and bathroom are useable, and don't need to be torn out immediately, don't replace. Fix any big holes in walls, check catches and handles are ok, get rid of carpets and vinyl that are torn, ripped or have holes in. Then price it to sell, you've got no tenants, so no income from it at the moment, there's is no point sitting on an empty property for months just to get a few more £££, when it's costing you every month.

Agency fees and costs for replacing things

Those would have been claimed against in the annual tax returns though. Wouldn't they?

@SouthWestisBest I would make it as smart as possible. The market is not great for flats so you need to be better than the competition to sell. That or be prepared to reduce the price to sell. Dont forget you have CGT to pay and HMRC want that quickly. It’s a big chunk of your profit from the flat.

@redboxer321 I worked like that and you cannot claim it again with CGT.

You don't get any benefit from keeping records of general expenses that just maintain the property in its current condition.

You can only claim relief on things that improved the value of a property like an extension.

I agree. I get disappointed when I see houses that are perfect layout for what we are looking for, but have been recently refurbed in a style I hate (grey, fake marble, more grey). It would be a waste of money to rip oput new fittings and start again, but it puts me off properties that are otherwise ideal. I'd far rather have slightly dated, as long as the place is structurally sound.

Don"t spend anything on it, get it on the market quickly, mortgage rates are rising fast.

In my mind, a 2010 full returb means it already <is> all (pretty much) new!

I wondered. My accountant did all mind with the records they had for me. I did do a big upgrade at the beginning but then the property only went up £35k in 7 years in London so there was no CGT to pay.
I was rather hoping to reduce her CGT bill. 😁

I had to pay CGT on a flat and hopefully gave my accountant details of expenses incurred since owning the flat. None of them could be used to offset the tax bill. Not even a new kitchen we had installed because it was still just a flat with a serviceable kitchen at the end. Only things that really add value count, unfortunately!

But you surely could have reclaimed the cost of putting in a new kitchen on you annual return? Sorry to labour the point but I am having work done on my btl - like for like replacement which is deemed necessary by the freeholder (it is) - and am planning to offset it against income but now I'm not sure!

Yes you can offset against annual income and tax for things like that; but you can’t use them
against CGT which is only when you sell.