Sell or rent my house before moving to study in another city

[Oakbutterfly]

Hello,

back again to get some soundings from you lovely people…

its been a tough couple of years, but finally I’ve decided (after much deliberation!) to move cities to study (and continue remote job. I bought just over a year ago to be near an ex I last spoke to on completion day.

my next decision is to sell or rent the house. Lucky enough not to have a mortgage as I downgraded from a London flat I owned for 20 years.

I’m late 40s, single, no kids sadly.

in favour of renting it:

• Im moving v soon (under a month) so likely to get rental income to go towards rent in new city (after tax and costs of course, may cover half!!)
• Keep up with any housing price increases in the next two years.
• puts off the painful selling process
• I’d need to pay council tax etc on an empty property when selling.
• red flags at selling so soon
• somewhere to come back to if needed

pro selling

• lower hassle (with RRA etc)
• avoids capital gains tax (not that I’ll make a gain in 18 months.
• avoids any future maintenance on house.
• frees up cash for a future purchase if I ever want to buy over rent in new city (it’s quite far away so not sure I’ll stay)
• cuts ties to area with baggage

I think my biggest fear is the house price increases if I sell and also whether I’d even get what I paid for it if I sell now.. it could take ages.. vs the stress of renting, what if communal drive needs replacing and they build houses on the lovely view that sold the property to me….

and wise words welcome!

I’d sell. It’s such a hassle to rent out a property these days and the tenants may be difficult. It’s a risk I’d rather not have. House prices are stagnant and may even drop if interest rates rise further. It would free you up to t
buy if you like the new city.

There are fairly onerous statutory obligations on landlords and unless your property is a new build you need to factor in costs to modify, maintain and have annual checks made. Would you leave it furnished as there are regulations about fire safety, for example? Do you plan to return after two years as you need to emotionally distance yourself from the “home”. You would be liable for council tax and utilities during void periods.

Sell. As a landlord of over 30 years I'm getting out as soon as I can. No one in their right mind would choose to become a landlord now.

I’d do neither for a few months to see that the new city, the course etc were all working out ok.
Then I’d sell.
If you rent it out you have no flexibility to move plans along at the right time for you.

I would sell, but your right you probably won't get back what you paid for it. I'd also guess that if you rent and wait - you won't see any increase in its value over the 2 year period you mention. Its more likley to fall further...

I'd either 'rent a room.' Or 2 or sell. No way would I get into renting now (which I have done previoysly).

Sell it, if you get a bad tenant you will lose money, I would rather lose money because it took a few months to sell.

I was in a similar situation and got a lodger in my own place & rented a room in new area. Came back most weekends. Much more control over who is in the house and it worked out very well - lodger stayed for several years then I sold. I wouldn't rent it out fully- too risky. Give it a year in the new area and if you're confident you will stay there longterm sell at that point.

Thanks - good idea - but the new place is the other side of the country, so I'm not sure coming back much would be an idea - although I know having a lodger is a bit more tax efficient.

Thank you so much for your messages all - why are you all in the strongly "don't rent" category.. Is it mainly about not being able to evict a bad tenant with RRA?

You get insurance to cover tenants who don’t pay.

If you are hoping the proceeds will cover your other rental you may find yourself disappointed by the time you pay for ongoing costs, income tax, maintenance and agency fees. If you are not planning to use an agency to cover day to day(10% gross rent is not uncommon) you need to think about how you would deal with emergencies and breakdown, deposit schemes, safety certificates, inspections, maintenance and inventories, and so on. Read up about the statutory obligations of landlords as failure to comply, even where an agent is used, can have significant consequences.

PS - my friend is saying lots of landlords selling also makes it a bad time to sell...

Thanks - yes I realise it's likely to only cover 50% of my rent...

I'm a landlord, its not so much that, in reality the RRA in some respects works in our favour, in others the tenants, its not all bad.

In your case you can easily evict on two section 8 grounds (moving back in or selling) at the appropriate time.

However, to rent out the property you first need various things in place and it must meet various safety standards - there is a cost in getting it rental ready, because not meeting these obligations can be very costly and cause issues with eviction.

Then there is the process of getting the property back, some tenants leave when given notice, others, because they have nowhere to go are obligated to sit out the eviction procedure in order to qualify for social / emergency housing - the procedure costs and you are going to be looking at 6 months to get it done.

Then when you get the place back you are pretty likely to have to redecorate, maybe new floor coverings, just to be ready to move back in or sell.

If you do rent, do it through a reputable agents, they will handle the day to day and ensure all the paperwork is in order - take out comprehensive insurance with rental loss guarantee.

I've been a professional landlord since 1996, its not a sit back and here comes the money occupation can be very stressful and a gamble, when you get good tenants its great, bad ones, bloody nightmare!

You won’t pay any capital gains tax if it’s been your main residence I don’t think. If you rent it though and then sell in a few months I think you do have to pay.

In your situation I’d sell and put the money into a savings account. The interest on that will probably go a way towards paying your rent, and you have no hassle of tenants.

Thanks - yes I'd only pay CGT if I rent it.

My friend who rents a lot of property is warning me against selling in case I then can't re-enter the market in a few years... Also the estate agent told me it is a lot easier to rent than to sell atm. finding it so hard to decide.... Wish I'd never moved to this place!

Lots are trying to sell, only the ones doing significant price drops will probably actually sell.

The savings account or money market fund then renting move was the one to make straight after selling the London flat, now the OP will definitely be looking at a loss on a purchase made a year ago. Houses are not ATM"s any more, they can become money pits, there are so many threads where people think that a property will just automatically produce the finance needed for various lifestyle choices.

I’m a landlord. Have you got another income? If not then rent it out, use your tax free allowance and put aside enough from the rent to cover the 22% tax on the remaining
rent, use an agent to let, get landlord insurance, move back in when done studying, you can issue notice if moving back in and then sell to relocate to a happier place.

im keeping my rental on the basis that nothing is selling around here due to the war/impact on interest rates and landlords selling.

Just wanted to express solidarity… currently in a very similar situation to you (relocating to a new area). Our local market isn’t moving at all at t’mo and the lack of listed rentals is making it tempting to rent out our property until the market picks up… this thread has been very useful! Good luck whatever you choose to do Xx

A few years ago we were in the same position. We decided to rent out. The rent didn't quite cover the mortgage, the house decreased in value over those 3 years by 40k, we had to spend around 20k on repairs during that time. We've just managed to sell it now, after it being on and off the market for almost a year (2 sales fell through just before exhange). During that time we've had to pay council tax and bills on an empty property while it continues to go downwards in value! If I could go back in time I would have sold before moving!!

Your friend is a bit misguided because you could always come back to the market via buying a flat, although not in certain parts of the country. The situation for selling flats is terrible and won’t be improving anytime soon. People on this website generally hate flats (and I would never buy one) but it will always be an option should you sell up (or try to).

As we all know, the property market in general isn’t great. Are houses selling quickly in your area and at the prices you expect? All in all I would hang onto your house, move and let it out (does the 50% also include agency fees and landlord insurance?). Give it six months to a year and see if the market / economy improves before trying to sell up.

I will also be working.

There is risk involved , most recent BTL was a bet on rising prices and light touch regulation I think, both bets look bad now.