What do you think – sell or rent?

What do you think – sell or rent?

14:55 PM, 4th October 2022, About 2 months ago 13

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Hello, We have a leasehold property in London which is unexpectedly vacant.

The letting agent can find a good credit tenant at an increase in rent.

Or another estate agent wants to sell it and quote a good price. This will expose us to a good chunk of CGT.

If we sell, we can buy multiple properties in our other favourite area – hopefully with a higher yield but freehold.

The question is, with the change in the mortgage market am I going to get my sale stuck in a chain and have perhaps six months void?

What do you think?

Please get your crystal ball out!

Thank you,

David



Comments

Helen

15:22 PM, 4th October 2022, About 2 months ago

My situation is similar in that I have an empty property in my portfolio which I can sell now or rent for a higher amount. However, in my case I am winding down so not buying again. As you are in the fortunate position of being able to buy more properties in another area you like, and buying freeholds I would definitely do that. I've been slammed by too many fishy Management Companies for Freeholders. One things
is that you have to buy properties with an EPC level of C or above. Anything else could incur large retrofiiting costs in order to rent them out after 2025.

david porter

17:30 PM, 4th October 2022, About 2 months ago

you have a picture of Albert bridge?
you must know where the flat is?

DSR

18:45 PM, 4th October 2022, About 2 months ago

sell and leave empty until then. Getting a tenant in will limit the market who may wish to buy. You are in no chain so you can offer them a discount if they buy by a certain time?

david porter

21:16 PM, 4th October 2022, About 2 months ago

The question is, with the change in the mortgage market am I going to get my sale stuck in a chain and have perhaps six months void?

What do you think?

Helen

23:21 PM, 4th October 2022, About 2 months ago

Reply to the comment left by david porter at 04/10/2022 - 21:16
From what I have been hearing sales are still buoyant. However conveyancing is slow at the moment and I have been quoted four months. I think that to achieve your goals you will have to take the hit of a possible long void.

Marlena Topple

9:44 AM, 5th October 2022, About 2 months ago

I would focus on my longer term strategy and take the hit assuming that you are confident that your property is sellable and there are no issues that might scupper the conveyancing process. You will smooth out your losses over time as you are buying more properties with higher yields.

Darren Peters

10:41 AM, 5th October 2022, About 2 months ago

I think the biggest factor will be how prices change where you are selling vs where & what you are buying.

If you were selling then buying the house next door then any mortgage rate change that depressed your asking price would (theoretically!) also depress the price you pay for next door.

You're clearly not doing that so the question is what do you think will happen to prices where you sell and where you buy as a worst case scenario? In that scenario, what do your numbers look like? Do you have a sense of how your other area is moving compared to your London area?

Rather than an AST, could you holiday let your London property on a short term basis?

Robert

11:26 AM, 5th October 2022, About 2 months ago

Reply to the comment left by Helen at 04/10/2022 - 23:21We've had a flat on the market for the last two weeks with a good agent in a nice area of London, at the lower end of the market. We have had only one viewing from a cash buyer in that time. No-one who needs a mortgage is viewing - presumably because they are now stress testing loans at 7or 8%. So I would be concerned you'd end up with a long void too.

david porter

12:34 PM, 5th October 2022, About 2 months ago

Reply to the comment left by Darren Peters at 05/10/2022 - 10:41
yes we are selling a million dollar dog for two half million dollar cats!
It does not matter if the prices are up or down in fact the lower the prices the less CGT.
The lease does preclude short lets- shame,

Dennis Forrest

17:40 PM, 5th October 2022, About 2 months ago

Might sound stupid but I would do both things at the same time. I would rent on a 6 month AST at a discounted rental rate and also put the property on the market for sale. The AST would allow viewings to prospective purchasers that's why you discount the rent in effect to pay for the tenant's inconvenience. Most sales take at least 4 months to go through. So you get any buyers to agree to a minimum of 2 months between exchange and completion. So the date for exchange is 4 months after the tenancy starts so you can give the tenant notice to leave after 6 months. If no buyer is found quickly you then you put the tenant on a periodic tenancy, still with 2 months notice. It is a slightly precarious situation for the tenant but if say you reduced the rental by say 25% to 30% then some tenants would like this arrangement. If you left it empty whilst trying to sell it you would have council tax and fuel bills and no income.

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