*Jen*

Hello all

I've thought about this so much now I've got to the stage where I can't actually make a decision

Moved in with my boyfriend 2 1/2 months ago, we've been together for almost 8 months now and knew each other for about a year before hand.

I have my own house, a little 1 bed cluster house, 2 parking spaces, front and back garden, power shower etc.etc... just outside Southampton in Hampshire. Obviously, there's no need to have a house standing empty so a decision needs to be made to rent or sell. I'm no expert and am not really looking for experts, just opinions of others that aren't 'involved' in the situation (and I've been boring my friends enough )

To let the property through an agent would cost me approx. £50 a month. (allowing for putting some money aside for maintenence etc.). I have an offer from a neighbour who wants to rent from me directly, but I'm unsure about the risks etc. involved in this... if I did it this route I could probably 'make' £25 a month.

There's roughly £48,000 worth of 'cash' available if I sell the house, which would sell easily at the moment for £120,000 (4 in the close have gone in tha last 2 months). This would then be put in a savings account until such time as I'm comfortable to make a more long term committment and put the money into the house we share at the moment. (although I'd have to go the extra long way to work everyday to avoid the Scooby dealer )

I'm very wary having been 'caught out' in a relationship in the past, it's taken me a long time to get my own place and I don't want to take any unnecessary risks, although I am more than happy with my relationship at the moment . Any 'outside/logical' opinions on this matter would be greatly apriecaited

Thanks for your time,

Jen
(ex-Hants R/O incase anyones wondering, I'm stupid and lost my user ID )

Brendan Hughes

Rent it for 6mths-1yr while you see how your relationship goes. Given maintenance costs, insurance, anything else, just don't expect to make money on it while you're renting it. Think of it as a realistic bolt-hole if relationship collapses (but you won't be able to kick a tenant out immediately, so hope you can live with parents etc for a month or two), and imagine that it will go up perhaps (insert multiple disclaimers here) if you decide to sell in a year or so.

No way would I sell for a relationship so young, end of story. It's not if you rent it, just how.

PCatWork

Alternatively, sell it and stash the capital away in a high interest account (after you have used up your ISA allowance of course). If everything goes breasts up, then you can always buy another place, using your cash as a deposit. As prices are unlikely to rise significantly in the next few years, you would be unlikely to lose out - you might even gain a bit if prices fall.

Jap2Scrap

That settled that then

PCatWork

whereas £48,000 @ 5% returns £200/month with no hassle, no void periods, no maintenance, no tenants wrecking the place etc etc.

Seems an easy enough choice to me.

Brendan Hughes

Not the phrase I'd use to describe the break-up of a relationship, seems more appropriate for the start of one...

Scooby-Doo

It does but if your working you will pay 25-40% Tax on your interest. If your relationship works out OK and I hope it does, you will also be liable to capital gains tax when you sell the property as it is not your primary residence. If you do rent the property you will have to pay tax on rental income after costs.

Good Luck and for whats its worth I would sell and invest the money.

fast bloke

you missed the bit about the house increasing in value - the correct answer really depends on what the housing market in that area is doing. We are still seeing an average 16% on prices in Belfast, which would be about 20k a year on this property. If house prices are rising very slowly or falling then sell and stash is probably the wayto go. However, the fact that the houses are selling quickly would indicate a reasonably bouyant market.

If it was me I would let it to the neighbour (get a solicitor to draw up an appropriate agreement) wait 6-12 months and then review the situation based on relationship and house prices

*Jen*

Thanks guys, all something to discuss tonight I reckon

Don't you just love decisions like this?!

Nick100

Could sell the house and buy two scoobies

Seriously, I would try to rent it out. Either to your neighbour (as said above, get a solicitor to draw up a contract) or via letting agency. Either way, you get to keep the house as an investment or if things change. Would advise to keep it on a short term agreement (can't remember if they are typically 3, 6 or 9 months at a time). This would allow you not to renew the agreement if you wanted and saves trying to get an unwanted tennant out. I know a few people who use a letting agency. Although they take a large chunk of the money, they also take all the hassle. I think they are obliged to decorate the house to the same standard when they/you finish letting it.

Brendan Hughes

IIRC, letting (furnished) via an agency usually requires a hell of a lot of work - full inventory of every last mark on the wallpaper and how many teaspoons, sofas etc should all be of fireproof material, etc etc. Doubt you'd let for a short period unfurnished. If you can come to a good agreement with your neighbour, that would be far simpler.

Hint - when I rented and had problems, we let the taxman know about the landlord. So I hope you'll declare for peace of mind

Luminous

iTrader: (3)

I think the first thing you have to do is look at your local market (I know this was said above). You have to determine what you think will happen to house prices.

There are lots of different opinions on this topic, some of them very strong What I can say, is that over a 10 year period, no well mantained property has ever lost value. If you look at house prices historically, they have always risen in the past over a 5 year period (that includes the nasty crash). On average prices have doubled every 6-7 years for the last 50 years. That is just over 10% per year, or around £12k for you.

That is an awful lot more interest than you will ever get by putting you money away, assuming you agree with the above figures.

As your house price rises, so will the amount of rent you can charge (although this lags behind). Your mortgage costs are unlikely to alter, and therefore your rental profit margin keeps on increasing.

I think that your estimates of costs are unrealistic. If you are going to rent on a commercial basis, long term, your costs will be a lot higher. You can get a full management service for about 10% of your rental income. You will also have to pay for maintenance on top of this. Think how much new windows, kitchen, bathroom, applicances, decoration are going to cost. Then think how long they will last. Apportion this per year. Eg £2500 kitchen lasting 5 years costs you £500 per year. Budget for this.

You can do things the cheap way by going to see an agent and talking to them. Say that you are new to this an would like to know all of the details. Get a copy of the contract that they will make the tenants sign (you now have a free contract ). Then take it to your neighbour, get them to sign it (after re-wording some names). Job done.

I've let property for a few years. Some I did myself, some I did through an agent. I've also had the bad tenant experience, and now know how to avoid it.

You can also get insurance against bad tenants, none payment of rent, void periods etc from someone like Homelet. You can get insurance for just about everything. But it costs. Sooner or later you have to take a view about what is worth having, and what is worth just taking a risk over. Most tenants are good, but they are only as good as your ability (or your agents) to find them.

If you use a cr*p agent, you will have no end of problems. You can pretend to be wanting to rent a place to test them out. Ask them to show you a few properties, see how good they are at selling. See how good they are at checking your references. Talk to the current tenants. Do the agents bother to solve problems quickly?

There is work to do when you let property out, and there is risk. Some people also make very nice profits. It is a long term game though.

In your situation I would let the property out, I think Just depends how much cash you have behind you. Things can and sometimes do go wrong. You need to be able to afford to sort it out.

Patt@firstime

I'd rent for 6 months at a time and see how your love life goes. Just my 2p's worth

Richard_P

I'd keep the property, without a doubt. I can't see house prices dropping by much, if they do it will be a temporary thing and all we've seen so far is a slight slowdown.

You already stated it's taken you a while to get your own place, seems strange to consider getting rid of it so promptly, 8 months is not a long time.

As for the talk of moneys better in the bank, If you look at house prices over the past 50 years and indeed as far back as records have been kept you will see that has never been the case over the longer term.

camk

The other question to ask yourself is would you actually go back to this house if it didn't work out. If you have the cash in the bank you are more flexible and not worried about not getting a tenant or prices dropping. Over the next 12 months 'in most areas' house prices will not go up as much as they have.

Henrik

iTrader: (5)

I would sell A.S.A.P to be honest, atleast if I didn't need the house to live in.

The market has stagnated (i.e. houses are not selling) (it's all over the news...). The houses that sell are priced realistically (i.e. not what the prices were in 2004).

Over the past few months prices have fallen, despite spring being the best time to sell a house.

Remember that housing is a very sticky market, it seldom changes direction, but when it does change direction, it usually keeps going in that direction for a while.

If you have any equity in your house, I would recommend you to sell it and cash in on the equity you have gained due to a raising market, then stick the profits in an INGDirect savings account (5%).

Markus

Hello Jen

If you rent it and you have the tennants from heaven (like wot I am to my landlady lol) then it could be a good thing. If you have tennants from hell, you'll be cursing yourself for renting it out.

I think if I was in the same position then I'd sell up and stash the cash away somewhere and make a bit of money on it. It would also always be there if you need it for anything, plus it'd would stop me from spending it on all something with four wheels lol

JoeyDeacon

I don't know where in the country you are but in the South East the market is totally dead. We are tentatively looking at selling up to move to a bigger house and keep seeing the same properties for sale month in, month out. Talking to agents we got the impression that a starting offer of 10% under the asking price would be a good starting place.

When we bought our current house 5 years ago unless you offered full asking price you were unlikely to get it.

We are going to look at another house tomorrow so I did a bit of homework on www.nethouseprices.com. It would appear that the asking price for this house is only a few grand more than houses in this street sold for 12-18 months ago.

My brother is also looking for a flat at the moment (first time buyer) and due to the current market he know feels no rush to buy anywhere and is more than happy to bide his time and see what happens.

It seems like the market is in stalemate at the moment as buyers are not buying and sellers are not prepared to lower their prices. As buyers now hold all the aces the market can only go one way as far as I am concerned.

Henrik

iTrader: (5)

^^ What he said

Matt P

Flog it quick while it's still worth something!! House prices in / around Southampton not going up at the moment (trend definitely heading south...), and as soon as Prescott's plan to build on every blade of grass between So'ton and Portsmouth goes ahead it'll be worth even less

If your relationship doesn't work out you can take a look at the market and either rent while prices fall further or use your healthy deposit on a new place

All IMHO of course!

Apparition

My daughter and her b/f & baby are in a similar position. They are considering moving from the Northumberland area to nearer here (Lincs) and are undecided as to whether to sell their house or rent it out.
The biggest problem they are having with the rental idea is the possibility of having to return to the house if things don't work out down here. At the moment, its their home , they don't like the idea of having to return to it after complete strangers have been living in it. Just a personal angle.
But, if they sell and have say a 6 month stay with us here while they look around, they could very well fall off the property ladder completely. Difficult call.

Kev_turbo

One thing worth noting is that if you do rent it out and your relationship fails leaving you effectlvely homeless the tenants have no rights to the house they are renting.

This is basically the only way to end a tenants rental period early and without much trouble as you, being the home owner, have more rights to that place then they do. One of the two of you would be looking for a place to stay and the law sees it as you having one.


Kev

Jap2Scrap

Call me an old romantic but I think it's a bit sad that people nowadays are looking for safety nets for when relationships go wrong. Why are you moving in with someone if you're not sure it's going to work out? I've lived with 2 girls before the one I'm with now so I'm not perfect but I've believed every one was 'the one' when I've moved in. Having something to fall back on smacks of you expecting it to go wrong. If I was the other party in that relationship I'd be really hurt about that.

Diesel

CG applies only after a 3 year gap, and then it is progressive - shouldnt be an issue in the current climate as you are allowed £7k pa gain.

As the costs involved in selling/buying houses are HUGE (stamp duty/est agents/solics etc) I would tend to hang on for it for a bit. Dont look to making any money on it for a while though - you are just keeping your options open as you shouldnt sell a house until WELL after he proposes

Diesel

Jap you ARE such an old romantic! Best get asbestos gloves standing by mate

ChrisB

I can see your point J2S. To me, the whole point of moving in and living in sin is to see if you can stand being together 7 days a week. Things might be working very well seeing each other two or three times a week (as an example) but I would bet some people would be trying to kill each other if they lived together...

Brit_in_Japan

Sorry Kev, that's not correct. If the tenants have an Assured Shorthold Tenancy Agreement (which is the usual situation) then so long as they don't break any of the terms of the agreement, they have a perfect right to stay put until the end of the agreement and the landlord cannot evict them.

So if you let you house and two weeks after tenants move in you decide you want to move back, tough! You would have to wait for the end of the 6 months and you would still need to give 30 days notice.

You can trust me on this, past experience of a houseshare where the letting agents thought they could give us 30 days notice as the house was being sold. One of my housemates was a solicitor. We only agreed to moving out if they met the terms of a "Surrender Areement", which was they paid our last month's rent, returned our deposit promptly and gave us £300 each in cash. They signed

*Jen*

Yup - I know all about the 'I can't get it back without giving notice'...hopefully all will be fine though and I won't have to worry about it.



Jap2Scrap - don't worry, I do think he's 'the one' and he knows it I wouldn't have moved in if I thought he wasn't. It's just that I was previously married, and things went seriously wrong - lots of me having no control/being hit/him getting us into serious debt.. I'm now a bit of a control freak and like to have a nice safety net



The market in Hampshire is 'interesting' , I don't think I'll ever make alot on the house, I brought it for £118,500 before the £120000 stamp duty limit was changed... so realisitcally I can't see it making money in the short term, most houses in the close (similar to mine) have gone for £119500 (unsurprisingly!). Still, that's not the point I've done alot to the house in the last year, so maintence costs (in the short term) should be low. I'll be putting money aside to deal with most problems, but I don't anticipate any really straight away, especially as it's being let unfurnished (just with good quality white goods being left), my stuff was too old to meet the requirements to leave it in there.


Seriously, thanks for the advice guys. Lots of new things to think about.... I think I'm going to take the view that this isn't a money making proposition and I'll let it through agents (primarily because I'm planning on being out the Country for 6 months in the next couple of years, and at least I can pay someone to keep an eye on it that way) at least for a year then review where we are. The house would have to 'loose' £50,000 before I was anywhere near problems, and if that was the case I'd just hang on to it. Hopefully we'll never be in the position where it *has* to be sold. Fingers crossed

Marcus - Hello! Yeah, I hope I do get good tenants like you! Don't fancy commuting from Southampton to Toronto then?

Luminous - thanks, good to hear about first hand experience. I've investigated insurances etc. and factored all that in. I did speak to one agent I thought was good, but a bit of 'asking around' as shown the company to be pretty useless *******... mainly from the tenants view, but I'd rather have happy tenants I gues it's all a bit of a risk, but I can do what I can to minimise it... If we plan on keeping the house let for more than a year I'll put more aside to maintain it, at the moment I'm thinking relatively short term.

Anyway, guess that means I'm spending today painting the red wall in the lounge cream to match the others and replacing the manky carpet with hard wearing laminate!!

Thanks guys, I might be back for advice later when it all goes wrong

Jen

Kev_turbo

Brit in Japan.

As stated in the post you cannot be removed from a propery for reasons such as selling the house, landlord fancies a change, etc, but if the landlord finds themself homeless but owns a house they have rights to it. I do beleive it goes through the courts though. This includes an assured shorthold agreement

I have a BTL myself and checked this out before letting it.

Kev

Petem95

Sell for sure if you can get a good price for it!! You can put the money into a high interest account and see a return of 5.35% gross (with instant access), or more if you dont mind taking more risk.

Houses are currently 30-40% overvalued, so at best will slip/stagnate in price over the next 5-10years, and at worst fall sharply as the get-rich-quick possy start to realise BTL isnt worthwhile anymore.

Renting can be a real headache if you cant get any renters in, or get awkward ones.

When house prices have fallen you should be able to get back into the market - and if you've got a lot of cash to buy with that gives you an advantage.