Landlord dilemma – do I sell the family home or rent it?

Posted on: 5 August 2019

Landlord dilemma – do I sell the family home or rent it?

Imagine the situation, your home has been in the family for decades, its literally part of your history and has been handed down through generations. However, it’s now empty, you’ve got somewhere else to live, you don’t need to sell your family home and so you’re in a quandary. Its mortgage free but could do with some work to modernise it. Do you sell your beloved family home and release all that capital? Or do you hang onto it and chance renting it to strangers to review what to do in a few years?

Here are my pros and cons of each option to help you make a decision.

Pros of renting it.

  • Firstly you need to get an up to date rental valuation from a professional, on how much it will rent for each month and what changes you need to make. Factor in any upfront costs to get the property ready for letting, plus management charges, potential repairs and the renewing of safety certificates to give you an annual rental income.
  • Having a paying tenant in there means they will be responsible for council tax and utilities which you would need to pay for otherwise whilst its empty.
  • If you have no borrowing on the property, you could use the opportunity to take out a buy to let mortgage on it, release some equity and use this as a deposit for another property. Thus giving you two sources of rental income instead of one, or none. If you do this, you will need to work out the yield for each property then gives you to check if you have a good rate of return on your investment, remember, yields aren’t what they used to be and anything over 7% is considered great in todays market.
  • Once that equity has recovered, you can release more equity from it over time, thus providing you with money to start a potential property portfolio.

Cons of renting it

  • A home which has history needs to be treated differently from your standard investment property. Consider how you will feel about renting out your beloved family home to strangers, if it has significant sentimental value then no tenant is going to be able to look after it as you could.
  • To ensure it is looked after properly, you may need to think about paying for gardeners or cleaners which will eat into your rental income.
  • Remember if you do decide to rent it that all sentimental items should be removed and placed in storage, plus you may need to change the décor to something neutral and hardwearing which will eat into your initial year one income. All of these costs (removals, storage, decorating, carpets etc) need to be considered in your decision.
  • You’ll not only be responsible for general repairs with a tenant in there but will have to act quickly if the property is in danger of being classed as ‘uninhabitable’, if you don’t have spare cash to fork out for an expensive new boiler (if needed) or to repair a leaking roof then think carefully about whether you should become a landlord.
  • You will need to abide by all 150+ pieces of legislation that it is thought private landlords now have to uphold. The sensible landlords defer this liability to letting agents who know what they’re doing day to do to keep your tenants, and you, safe from the law.

Pros of selling it

  • You get to remember the property ‘as it was’ without tenants potentially causing damage OR changing it.
  • You could sell the property and re-invest the money intoproperty which has less emotional attachment for you and potentially better yields if in more sought after areas for tenants.

Cons of selling it

  • The sales market at the moment is exceptionally slow and any completion can take up to 6-7 months to go through even after you’ve found a buyer, this could mean having an empty property draining you of funds for council tax and utilities for all this time. Having a paying tenant in there until the market picks up could be an idea to save yourself from this.
  • Because there is such a glut of available properties on the market at the moment, it could mean you achieve a lower asking price than you hope for, which you could achieve when the market picks up again.
  • Doesn’t the old saying go ‘always buy property, never sell’?
  • Of course, selling it means waving goodbye to a property that contains many memories for you, it can be a lot of heartache selling a property, ask yourself, do you want to put yourself through this right away?

Every situation will be different so its important you consider all the facts plus your emotional attachment to the property and what you look to gain from both options. Based on the information provided above, I would rent the property, release equity to purchase another and then look to sell when the market improves in the future. But then, as a letting agent, I’m biased….

Get in touch if you have any queries or require any advice.

Angharad Trueman – Managing Director




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