Choice to Sell or Rent PPR

[TheLastBeep]

Hi All,

Looking for some views on the implications of a decision that my wife and I are currently facing. She has been offered a job in the UK which is a great opportunity for her and would result in a significant increase in pay and career progression. Luckily, my job is flexible enough for me to be able to work remotely from the UK. It's likely my wife's role would be for at least 3-4 years but there is potential we may not return to Ireland. It's hard to predict.

So, we are faced with the decision of what to do with our property in Dublin.

We currently own a 4 bed property in Kimmage with a large garden, we been in the house for 7 years and are very happy with the property and location. We have around 300k left to pay on the mortgage and as a conservative estimate the property is worth around 600k. We have a fixed rate mortgage with Avant for the next four years at 1.95%.

The question is whether to sell the property and risk being priced out of the market when/if we return to Ireland, or to rent it out and face the risks associated with being a landlord.

Arguments for selling:

1. We'd likely be able to sell at a reasonable profit giving us the potential to buy in the UK with a relatively small mortgage
2. Selling would provide us with a clean break and eliminate any potential stress or headaches associated with being a landlord
3. Neither of us have family in Dublin so we'd be remote landlords and would potentially need an agent or similar arrangement
4. Possible (likely) we'd have to switch to a BTL mortgage on a much higher rate. Application process could also be complicated by work location

Arguments for renting:

1. With rental prices like they are at the moment we might be able to achieve a rent far in excess of our mortgage
2. Maintain a foothold in the Dublin property market meaning we're not priced out if we do decide to move back
3. Attachment to the property having invested in it over the last 7 years

We would to appreciate your thoughts, ultimately the decision isn't going to be made purely on a financial basis but it obviously plays a significant part. Personally I'm most concerned about the risk of tenants overstaying in the property if we do return to Ireland which would defeat the purpose somewhat.

 

[DannyBoyD]

Arguments for selling:

1. We'd likely be able to sell at a reasonable profit giving us the potential to buy in the UK with a relatively small mortgage
2. Selling would provide us with a clean break and eliminate any potential stress or headaches associated with being a landlord
3. Neither of us have family in Dublin so we'd be remote landlords and would potentially need an agent or similar arrangement
4. Possible (likely) we'd have to switch to a BTL mortgage on a much higher rate. Application process could also be complicated by work location

5. indefinite tenancies
6. risk of overholding when / if you choose to return
7. can buy a property in UK rather than renting; more security and better options
8. sale prices are very good right now

Arguments for renting:

1. With rental prices like they are at the moment we might be able to achieve a rent far in excess of our mortgage
2. Maintain a foothold in the Dublin property market meaning we're not priced out if we do decide to move back
3. Attachment to the property having invested in it over the last 7 years

1a "might" being the operative word, you could just as easily have problem tenants who don't pay the rent
2a. if you have a UK property to sell, you'll have something to bring back
3a. ditch the attachment; you'll be removing all your personal belongings and making it into a rental property, totally different.

as an aside: wouldn't worry about switching mortgage - as long as it's paid in full and on time, bank won't know or care

If I were in your shoes, I'd sell.

 

[LS400]

I can see the dilemma your in with such dysfunction in the market, however, if you have any interest in returning to Dublin, you’d need your head examined to sell your home.

As for the buy to let mortgage, I wouldn’t change a thing, you continue to pay your mortgage as you are now. You pay the tax due on the rent, and that’s it.
When/if you do ever decide to sell, the rental years may need to be considered for Capital Gains.

Kimmage particularly, is a great area, should you sell, there’s a very strong chance you’re going to be priced out of what you have there at the moment.

A home is an attachment, it’s alway easy for someone else with no connections of same to be dismissive about such things.

In your case, I would have an agent manage the rental, they will do the best checks as they can, that’s where they get their revenue from.

I’ve never had a bad tenant in Dublin, it’s the RTB and Misinformed Politicians I fear more.

 

[Right Winger]

Agree completely with @LS400. You will earn a tidy sum in rent plus you have the option of returning should you wish. An agent's fee will cost 10% of the rent, and is fully allowable as an expense. Capital appreciation is a bonus if it happens.

But thorough vetting of potential tenants is essential. It's a landlord's market at the moment so you can be picky. Get employer references, previous landlord references and proof of funds. Politically incorrect to say it but avoid HAP, these are the tenancies that tend to go wrong.

 

[The Horseman]

I can see the dilemma your in with such dysfunction in the market, however, if you have any interest in returning to Dublin, you’d need your head examined to sell your home.

As for the buy to let mortgage, I wouldn’t change a thing, you continue to pay your mortgage as you are now. You pay the tax due on the rent, and that’s it.
When/if you do ever decide to sell, the rental years may need to be considered for Capital Gains.

Kimmage particularly, is a great area, should you sell, there’s a very strong chance you’re going to be priced out of what you have there at the moment.

A home is an attachment, it’s alway easy for someone else with no connections of same to be dismissive about such things.

In your case, I would have an agent manage the rental, they will do the best checks as they can, that’s where they get their revenue from.

I’ve never had a bad tenant in Dublin, it’s the RTB and Misinformed Politicians I fear more.

I would suggest the poster think very carefully about their decision.

You are required to advise your mortgage supplier if your property changes to a buy to let. Whether you advise them or not is your decision.

A home is indeed an attachment but this is not a home once you rent it out. It is still bricks and mortar and a home is not about bricks and mortar.

Getting an agent is all well and good but you will pay a hefty price if they are to manage the property for the poster. They don't choose the most cost effective tradespeople etc.

It is good to hear you have never had a bad tenant in Dublin thankfully neither have I but being a hands on landlord significantly helps. Despite what people think being a landlord is not all sweetness and light. A rogue tenant can destroy a small landlord and this can be compounded by an absent landlord who does not have local trusted people looking out for their property.

The poster needs to consider can they maintain mortgage payments should a tenant stop paying, are they prepared to travel back and forth from the UK to deal with these matters.

Ultimately this is a business decision that the poster needs to weigh up the pros/cons and whether they feel the rewards exceed the risks involved.

 

[NoRegretsCoyote]

Arguments for selling:

1. We'd likely be able to sell at a reasonable profit giving us the potential to buy in the UK with a relatively small mortgage

This is true but that's not an argument for selling immediately. You can always remove a tenant at a future point if you need to sell. But see point on CGT below.

1. Selling would provide us with a clean break and eliminate any potential stress or headaches associated with being a landlord

I think the clean break part is not so much a big deal. You can get a managing agent for as little as 7% plus VAT who will inspect, deal with tenants' queries and source tradesmen for repairs. With email and phone you can supervise this pretty easily. You will presumably be back in Dublin from time to time and can inspect yourself. But it's important that a tenant knows that you are not totally passive. It's a landlord's market so you can be extremely picky. Find people in their twenties with a good career trajectory and an income likely to grow. I agree with @LS400 that if you are careful and are at the higher end of the rental market then there is much less risk of a bad tenant.

1. Neither of us have family in Dublin so we'd be remote landlords and would potentially need an agent or similar arrangement
2. Possible (likely) we'd have to switch to a BTL mortgage on a much higher rate. Application process could also be complicated by work location

Once you pay the mortgage on time your lender will neither know nor care that it is no longer a PPR. There are probably tens of thousands of mortgages like this. You would be mad to be tell the bank about this, just change the correspondence address to a family member in Ireland. You would be mad to approach the lender about this. Particularly as a fixed 1.95% is the lowest rate ever seen and likely to be ever seen in the Irish market!

Arguments for renting:

1. With rental prices like they are at the moment we might be able to achieve a rent far in excess of our mortgage

Don't forget about tax. I simplify a bit, but for non-resident landlords it's 20% of rental profits. There may be a UK tax liability as well so look that up in advance.

1. Maintain a foothold in the Dublin property market meaning we're not priced out if we do decide to move back

This is the most important part! You remain hedged against the Dublin property market so will never be priced out. If you do decide to come back you won't have to rent before buying again.

1. Attachment to the property having invested in it over the last 7 years

I think this is less important. But if you like the area and have good neighbours then that's useful information and you wouldn't know that if you tried to move somewhere else when you come back.

Don't forget CGT. If you move away and sell you are liable for CGT on the capital gain for the proportion of the period that the property was let. So if you sell after two years you would be CGT @33% on 2/9 of the gain - that's a lot! But at the same time if you move back to the house and occupy it again as a PPR for a year then it will qualify for a full CGT exemption again.

Good luck with the move and do let us know what you decide!

 

[Bluefin]

This is true but that's not an argument for selling immediately. You can always remove a tenant at a future point if you need to sell. But see point on CGT below.

I think the clean break part is not so much a big deal. You can get a managing agent for as little as 7% plus VAT who will inspect, deal with tenants' queries and source tradesmen for repairs. With email and phone you can supervise this pretty easily. You will presumably be back in Dublin from time to time and can inspect yourself. But it's important that a tenant knows that you are not totally passive. It's a landlord's market so you can be extremely picky. Find people in their twenties with a good career trajectory and an income likely to grow. I agree with @LS400 that if you are careful and are at the higher end of the rental market then there is much less risk of a bad tenant.


Once you pay the mortgage on time your lender will neither know nor care that it is no longer a PPR. There are probably tens of thousands of mortgages like this. You would be mad to be tell the bank about this, just change the correspondence address to a family member in Ireland. You would be mad to approach the lender about this. Particularly as a fixed 1.95% is the lowest rate ever seen and likely to be ever seen in the Irish market!


Don't forget about tax. I simplify a bit, but for non-resident landlords it's 20% of rental profits. There may be a UK tax liability as well so look that up in advance.


This is the most important part! You remain hedged against the Dublin property market so will never be priced out. If you do decide to come back you won't have to rent before buying again.


I think this is less important. But if you like the area and have good neighbours then that's useful information and you wouldn't know that if you tried to move somewhere else when you come back.

Don't forget CGT. If you move away and sell you are liable for CGT on the capital gain for the proportion of the period that the property was let. So if you sell after two years you would be CGT @33% on 2/9 of the gain - that's a lot! But at the same time if you move back to the house and occupy it again as a PPR for a year then it will qualify for a full CGT exemption again.

Good luck with the move and do let us know what you decide!

Hedged against the Dublin property market is extremely important.. Imagine trying to find your current property in today's market!

 

[misemoi]

While I would trust an agent to manage repairs, ensure rent is received etc I would absolutely never let them choose a tenant. Between your professional and personal networks you might already know someone suitable that you can do discreet background checks. Note the CGT exemptions if you work abroad as well, you might be exempt but seek correct advice on this.

 

[Mrs Vimes]

Don't forget CGT. If you move away and sell you are liable for CGT on the capital gain for the proportion of the period that the property was let. So if you sell after two years you would be CGT @33% on 2/9 of the gain - that's a lot! But at the same time if you move back to the house and occupy it again as a PPR for a year then it will qualify for a full CGT exemption again.

Good luck with the move and do let us know what you decide!

The bolded part is incorrect - the period when you were not resident in the property is subject to CGT as a proportion of the total period of ownership, but the final 12 months is considered to be a period of occupation:

Revenue:

Note
The last 12 months of ownership of a PPR is considered to be included in your period of occupation.
This allows for the possibility that you have moved into your new home, but have not sold your previous home.

There are exceptions where the property is deemed to be occupied where your employer requires you to work at a different location for up to 4 years, or indefinitely if abroad but in that case the property must be occupied by you before and after the time you are away.

 

[NoRegretsCoyote]

There are exceptions where the property is deemed to be occupied where your employer requires you to work at a different location for up to 4 years, or indefinitely if abroad but in that case the property must be occupied by you before and after the time you are away.

Indeed. But wouldn’t that be the scenario here for the OP?

 

[TheLastBeep]

Many thanks to everyone for the considered responses. You raise a lot of valid points to add to the pro's and con's from my opening post.

We had considered many of these previously and were leaning towards renting, but thought I'd gather some other views to see if we'd missed anything.

The main concerns I have about renting have been rightly raised by several posters above. This would be the first time either of us have been landlords and to do so while spending most of our time outside of Ireland is a potentially uncomfortable situation. My wife has family in Ireland (but not Dublin) so we will be back relatively frequently which might balance out a lot of the downsides there.

The main issue seems to be finding good tenants which I understand can be a bit of a lottery.

While I would trust an agent to manage repairs, ensure rent is received etc I would absolutely never let them choose a tenant. Between your professional and personal networks you might already know someone suitable that you can do discreet background checks. Note the CGT exemptions if you work abroad as well, you might be exempt but seek correct advice on this.

Good point. It would be ideal if we could find someone we know and trust who would be interested in renting. I don't know what we'd expect to get in this market but I imagine it might be out of the range most people we know.

Considering getting an agent round as a next step to see what they think we could get in the current market.

 

[bipped]

If you will continue to be employed in ireland and intend being back frequently could you not keep your dublin house as your base, get a lodger and go to the UK regularly. Lots of people spend time going back and forth to the uk every week for work or to be with a spouse/partner/family especially if it's for a fixed term contract which will end in a few years. Big decision to sell your house, what happens if your wife's job doesnt work out?

If you get a lodger it means the house is not empty while you're away so insurance is not affected; a lodger is not a tenant so no need to register with the RTB & they do not have tenants rights plus you can ask them to leave when it suits you eg if you decide to stay in dublin; house remains your PPR so no impact of CGT if you eventually sell; you'd have no worries about rental withholding tax as a non resident landlord because you'll still be living here and you wouldn't have a tenant.
There are rules about the number of days you need to be here in the year to be tax resident so maybe an idea to check out the rules and the rules about domicile also.

If you have a lodger with the rent a room scheme you can let for max €14k pa which is tax free but must be included in your annual tax return. You could probably rent the house for much more in the current market but being a landlord has its own headaches as others have posted.
If you rent a place in the UK and see how you like living there for a few years then you'll have a better idea about whether to sell or not.

 

[NoRegretsCoyote]

If you have a lodger with the rent a room scheme you can let for max €14k pa which is tax free but must be included in your annual tax return.

You can’t make use of the RaR scheme if you’re not living there yourself consistently. By the sounds of the OP’s plans - no family in Dublin and a UK job - they won’t be back frequently enough to qualify.

 

[Right Winger]

You can’t make use of the RaR scheme if you’re not living there yourself consistently. By the sounds of the OP’s plans - no family in Dublin and a UK job - they won’t be back frequently enough to qualify.

Er, the OP said his job is flexible enough to work remotely from the UK. That sounds like it's based in Ireland with Irish PAYE, PRSI, USC, etc etc. Couple that with a house, mortgage, utilities, mobile phone, etc, etc, in his name in Ireland and it looks very much like he does indeed reside here.

 

[NoRegretsCoyote]

The OP has said he intends to move his residence to the UK (possibly permanently) and I’ve given advice relevant to that scenario.

Couple that with a house, mortgage, utilities, mobile phone, etc, etc, in his name in Ireland and it looks very much like he does indeed reside here.

It’s not about how it “looks” for tax law, it’s how it is.

If others want to give life advice as well as the central “buy or sell” question go right ahead but please try not go confuse these issues.

 

[NoRegretsCoyote]

They don't choose the most cost effective tradespeople etc.

In fact it’s very much the opposite. Tradesmen take calls from agents as they know there is repeat business. People ringing them up randomly are much more likely yo be messers.

In the OP’s shoes I would recommend strongly in favour of using an agent.

 

[bipped]

By the sounds of the OP’s plans - no family in Dublin and a UK job - they won’t be back frequently enough to qualify.

OP's job is not moving to the UK though. Many families/couples don't up sticks lock stock and barrel if one party gets a great job opportunity, especially if its not permanent. I know plenty of people where the person with the uk job commutes and the family split their time between here and the uk, my brother's family did it, my cousins family is still doing it. Its not that unusual.

Selling up is a big decision and there is a huge risk of being locked out of a preferred location in dublin in future. Renting to tenants is an even bigger risk with a myriad of problems, hassle and legislative changes that causes angst even for seasoned landlords and that is compounded for non-resident landlords. Less risky to take a licensee/lodger and afaik, RaR only applies if the amount is under €14kpa so OP is not obliged to follow that scheme. AirBnB is also a possibility within the rules for PPR.

 

[The Horseman]

In fact it’s very much the opposite. Tradesmen take calls from agents as they know there is repeat business. People ringing them up randomly are much more likely yo be messers.

In the OP’s shoes I would recommend strongly in favour of using an agent.

We will agree to disagree so. I have a good network of trusted tradesmen who I know are genuine and reasonable with prices. I have used them for the last 15 plus years.

Do you honestly think an agent is going to find the best tradesmen? It's a job to the agent using the landlords funds.

 

[The Horseman]

The bolded part is incorrect - the period when you were not resident in the property is subject to CGT as a proportion of the total period of ownership, but the final 12 months is considered to be a period of occupation:

Revenue:

You are spot on with your CGT explanation.

 

[Right Winger]

We will agree to disagree so. I have a good network of trusted tradesmen who I know are genuine and reasonable with prices. I have used them for the last 15 plus years.

Do you honestly think an agent is going to find the best tradesmen? It's a job to the agent using the landlords funds.

Agent's differ. Friend of mine worked in a letting agency and he recommended an excellent plumber to me that they used all the time. I used the guy to do jobs both in my own PPR and in a BTL. A good agent will know who's reliable and reasonable. A bad agent won't care. Ask around for recommendations for agents.