Moneymakeover Evaluating Pros and Cons of selling buy to let

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Mammysboy

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Personal details

Your age: 52
Your spouse's age: 54
Number and age of children: No children


Income and expenditure
Annual gross income from employment or profession: 120k
Annual gross income of spouse/partner: 54k

Monthly take-home pay: E4400 for me and E3200 for my wife

Type of employment - Employee
Employer type: Both private

In general are you:
(a) spending more than you earn, or
(b) saving about 1000/month


Summary of Assets and Liabilities
Family home value: 650k
Mortgage on family home: 200k
Net equity: 450k

Cash: 50k
Defined Contribution pension fund: Me: 400k; Wife: 170k
Company shares : Current value of 82k (they will vest in August 2026)
Buy to Let Property value: 325-350k
Buy to let Mortgage: 0


Family home mortgage information
Lender: PTSB
Interest rate: 2.95%
Type of interest rate: Fixed
If fixed, what is the term remaining of the fixed rate? 3 years


Remaining term: 11 years
Monthly repayment: E1771

Other borrowings – car loans/personal loans etc: None

Do you pay off your full credit card balance each month? Yes


Pension information

Value of pension fund: Me: 400k; Wife: 150k
I contribute 30% of my salary, my employer contributes 5%; my wife contributes 10% of her salary and her employer 8%

Buy to let properties
Value: 325-350k, 1 bed apartment in Dublin city centre; I bought it in 2004 for 295k
Rental income per year: E19,000 but at market rate I would expect E24,000; Tenant has just served notice and will move out in August 2025
Rough annual expenses other than mortgage interest : E5,000


Other savings and investments: None


Other information which might be relevant: Will probably inherit E200k within next 5 years


What specific question do you have or what issues are of concern to you?

My tenant has just served notice they intend moving out in August so I now have an opportunity to sell the apartment and pay off the mortgage on our home, the plan would be to increase my wife's pension contributions to her maximum and spend about 100k on improving our home, sun room, solar panels, better insulation and ventilation; any excess I would likely invest in stock market

I'd like to be able to retire before I turn 60; my wife would probably work on until she is 65

My question is what are the pros and cons of this plan?
 
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By my calculations, your PPR mortgage is currently costing you around €5,900 a year in interest payments, whereas the rental is netting you around €6,400 a year after all expenses and taxes.

Now you could leave the apartment vacant until March 2026 and then reset to market rates. But that necessitates a 7-month void.

On the other hand, it seems unlikely that you will be able to re-fix at as low a rate as 2.95% at the end of the three-year fixed term.

Also, making your home more energy efficient will presumably result in long term cost savings and the additional comfort has a value.

You reckon the apartment would now sell for more than the acquisition cost so there’s no CGT shield on any future capital appreciation.

While it’s not clear cut, in your shoes, on balance, I would be inclined to proceed with your plan and sell the rental.

Your wife should increase her pension contributions regardless.

Hope that helps.
 
Mammysboy said:
Buy to let properties
Value: 325-350k, 1 bed apartment in Dublin city centre; I bought it in 2004 for 295k
Click to expand...
This statement can tell a story. Good for you that purchase didn't completely derail your financial future. Maybe the rent was always close to covering the mortgage.
 
@CharlieMac thank you, yes I lived in the apartment for 4-5 years before renting it out and yes the rent was close to covering the mortgage before I was able to clear it about 3 years ago
 
ProsCons
1. Mortgage interest & life assurance savings over remaining term of loan (11 years): 47k1. Might lose out on capital appreciation of apartment
2. Ability to maximize my wife's pension comfortably from 10% to 30% now and for both of us as we age (link)2. Lost of income from the apartment: about 7k per annum currently but would grow to maybe 12k per annum after Mar 2026
3. Will have our house upgraded straightaway without having to save the 100k first; will make some energy savings3. My vague plan previously was to sell the apartment at aged 60 and use the proceeds (say 350k ish) to live from age 60 to 65 until I access my pension; this would no longer be necessary but point 5 in the Pro list should offset this loss (as well as the likely future inheritance)
4. Not locked into a 6 year tenancy from March 2026
5. Will have excess cash of about E1300 per month to save or invest elsewhere i.e. we will have no mortage/life assurance (E1842) and to max my wife's pension will cost us E540/month.
6. Not exposed to non-paying tenant or government changes in policy that penalises landlords
 
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Sarenco said:
While it’s not clear cut, in your shoes, on balance, I would be inclined to proceed with your plan and sell the rental.
Click to expand...

Sarenco has summarised it well. On a strict financial basis, it's a close decision. It's not much wrong either way.

Being a landlord works out well most of the time, but when it goes wrong, it can be horrific.

Mammysboy said:
4. Not locked into a 6 year tenancy from March 2026
Click to expand...

For me, this would be the deciding factor. If you buy shares, you can sell them whenever you want without needing to comply with strict rules and regulations. No one will tell you that you can't sell them. The property rights of landlords are being increasingly constrained.

If I had a rental property, I would be so thrilled if my tenant gave notice and would get out of the market very quickly while I can.
 
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