keep renting or sell investment property?

Advicepls

Registered User
Messages
84
Advice please - what would you do?

Myself and my husband have a house thats rented out, we bought it in 07 and lived there until May 2013. We moved house and couldnt sell due to massive neg eq at the time. Its registered with prtb, taxes paid, all up to date etc etc.

Bought for 381 in 2007
Mortgage outstanding: 290k
current value: circa 325k
mortgage is ecb +.8, payments 1150pm
rent: 1200 (will increase 4% this yr. Properties in estate renting for 1800)
It is with an agent so we pay his fee, then insurance, life assurance, prtb, maintanence etc and the tax bill is around 2k per annum.

The property costs us a fair few quid a year and i dont really understand when we will see a profit from it. Even if rent is higher i presume tax man will get most of that? As we are finally out of neg eq we could sell and make a few quid. Would we have to pay tax on any profit after selling. Husband wants to keep it long term. I have zero appetite for that and would love to be free of it (although we are lucky with great tenants right now). What would you do?
 
You can be out of negative equity and not have any profit to pay tax on, so you may have no tax to pay on selling.
Also the rent caps will put the brakes on any profit you thought you were going to make in the future.
Add to that that more and more people think it's normal to just overholding and not bother paying rent and you have an awful business model going forward.
And if you are not in a rent pressure zone you could be tomorrow.
Not to mention the talk about preventing landlords from selling their properties when they are rented.

You are losing money on it now and will not be allowed to make a profit on it in the future.
Even 4% increase gives you €48 a month and after the tax man gets his you'll get about €20 out of that.

You would clear over €30,000 by selling and not be throwing money away afterwards either.
I would sell and be out of the whole sorry business of renting.
 
Last edited:
Couple of quick questions:-

Are you renting or paying a mortgage on your PPR? If it's the later, what rate are you paying?

Also, are you contributing to pension schemes?
 
Hi Sarenco

We have a mortgage on our PPR, 3.7% fixed for another year.

My husband pays into a pension at the mo. I dont currently but i have one from my last job and plan to start soon. We are both in our 30s.
 
Thanks.

In that case, I think you should sell the rental and apply the net proceeds against your PPR mortgage.

That would give you a much better risk-adjusted return on your capital, taking expenses and taxes into account. You won't have any CGT to worry about on the sale of your rental.

That might even bring you into a lower LTV bracket which should allow you to reduce your PPR mortgage rate.

Your cash flow should improve and that hopefully will allow you to maximise your pension contributions.

Seems a shame for your tenants that Minister Coveney's rent control legislation has put you in this position but there it is.
 
Back
Top