UK Landlord Forum / Life

I have a house I'm trying to sell for £1.3 million. It's empty and been on the market on and off for 2 years. Whilst trying to sell I rented the house out with the understanding that after the 3 month initial period I could ask for the property back if I sold it. A buyer came along after 9 months and the tenants moved out when asked. The sale then fell through (buyer didn't realise how much stamp duty was!). I found another tenant and he agreed to the same rules. He stayed for a year and when I had  (another) house buyer he moved out (reluctantly). Now this sale has collapsed and I need some income from the property. I was getting £3,300 per month in rent and bills paid. New rules mean I can't just rent it out with a 3 month contract anymore and am reluctant to guarantee someone 6 months in case a cash buyer turns up next week.

I have now furnished the property so it looks nice for fresh photos and for viewings and was considering using Airbnb to let it out for holiday lets (I live next door so am on hand to do a bit of cleaning) but the area doesn't pull in many holiday makers and other similar Airbnb properties in the area aren't booked up.

Just thinking out loud .....how about using one of the online letting agents to promote the property on Rightmove then once I have found a tenant I like ask them to book it via Airbnb month by month? I'm not sure what the eviction process is should you need it with Air bnb guests or what to do about a deposit?

As much as I'd love to continue to benefit from the income the property generates (I have a buy to let mortgage on it costing me 500 pm) the house was my late husbands and I need to sell it to pay off a tax bill of 120k he also left me!

Any advice gratefully received.

Quote from: cbenbrook on October 13, 2019, 10:55:31 AM
I have a house I'm trying to sell for £1.3 million. It's empty and been on the market on and off for 2 years.

The market appears to have concluded that it's not worth £1.3 million. You could either price it more realistically end get shot of it or increase the mortgage to pay the tax bill and then rent it out properly.

Mind you, if you look at the rental yield, that tells its own story: £3.3k a month is about £40k a year, which is not much more than a 3% yield on a £1.3 million asset.

If we assumed a 4% gross yield (which is still very skinny) on the same rent, that would make the property worth just shy of a million.

Thanks for your reply Simon. It was valued at 1.4 but I reduced it after 6 months. I have had two offers pretty close to asking price (I accepted, the sales fell through) so I think it will sell at this price eventually. Am I not  better to hold out rather than lose 100k to get a quick sale? Everyone keeps telling me the property market has been dead for this price point over the past few years and that it'll pick up again soon.

I did try to borrow more to pay the tax bill but mortgage broker said you're not allowed to mortgage to pay tax bill.

I have no mortgage on my own home next door, I'd be happy to take a mortgage on this to pay the bill but it doesn't look like an option.

Quote from: cbenbrook on October 13, 2019, 10:55:31 AM
New rules mean I can't just rent it out with a 3 month contract anymore

There's no new rules. You were simply lucky to find tenants who didn't decide to stay despite the expectation / informal agreement made prior to the tenancy.

Quote from: cbenbrook on October 13, 2019, 10:55:31 AM
how about using one of the online letting agents to promote the property on Rightmove then once I have found a tenant I like ask them to book it via Airbnb month by month? I'm not sure what the eviction process is should you need it with Air bnb guests or what to do about a deposit?

Err no. It's not possible for you to clever your way out of assured (shorthold) protection (assuming E&W). You're only going to end up in tears in one or more ways.

Quote from: cbenbrook on October 13, 2019, 10:55:31 AM
As much as I'd love to continue to benefit from the income the property generates (I have a buy to let mortgage on it costing me 500 pm) the house was my late husbands and I need to sell it to pay off a tax bill of 120k he also left me!

I don't understand. If it has been 2 years, then the inheritance tax would had already been due. If the tax hadn't be paid or other agreement made, then probate wouldn't have been granted.

There's probate loans one can take out, and/or one can get agreement to pay the tax by installments. And there are specialist lenders out there that are willing to mortgage for tax repayment.

Thanks for your reply KTC,

It seems I was not correctly advised by my letting agent then. He never warned me they could choose to stay if asked to leave after 3 months! Anyway, luckily it worked out okay.

Looks like I'd be safer to leave the property empty then now but not sure if this is allowed having a buy to let mortgage.  I can just about make the payments myself if I live frugally until it sells.

The tax wasn't inheritance tax it was tax my husband owed at the time he died which is now due from his estate. Yes it is very overdue and the interest & penalties are getting ugly. I make a £500 a month payment a month to keep them from taking the property but this is up fro review in 2 months so they could decide to just take the property.

Not sure if renting it out opens you to any CGT issues when it finally sells, ignore agents and speak with a decent accountant.. I hope you find the answers to your questions soon and things go well for you. Good advice is never cheap, but cheap advice is rarely good.. Ask me how I know...