UK Landlord Forum / Life

Evening all..I'm a newbie to the forums although I have followed The Landlord for years and have been letting out my old one bed since 208 (boy were those blogs helpful!) I guess I am an accidental landlord.

In a quagmire. To put it mildly. 

The flat I rented out is on a proper BTL mortgage and has to 2033 to go. Sadly it is with a certain Irish bank with a rubbish website, workforce and attitude but let's not go there!

My tenant was great (yep, I found him myself, saved a lot from agents who would have charged me loads more and I am local so did it myself, all legit, all the EPC, gas safety, how to rent, deposit sections, keys to Valhalla, you name it.)

My lender now is raising interest very quickly every single month as muggins stayed too long on her SVR and now the only rate it seems I can get with is over 4%.  It would also lock me in and there'd be the redemption penalty stuff after I fixed.  They seem to be really clamping down on lending; blooming back even said they only reserve the best rates for new customers, existing ones can do one, it seems. Have lost trust in this lender and they all seem pretty meh, along with the remortgage deals.  I looked at Birmingham Midshires but the feedback and reviews on them is VERY bad.  Remember that I am a pretty good small-time landlady but no property tycoon. I kept the flat because I've had an illness which means I'm ok day to day but full-time work isn't an option anymore.  It all worked fine while interest rates were low! Other stuff: I have a BTL with a mix of mostly interest only but also  some capital repayment.  There's 117 grand left to pay it f and I can do unlimited overpayments on this one.  I could use another income source ('rainy day fund, shall we say) It just isn't what I want to do, but then again if I did do it, it would kill the interest rate rises.  I'm confident I can let it quickly as the area is London and high demand but am a little uneasy as we're about to hit a recession and there's always the risk of tenants getting into understandable difficulty this year and possibly a lot longer afterwards. CGT is creeping up and close to £18k but I could possibly make it my primary residence in the future to use  PRR. There's also a chance I (gulp) may be divorcing soon, in which case, from next summer, it would be my main residence and it would be easy to move into.  With no BTL debt on it, I could do this.  It is a lovely flat and I am probably being too sentimental about it.  I cannot easily buy a new place as I'm not working.  If I sell, I should make 150K on it which is amazing but I'm worried about where that money would leave me in a divorce as it would surely become a shared asset (flat's in my name only) which would be a real problem for me.  Then again, house process might be about to tank and frankly, I think London flats have hit their highest. So maybe best to sell now?  I've had it since 2004 and rented it since 2008 so it has been a good run..just wanted 3 more years but my lovely tenant is going and I have been sort of forced to reasses.  I could maybe half-pay off the debt, then remortgage at a ruddy rate but on a lower amount?  Any advice appreciated...thanks all.

I've been predicting a fall in the property market ever since I joined this forum. I've been spectacularly wrong ... so far.

Surely, though, the market can't continue to defy gravity forever. When I was growing up it was axiomatic that the interest rate for a risk-free loan was basically inflation plus 2%. Now we've got inflation at 10% plus and retail lenders are still offering mortgages below 5%. How long can that last? Who wants to lend out money for 5% when it'll come back at the end of the year worth 10% less? I suppose the answer is people who can't find anywhere better to put their money - and maybe that as much as anything s what's propping up the buy-to-let market: as steady influx of people who are appalled at what their savings are earning in the bank.

On that basis, if a mere 4% looks expensive to you, then maybe you're best off seizing the opportunity and cashing out while the property's vacant - or at least giving it a try on the market and see what response you get. I am not a lawyer of any flavour but I don't think it makes much odds what form your assets are in when assessing a divorce settlement.

I don't think this is a good time for you to be making such a decision. I would keep the flat for now,hopefully raising the rent for the new tenant to offset the rising interest rates. A solicitor will obviously tell you the situation regarding assets if sadly it comes to divorce.I still think property is the most reliable investment for the average person. Don't feel obliged to act until you really have to or really want to. Good luck.

Thanks both.  Much appreciated. Tenant has just discovered her new place isn't ready this Septembert so is asking to move out on...Halloween!   I am a small potato landlady so 4 percent on a remortgage and rising as it is on SVR is a lot.  I think charging 1,500 to just end to someone is outrageous but there you go. I might well need to sell it and cash out but still overpay the mortgage (and not fix to enable this to happen) to avoid big month hikes of 50, 60, 70 quid. It may take 3 months to sell anyway.  This is going to make a very weird final tax return. Simon I think you're right..the market bubble is about to burst..not being able to sell last time, in '07, caused my landlord life to start in the first place. Will give it a try on the market but keep options open.  Thanks both. xxx

The first time buyer market is still very active around here, that's what I buy up starter homes small neat 50 year old & newer, but the banks are getting very twitchy about lenders, personally I don't think you'd have a problem selling, the problems are to do with your circumstances.