[Moorf]

Ok, this question is rearing its ugly head again and I'd love to hear your thoughts on what YOU would do in my situation.

I still own a small flat in Sussex. There's a £45k mortgage on it - and it is valued at £100k. Mortgage and maintenance (high maintenance as it's a Grade II listed building on the seafront) totals £320/month. I rent it out for £520 / month. Not a huge income each month but it does pay for itself etc. And we can now get away without paying CGT....

Dilemma - do I sell now whilst the valuation is still pretty good (considering it was bought for £24k in early 1990's) and therefore net myself £55k and keep this in a UK bank until the NZ/UK exchange rate improves... are house prices in the UK set to keep rising? Or is a crash likely? What about interest rates - going up or going down or staying put?

OR...

Do I keep it on as a rental and risk the valuation going down significantly, house prices dropping, interest rates rising and, potentially, the rental market shrinking as first time buyers manage to get on the property ladder?

We've been over and over this but can't seem to figure the best way forward - so perhaps some of you guys can throw some fresh thoughts our way??

Cheers in advance.

Moorf

[Jo and Andy]

We rent a house out in Hedge End Southampton and it pays for itself, we are in the same position wondering to sell and take cash to NZ for nice big house mortgage free or keep it as investment, slight income.

Andy has been told that it might be best to sell as he thinks house prices will start to drop next year.

Will keep you up todate with our info.

Diff though, I always think of it as my pension or bolt hole if all doesn't work out.

[Moorf]

Just had a chat with my dad in UK - he too feels that a fall in prices is likely and that our money would be better off in a 10% + savings account here in NZ. He thought it would be best to sell now but keep the money in the UK until the exchange rate gets better.

Really tough to decide - as our flat in the UK is our "bolt hole" - but then I guess we're committed to being here so why would we need one?

I wish there was an easy answer to this - would hate to sell now only for house prices to rise and vice versa. :?

[Paul]

Just had a chat with my dad in UK - he too feels that a fall in prices is likely and that our money would be better off in a 10% + savings account here in NZ. He thought it would be best to sell now but keep the money in the UK until the exchange rate gets better.

Really tough to decide - as our flat in the UK is our "bolt hole" - but then I guess we're committed to being here so why would we need one?

I wish there was an easy answer to this - would hate to sell now only for house prices to rise and vice versa. :?


There is no easy answer Moorf! Noone truly knows what the market is going to do - the only thing that is almost certain is that you will not see the kind of rises over the next 5 years that we have over the past 5

Options:-

1. Keep the flat, you have a base in UK if you should ever need it (you never know what is round corner). If prices carry on going sky high over next 10 years and for whatever reason you need to return at least you have property to get you on ladder again. Also slightly protects you against a property crash in NZ as you have a finger in both pies!
2. The flat is part of your pension (it pays for itself and will earn you £500 pmth+ once paid off) - work out how much pension contribution you would need to make to get £500 pmth in pension (quite a lot!)
3. Downsides are that you could end up with an empty flat and it costs you £300 pmth. Maintenance in an older building could be high in future (new roof etc)
4. Plus side of selling is that you would pay no CGT and would net a nice little sum to invest. How much do you need the money? Will it leave you debt free if you did sell?

Other things to consider - if you ever have a family, might be nice to have a place in the UK where they could settle?
Is the flat in a highly rentable area? If so then probably a safe bet to keep and enjoy the income. Invest the surplus each month in a high interest account and keep in case of any maintenance issue etc and then you are growing a nice nest egg over time as well as getting capital appreciation over a number of years

If it was me?.............. I would probably keep for a couple of years and then review situation. Being mortgage free would be a nice scenario and if selling the flat achieved that I would seriously consider it

:nice1

[JJG]

I'd sell it and invest the money.
One less thing to worry about.

[jo b]

Moorf

I read in the Independant today that house prices won't crash because unlike in the 90's crash the unemployment rate is so low and therefore people will be less liekly to be out of work. They reacon the increasing value of property has almost halted but it will be only gradual rises of 3-5% per year. So if you are making money on the rent great, if it is only just paying for itself then your dad is right as 10% is obviously higher. However it depends on how long you plan on keeping it, who knows what might happen in say 10 years time.

Jo

[Bubbles]

Moorf,

with near on 120% profit and with everything which has been said about the housing market and it's most probable very, very slow rise over the next few years, I say, sell it and take the money. Stick it away in a high interest account until you need it. I think there would be more growth in your nestegg that way.

John

[veronica]

Me, I'd keep it. while property may slow down or even fall in the short term I reckon it will over the long haul rise again. If you don't need the money now and it is rented out and not costing you anything and you can afford to leave it there paying its own mortgage then I would just leave it as it is. I certainly wouldn't exchange the money from it into NZ$ if there is an option to leave it in a high interest sterling account, either here or in the UK. Just my take on it.

[Diny]

If the flat is paying for itself, and bringing in an income each month, unless you actually need the money at the moment my advice would be to keep it.

Like somebody has already said, who knows what's going to happen in the future. I doubt we're going to see another amazing boom in property prices, but personally I don't think there's going to be a massive crash either.

If you're anything like me, whichever decision you make, you'll spend the next few months thinking you should have taken the other :roll:

Diny

[markkellaway]

I would seriously think about selling if it was me and stick the cash into an offshore account until (if) the exchange rate improves. Remember that Sterling still may not be a long term currency, there's no gauruntee that if Sterling does go the way of our European cousins that the conversion into Euro's will be favourable. I personaly think it HIGHLY likely that sometime in the next 5 - 10 years Sterling will be no more.

So, I would put it into an offshore account. If you feel that property is a good investment later on you can always buy something in NZ with it. Just don't go mad and spend it all!!!! :nice1

Ultimately you will get as many people telling you to keep it as to sell, as with so many of these emigration related questions, I think you should go with your heart. :yes

Mark. :P

[Moorf]

Thanks everyone :nice1 food for thought.

[Hannah-NL]

Interesting reads, esp if you have to sell the house to finance the trip and get a down payment on one there and other things, like we have to.
But if it were otherwise I might keep the house I had, till say after I would have passed the first 2 or 3 years ;)
Just wondering if it's easy to get a decent mortgage when you're in your mid forties? Say a wage of 70 K?

[Graham Barnes]

A few thoughts from a fellow landlord...all general thoughts, not specific to your personal circumstances;

Looking at the exchange rate (2.5 at best :wah , selling up now and converting into NZ dollars is the worst possible time to do so. Even with a decent interest rate.

I don't know about our own UK 'skeleton coast', but I would go with the opinion that NATIONALLY, no huge slump on the horizon-His Tonyness permitting-(employment high, interest rates not going much higher-if at all). Basically, stagnation until wages catch up with current valuations, if sellers not willing to adjust.
Therefore, if it's paying for itself (and then some), watch and wait. House prices seem to go in cycles-so wait and time the next peak right!

But I'm sure that Gordon Brown introduced a new rule in the Budget which said that you can only escape CGT if you have lived abroad for more than 5 years. Worth checking out.

[baboonworld]

On the news a couple of nights ago Trevor said that property prices werew set to rise again (not as much as the last couple of years) due to the interest rates which are supposed to be dropping. New fixed rates should be around 4.3%.

Now this makes me think that if you dont need the money - leave it invested in property - which is always a solid investment.

I would like to have a foot in both camps (so's to speak). :exit

Someone once told me that property value doubles every ten years - if you look back then this is true. Therefore if you keep it for another ten years it should be worth twice what it is now - so what could you do with £110K in ten years time??

However, if you put you £55K into a 10% compunding interest account (if there is one) then in 10 years, assuming you havent touched the money, it would be worth £142K anyway - without the risk.

[Graham Barnes]

Yes, if you can get this risk-free rate of return, all well and good.
But if the property is not yet paid for, don't forget that renting it out is a way to get someone else to buy a house for you!! So you are also gaining capital-not in terms of it gaining in value, but just because it is being bought for you by someone else.

[UktoKiwi]

Moorf said
'Just had a chat with my dad in UK - he too feels that a fall in prices is likely and that our money would be better off in a 10% + savings account here in NZ. He thought it would be best to sell now but keep the money in the UK until the exchange rate gets better. '

How can someone get 10%+ account??

[Jo and Andy]

We have decided to sell, not use all the money, but put in a savings account either in NZ or UK.

Dissapointed by the valuations I have had so far, property has falled in price according to 2 estate agents, wondering that as we are not nearby they are trying to pull a fast one, buy it themselves as a rental (is already rented out), and make a profit on it.

Are just being synical. :roll:

[markkellaway]

Jo,

Go to the Land Registry site:

http://www.landreg.gov.uk/

You can view prices that property in any area has sold for, should give you an idea. The other idea is to find online extate agents for that area and look at the pricing on their Web sites. :nice1

Mark. :P