Should I Sell Or Rent It Out?

[Kurt Barlow]

Off to the Big sandpit in october and have a quandry over whether to sell or rent out my House. Currently its a reasonably well maintained 4 bed detatched north of Cambridge. Other quirky stuff like Solar Water Heating, stove etc. £45K mortgage on lifetime tracker - BBR plus 1.5%. Monthly repayments £221pcm. Had previously looked into renting to a friend with a disabled kid but thats a non starter now.

Estate Agents reckons £225K to sell quickly / £235K - typical price a house like mine would be marketed at.

Alternatively if I rent out the going rate appears to be anywhere between £850 and £1000 per month.

If I go for 3 plus years then sell is definitely the option however if don't like it and come back in 12-18 months ( I would stick it for that long no matter how bad for the purposes of my CV) its in a convenient location and I wouldnt mind reinhabiting the house?

Selling - positives

£170-£175K in cash - could be invested at 3.5- 4.5% fixed for 3-5 years

If HPC happens could buy back in in 4-5 years time

No aggro with renting although voids no major issue mortgage is tiny

No paying money to a rentals agent leech

Selling - Negatives

No fixed assets - all investments in paper form

Somewhere to come back to rather than a bTL squat

Its Cambridge - HPC won't happen here

Cash flow on rental nominal better than investment in bonds

Mortgage is dirt cheap - shame to relinquish it.

Any thoughts?

Edited July 27, 2010 by Kurt Barlow

[non frog]

.....

Any thoughts?

If you keep it you have somewhere to come back to. We left London in 2004 and sold as we thought the market had topped out. I don't think the following period made very much difference in money terms but if we still had the place we would go back now as work is crap anywhere outside London. Rents and capital values are going to fall, but I can't see any big investment opportunities for the money either.

I take it the "big sandpit" is the middle east? In which case you will be coming back. Its a shithole.

Rent out.

[Kurt Barlow]

If you keep it you have somewhere to come back to. We left London in 2004 and sold as we thought the market had topped out. I don't think the following period made very much difference in money terms but if we still had the place we would go back now as work is crap anywhere outside London. Rents and capital values are going to fall, but I can't see any big investment opportunities for the money either.

I take it the "big sandpit" is the middle east? In which case you will be coming back. Its a shithole.

Rent out.

Thanks.

I am going to work for Aramco which has a reasonably good reputation as an employer. I will also be living on a compound by the Persian gulf, 1 hour from Bahrain so hopefully a better smelling shithole.

BTW - have you worked out there? If so which Country and why the bad experience?

Edited July 27, 2010 by Kurt Barlow

[tim123]

Thanks.

I am going to work for Aramco which has a reasonably good reputation as an employer. I will also be living on a compound by the Persian gulf, 1 hour from Bahrain so hopefully a better smelling shithole.

BTW - have you worked out there? If so which Country and why the bad experience?

It's too hot to walk outside your front door and there's nowhere to go if you do.

tim

[Kurt Barlow]

It's too hot to walk outside your front door and there's nowhere to go if you do.

tim

I am going to be at Ras Tunara. From what I gather sailing, snorkelling, diving and fishing are common persuits.

Apart from summer spring, autumn and winter are pleasant and make up for the June to Sept furnace in which you book as much leave as possible.

[cartimandua51]

Have you taken advice about any tax implications of severing all links with the UK versus retaining an interest in the property? Over 12 years it is possible there might be CGT to consider, to say nothing of whatever other swingeing taxes have to be introduced!

Also, you've put in a lot of effort on the self-sufficiency route which might be difficult to replicate when you get back for various unpredictable reasons ranging from age to health to new legislation.....

[Kurt Barlow]

Have you taken advice about any tax implications of severing all links with the UK versus retaining an interest in the property? Over 12 years it is possible there might be CGT to consider, to say nothing of whatever other swingeing taxes have to be introduced!

Also, you've put in a lot of effort on the self-sufficiency route which might be difficult to replicate when you get back for various unpredictable reasons ranging from age to health to new legislation.....

What I have done on the house would be one reason to keep it. However if I stay with aramco for 5 years my savings plus termination bonus will be in the region of £300,000 on top of the £170,000 I would have from the house sale and other investments. I am reasonably confident that I can replicate on my return. If I stay 12 years my return fund will be more in the million quid range.

As for offshore its not worth it. It probably was when interest rates were high but now you are better off bringing it inshore and letting the UK govt tax it than going offshore and feathering the banksters nests.

Cant see CCGT being a problem with the House over the next 10 years and in any case as my former residence I think there are some exemptions.

Despite Mr. Parry's valued advice I am going to keep most inside the UK and will maintain NI payments in the optimistic hope I will get some form of state pension in my dotage.

Cheers

KB

[Lucifer]

If you keep it you have somewhere to come back to. We left London in 2004 and sold as we thought the market had topped out. I don't think the following period made very much difference in money terms but if we still had the place we would go back now as work is crap anywhere outside London. Rents and capital values are going to fall, but I can't see any big investment opportunities for the money either.

I take it the "big sandpit" is the middle east? In which case you will be coming back. Its a shithole.

Rent out.

Good advice...that whole middle east area is disgusting, one of the most unpleasant places on earth, if you manage to avoid becoming a raging alcoholic as a response to the disgustingness of the place, you will be coming back pretty quickly, so DO NOT sell.

[audi tt]

We sold everything and relocated , then 5 years down the line have purchased a small apartment in the uk for holidays and as an investment.

If I were you I would rent your house at for the first two years, by then you should know if you like the new place enough to stay. if you do then you can sell the house but until your sure I wouldn't give it all up just yet.

Another thing you will need to remember is that if you are not on the electoral role you will have trouble getting bank accounts/mortgages when you return to the uk. Even if you have been a uk tax payer and have a good credit history, nobody will touch you if you have let the electoral role slip. Something we found out even though we were registered at a friends place for tax returns, banking ect.

Are you getting medical cover included in your job? Most countries charge for medical treatment and the charges can be quite high, no more gp's and nhs. Something people fail to remember as they get older.

Good luck, enjoy.

[Kurt Barlow]

We sold everything and relocated , then 5 years down the line have purchased a small apartment in the uk for holidays and as an investment.

If I were you I would rent your house at for the first two years, by then you should know if you like the new place enough to stay. if you do then you can sell the house but until your sure I wouldn't give it all up just yet.

Another thing you will need to remember is that if you are not on the electoral role you will have trouble getting bank accounts/mortgages when you return to the uk. Even if you have been a uk tax payer and have a good credit history, nobody will touch you if you have let the electoral role slip. Something we found out even though we were registered at a friends place for tax returns, banking ect.

Are you getting medical cover included in your job? Most countries charge for medical treatment and the charges can be quite high, no more gp's and nhs. Something people fail to remember as they get older.

Good luck, enjoy.

Thanks for the advice.

I am coming round to this way of thinking. I will stick my name on the electoral register at my parents. However my intention is to work long enough to never need to get a mortgage again. Intend to apply a high income - moderate aspirations approach.

Medical is covered. The job is with Aramco and I am told independently that their facilities are second to none. I am going to be living on Ras Tanura compound. Feedback from other expats is generally positive about the place - the beach is fantastic and Bahrain is only 60-90 minutes away.

[sukuinage]

Hallo Kurt,

I would probably leave it for a year to see how things go just in case you don't like it in Saudi a then sell - that is if the market hasn't crashed by then . I have been in a similar situation to you with working abroad and letting out the house & it's a pain with useless LAs giving you hassle.

As to living in Saudi, from my experience 10 years ago:

Getting to Bahrain is a good 2 hour trip at the popular times due to getting over the causeway through all the customs etc. You need a trip for a weekend at least once a month to get a bit of life though

The gulf is pretty boring for diving & snorkelling, there are silly restrictions on sailing. I've no idea about the fishing.

Aramco is ok as an employer & the money is good but it was full of arrogant yanks who last did a decent day's work about 20 years ago (if then). Add to that the Saudi nationals who can't be bothered to do anything then you'll realise you're actually working for the civil service. I don't know how fast you would normally work but you'll probably have to get used to a somewhat slower pace.

Life in Saudi in general is dull. There really isn't much to do especially if you're on your own apart from shopping unless one of your hobbies coincides with what's available there.

Not trying to put you off but I always had the idea that I was in prison for the time I was there (but knowing that the stash from the bank job would be there when I got out )

If you want any other info on Saudi let me know.

[Propertybuyersnetwork]

Take the short term view and sell up and hope prices crash which they will. Stick the money in a bank and let the tax man get his hands on it.

Or rent it out, keep your mortgage on repayments as you don't need the cash and any positive cash flow stick in a bank account.

Look for a good agent, some do exist really, one that will fully manage and maintain the property while your away.

Best of luck with the new job, hope all goes well.

[Kurt Barlow]

Hallo Kurt,

I would probably leave it for a year to see how things go just in case you don't like it in Saudi a then sell - that is if the market hasn't crashed by then . I have been in a similar situation to you with working abroad and letting out the house & it's a pain with useless LAs giving you hassle.

As to living in Saudi, from my experience 10 years ago:

Getting to Bahrain is a good 2 hour trip at the popular times due to getting over the causeway through all the customs etc. You need a trip for a weekend at least once a month to get a bit of life though

The gulf is pretty boring for diving & snorkelling, there are silly restrictions on sailing. I've no idea about the fishing.

Aramco is ok as an employer & the money is good but it was full of arrogant yanks who last did a decent day's work about 20 years ago (if then). Add to that the Saudi nationals who can't be bothered to do anything then you'll realise you're actually working for the civil service. I don't know how fast you would normally work but you'll probably have to get used to a somewhat slower pace.

Life in Saudi in general is dull. There really isn't much to do especially if you're on your own apart from shopping unless one of your hobbies coincides with what's available there.

Not trying to put you off but I always had the idea that I was in prison for the time I was there (but knowing that the stash from the bank job would be there when I got out )

If you want any other info on Saudi let me know.

Cheers

Well I spend so much time on HPC could be anywhere!

Certainly interested on peoples experiences of Saudi good and bad. I decided to take the job because it was based at Ras Tanura. Had it been Riyadh - no way.

The job is basically Company Environmental Health Officer. The team is predominantly staffed by Brits - Aramco seem to like UK EHO's. Job is a mix of food safety (inspecting outlets, auditing suppliers, food complaints, FP outbreaks, and possible food safety training), water safety - drinking & leisure, occupational safety in non industrial settings, and some environmental protection work. Get to go offshore and out and about which is a plus.

What do you mean silly restrictions in terms of sailing? RT has a yacht club where people keep cats, dinghy's, and possibly small yachts / keelboats.

From what I gather the diving scene is fairly active - local trips around Bahrain at weekends with several longer trips - Red Sea, Maldives, Sychelles organised each year.

Nothing ventured nothing gained.

KB

[Kurt Barlow]

Take the short term view and sell up and hope prices crash which they will. Stick the money in a bank and let the tax man get his hands on it.

Or rent it out, keep your mortgage on repayments as you don't need the cash and any positive cash flow stick in a bank account.

Look for a good agent, some do exist really, one that will fully manage and maintain the property while your away.

Best of luck with the new job, hope all goes well.

Cheers

That is certainly one line of thought. Sell and buy back for 60% in 4-5 years!

[sukuinage]

Cheers

Well I spend so much time on HPC could be anywhere!

Certainly interested on peoples experiences of Saudi good and bad. I decided to take the job because it was based at Ras Tanura. Had it been Riyadh - no way.

The job is basically Company Environmental Health Officer. The team is predominantly staffed by Brits - Aramco seem to like UK EHO's. Job is a mix of food safety (inspecting outlets, auditing suppliers, food complaints, FP outbreaks, and possible food safety training), water safety - drinking & leisure, occupational safety in non industrial settings, and some environmental protection work. Get to go offshore and out and about which is a plus.

What do you mean silly restrictions in terms of sailing? RT has a yacht club where people keep cats, dinghy's, and possibly small yachts / keelboats.

From what I gather the diving scene is fairly active - local trips around Bahrain at weekends with several longer trips - Red Sea, Maldives, Sychelles organised each year.

Nothing ventured nothing gained.

KB

Hi,

If you're working with other Brits then it shouldn't be too bad. Most that I met there were fine but there are definitely some serious wierdos in Saudi - generally those that have been out there for too long. They're usually the ones who slag off everything about the UK (they're probably HPC posters these days ) as they're trying to justify staying in Saudi. I don't know what Ras Tanura is like despite having worked on a project for automating the ship loading there. I was based in Al Khobar down the road. Eastern region is certainly more relaxed than other parts of Saudi.

I'm sure the diving club is pretty active - it's just that the Gulf is not the most interesting place to dive. The Red Sea is a lot better. I only had one day off max per week when I was there (working 60 - 80 hours) so my experience is slightly coloured in that I didn't have much time for sport or hobbies. Did get to play golf on the sand and the putting "browns".

I didn't go sailing when I was there but I did hear that every so often the authorities get nervous about people "spying" or "smuggling" and bring in petty rules. Don't know if it is true or apocryphal but I did hear that they stopped people windsurfing by insisting that the windsurfs be equipped with running lights and an anchor

Don't let my musings put you off. The life there can be very good if it suits you and it's certainly worth spending at least a couple of years there to set yourself up financially. I've considered going back but with kids coming up to the teenage years I think the restrictions for them would be too great.

Enjoy your stay whatever.

[Kurt Barlow]

Income wise you'll get about the same amount in interest on the money sitting in the bank as you would in profit renting the house out. So there are some questions you need to ask yourself. The most important one I think is how much do you like the house? If you weren't going to Saudi would you see yourself living there in the long term? How easy would it be to find a house that's just as suitable and do it up to the same standards?

If you're not that bothered about the house then you need to ask yourself if you're more worried about your savings being inflated away or more worried about your house losing a lot of value? In your situation I think I'd be tempted to hedge my bets and keep the house since you say you're going to be able to save up a lot of money while you're out there so you'll have a large asset plus a big pile of cash. You've got a small mortgage so you'll not have the worry of getting into negative equity and if the UK does go all Zimbabwe at least you'll have somewhere to live.

Thanks - thats the kind of position I am moving around to.

Whilst I have no great emotional attachment ( never been luvved up or had kiddies here) to the house for practical purposes it is convenient - good village location, good transport links and near to Cambridge. Whilst not immune from recession Cambridge does benefit from big inputs of foreign cash through the Uni and various international school. Every week I seem to get cards through the door seeking host familes. They offer £450 per student per month.

I have no shiney stuff urgings so the house represents my main investment in 'stuff' At the current mortgage rate the typical rent would cover the mortgage 3x over after LA / other costs.

If the UK goes all Zimbabwe then the equity could be converted to toilet paper - so yes that is a concern. My contract is sterling however in such an event I gather the company would be prepared / have done so before to renegotiate salary in another currency.

[Kurt Barlow]

Hi,

If you're working with other Brits then it shouldn't be too bad. Most that I met there were fine but there are definitely some serious wierdos in Saudi - generally those that have been out there for too long. They're usually the ones who slag off everything about the UK (they're probably HPC posters these days ) as they're trying to justify staying in Saudi. I don't know what Ras Tanura is like despite having worked on a project for automating the ship loading there. I was based in Al Khobar down the road. Eastern region is certainly more relaxed than other parts of Saudi.

I'm sure the diving club is pretty active - it's just that the Gulf is not the most interesting place to dive. The Red Sea is a lot better. I only had one day off max per week when I was there (working 60 - 80 hours) so my experience is slightly coloured in that I didn't have much time for sport or hobbies. Did get to play golf on the sand and the putting "browns".

I didn't go sailing when I was there but I did hear that every so often the authorities get nervous about people "spying" or "smuggling" and bring in petty rules. Don't know if it is true or apocryphal but I did hear that they stopped people windsurfing by insisting that the windsurfs be equipped with running lights and an anchor

Don't let my musings put you off. The life there can be very good if it suits you and it's certainly worth spending at least a couple of years there to set yourself up financially. I've considered going back but with kids coming up to the teenage years I think the restrictions for them would be too great.

Enjoy your stay whatever.

Hi - how did you find driving out there?

General advice I have had is avoid driving whenever possible. I wont be able to drive for the first few months until I have a KSA licence. I can use company vehicles for business plus the bus services between different compounds and sites. Aramco also have contract drivers. Fill in the gaps with car hire and do without buying a car?

Apparently insurance although not compulsory is a must - as any accident involving a national it will be your fault

[sukuinage]

Hi - how did you find driving out there?

General advice I have had is avoid driving whenever possible. I wont be able to drive for the first few months until I have a KSA licence. I can use company vehicles for business plus the bus services between different compounds and sites. Aramco also have contract drivers. Fill in the gaps with car hire and do without buying a car?

Apparently insurance although not compulsory is a must - as any accident involving a national it will be your fault

Hi,

the driving is dodgy. The worst thing is that on the main roads you have trucks doing 60k & Saudis in their Mercs & Beemers doing 200k; add the indians trying to run across a three-lane road & you can see why there are accidents. On local roads as long as you realise that drivers will pull out blind from a side road it's not too bad. I drove whilst I was there & didn't have a problem - generally if you have your wits about you & use the horn plenty it's ok. I'm not a nervous driver which does help. The worst is on Eid holidays when everyone's on the road - think two-lane road with three lanes of traffic & an extra one piling on & off from the desert at the side.

I don't know what the situation is for private vehicles as I had a company one with private use. As you say, if there is an accident the tend to side with the Saudis. This isn't 100% though - a colleague got broadsided by a police car and it was decided at 50% (it would have been 100% their fault in any other country). Your best bet if you're a bit nervous is to buy a 4x4; at least you have some protection if hit.

[Kurt Barlow]

Hi,

the driving is dodgy. The worst thing is that on the main roads you have trucks doing 60k & Saudis in their Mercs & Beemers doing 200k; add the indians trying to run across a three-lane road & you can see why there are accidents. On local roads as long as you realise that drivers will pull out blind from a side road it's not too bad. I drove whilst I was there & didn't have a problem - generally if you have your wits about you & use the horn plenty it's ok. I'm not a nervous driver which does help. The worst is on Eid holidays when everyone's on the road - think two-lane road with three lanes of traffic & an extra one piling on & off from the desert at the side.

I don't know what the situation is for private vehicles as I had a company one with private use. As you say, if there is an accident the tend to side with the Saudis. This isn't 100% though - a colleague got broadsided by a police car and it was decided at 50% (it would have been 100% their fault in any other country). Your best bet if you're a bit nervous is to buy a 4x4; at least you have some protection if hit.

Hi

Thanks for that. Thankfully I wont be driving for a few months until I get my KSA licence. will then see if I can manage with company vehicles and public transport. In the event I need to buy a second hand discovery or other 4x4 with plenty of metal will be what I get. Apparently plenty on the second market as Saudi's make Essex boys look modest when it comes to automotive willy waving contests

[sukuinage]

Apparently plenty on the second market as Saudi's make Essex boys look modest when it comes to automotive willy waving contests

Nothing more satisfying than seeing a brand new Lexus Landcruiser being rolled on a sand dune

[Kurt Barlow]

Nothing more satisfying than seeing a brand new Lexus Landcruiser being rolled on a sand dune

Talking to a few of the Ras Tanura boys - they love it and generally avoid the material sid eof saudi life. Great beach there. The diving isn't the best in the World but when its 10 minutes walk from your front door who can complain! They try and organise 1 trip a month to Bahrain for social stuff.

I am hoping my job comes with weekend oncall rota and Time off in lieu is offered instead of over time.

[Kurt Barlow]

Looks like I will be going down the rental route. As of the 8th October I will be a prospective Landlord!

Whilst wary of house price falls I am also minded towards spreading investment between property, cash, and equities. Keeping the house (which only has a small mortgage) broadly speaking falls within this strategy. Property is a good hedge against inflation.

Whilst the sales market is dead rental prices are very firm - all you STR boys keeping the rents up - thanks:P

If I stay in the ME for a short period I can return and reoccupy the house whichy I quite like.

If I stay long term - well the house is me pension innit (although with 2 other pension schemes)

[longtomsilver]

Looks like I will be going down the rental route. As of the 8th October I will be a prospective Landlord!

Whilst wary of house price falls I am also minded towards spreading investment between property, cash, and equities. Keeping the house (which only has a small mortgage) broadly speaking falls within this strategy. Property is a good hedge against inflation.

Whilst the sales market is dead rental prices are very firm - all you STR boys keeping the rents up - thanks:P

If I stay in the ME for a short period I can return and reoccupy the house whichy I quite like.

If I stay long term - well the house is me pension innit (although with 2 other pension schemes)

Personally, I think that you have made the right move. Our government has rather a large deficit (whopping) and have pledged to reduce said deficit by half in just a few years (4 or so) this rings alarm bells for me as the only plausible way that they are going to able to do this is by devaluing sterling by say 25% (sterling has already taken a hammering on the world markets in the last 2-3 years) and chipping away at the deficit by a further 25% give or take. If you have a 'nice' house in a good area (none of this ponzi investment cardboard housing that was thrown up to feed the boom frenzy) then hold on to it as I can see good homes holding onto their worth (as a place to call home) and all the others become very, very affordable indeed No point sitting on lots of cash in the bank if it's purchasing power is being eroded at 7% per annum. The 80k mortgage is irrelevant and will feel more like 40k in 10 years time. It will be the 70's all over again with green shoots over the horizon mark my words.

[Kurt Barlow]

Personally, I think that you have made the right move. Our government has rather a large deficit (whopping) and have pledged to reduce said deficit by half in just a few years (4 or so) this rings alarm bells for me as the only plausible way that they are going to able to do this is by devaluing sterling by say 25% (sterling has already taken a hammering on the world markets in the last 2-3 years) and chipping away at the deficit by a further 25% give or take. If you have a 'nice' house in a good area (none of this ponzi investment cardboard housing that was thrown up to feed the boom frenzy) then hold on to it as I can see good homes holding onto their worth (as a place to call home) and all the others become very, very affordable indeed No point sitting on lots of cash in the bank if it's purchasing power is being eroded at 7% per annum. The 80k mortgage is irrelevant and will feel more like 40k in 10 years time. It will be the 70's all over again with green shoots over the horizon mark my words.

Yep thats what I am going to do.

I fear the cash would just sit in fixed rate bonds barely keeping pace with inflation. In contrast the rent yield would be somewhat higher although I have to balance this against falls in the value.

Whilst in the ME I won't have a pension scheme as such so could view the House as one way of banking a sum for the future - as they say - it's me pension innit

If the Govt go on yet another QE printing spree I can see a flight to tangible assets.

Finally if the ME adventure comes to a premature end then I would like to come back here - nice neighbourhood, countryside, prosperous area, good transport links into London.

[sukuinage]

Looks like I will be going down the rental route. As of the 8th October I will be a prospective Landlord!

Whilst wary of house price falls I am also minded towards spreading investment between property, cash, and equities. Keeping the house (which only has a small mortgage) broadly speaking falls within this strategy. Property is a good hedge against inflation.

Whilst the sales market is dead rental prices are very firm - all you STR boys keeping the rents up - thanks:P

If I stay in the ME for a short period I can return and reoccupy the house whichy I quite like.

If I stay long term - well the house is me pension innit (although with 2 other pension schemes)

Scumbag BTLer

Seriously, enjoy your time in the ME. I'll look you up if I'm ever in Ras Tanura.

If you can, see if you can get a friend in the UK to keep tabs on the house. My experience of LAs is pretty dire; I ended up having to ring the tenant directly a couple of times to find out what was going on as the LA was telling porkies to both of us.