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Landlord Selling Property

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Have given notice on current rented property and LL has advised he is selling the property rather than re-letting.

Make sure you offer 3x your salary on it and when he says "are you joking" say "no, are you ?".

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Yep, quite a bit of ex-btl and btl type stock on the market here too. Most of it would have sold within a week, now it's sitting on the market.

Will be interesting to look at the rightmove trends for terrace and flats over the coming months.

Me thinks that FTB'ers are going to have a much easier time going forward that they've had since 2012.

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Yep, quite a bit of ex-btl and btl type stock on the market here too. Most of it would have sold within a week, now it's sitting on the market.

Will be interesting to look at the rightmove trends for terrace and flats over the coming months.

Me thinks that FTB'ers are going to have a much easier time going forward that they've had since 2012.

There's an increasingly amount of currently-let stuff on offer in my town (Bournemouth) but sadly the asking prices have gone stupidly high. Who on earth would buy a let property anway?

Oh well, maybe all those brand new enormous student farms built in Lansdown over the last several years are finally having an effect.

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Make sure you offer 3x your salary on it and when he says "are you joking" say "no, are you ?".

That would probably equate to around 60% of what I think it will go on for.

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If I was a buyer, even if the seller got in late and high (giving me more leverage), I still wouldn't bother for the same reason I wouldn't climb up a precarious tree to cut a branch off. A stupid idea.

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There's an increasingly amount of currently-let stuff on offer in my town (Bournemouth) but sadly the asking prices have gone stupidly high. Who on earth would buy a let property anway?

Oh well, maybe all those brand new enormous student farms built in Lansdown over the last several years are finally having an effect.

Not so much in the way of tenanted places but an ever increasing number of no chain/vacant possession empty houses/flats around my way( South Wales) all of them look to be BTL

It's almost possible to see the leverage involved just by looking at the asking price identical house in the same street with price differences of up to 20%

It`s going to be interesting to see how all this plays out as MMR +local wage does not equate to the asking prices, add in the fact the greater fool looks like they are becoming rarer than hens teeth (the greater fools were/are the ones now selling instead of buying)

Popcorn time could be fast approaching

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the greater fools were/are the ones now selling instead of buying.
...and subtract £1000+ per year from potential profit due to council tax.

There's an increasingly amount of currently-let stuff on offer in my town (Bournemouth) but sadly the asking prices have gone stupidly high.

Life boat not good enough, must put expensive chairs on it first (once re-arranged).

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I think my landlord is close to selling up. He's normally offered 12 month fixed terms, with the agent organising the renewal a good 2 months before expiry. This time, he's left it a lot later, and only offered a 6 months term. I suspect he's timing things for putting it on the market in Spring 2016.

From what I can tell, he bought the place in 2003. If he gets what Zoopla estimates it's worth, he will have made pretty much zero capital gain on the place in real terms - and this is in Bristol.

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I think my landlord is close to selling up. He's normally offered 12 month fixed terms, with the agent organising the renewal a good 2 months before expiry. This time, he's left it a lot later, and only offered a 6 months term. I suspect he's timing things for putting it on the market in Spring 2016.

From what I can tell, he bought the place in 2003. If he gets what Zoopla estimates it's worth, he will have made pretty much zero capital gain on the place in real terms - and this is in Bristol.

In which case he will probably have made a loss in real terms, as he'll still have to pay capital gains tax on any nominal gain.

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In which case he will probably have made a loss in real terms, as he'll still have to pay capital gains tax on any nominal gain.

I think he escapes CGT. He's an "accidental landlord" (as if we're meant to feel sorry for him!). Because he lived in the property before, and in addition to lettings relief, he falls below the threshold.

He bought in 2003 for £117,500. It seems that he got a job elsewhere in 2011, and had it on the market at £145,000 for about 5 months. He's been renting it out ever since. Zoopla estimates it at £170,000, so I make that pretty much zero real capital gain (if he'd have sold it in 2011, he'd probably have made a real terms loss).

It would be interesting to know how the place is financed. At one time it would have appeared to make sense to max out on a BTL mortgage and use those funds towards his new home, thereby getting tax relief on the interest payments that wouldn't be available for a normal residential mortgage - not to mention the advantages of having a live-in serf to pay for the privilege of being the caretaker. If this is the case, I reckon he's been making a net profit of about £1200 pa out of the place (I suspect he's a 40% tax payer, and he's getting the full management service from his letting agent). Without the full mortgage interest relief, I'm sure this would be a loss.

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I think he escapes CGT. He's an "accidental landlord" (as if we're meant to feel sorry for him!). Because he lived in the property before, and in addition to lettings relief, he falls below the threshold.

He bought in 2003 for £117,500. It seems that he got a job elsewhere in 2011, and had it on the market at £145,000 for about 5 months. He's been renting it out ever since. Zoopla estimates it at £170,000, so I make that pretty much zero real capital gain (if he'd have sold it in 2011, he'd probably have made a real terms loss).

It would be interesting to know how the place is financed. At one time it would have appeared to make sense to max out on a BTL mortgage and use those funds towards his new home, thereby getting tax relief on the interest payments that wouldn't be available for a normal residential mortgage - not to mention the advantages of having a live-in serf to pay for the privilege of being the caretaker. If this is the case, I reckon he's been making a net profit of about £1200 pa out of the place (I suspect he's a 40% tax payer, and he's getting the full management service from his letting agent). Without the full mortgage interest relief, I'm sure this would be a loss.

Sounds like his net profits could be wiped out pretty quickly if he has it takes any length of time to sell, assuming he does ask you to move out so that he can market it untenanted. If he is selling because of the changes to mortgage interest relief then it will be interesting to see how much competition he gets from other landlords with the same idea.

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I think he escapes CGT. He's an "accidental landlord" (as if we're meant to feel sorry for him!). Because he lived in the property before, and in addition to lettings relief, he falls below the threshold.

He bought in 2003 for £117,500. It seems that he got a job elsewhere in 2011, and had it on the market at £145,000 for about 5 months. He's been renting it out ever since. Zoopla estimates it at £170,000, so I make that pretty much zero real capital gain (if he'd have sold it in 2011, he'd probably have made a real terms loss).

The house was his Personal Private Residence at some point so the taxable gain will be apportioned over his period of ownership. Rough numbers:

Purchase price 117,500

Sale Price 170,000

Gain 52,500

Period of ownership 12 years

PPR 8 years

Final Exempt period 1.5 years

Taxable Gain 52,500 /12 x (12-9.5) = £10,937 less annual exemption 2015/16 £11,100.

Selling expenses will obviously reduce the gain even further so there will be no CGT liability.

So he has made a profit from the capital appreciation in addition to any profit from the rental income.

In my book he made a sound investment decision.

Edited by sleepwello'nights

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So he has made a profit from the capital appreciation in addition to any profit from the rental income.

In my book he made a sound investment decision.

Inflation since 2003 has been 45.35% (from thisismoney online inflation calculator). If my sums are correct, I make £117,500 in 2003 equivalent to £170,786 today. Zoopla estimates the place at £170,000 - in terms of capital appreciation, that's not much to show for 12 years. Also, that excludes costs of sale, and it's not entirely certain exactly what he'll get in Spring if lots of others have the same idea (on a typical day in this area, you see a lot more "to let" signs than "for sale").

He's made some money in rent, but his true profit will depend on how the place is financed. I suspect the real winner here is the letting agent.

However it goes for him, at least he can look back and say that he was once a "Lord".

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Your argument would be stronger if the property had been purchased outright. If it had been purchased with mortgage finance then the equation is more complex. The return would be greater as there would be a return on the leveraged finance to consider. It would not be simply a comparison of the inflation adjusted return.

Another aspect is the inflation calculation. How inflation affects individuals can vary dramatically depending on their income and expenditure patterns. It is also quite a common refrain on this forum is that wages and salaries have not risen as fast as inflation, if at all. So if you inflation adjust the profit in line with the increase in average wages and salaries it will show a different result.

Edited by sleepwello'nights

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Update: valuation came back and landlord not happy with it so has decided to let again. I'm not sure if it was too low and therefore not worth it or too high and he can't afford the CGT!

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