Thank you MarsherLady for the hint, hopefully I could get a UK perspective on whether to sell or rent my current flat.
I am considering (potentially temporarily) leaving the UK.
Selling or renting decision in the UK has some specifics: potential drop in property prices after Brexit potentially offset by unavailability of credit, currency fluctuations depending on Brexit negotiations,
tax development on the BTL front ,
local council renting schemes etc. etc.
Market Value: ~£290k (I had 3 separate valuations done in the last 6 months and they varied between £270-330k, the worst one being the last one (closest to Brexit) which also suggested that there aren't that many buyers around atm)
Original Purchase price: £197k
Original Mortgage Amount: £150k
Interest Rate: 3.54%
Mortgage Term: 5 year fixed
Term remaining: 1 year, allowing me to remortgage with the same supplier 4 months beforehand
Amount remaining on mortgage: £102k
Gross Rents: £1000, the rents have dropped by £100-150 in my area in the last year but having a garden and being this close to the station should reduce the vacancy rate if I stick with the lower rental number
Separately the garage currently nets £70/month
Principal and Interest: P of mortgage ~£530, I of mortgage ~£300
Taxes and Insurance: Lettings, contents and liability insurance approx £40/month (this actually includes some buildings insurance but I haven't had confirmation how much, if at all, it could reduce the overall premium if they took it out)
One off cost of agreeing with the mortgage provider for the property to be let: £275
Croydon council letting scheme (up to once every 5 years): £350 (since it is a single property)
0% income tax due to personal allowance and tax credit of up to 20% of mortgage interest
HOA costs: Buildings insurance & ground rent is covered in £120/month
If I were to let via one of the local lettings agencies, they'd charge £300 tenant placement fee, £135 tenant renewal fee and 12% running costs for actually managing the whole process for me (also organizing any repairs, etc.), £80 for inventory/condition out survey
one off £125 for inventory condition
Deferred maintenance notes: Recently renovated property, so £0
I am considering the two options because
1) I'm not sure if my move is permanent and I like the property that I own and would prefer to move back if needed BUT if I do sell it, I could put £30k of the proceeds in an ISA fairly sharpish after the sale (therefore protecting it from any tax forever),
2) there are some tax benefits if I keep the property (I'd be moving overseas where they do not have personal allowance, which would make this rental 'tax free' + I'd get 20% tax credit on mortgage interest allowing me to extend the mortgage term and benefit on some of the potential income from a limited company (not sure how much as I don't have a lot of revenue through it yet)),
3) it might help me retain permanent residency if it becomes a problem after 2 years.
I have considered letting the property myself (via Gumtree or similar) at least from the start since I do not expect massive issues with any repairs or similar, but I have provided the numbers from a well respected local lettings agents and have run the maths with these numbers. I've also assumed 10% vacancy, 5% repairs and remortgaging in February 2019 to 1.98% 5-year fixed borrowing £130k to get cash ROI very close to zero, but total ROI 4.60% (on the purchase price).
I have also ran the numbers at 3.54% and the current repayment plan, but that made cash ROI very close to 0% and the total ROI around 3% so I think the sensible thing, if letting, is to extend the mortgage to 25 years and look at my situation in a few years; I can always overpay at the end of the 5 year term if I move back and wish to repay it earlier or I can always borrow more, to even further hedge against Brexit/not being able to put the money in an ISA wrapper.
To explain, I find the option of borrowing more (and not focusing on repayment) a possible hedge to Brexit risk - and have assumed borrowing additional £30k to cover whatever I have left at this year's ISA and next. If I use the current estimated value of the property, I can clearly see from the total ROI being below 2.5%, that this is really not a great rental.
Not really a surprise and really looking to see if you think that the sentimental value of potentially being able to move back outweighs the gamble of Brexit.
The alternative is obviously selling, but I'm conscious that I might need to sell the property cheaply at this stage since it looks like buyers are waiting for Brexit to happen and that I'd need to invest this money outside of the ISA wrappers (from what I can tell, I'd be taxed on dividends above £2k and if the capital gains are ever above 7% or so (£170k*7%=11.9k), I'd be at risk of paying Income Tax on over and above as well; as opposed to flying under the radar (since you also get tax credit equal to 20% interest paid)).
Any thoughts would be appreciated.