# sell or rent out house



## lofty666 (27 Mar 2021)

Hi, i will try to be brief in background information!
My wife and i bought a house in Dublin for 350,000 euro in 2007 just before the crash. We now owe 230,000. Unfortunately we are now in the process of separating. It is amicable and we are on good terms and have no children.  I moved out 3 months ago and hoped she would remain and rent out a room to cover the mortgage payments of 1300 per month. She has now informed me she wants to also move out and for us to sell the house by May at the latest. Her friends advise her that a recession is imminent and the house will certainly drop in value again. She does not want to rent it out as she sees this as a risk and does not want the hassle/responsibility/worry that goes with it.  She had two estate agents value the house at 275,000 - 285,000 and 285,000-295,000 with both assuring her it would most likely sell for 300,000 euro. So after costs etc we might each come away with 30,000 euro.
For my part, i do not have a pension (i know, very irresponsible!), and always saw the house as a financial investment which would provide us with some sort of a lump sum if we held on to it for long enough, (another 5/10/15 years). My best case scenario would be to hand the house over to the council on a long term lease which would guarantee the mortgage payments are covered and thus no worry or stress for us and would ensure i have at least something to fall back on once i retire.

So my questions are......am i being naive? Is it a sound financial investment? (I know it wasn't when we bought it!!). I know there is no absolute certainty with house prices and a lot of speculation involved but i would have thought that in the long term (10/15 years) the house value will inevitably rise? Should i even try to convince her to hold off till next year as I read values are still currently rising and the new government 'help to buy' scheme might increase value further? Or should i bite the bullet and agree to sell?
Apologies if my question requires too much speculation.

Also, i know keeping a long term financial investment would be unusual for a separated couple but i must stress we are on good terms and always intend to stay in close contact.
Any advice would be much appreciated! Thanks.


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## galway_blow_in (27 Mar 2021)

the council use those long term lease schemes for problem tenants , not official policy but it happens a lot and is perfectly logical from their POV , gets rid of problem cases for a long time . , they are a good reliable income stream if you are willing to look past that . ive one myself though it only cost me 72 k to buy ( not in dublin )

someone a lot smarter than me will advise you here on the financial pros and cons of retaining rather than selling , no offense intended but your wifes friends dont know whether or not a recession and property downturn is imminent anymore than expert economists do , a lot of people were sure prices would drop due to covid and it didnt happen.


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## NoRegretsCoyote (28 Mar 2021)

lofty666 said:


> Also, i know keeping a long term financial investment would be unusual for a separated couple but i must stress we are on good terms and always intend to stay in close contact.


The thing is that most likely  one or other of you will want to buy again with or without someone else. Having an existing mortgage will reduce your borrowing potential.

If you had a tracker I would say thing twice but it looks like you don't.


Can one or other of you buy the other out? You will both need a roof over your head. Otherwise I think you need to sell up.



lofty666 said:


> Her friends advise her that a recession is imminent


Otherwise this advice is 180° wrong. The economy will inevitably grow once Covid restrictions are lifted when the population is vaccinated.


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## Brendan Burgess (28 Mar 2021)

galway_blow_in said:


> no offense intended but your wifes friends dont know whether or not a recession and property downturn is imminent anymore than expert economists do ,



Hi Galway, the Coyote knows!



NoRegretsCoyote said:


> this advice is 180° wrong. The economy will inevitably grow once Covid restrictions are lifted when the population is vaccinated.


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## Brendan Burgess (28 Mar 2021)

Hi lofty

This is very complex, but I will try to entangle it. 

1) The first thing to look at here is whether  you should try to retain this as your home. 

Where are you living now? 
A mortgage of €230k @3% interest would be about €600 a month interest.
If the repayment is €1,300 , it means that you are repaying capital of about €700 a month. This is a form of saving.
I presume you could not rent a house like this for €600 a month or anything near it. 

So it would make huge sense for one of you to try to retain the house if you need it for accommodation. 

Where does your ex intend to live? 
Will she be renting or sharing? 
Again, it makes no sense to sell a property if it suits your housing needs and you can afford the mortgage. 

2) 





lofty666 said:


> Her friends advise her that a recession is imminent and the house will certainly drop in value again.



We do not allow speculation about house prices on askaboutmoney.
But no one knows whether house prices will rise or not.  For everyone who will tell you that "house prices are definitely going to rise" you will find someone to tell you that "house prices are definitely going to fall." The truth is that no one knows. 

I don't think you should base your decision on keeping this house in the expectation that house prices will rise. 

You should base the decision on the current price, the current interest rates and the expected rent. 

Do you have a tracker mortgage?  If so, this would be a very profitable investment. The rent will be way higher than the interest paid. 

3) Back to your own housing needs. 
If you and/or she has an existing mortgage, it will be more difficult to get a new mortgage.

So, for example, if she has a new partner with whom she wants to buy a house, she probably has had her mortgage application declined as she already has a mortgage of €230k. 

4) Emotional issues 
If there is no compelling issue to keeping the house e.g. that one of you needs it to live in, it might make sense to sell it and break all ties with the other person.  If you can't buy her out, but agree to take over the mortgage, you are still connected.  She might want a clean break, and she would probably be right. 

Even if the house suits her needs, it's possible that she might just want to move out of it as she doesn't like the baggage that goes with the house.


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## NoRegretsCoyote (28 Mar 2021)

Brendan Burgess said:


> Hi Galway, the Coyote knows!


I know a recession is not imminent

I said nothing about property prices if you had read carefully.


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## ArthurMcB (28 Mar 2021)

NoRegretsCoyote said:


> I know a recession is not imminent
> 
> I said nothing about property prices if you had read carefully.


How do you know?


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## Clamball (28 Mar 2021)

If as Brendan has said you are repaying capital at about €700 you could consider the €30K each you speculate you would clear as you and your wife “saving” €700 a month for the past 7 years.  So you would get your savings back from the house sale.

Would it be possible for you to pay your wife €30K, take on the mortgage in your own name and continue to live there?  And rent out a room to make the mortgage payments?  You seem keen to keep on the house with joint owners, what are the obstacles to taking over ownership yourself?  I feel I am missing something from the story, do your current living arrangements prevent this?

It could possibly be 20 years before you might be in a position to sell the house if you both owned it and rented it to the council.  Who still wants to be financially tangled up with an ex after 20 years?  The chances of you now after a couple of years is pretty slim, people move on with their lives and leave ex-partners in the past. 

If you want to take on the house, live there yourself, take over the mortgage and rent out rooms.


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## niceoneted (28 Mar 2021)

no matter how well you think your relationship will be in the future you are better off dividing assets now while thinks are amicable - I have seen a few times that over time these amicable breakdown turn sour.


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## NoRegretsCoyote (28 Mar 2021)

ArthurMcB said:


> How do you know?


Because a fifth of the economy is forcibly shuttered and won't be in a few months


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## Protocol (28 Mar 2021)

There was a savage recession in the first half of 2020.

Overall, although 2020 GDP is above 2019, using all other indicators of the domestic economy, 2020 was down on previous years, obviously.

I can't see there being a second recession in 2021.


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## AlbacoreA (28 Mar 2021)

Sell it, move on with your lives. 
Get another investment property afterwards  if that what's you want to do. 
But you need to seperate your finances.


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## lofty666 (31 Mar 2021)

Brendan Burgess said:


> Hi lofty
> 
> This is very complex, but I will try to entangle it.
> 
> ...


Hi Brendan, thanks for the reply.

Just to fill in a few of the gaps in my story.........unfortunately we did not get a tracker mortgage so are on the variable rate. I am currently living in Sligo. I am a chef but currently unemployed because of the pandemic but hopefully this situation will change in the coming months once things get back to the new 'normal'!. Originally my partner was going to move out but i was offered the chance of cheap accommodation in Sligo by a close relative. When the realities of the high costs of renting in Dublin became clear to my partner i decided to take up the offer from my relative (last November),  and give her the chance to remain in the house and look at renting out one of the rooms to help cover the mortgage repayments. However she has since decided that she does not want to share accommodation but also does not feel comfortable living in our house on her own, hence her decision to move out and rent accommodation outside of Dublin and commute instead.
As i mentioned, I am a chef so will never earn the 70,000 salary needed to take over the 230,000 mortgage so buying her out is not an option. 

My very basic thinking on the situation is this....yes every few years there will be a recession of some sort which may negatively effect house prices, but overall, in the long term, house values will continue to increase and therefore i should try to keep the house if at all possible. Given we have only just come through a very severe recession the likelihood of there being a similar downturn (of minus 50% to 60%), is slim and so keeping the house for say 8 or 10 years and then selling it represents a small risk worth taking.??!
If i go with that line of thinking, could i give her a legal agreement to pay her 30,000 euro ( the max she could walk away with if we sold the house now), when we eventually did sell it, regardless of how much it sold for? Of course this would depend on weather she met a new partner in the future and wanted to take out a new mortgage or indeed if I wanted to do something similar. Then we would certainly have to look at selling it at that point. And of course there are other factors like the need for us to remain on good personal terms! 
But if all went well, we could hand it over to the council on a long term lease. An estate agent has told us we could get 2000 euro per month rent if we went private. The council pays 80% rent so that would easily cover the mortgage and i wouldn't be too bothered if we didn't actually make a profit from it. 
All of my friends (who have no financial background!), suggest i should try at all costs to keep the house. Easy for them to say, i know!!

I suppose what i would love to know is, if you were in my situation, would you see keeping the house for another 8 or 10 years as a safe financial investment or would you think it too much of a risk?!
Again, I understand there are no definite's and you may feel uncomfortable answering that last question, but rest assured i will not hold you accountable whatever the outcome!!!!!


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## lofty666 (31 Mar 2021)

galway_blow_in said:


> the council use those long term lease schemes for problem tenants , not official policy but it happens a lot and is perfectly logical from their POV , gets rid of problem cases for a long time . , they are a good reliable income stream if you are willing to look past that . ive one myself though it only cost me 72 k to buy ( not in dublin )
> 
> someone a lot smarter than me will advise you here on the financial pros and cons of retaining rather than selling , no offense intended but your wifes friends dont know whether or not a recession and property downturn is imminent anymore than expert economists do , a lot of people were sure prices would drop due to covid and it didnt happen.


Yes that would be somewhat of a concern for me, but ultimately as long as the council agree to hand back our house in the same condition as we gave it, i would be happy enough. I would have more of a concern if they put 'problem tenants' in and I ended up having to deal with them throughout the course of the lease. 
I will need to get in touch with them to find out the finer details of any agreement but i am a little concerned as a few people have told me the council are changing the terms of these leases. Whereas before, the owners would hand over the house and have nothing to do with it until the end of the lease, now it seems the owners will be responsible for dealing with the tenants and sorting any problems that may arise! If that is in fact the case I may have to reconsider this option.
 That said, I know my partner will not agree to renting it out privately through an agent as this option carries the risk of the mortgage not being covered in periods where we had no tenants. She is not prepared to take the risk of us having to cover the mortgage as well as our respective rents which is fair enough I suppose.


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## lofty666 (31 Mar 2021)

NoRegretsCoyote said:


> The thing is that most likely  one or other of you will want to buy again with or without someone else. Having an existing mortgage will reduce your borrowing potential.
> 
> If you had a tracker I would say thing twice but it looks like you don't.
> 
> ...


Hi!
Yes you are correct, we are on the variable rate unfortunately! I am not in a position to buy her out as I would need to be earning 70 grand and that will not happen on a chefs salary!
You are also correct regarding our borrowing potential however I don't see myself wanting to buy in the short term future ( I have moved to Sligo where I have cheap longterm accomadation available to me)  and I think it more likely that my partner may emigrate to Australia to her only brother. But if that scenario did emerge then yes we would have to sell regardless.
In my very limited knowledge of financial issues I would agree with you regarding the prospect of another recession. In fact I would suggest it is very unlikely we would have another recession as deep as the 2007/2008 one in the next 10 odd years.....but then what do I know!!


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## galway_blow_in (1 Apr 2021)

lofty666 said:


> Yes that would be somewhat of a concern for me, but ultimately as long as the council agree to hand back our house in the same condition as we gave it, i would be happy enough. I would have more of a concern if they put 'problem tenants' in and I ended up having to deal with them throughout the course of the lease.
> I will need to get in touch with them to find out the finer details of any agreement but i am a little concerned as a few people have told me the council are changing the terms of these leases. Whereas before, the owners would hand over the house and have nothing to do with it until the end of the lease, now it seems the owners will be responsible for dealing with the tenants and sorting any problems that may arise! If that is in fact the case I may have to reconsider this option.
> That said, I know my partner will not agree to renting it out privately through an agent as this option carries the risk of the mortgage not being covered in periods where we had no tenants. She is not prepared to take the risk of us having to cover the mortgage as well as our respective rents which is fair enough I suppose.



Who told you that ?,  seems strange that some of the big funds would agree to lease properties for thirty years ( as has happened recently ) if it turns out the councils expect the owners to manage the tenants?


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## RedOnion (1 Apr 2021)

lofty666 said:


> a few people have told me the council are changing the terms of these leases


It's probably more the case that there are different types of leases, and some require the owner to manage issues with tenant. There have always been multiple different lease types, depending in the scenario and needs of the particular council.


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## galway_blow_in (1 Apr 2021)

RedOnion said:


> It's probably more the case that there are different types of leases, and some require the owner to manage issues with tenant. There have always been multiple different lease types, depending in the scenario and needs of the particular council.



HAP involves the owners managing the tenancy , as does RAS or whatever RAS is called today ?

long term lease ( minimum ten years ) are a different arrangement entirely

not saying the councils wont change the terms for future arrangements but it would be quite a big change and im surprised i have not heard anything about it ?


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## RedOnion (1 Apr 2021)

@galway_blow_in 

Yes, sorry I'm getting my schemes mixed up. There are 3 different types of RAS contract.

By the way, the lease that funds are entering into is different to the one you would.






						Enhanced Long Term Social Housing Leasing Scheme
					






					www.gov.ie


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## Brendan Burgess (1 Apr 2021)

lofty666 said:


> I have moved to Sligo where I have cheap longterm accomadation available to me





lofty666 said:


> I am a chef so will never earn the 70,000 salary needed to take over the 230,000 mortgage



You must sell the house.  It makes no sense to keep it.

1) It is better for both of you to have a clean break. 
2) In your particular case, you may meet someone else with whom you want to buy in Sligo (or somewhere else)  and you and your new partner might well qualify for a mortgage.  But you have a mortgage of €230k, so you would be excluded.
3) From your ex's point of view, she would also find it difficult to borrow.
4) If you keep it , you might fall out and it would be a nightmare to resolve.

Keep life simple - sell the house. 

Brendan


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## Leper (1 Apr 2021)

I'm not the greatest giving advice on finances, but having read and re-read this thread, I think you have a favourable attachment to your house. Also, I think your "former" wife has no attachment to the house. Like me, you're probably "not great with money" issues. I'm sorry you're in the situation you're in, but with no children involved most of your potential negatives are nullified. 

If you're a grafter (i.e. work yourself to the bone like most chefs when the economy re-starts) and can keep the house in tip-top shape through your own labour I'd rent out the house/rooms/part-of-house until you get up and running again. I'd advise you to work towards your income being enhanced. I think your wife wishes to be onside too; count that as a win/win. She will get on with the rest of her life too. 

If you sell your house your options are lessened although you'll have a few bob to bank. But, not a huge amount in the greater scheme of things. We don't know if there is a recession looming and neither do we know things will escalate financially favourably. Therefore, I advise on you hedging your bets and let out the house through the local authority or through an estate agent. You may wish to have your former wife buy in to your situation. 

I hope I'm not causing offence to anybody whatsoever; I never wished to. I hasten to add that I've no financial qualifications whatsoever and neither would I have much knowledge of the legal consequences here. Whatever you decide to do I wish you and your former wife only what is best for both of you.


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## RedOnion (1 Apr 2021)

lofty666 said:


> But if all went well, we could hand it over to the council on a long term lease. An estate agent has told us we could get 2000 euro per month rent if we went private. The council pays 80% rent so that would easily cover the mortgage and i wouldn't be too bothered if we didn't actually make a profit from it.
> All of my friends (who have no financial background!), suggest i should try at all costs to keep the house.


You're being overly optimistic with the financials here, so I think you need to sit down & work them out.  

My initial thoughts:
As an investment this is cashflow negative.  That means on top of the rent, every month you'll have to put your hand into your own pocket to come up with the cash to pay tax.  
I've assumed your income is over 35,300 here, so the rental profit will be taxed at higher rate.  Over 5 years, it'll cost you 17,000
That's using 3% interest rate, and 1600 per month rent, but only allowing for 600 per annum expenses to cover insurance, assuming you rent to council.  (If you rent privately, the rent will be higher, but so will the expenses).
At the lower rate of tax it just barely breaks even, from a cashflow perspective.  But your income would need to be under 24k for it all to be at the lower rate.

On paper it's a profitable investment, and the payments are increasing the mount of equity you have in the property.  But you're basically being 'forced' to save money every month.  Unless you can commit to putting in 300 per month of your own money this will tie you down. 

Apart from the financials, I'd suggest you're better to make a clean break while you're both on good terms, rather than being forced to sell at a time that doesn't suit in the future.


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## Mcivor (1 Apr 2021)

I would recommend selling, take your c. €30K equity and move on with your life. Make sure to lock away this €30K and add to it over next few years once you're back working to build a deposit towards your next house possibly in Sligo where prices would be much lower than in Dublin so lower mtge required.  Too many risks in trying to keep the house in Dublin as a rental incl that you will likely have to use your wages to supplement the mortgage repayments once taxes and expenses are taken into account. 20 year council lease means that you probably won't be able to purchase another PPR for yourself as Banks will take the current mortgage into account when deciding whether to offer you a 2nd mortgage, etc


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## Brendan Burgess (1 Apr 2021)

Clamball said:


> It could possibly be 20 years before you might be in a position to sell the house if you both owned it and rented it to the council.



Lofty

If by any chance you decide to keep the property and rent it, Clamball's point is really vitally important.

Do not rent it to the council.   If you do, you will be stuck for 20 years and your financial position may well change in that period. 

So if you do rent it, stay flexible so that you can sell it is the right thing to do.

Brendan


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