Should I sell my current buy-to-let property?

[Rick Jones]

I bought a house in 2007 for £96500. Have got £88000 left to pay.

The rent is £330 but I pay interest only at 366 (SVR = 4.99). The current value of the house is estimated to be around £70000. Rent is low as tenants are reliable and they have furnished the house themselves. House is well looked after.

Reports indicate that house prices are to drop further, should I sell or wait until house prices rise again?

If I hold out what are the chances that the SVR will increase to 8-10% over the next 3-5 years? Will this go down again?

I am hoping the value of the house will reach the original figure I bought the house for (£96500) so I can sell. Am I being unrealistic? How long will need to wait?

Should I increase the rent to £400+? Future tenants may not be reliable but I will be in a slightly stronger financial position if SVA goes up

Any advise?

[Adam Long]

Rick,

Sounds like a bit of a mess, I presume that you bought the property as investment vehicle and it doesn't look like it is working out that way - ouch !

1) When will house prices rise - how long is a piece of string ??? but most "experts" think that they will start to rise (slowly) in 2012/13 but you need a 37% rise to meet your purchase costs which might take a while. If you look at house prices over the last 100 years they double on average every 7 year but this takes into account bust and boom increases / decreases.
2) Rates can only go up, the average base rate in the UK is 5% which would make your rate 9.49% if I am reading it correctly as 4.49% over base rate ? Which would be £696 interest only.
3) YES PUT THE RENT UP!!! Make the rent whatever the real market rate for your are and property is, you are a business not a charity.

Hope this helps

[Luke Owen]

You've got a good income, the property mantra is never sell!

[UK Mortgage Broker]

If you brought the property to earn the short time and monthly difference in rent, then maybe sell if you have found a more suitable investment that works better for what you want. Or, if you brought the property as a long term investment then keep it you'll only lose if you sell now!

You should reassess the rent to ensure its covering the mortgage as rates will start to go up at some point. But remember, its better to have some rent than no rent.