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Profitable to rent or to sell?


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Our current situation is that we currently own 2 flats - one we are living in and one we are renting out. We have just bought a new house to live in and are wondering whether to rent the other flat out too (the one we are living in at the moment).

Is there a logical calculation for working out whether this is actually profitable over time? i.e. as opposed to selling one flat and thereby reducing the mortgage payments on our house.

Any advice would be appreciated.

p.s. well done to everyone who is contributing to this forum - i've learnt loads by reading.

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I have always worked on the principles that it is better to retain (and rent out) property than to sell. I don't need a formula to come to this conclusion because "the trend - in house prices - is your friend".

The trend is that house prices will go up in value - probably by at least 3% and maybe 4.5% per annum (prices have risen on average by 4.5% over the last 50 years).

This trend means that over a 20 year period (at 3% growth) the value of the flat will DOUBLE. At 4.5% growth the flat will increase by 133% !

So, as long as the rent covers the interest only portion of the mortgage, your flat should double in value in 20 years and your only risk is if the flat is empty and, therefore, not rented.

To minimise void periods, offer the property in good condition at a realistic rent !

Good Luck,


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Thanks for the advice Mark

Can you also advise me on the tax implications of renting this flat out?

I understand that I will be liable for income tax on any profit (this I believe to be rent less any outgoings such as mortgage payments, repairs etc) but how about capital gains tax when I come to sell it?

Are there any further tax implications that I need to be aware of?



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Hi Al,

I'm not a tax specialist but you are correct to say that mortgage INTEREST payments and repairs are tax deductable from the monthly rent.

You should gain advise from an accountant because depending when you sell the flat will determine how much CGT, if any, is payable.

Capital Gains on buy-to-let property can be complex and I don't want to mis-inform you.


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