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Advice needed: Sell or rent-out?

jimmymelrosejimmymelrose
edited February 2008 in Not Sports Related
A little inspired by dansmudge's recent thread I've decided to pose this problem to all you fellow lifers.
It's a bit tricky as you don't live in France but I'll explain.

We have to move away from Lyon to a region near the Swiss border. Meanwhile we own our flat here which is probably quite a good investment as we live near the central business district in Lyon which is intended to become the '2nd La Defense' of France. We are also moving away for what is initially a one year working contract.
However:
If we rent-out but then have to come back after a year we can not claim back our own flat as French law states that the tenant has a minimum of three years.
In addition if we rent and then sell later we will have to pay 25% of the profit in capital gains tax.
The rent will also fall short of the mortgage.

We have to make a decision soon. Should we sell or not? I don't expect anyone to have a clear-cut answer but is there anything we're not considering?

Comments

  • Oggy RedOggy Red
    Stanmore Addick is able to give professional quality advice, I believe, Jimmy.
  • BlackForestRedsBlackForestReds
    This really looks like a bet on house prices - if they are expected to rise and if Lyon is where you want to return to then by selling now you might be pricing yourself out the market.

    A couple of other questions...

    Is it likely that your one year contract will be extended? Or when it's over is Lyon the place you want to return to?

    Is there a friend or someone you know who could move in for a year, on a private/informal basis and then move on when you return?

    However, if you sell will you turn a profit having paid some of the mortgage down and with a rise in property prices etc? If so don't forget to take into consideration that you'll earn interest on the profit while it's sat in the bank.
  • StanmoreAddickStanmoreAddick
    [cite]Posted By: Oggy Red[/cite]Stanmore Addick is able to give professional quality advice, I believe, Jimmy.

    Thanks Oggy, you are correct that i am involved in property finance, but i rarely get involved with overseas stuff so i'm sure that my level of "knowledge" on this is less that JM is already aware of.

    I think BFR raises an interesting point about renting to a friend, if by chance someone is looking, but imho, friendships and money don't always go well together.
  • Off_itOff_it
    Sell. Cash today always beats possible cash tomorrow.
  • vancouveraddickvancouveraddick
    How about executive rental Jimmy - I'm not sure of the law there but would an agency that organises places for business persons for short periods be workable? We did it and you get substantially more money per day/week/month that makes up for any agency fees and/or periods with no tenant.
  • Oggy RedOggy Red
    That's actually a very good suggestion, Vancouver - especially as Jimmy's 'aparte' is near the central business area of the 3rd largest city in France.

    If it's in a reasonably sought after area, it would fetch a decent rent - and as you say no end of tenancy challenges.
  • jimmymelrosejimmymelrose
    [cite]Posted By: vancouveraddick[/cite]How about executive rental Jimmy - I'm not sure of the law there but would an agency that organises places for business persons for short periods be workable? We did it and you get substantially more money per day/week/month that makes up for any agency fees and/or periods with no tenant.

    I really don't know about this in France. I'll find out. Thanks.

    The renting to a friend would be interesting if I knew of anyone who is both looking for a place and who I know well enough to trust. I do know of someone who does illegal rentals but not sure if I want to go down that route.

    To answer Black Forest, house prices have stalled here and we're not necessarily likely to come back to Lyon. The one year contract we're told is a formality, that is that it should be extended unless anything is seriously wrong.

    So far, I'm inclined to think like Off It.

    Thanks for all ideas so far.
    Any further comments?
  • Oggy RedOggy Red
    If the housing market has stalled in Lyon, your flat may prove a challenge to sell quickly - unless you substantially drop the asking price. And no seller really wants to do that, unless desperate.

    Unless you are in a hurry, Jimmy - best to take a little time to explore various options.
    Or go with your first instinct.

    Often that first hunch is the right one. Or at least a stepping stone to the right decision.
    Good luck!
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