I’d definitely see until end of the fix to see if things change. What is the situation with the flat and the area? Is it possible prices will creep up? Personally I’d hold on and not sell yet.

Why are the agency fees so high? Can you try and negotiate that down? Or find different agent?

Do the agents also manage the property?- if their fees are high that’s the least they should be doing. Would take your headache away atleast.

Also paying 2% penalty (~7.5k£) to sell at a loss doesn’t really sit well…

We are in a very similar situation.

Our way out was to turn the flat into a buy to let and get interest only. So the rent is covering all costs and basically we will sell it on 20 years and either make some money for retirement or at least get our money back.

We then got a separate mortgage on our new place and treat the two very separately.

Can't see flats going up for a good few years, but surely they will eventually.

I’m in a VERY similar situation. I’ve modeled it, and the first few years will be absolutely rough, with negative or low yields. However, as the mortgage balance decreases, things get much more interesting, particularly because it’s a leveraged investment. You’re earning rent on the full value of the property, not just on the amount of your deposit, and over time, you’ll get to keep more of it. Eventually, you could achieve an annual return of around 20% of your initial investment (assuming all else remains equal). This is only possible due to the leveraged nature of mortgaged properties.

It’s tempting to look at stocks and other investments and think you’d be better off, but the reality is that while you might earn higher yields, it would be on a much smaller investment pot since stocks aren’t leveraged. Plus, we don’t know how long interest rates will stay high or whether we’re headed for a downturn in the stock market.

In the long term, keeping the property might turn out to be the best decision. No one can say for sure.

I’ve decided to hold onto mine for as long as I can finance it and roughly break even.

EDIT: typos, phrasing.

This is a tough call on what to do but I do know it's a terrible time to sell as it's a total buyers market ATM.

If I could be so bold here is what I would do in your situation. I would have an exit plan of selling as soon as property market starts to boom again. This might be several years whilst high interest rates mean BTL investors such as yourself leave the market and sell up. I feel the market is flooded with properties from people such as yourself ATM so if you don't ride the storm you are looking at less for your property than you purchased for.

I would get rid of your property management company and go for rent collection only, this will reduce your management fees from 15% to about 7%. This will save you £208 a month which you can put towards the service charge.

Why I'm suggesting dumping the property management side is from experience they do very little. If a repair is needed they typically charge 3x the amount for trades than finding one yourself, they don't check on the trades and or follow up with tenant that the repair has been fixed satisfactorily. I find it so much less stressful to deal with issues myself and I can ensure my property is properly protected.

Next insurance. This is key to feeling secure and protected. Many insurance companies offer a range of protections including rent guarantee, legal protection, emergency cover, accidental damage, buildings and contense etc. I pay just under £800 for all these protections on a 3 bed semi in Surrey. Well worth it particularly rent guarantee and legal protection because I'm covered for upto 2 years if a tenant stops paying and they will handle eviction of tenant as part of my legal protection cover.

To give an example of how bad property management companies are Haart Guildford offered only rent guarantee for £980 a year which is 5 times more than that portion of my insurance done privately.

If your property is in good repair then you might want to reduce levels of cover but it's good to self manage if you can afford the time for occasional disruption in sorting issues.

Once the property market bounces back then sell if being a LL isn't for you. That's my opinion if it was me.

You didn't buy that long ago. This could turn out quite well but needs time as Covid was a major spanner in the works and affected everything.

Thank you, this is great advice. I do plan to choose a cheaper alternative than my current real estate agent. May I ask who the insurance provider is? Which one do you recommend?

A perspective of a tenant who needed to secure a new property recently. My previous landlord was renting a flat for 2350. They wanted to increase the rent to 2500. They couldn’t find anyone to rent for that price because they were plenty similar properties which struggled to rent for 2200-2300. So the landlord needed to drop the rent to 2300 to be able to secure a new tenant. The landlord was confident that they will find someone for the higher price based on previous experiences / history. I feel like the market is really unpredictable and while you may not have this problem right now but you will reach the point where only a small minority can afford your place. In short, I wouldn’t make assumptions that you will be able to increase the rent indefinitely- you will reach the point where other properties will push your desired rent amount down. Something to consider while making decision.

Just maybe a short term option but You could consider extending the term of the mortgage to reduce payments, or, maybe go interest only, just to give you that cushion for now, and when things improve rent-wise or, capital appreciation wise, change back term/capital and interest, or sell.

It’s not worth stressing yourself, the money you save you could put side, and if you never need it, you could pay a lump sum to your mortgage.

Don't use an agency.

Well you are stuck so keep it rented now. This is why we say stay away from flats. You could have got a house in zone 5 london during that time. And today it would be worth 650k minimum.