I own a one-bed flat in east London. I bought it eight years ago, and shortly after I met my now wife. She moved in four years ago and we now have a one-year-old daughter.

I've wanted to sell the leasehold flat for the last three years, as we would like to move to Essex to get more space. However, I keep being told by estate agents that I'd be lucky to get back what I paid for it. 

I hoped that prices would eventually pick up – but now it seems to be getting worse. One estate agent recently said that the flat I paid £495,000 for is now worth £400,000. That would wipe out almost all the equity I have in the property.

We are now looking to rent the flat out and move anyway. An estate agent told us we could rent it for £2,000 a month. This is less than we pay for the mortgage and service charge, the latter of which keeps rising and is now £500 per month. 

We will also have to pay tax on the rent the tenant pays. What should we do? Should we rent it out, or keep waiting for a better time to sell?

Ed Magnus of This is Money replies: This is a tough situation, but one you won't be alone in facing. 

More than a third of one-bedroom apartments are selling for less than the owner paid for them, according to analysis of Land Registry data by property analytics firm, Bricks&Logi. This is compared to just 7 per cent of houses.

If the estate agent is correct in their assessment that your flat has lost £95,000 in value, then that is a big loss to absorb.

Keeping it and letting it out could be a good option, but continuing to pay the mortgage, service charge and upkeep costs could make this feel even more of a burden, rather than the investment it was meant to be.

The service charge in particular could be a concern. These tend to rise over time, and homeowners often have little control over this. 

For expert advice we spoke to Angela Kerr, director and editor at property advice website HomeOwners Alliance, Peter Stimson, director of mortgages at the lender MPowered and James Nightingall of property search service HomeFinder AI.

Renting flat could create challenges 

Peter Stimson replies: You could dig in, holding on to the flat and renting it out in the hope its value recovers.

However, this approach would come with several risks. As you point out, you'd be making a loss once you factor in the shortfall between your mortgage costs and the rent you'd earn each month, not to mention the tax and the service charge you'd have to pay each year.

There's also a less obvious but equally serious risk, which is that keeping the flat may hamper your ability to buy somewhere else in future. 

As a loss-making buy-to-let, the flat would negatively impact any mortgage lender's assessment of your finances. Losing money each month could also make it more difficult to save for a future deposit to get back on the property ladder. 

There's one sliver of good news - and that is that you're not in negative equity. But if the value of the flat were to keep falling, you might fall into that trap. 

Entering negative equity - where the value of your home is less than the mortgage debt outstanding - would make life even harder as you wouldn't be able to sell.

James Nightingall adds: Putting your property on the rental market comes with a wave of new challenges. 

Firstly, it's difficult to predict when and if your property will see an increase in value again or at all. Bearing in mind the current market performance, it could be months if not years. 

Secondly, being an accidental landlord comes with a number of responsibilities that are not to be taken lightly - particularly with the Renters Rights Act coming into force. 

You therefore have to ask yourself if you are willing to face the stress of being a landlord for a prolonged period of time. 

Whilst selling your property now might result in a one-off loss, it would mean that you can close this chapter and move on.

Selling will lock in a financial loss 

Angela Kerr replies: If you sell now, the upside is certainty. You draw a line under the property, clear the mortgage, and can move on with your lives in a home that suits you better. 

The downside is that you may have to accept a financial loss and miss out on any future recovery in prices. 

But you also remove ongoing costs, such as the £6,000 per year service charge which could keep on increasing every year. 

It's worth noting that selling a leasehold flat isn't always straightforward, particularly in the current market. Issues like service charges, lease length and building management can all affect buyer demand. 

If you do decide to sell, get three estate agents round to value it to help you get a better idea of house prices. 

And do your own house price research, looking at what's on the market locally but also recent sold prices listed on the Land Registry.

Peter Stimson adds: To decide which is right, ask yourself whether you can afford and want to sell now. 

Doing so would mean you'd essentially be walking away empty-handed.

But selling up now would help with your day-to-day cash-flow. You'd save yourself that £6,000 annual service charge for starters, and the easing of the pressure would allow you to rent somewhere else, and in time make a fresh start, ready to buy somewhere else if you wished.

What should they do? 

Angela Kerr replies: I'm sorry to hear you feel so desperate. This is a very personal decision and there isn't a clear right or wrong answer. It comes down to what works best for you, your finances and your family life.

A home is first and foremost for living in, so if your current flat no longer meets your needs, that is a lot of pressure and should carry real weight in your thinking.

Waiting for the market to improve can make sense on paper, but it's much harder in practice if your home isn't working for you day to day.

Finally, it would be sensible to speak to an independent financial adviser before making a decision.

They can help you properly compare the long term impact of selling versus holding and renting, based on your wider finances and plans.

If you can afford to hold on and are comfortable with the risks, waiting could pay off, but it may take time and there are no guarantees.

James Nightingall adds: Although I'm not sure which part of East London your property is located in, I understand your estate agent has already suggested that the market has since been subject to price fluctuations. 

This is likely due to subdued demand, increased supply and uncertainty over interest rates and geopolitical developments.

Whether or not you should sell now is a difficult decision to make and really comes down to what is more acceptable to you: a monthly loss by letting the property or a one-off, more predictable loss by selling now.

Peter Stimson adds: My heart goes out to you; you're in a tight spot and I understand your desperation to get out. You've clearly outgrown the flat - with three of you there, it must feel like it's bursting at the seams.

You're not alone either. The past 10 years have been a 'lost decade' for London flat owners, with average prices falling over this period. You will join that unhappy club if you sell now. But staying put, or moving and renting out the flat, sound equally unpalatable.

There are no easy options, but your choices boil down to this - hold or sell?

For now at least, you are the master of your own destiny. If you are worried about selling now and missing out on future price rises, I would suggest that if you try to buy again in the reasonably near future, this would act as a good hedge for any losses you make on your current flat. 

Letting out the flat could cost more than you think

Ed Magnus of This is Money adds: The Government has not made life easy for accidental landlords who have kept hold of a previous home to let out. 

You can no longer fully offset your mortgage interest costs against rental profit, instead only getting tax relief based on 20 per cent of mortgage interest payments. 

This is less generous for higher rate taxpayers, who previously received a 40 per cent tax relief on mortgage costs before the 2016 rule change, brought about by George Osborne.

As a hypothetical example, say your mortgage interest costs for the year come to £18,000 and your rental profit after costs are deducted is £22,000. 

You pay tax on the full £22,000, but with a 20 per cent rate on the £18,000 that is being used towards paying the interest on the mortgage while the remaining £4,000 of rent will be taxed at your normal income tax rate.

If you are a higher rate taxpayer - someone earning over £50,271 a year - then that means you'd pay £5,200 in tax.

So you'll have to work that into your sums. You will be able to offset costs like service charge, repairs and letting agents fees against your rental income - but not being able to fully offset your mortgage interest costs will feel like you're being taxed on revenue rather than profit.

If that wasn't off putting enough, you have the Renters Rights Act kicking in from 1 May. This will ban 'no-fault' evictions, and mean you have to give a proper reason for telling tenants to leave. 

This includes selling the property or moving back in. Wanting to put up the rent is an accepted reason. 

If you do decide to rent it for a while and then later decide to sell, you also face a rather absurd new rule. If you evict the tenants, you then can't re-let the property for the next 12 months.

That means if you put the home on the market but find you can't sell, you can't then get a new tenant to stop you from hemorrhaging money for many months. You'll be stuck with an empty property - and still paying the mortgage, service charge and other bills.

The rule is being put in place to prevent landlords from evicting tenants by falsely claiming they plan to sell and then getting in new tenants and putting the rent up.

If you break these rules, you could be fined £25,000.

The Renters Rights Act will also abolish fixed-term tenancies, meaning renters will be able to end tenancies at any time as long as they give two months' notice, which could also mean more hassle, void periods and cost if renters keep coming and going.