Utter desperation

GracieP · 15 August 2008 at 1:51PM

I was looking through property on ebay and came across this ad titled;
Fantastic opportunity for capital growth and earnings. With a secondary title of Please buy our house and rent it back to us for 10 years.

Tbh, my first reaction was to laugh and click on the link. It starts off with some really spurious reasons as to why someone should buy the house as an investment. And then goes on to describe why the current owners are in this situation.

The Background - a summary

The current occupiers had a thriving business and took out secured loans in order to expand which were in addition to the normal house mortgage.

1. Then they fell ill and business had to close.

2. Income drastically reduced.

3. Mortgage fixed term ended.

4. Interest rates shot up.

5. House prices fell.

Result

They can no longer afford the repayments on their reduced income.

Consequently arrears have built up because they cannot pay the mortgage and loan repayments that the bank now demands.

They were allowed to take 97% LTV but this has produced a negative equity situation because the capital sums owed plus arrears, interest and court costs are no longer covered by the market value of the cottage.

Although they are now trying to run their business on the internet their lenders realise that their financial position will be unlikely to improve in the foreseeable future and so have started proceedings for repossession.

Unless the current owners can sell for a price acceptable to the lenders they will have to vacate but do not wish to leave their beautiful home.

The total owed to the lenders is £404K but it is believed that they would probably accept something around £350K for sale and would then hopefully write off the balance. Any possible shortfall which would no longer be secured on the property, would anyway be the responsibility of the current owners who would become the tenants after the sale.

I know people make their own decisions in life, and the way I see it is that if you buy something you can't afford and lose it because you can't keep up the payments then it was never really yours in the first place. But I still feel sorry for these people, because their hope here is so pathetic. They are basically asking for charity, as no-one in their right mind will buy this house and rent it back to them for 10 years. Especially when they have spelled out that they are soon to be repossessed so anyone interested in the house now knows to keep an eye on it as it may soon be available at auction.

Dithering_Dad · 15 August 2008 at 2:05PM

Just goes to show how easy it is to be lulled into a false sense of security when the good times are rolling. How many times have we seen people who are doing moderately well overstretch themselves with the dream of doing superbly well, only to find themselves in hot water.

I feel bad for anyone who is struggling financially, but sometimes you really do wonder at people's common sense.

Leighthal · 15 August 2008 at 2:15PM

That place looks great.I liked the snowy wintery picture they included:snow_grin .

If I win tonights Euromillions draw I'll bail them out.(fat chance though:( )

amcluesent · 15 August 2008 at 2:16PM

>Then they fell ill and business had to close.<

Not unreasonable to take out critical illness insurance when the outcome would be losing everything.

WTF?_2 · 15 August 2008 at 2:17PM

One thing that does come through quite often is an irrational attachment to a particular house that owners will have. I guess they can't accept that they screwed up badly with their financial planning and lost something dear to them. Why didn't they consider this before putting the house in jeopardy?

Hence all the sharks out there offering "We buy your house and rent it back to you" services.

If you own a house and need cash, just sell the thing for the best price you can get and rent somewhere else.

And I would never considering buying property with a sitting tenant who was the previous owner of the house - a sure recipe for problems. Chances are they would feel themselves the rightful owners of the place and would be a nightmare to deal with. Plus they'd probably expect to be able to buy it back at whatever price they sold it to you at some future date should their finances recover, then give you nothing but problems when you refuse. Avoid.

Dithering_Dad · 15 August 2008 at 2:24PM

amcluesent wrote: »

>Then they fell ill and business had to close.<

Not unreasonable to take out critical illness insurance when the outcome would be losing everything.

Critical illness insurance will only cover certain life threatening illnesses such as cancer, heart conditions, etc. and not all of those. This insurance won't cover a less serious illness, no matter how debilitating.

They should have had Executive Income Insurance taken out in the name of their Limited Company. It's not cheap, but it will cover you for illness even if that means until retirement date. You can also offset the cost of it via the company's Corporation Tax bill. This was the first thing I sorted out when I set up my limited company and went contracting.

dopester · 15 August 2008 at 2:55PM

!!!!!!? wrote: »

Avoid.

Not to mention just £800 per month before all other costs (insurance and stuff.. I'm no landlord), on a £350K "investment".

And that is even ignoring the wishful thinking stuff in that listing.

Plus they objected against planning permission put in to build a new house nearby.

Oswestry Borough Council
January 2008
Development Control Committee

- Loss of privacy to Kelvindale and Redstone Cottage via overlooking from proposed dwellings windows

The objection based on the loss of view across the site from the adjacent dwelling is not valid from a planning point of view as there is no entitlement to a view across land not in an objectors ownership, otherwise development in general would be impossible.

RECOMMENDATION : Application Permitted -

teabelly · 15 August 2008 at 3:43PM

You wouldn't get a BTL on that house without having to leave in probably 200k of your own money if you bought it at anywhere near what they want. If there is development nearby which will have a negative impact then the current owners are being disingenuous. It's not a particularly nice house either.

This one at 270k think is actually nicer than theirs in many ways: http://www.rightmove.co.uk/viewdetails-17351299.rsp?pa_n=6&tr_t=buy

There are many more around 350k that blow that one out of the water.

http://www.rightmove.co.uk/viewdetails-19313327.rsp?pa_n=3&tr_t=buy

The above is an 8 bedroom detached for 332k! Although one bedroom has been quoted at 2 foot wide which would make it rather a squeeze...

Incisor · 15 August 2008 at 4:12PM

So even if you accept the sellers' valuations at face value, how much is it worth with sitting tenants for 10 years?

Gorgeous_George · 15 August 2008 at 4:46PM

I get £420 per month from a property worth less than £80K. Paying £350K for an £800 pcm return is a non-starter. Absolutely barking.

What they are asking for is charity.

GG

Ivan_Konstantinov · 15 August 2008 at 5:27PM

teabelly wrote: »

http://www.rightmove.co.uk/viewdetails-19313327.rsp?pa_n=3&tr_t=buy

The above is an 8 bedroom detached for 332k! Although one bedroom has been quoted at 2 foot wide which would make it rather a squeeze...

wow,that is a nice house,if it was in my area i would be very interested

Debate House Prices

Utter desperation

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