Guys im 26 and need serious help!

k0108356 · 11 February 2008 at 7:38PM

Hi people

In 2005 I bought a new build property through G.Wimpey for £219, 995 (a one bedroom 768sq m flat in Blackwater, Camberley) and have been renting this out since then. Halifax valued this property at £220, 000. I, a rather naive chap, bought the flat. It was one of the first flats in the block and had no idea about prices (based upon my ex's brothers advice I bought the flat, however things turned sour so I couldn't ask him why he advised me to buy it).

The rent doesn't even cover the mortgage on an interest only basis. The property must be valued around the £150, 000 mark and I really don't know what to do. None of the sums add up and I am so scared that my life is going to be based around this stupid investment decision.

Im getting married in July and don't want to be in this position. I just don't know what to do.

Regards

Kully

kne · 11 February 2008 at 8:11PM

Use this to see what other flats have been bought for http://www.houseprices.co.uk/.

Did you get a survey on the flat? I'm sure this estimates its value for the mortgage company as they don't want to lend more than the flat is worth..... Obviously prices could have dropped but £70k is a lot in 3 yrs!

You could also get a valuation to put your mind at ease about the current value.

Due to recent increases in interest rates its possible the rent will not cover the mortgage, perhaps it would be worth looking into how much rent you charge?. Hopefully the property has increased in value to outweigh this.

chappers · 11 February 2008 at 8:21PM

Basically what your saying is you want to sell up if you can do so without losing any money, but you think there may be negative equity in the property and when you get married you can't afford to subsidise the rent anymore because your future wife will want that money for handbags and shoes.

I think as has already been said you should get it valued probably by an estate agent, especially if you are thinking of selling, you may be surprised and then problem over.
Otherwise how much is your contribution to the mortgage hurting you, can you ride it out for a few years until the property increases in value. Where and in what sort of accomodation are you living in now could you move into the flat.

k0108356 · 11 February 2008 at 8:21PM

KNE the flat was surveyed by Halifax and value of £220, 000 as put on it. This is not right. None of the properties in this block have sold for such a high price. They all range from £140, 000 to £200, 000.

k0108356 · 11 February 2008 at 8:35PM

CHAPPERS: Im living in Coventry (130 miles away) and contribution is about £350 per month interest only on top of that service charges @ £150 pm. Im living at home with parents in a five bedder.

I could keep the flat but al these charges add up over the years so am lost mate. The sums only point one way.

chappers · 11 February 2008 at 10:20PM

Right I see your problem you will be getting married and your overheads are going to go through the roof, when you need your own place.
How much mortgage do you have on the place and what sort of a deposit did you put in, also am assuming you have an interest only mortgage already so you can't lower the overheads on the flat.
If you are in negative equity can't see any real alternative other than to continue with the current arrangement until things improve, just have to tell your new wife that handbags and shoes are out of the question for the time being.
As KNE says you need to maybe look and see if you can squeeze abit more rent out of the flat, or maybe you can find abetter mortgage deal on it.

k0108356 · 11 February 2008 at 10:39PM

CHAPPERS: I've just had an idea, seeing as though I bought from George Wimpey couldn't I ask them to part exchange the flat for something in Coventry?

Although in my humble opinion I wil never get the overvalued sum of £220 000 for a one bedder in GU17, they maybe willing to knock something off on a new build in CV?

Regards

Kully

TEDDYRUKSPIN · 11 February 2008 at 10:45PM

Kully, it seems to me what you are saying is that you can't even afford this flat on your own salary alone? You also have no need to even live in it? You are worried that if you sell it you will lose alot of money?

(1) Go to an estate agent (get 3 estimates from different agents) and ask for a valuation. You maybe wrong!

(2) Could you live in this property? Do you want to?

(3) Sell it?

(4) Part exchange it?

It just seems you are basis is on your own knowledge. It seems you have'nt actually gone out and asked an estate agent!

Just remember your property is a new build apartment. This property would have lost 20% when you moved in. My crued estimate would be that your flat is worth at most £198k. And could sell probably for this price if it is in good nick.

silvercar · 11 February 2008 at 11:42PM

How did you manage to get a BTL mortgage where the rent doesn't cover the mortgage?

dunstonh · 11 February 2008 at 11:48PM

Can you confirm how much deposit you PERSONALLY put down? How much was put down as an "incentive" by the developer/builder?

New builds and appartments are the two things that suffer the most in a property decline. Put the two together and you really suffer.

Builders routinely overvalue property and find ways to hide it by using marketing incentives. These have often been used to allow you to qualify for a mortgage which the lender would never have agreed to by other means. Lenders are cracking down on this now but up until last year they turned a blind eye.

Being honest (and its going to hurt i'm afraid) buying a new build flat in 2005 was never a good investment decision. You entered into a high risk transaction which you would have got away with 5 years early and made a decent profit. However, the risk side is now showing its ugly face and you are looking at potentially a big loss. The developer saw you (and many others like you) coming and thats how they get away pricing the properties above their real value. Although real value is what someone is willing to pay.

You need to get this property valued by an estate agent. You also need to find out how many others are for sale. Just looking at this map :
http://www.nestoria.co.uk/gu17/flat/sale/bedrooms-1

There are flats all over the place and 2 bedrooms with parking are going for 150k-£160k. A few are higher.

The area appears flooded with appartments and thats a bad sign.

This bad investment decision isnt going to impact on the rest of your life but you could lose £50-70k on it and its going to hit your lifestyle in the short to medium term. Your problem is that that property prices are likely to get worse before they get better and it could take 10-15 years for them to get to the level you need. Wimpey are unlikely to p/e on another property with a value higher than what a local estate agent can get you.

homer_j_3 · 12 February 2008 at 8:24AM

and usually when part ex's are involved with new build companies, you have to buy a property that is worth a large % more than the value of the existing property.

Guys im 26 and need serious help!

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