Should I buy the house I'm renting?

yoyo_money

Hi, first post (I've lurked for a while) so be gentle with me!

My landlady has just said that 'if I wanted to buy the house, she'd be happy to consider it'. Now I'm not the best at picking up on subtlety, and she did say she wasn't planning to sell it otherwise, but it's got me a bit insecure.

It is a nice place, I'd like to own it, but is this a good time to buy? There are a few details which might help to decide...

- I have a reasonable job, as secure as any in these times I guess. The last company status report said they were expecting to 'at least' break even this year, and were not considering shedding any staff.

- My only real capital is about 30K in two endowments (which are still running but not tied to a mortgage following my divorce settlement).

- The house is probably in the 140-150K range.

- Rent is currently 650pcm. I can maybe afford another 100 a month.

- I'm 42.

The endowments are currently ~30K after the Market Value Reduction, so will be worth more when that gets lifted. However, house prices will presumably go up at around the same time...

So.. your thoughts. Is now a good time to buy? Any good/bad issues with buying your own currently rented property? Any ideas about the best way of using the endowments to fund a mortgage?

Thanks in advance

happybroker

You have to wonder why an investor is selling at the bottom (or close to) of the market, maybe she is desperate, stupid or knows something you don't.

Re the endowments, speak to an IFA with all the figures but I guess you would have to make a judgement call on how much "value" you put on the price you get the house for, personally I see nothing wrong in buying the house you have been renting.

You would probably, assuming a good credit history, be looking at around the £700 per month mark for the mortgage at a purchase price of £140k and £110k mortgage but if the landlady is either desperate or stupid you could get it for less maybe. Do your research though in case she knows something you don't.

good luck with it

luckyfool

Good - Security of tenure. Your landlady can currently kick you out at any point at the end of a current tenancy agreement (which is a maximum of 6 to 12 months long), or if you have let it run on it is probably on a monthly rolling basis so possibly only 1 months notice.

Bad - you lose flexibility - i.e. you cannot drop everything and emigrate or move to another part of the country for a wonder job. The mortgage/house would tie you down more than renting would. If you lose your job or have other cashflow issues then a mortgage is less flexible than renting. If renting you could trade down easily to a cheaper house/flat. Of course if you are permanent in your job and eligible you can get insurance that would cover you for unemployment to link up with a mortgage so you can insure against that scenario to an extent.

you are responsible for the expenses associated with home ownership such as repairs and upgrades etc.

You may or may not be losing out through surrendering your endowments.

---

I guess the main thing is, is the property one you love and would like to own? Would you be getting it at only a reasonable price roughly its market value, or would you be getting a decent deal on it? If you really want to buy, depending on your are you might be able to buy a different property at a better price if you found a motivated seller (unlike your landlady who doesn't seem to be fussed one way or the other).

With £30k or so to play with

Gorgeous_George

If you have decided to buy a house or if you decide to buy this particular house, the usual rules apply. Only buy if you think prices will stabilise and only if you wnat to live in this house for the next ten years or more.

I wouldn't read too much into your LL's offer. I have no intention of selling my BTL but of course, everything has a price whether it is for sale or not.

GG