Should I sell and rent?

scoobiesnacks

Hi all

I'm selling my house to downsize after a separation. I've had a great offer from a buyer who wants to move quickly. Problem is I want to buy in the same area, Greenwich, but there is very little on the market. Because of this house prices are really booming here and competition is fierce for anything half decent.

So, should I take the offer and rent, or should I insist on waiting until I found somewhere myself? My concern is that if I don't find anything in the near future, prices might continue to go bonkers and I won't be able to afford what I want. If I take the offer I'll have 120k to put into a new property or invest while renting.

Contributions from anyone with a crystal ball greatly appreciated!

silvercar

We got an asking price offer on day 1 of marketing our house but couldn't find anything. We decided we couldn't take the risk of being out of the housing market for any length of time in case prices swept us by.

People kept saying prices could drop and we'd be laughing but having to spend more money to get the same house was a risk too great.

manhattan

120k in a high interest account would roughly give you around £400 a month interest which you could use towards your rent costs.

but as you say if you dont buy now you may not be able to afford the type of property you want in the future!

if i was a house owner right now with 120k equity, i myself would sell to rent,but everyone is in a different position or has a different lifestyle etc,etc.

that £400 monthly interest would cover around 75% of the rent costs of a new 3 bed house in my area.

lynzpower

I am considering very strongly selling to rent myself in the next 6 months.

I think yes prices will continue to rise here in london, i did think we were tipping a bit, but stuff round here is selling and the prices are silly.Personally I want to sell while people are still paying these silly prices, but of course you dont have much choice on the timing.

Our maths works out we will save around 350 a month ( taking into account savings on life assurances as well as the overheads) by renting a small flat for a while, and on top of our equity in the bank ( which wont make as much interest as yours but might pull us a further 150-180 a month - so we are looking at having 500 pcm spare to save towards our next place. We want something rather specific and with these sort of savings, we expect that we will be in a good position when if what we do/can buy comes up, we can move fairly quickly. We wont be pushed into buying something were not comfortable with, so we think its an option that works for us

HTH
lynz

scoobiesnacks

Sounds like lynzpower you're in a similar position to me. I know what type of property I want in my area but they're either all under offer or not on the market, so I'm going to have to wait. I think if I drag this out I'm going to feel pressurised into buying something so I don't lose my buyer which isn't the right decision. At the end of the day it's a gamble and I am nervous about stepping off the ladder, but I've done really well with this property and can't complain.

master_blaster_2

hi
i think the problem with selling and rentin is that if house prices go up too quickly u will end up with a bigger mortgage for the same house
if you heave £500 per month .. that is £6k per year ... now if house prices ar going up more than that you will have to borrow more to buy the same house.
i live in belfast and houses ini norther ireland were on average going up by 600 per week!!!!!!!
i just aggreed a house this week , and it went £35k over askin price
you defo need to take into concideration the local market

courtjester

They don't even have to go up that quickly.

If prices rise just 2.5% over 12 months, that is £5,000 more you have to find to buy back into a £200,000 property.

If you're saving £500 per month when renting, that doesn't really cover what would be a small rise is value and then there's the costs of selling up /purchasing on top to consider in terms of solicitors fees and stamp duty (1% when you buy another £200,000 property).

Every pundit has an opinion on what is going to happen to the market, but no-one really knows. Even if interest rates rise another point which it seems pretty certain they will this year, the overall rate of 4.75% is still pretty low.

lynzpower

thanks for that courtjester. Sadly Im really not brilliant at maths, but it does seem to stack up well for us, but thanks for your figurees, its something I hadnt really considered. . It also depends where you are going to buy. We are looking in stamp duty exempt areas only ( and somewhere fairly tatty ), so we have a v narrow boundary, of finding what we'd like. IM not worried about it overly, if it doesnt work out our way,then we will be happy to wait and bank whatever money we can.

Hey, if nothing shows up theres a plot of land in the carribbean Ive my eye on, so maybe we'll take early retirement :rotfl:

irnbru_2

courtjester wrote:

If prices rise just 2.5% over 12 months, that is £5,000 more you have to find to buy back into a £200,000 property.

By which time lynzpower (or the OP) may have the mortgage already to go and be able to give 1 months notice on their tenancy. An excellent buyer for any seller.

Additionally, interest rates may have risen tempering any rise in property prices - something which should be factored in to the mortgage equation.

scoobiesnacks

I'm beginning to think that selling to rent is a gamble I'm not prepared to take. There are houses coming on the market round here, Greenwich, which are very oridinary and each one that comes on is 20 - 30k more than the last, and they're regularly going to sealed bids.

An estate agent told me not to worry about losing my buyer as there's so little on the market and that even if I did there would be more buyers queueing up.

The downside is I'm not optimistic about finding what I want quickly. Catch 22.:rolleyes:

Buying in London sucks!

Rave

What's the rental market there like? If there's reasonably priced property to rent, then I'd STR and be done with it. Prices might still be rising- although appearances can be deceptive and EAs are economical with the truth, don't forget- but if they are it's a final sucker's rally. Greenwich is still SE London at the end of the day, not Knightsbridge. I can't see how high prices can be sustained in the long run. Mervyn King sounded a clear warning bell over the precarious state of the economy a couple of days ago- having no debts and plenty of liquid assets/cash will be a very sensible position going forward:).