anyone gone 'let to buy' on a house they can't sell?

23rdspiral

hi,

my EA is recomending we go 'let to buy' on our house which has been on the market nearly 12 months. Before i agree to talk to their in house mortgage broker (talk, not commit!), i thought i'd ask here for any advice / opinions. the idea of retaining an asset like this and not loosing any of the equity we've earnt through overpayments would be quite nice.

our neighbours house is for sale via probate so is on at 15k less, making it the cheapest house in our town, but still no-ones biting. so we've no chance of selling!

house 'vaule': 90,000
mortgage: was for 70,000; now 55,000 outstanding
rate: 1.5%
salary: 40,000

cost of house we'd like to buy: 130,000

i can't find any advice on the main site or the forum about this, sorry if i'm being dim!

GMS

23rdspiral wrote: »

hi,

my EA is recomending we go 'let to buy' on our house which has been on the market nearly 12 months. Before i agree to talk to their in house mortgage broker (talk, not commit!), i thought i'd ask here for any advice / opinions. the idea of retaining an asset like this and not loosing any of the equity we've earnt through overpayments would be quite nice.

our neighbours house is for sale via probate so is on at 15k less, making it the cheapest house in our town, but still no-ones biting. so we've no chance of selling!

house 'vaule': 90,000
mortgage: was for 70,000; now 55,000 outstanding
rate: 1.5%
salary: 40,000

cost of house we'd like to buy: 130,000

i can't find any advice on the main site or the forum about this, sorry if i'm being dim!

Do you have a deposit for the new property? If not are you raising this from a remortgage of your current property?

You will need to get permission to let from the current lender, which will most likely increase your interest rate. If you need extra funds they would probably insist on a Buy to Let product at a new rate which would be way above what you pay now.

The rental income would need to cover the mortgage payment plus a percentage, usually 25% more. Check what it would expect to get in rent and work the figures out.

Assuming you raised £13,000 for a deposit on the new place you would be looking at a 90% LTV mortgage and rates are not pretty.

Visit a 'Whole of Market' broker to discuss the scenario. You will get much better advice from a 'Whole of Market' than you will from the estate agent broker.

This is not as straightforward as it sounds. Retaining the asset sounds like a good idea but consider the possibility of rental voids, property damage, non paying tenants etc. Could you afford 2 mortgages if necessary?

23rdspiral

Hi GMS,

Thanks for your really quick reply.

We have a seperate deposit of around 15,000 but could possibly access more if it would help.

I will email my other half your questions/advice. Thanks again!

GMS

The more deposit you can raise the better. Lower rates are available for higher deposits.

Difficult to comment further without knowing your circumstances but you may be able to proceed with a 'Let to Buy'.

Good luck

surreybased

Hi,

Just check the likelyhood of it renting out - are you in an area that would attract renters? Voids must be factored into the equation.

g_attrill

I think let-to-buy is generally a better deal for the seller, but I believe that the regulation has been tightened recently and there are various hoops to jump through. Previously it was a free-for-all and the potential buyers were getting scammed by dishonest sellers using dodgy contracts - eg. the buyer would pay the rental price (often slightly inflated), plus a percentage extra as savings towards the deposit. Usually the tenant couldn't raise the mortgage and the landlord/seller is able to keep the saved deposit, or the landlord/seller is able to not proceed with the sale and keep the deposit due to some dodgy clause.

GMS

g_attrill wrote: »

I think let-to-buy is generally a better deal for the seller, but I believe that the regulation has been tightened recently and there are various hoops to jump through. Previously it was a free-for-all and the potential buyers were getting scammed by dishonest sellers using dodgy contracts - eg. the buyer would pay the rental price (often slightly inflated), plus a percentage extra as savings towards the deposit. Usually the tenant couldn't raise the mortgage and the landlord/seller is able to keep the saved deposit, or the landlord/seller is able to not proceed with the sale and keep the deposit due to some dodgy clause.

Are you thinking of Buy to Let? No seller in a Let to Buy

MadnessOfHPI

23rdspiral wrote: »

hi,

my EA is recomending we go 'let to buy' on our house which has been on the market nearly 12 months. Before i agree to talk to their in house mortgage broker (talk, not commit!), i thought i'd ask here for any advice / opinions. the idea of retaining an asset like this and not loosing any of the equity we've earnt through overpayments would be quite nice.

our neighbours house is for sale via probate so is on at 15k less, making it the cheapest house in our town, but still no-ones biting. so we've no chance of selling!

house 'vaule': 90,000
mortgage: was for 70,000; now 55,000 outstanding
rate: 1.5%
salary: 40,000

cost of house we'd like to buy: 130,000

i can't find any advice on the main site or the forum about this, sorry if i'm being dim!

Why not just drop the price to £70k? You'll still come out with £15k from the sale to go towards your deposit plus the 15k you have saved makes £30k deposit for the new house. No worry of two mortgages, void periods, damage, maintenance etc.

23rdspiral

MadnessOfHPI wrote: »

Why not just drop the price to £70k? You'll still come out with £15k from the sale to go towards your deposit plus the 15k you have saved makes £30k deposit for the new house. No worry of two mortgages, void periods, damage, maintenance etc.

thanks for the advice, but our neighbours house would take that and it's not selling either! our EA and our old EA both say that there's just not the buyers, aparently everyone wants to rent in our area (semi-rural, great road links), but there's not enough rental stock to go around, so we were thinking of going down that route.

TrickyDicky

Im pretty sure most houses will sell if they are on at the right price. Is this EA also a letting agent?

I just get the feeling that they might just be looking out for themselves. If you drop the sale price, they get less commision. If they can flog you a BTL mortgage and then get you on their books as one of the properties they manage, they stand to make more money from you than the lowered house price.

surreybased

Hi,
agree with the analysis of the last comment - be wary of the EA advising you especially they are the letting agent. Make sure you verify the rentability with other agents. It just seems strange that a place won't sell but can rent easily - if the rental yield is acceptable then I would expect professional BTL'ers looking at the properties.