Selling Up and Bailing Out

lynzpower

kingkano wrote: »

Although if there wasnt the 30% of BTL properties sitting empty at any one time and they were all available to purchase to real families, there is your HPI sorted and housing shortage would be alot less yes???

30% empty at any one time can mean any manner of things tho.

How long are they. When I worked in EA most properties were empty for a couple of days to enable cleaning & maintanence. our LL kept this place vacant for us for almost 2 months, waiting for us to exchange & complete when the flat was sold.

What exactly do you mean- 30% at any one time ?

Gorgeous_George

kingkano wrote: »

Although if there wasnt the 30% of BTL properties sitting empty at any one time and they were all available to purchase to real families, there is your HPI sorted and housing shortage would be alot less yes???

Have you got a link to the source data? My BTL was empty for 7 months while it was being prepared for rent. It had been empty for a long time before I bought it with ceilings down, load bearing wall missing and in a very poor state all around. It was empty again (for 8 weeks) when previous tenants left it in a disgusting state.

If 30% were really empty that would be something that local councils should be dealing with. As a LL I cannoit afford my property to be left unoccupied unnecessarily.



GG

kingkano

I cant find the link I'll keep searching for it....

500Triumph650

kingkano wrote: »

ummmmmm riggghhhtt... I often wonder where this magical mystical place is that rent is half the cost of a mortgage. The last 4 mths I looked at renting instead of buying the next house on. I found some places that were slightly less, most were similar. Nothing was anywhere near HALF a mortgage..... (fair dos I live in SE).

If you can find that.... definitely rent and save the difference. Quids in.

My rent is £800. My mortgage was £914. But the mortgage was for 172k and the rent is for a 260k house with a deposit of only £900 which I get back when I leave.

harryhound

It is amazing the good sense you and I were talking 7 months ago!

backtomum

We sold and are now renting, paid off all of our debts and and can now sleep at night. We've a wad in the bank and we are waiting until the market dips. We rent at £550 per month in a house that would probably cost £140k upwards to buy. We've been here nearly 18 months now - I'm not pretending doing this is easy - the house is shabby and there is always the uncertainty that the landlord will bail out but it was something we thought about really carefully. I cannot emphasise enough how our life has changed. We were both ill, couldn't sleep and our quality of life was bad when we had the debts. Good luck in what you decide.

macaque_2

keeperbear wrote: »

As a homeowner who will not be selling, I bet that I will be better off than you in four years time. During the last property crash, prices in my area of London recovered within two years. Factor in rental costs and transaction costs of selling and eventually buying again, it makes little sense to sell in the hope of a housing crash. That idiotic website housepricecrash (whatever it is called) is so fun to read. When was it set up? Years ago. Anticipating a crash, a mate of mine sold his 2 bedroom flat for £195,000 in 2004 and now rents for £1,100 a month. His flat was recently sold on again for £249,995. Owning property is not like purchasing and selling shares on the FTSE. As you live in your property asset, why uproot yourself with the risk of making or losing a few thousand quid? I never want to be a tenant again.

In addition, I don't care what my property is valued at, as it saves me rent every month (I am mortgage free). Even if there is a housing crash, many people, including myself, will be buying a 2nd property for speculative gain.

Your decision to keep your home it is entirely reasonable. Your suggestion that this decision will make you better off in 4 years time however is almost certainly wrong. For one thing, renting is now cheap compared to owning and this gives a renter more disposable income to invest. As an investment, property has historically low yields and a substantial risk of capital depreciation.

Circumstances today don't stand any comparison to those of the early 90s. For one thing, house prices are much higher than anything we have seen before. More importantly however is that the circumstances which delivered today's high house prices are unsustainable almost certainly unrepeatable. The spending spree that took off in the late 90's was fueled by a combination of higher taxes, and higher borrowing (public and private). As spending took off, so did house prices. As house prices took off, the economy was flooded with £50b per annum of MEW. This torrent of borrowed money created millions of short term jobs. Immigrants flooded into the country and increased demand for property. Domestic unemployment did not go down significantly but the government created schemes to reclassify the unemployed (sickness benefit, training schemes etc). We ended up in the extrodinary situation where even unemployed people were taking out mortgages.

The factors which have fed the house price boom for 10 years started to evaporate in the closing months of 2007. Inflation is back bringing with it higher interst rates. MEWing is drying up as house prices stall (or fall). Credit is much tighter. Public and private debt is unstainable at current levels. There will be £100b less to spend on immigrant jobs. The predictions are for steady rise in unemployment during 2007.

patchwork_cat

The only thing with selling up and renting is that I have noticed rents are lower than the buy to let mortgage you would pay were you to buy the house you are renting. How long will that be the case? Landlords are going to realise and put rents up to match buy to let mortgage prices and you will then be paying a lot more rent. Renting is not a cost effective long term solution. If it is a short term answer whilst rents are low and house prices are high, then until rents correct and house prices sort themselves out also fine, if longer than that you will be out of pocket.

I will just say this word of caution if you have made any equity out of your house then put it away safely as if you decide to rebuy you will need it as I can't see house prices falling a great deal merely stagnating a bit (can't comment on London and the Home Counties as they are a different kettle of fish and tend to be volatile)

Macaque when you say property has an historically low yield - how far back are you basing this. If you are going back 50 years then for 30 of those years yes possibly, but in the last 20 years house prices have rocketed. The house owning public has completely changed in the last 20 years, so stats from prior to that really don't hold water.

40 years ago it was relatively rare to be a home owner, not so today or even 20 years ago. The market has changed - whether it changes back to the market of 40/50 years ago - well let me get my crystal ball - I doubt it!

21 years ago I bought my first house for £18 000, that same house would be worth about £120 000, unless i had bought shares in microsoft, I don't know of any where else that would get that return. Is the next 20 years going to be the same is that growth sustainable, um again cross my palm with silver! Oh just worked that out 6.66 recurring I am going to the devil!

rebeccaj

patchwork_cat wrote: »

21 years ago I bought my first house for £18 000, that same house would be worth about £120 000, unless i had bought shares in microsoft, I don't know of any where else that would get that return.

but you haven't actually had that return on your money because until you sell your house you can't realise that gain, and because you always need somewhere to live, your 'return' will always be tied up in your house (unless you sell up and live in a tent!)

However, if you'd had that return from shares in Microsoft to quote your analogy, your gain would be in your pocket, so to speak. So increasing house prices are not the same thing at all!

patchwork_cat

whe

As an investment, property has historically low yields and a substantial risk of capital depreciation.

RebeccaJ - I was referring to the above quote . I take your point, but if I had wanted to invest what better way? My example was a personal illustration that that quote is incorrect on a purely return basis- If I had invested £18 000 and now sold up the return would be 666%.

As an investment buy a house has been in the last 20 years a very good deal. Do not make assumptions about whether I live in it - I was talking about investing.