let to buy - prices sky high

turtleneck

I want to convert my existing let property to BTL and take out a new residential mortgage for a new property to live in.

I currently have 50% equity in my property and want to release 25% to put down on the new one. So I will end up with two mortgages with both 25% deposits.

The trouble is I can't find anything I like in my price range. I am looking in Reading for a one bedroom. My budget is up to £160k. All I am finding is fairly new but small flats with high service charges, older flats with short leases or grotty flats converted from old terraced houses.

These are the best I have found:
http://www.rightmove.co.uk/property-for-sale/property-45446756.html
http://www.rightmove.co.uk/property-for-sale/property-30341820.html
The first has charges of £2000 a year if you total up the ground rent and service charge. The second has a short lease.

A year or two ago I would have been able to afford something a lot better probably a house with garden, but the prices have gone up in the last 6 months and are now astronomical.

What should I do now? Is it worth thinking about renting for a while until the market settles? I personally feel the prices are way too high and I am hoping they go down but who knows.

I have read advice before where people say to buy somewhere further away but there are two problems with this. One you have to go 20-30 miles away to get lower prices and it would mean a commute to work which would add up.

Any advice welcomed....

dimbo61

You need to either sell up the rental property so you have a good deposit for your next home or move to a cheaper area!

dimbo61

If you have 50% equity and £160,000 budget I guess 25% equity in rental is £40K s if you sell you have £80K deposit plus £120K mortgage!
Not sure of house prices in Reading but that buys a nice house round here!

cattie

I wouldn't be looking at the 2nd one because of the length of the lease. Plus there are no pics of the inside of the property & that makes me think it must be pretty bad.

You haven't said why you want to leave your current home in favour of a new one. Can't you just stay there & put off the BTL plans until some future point?

Reading is a very popular commuter area with a university, so it is likely that prices will continue to increase for quite some considerable time yet & I can well imagine how little will be available with your very small budget. The way prices are rising you are probably going to be priced out completely before long. When properties sell at very close to or over asking price, then the prices can't be considered way too high. It just means that the market has decided their value.

Renting should only be considered if there is no other option & you are prepared to perhaps have to keep moving on every six months.

turtleneck

Thanks, my existing property is already let and I want to keep it that way - I like having an income other than from working. My long term plan is to only have to work part time so I want to keep the rental income.

I have been told I need to convert to BTL as it has been let for nearly 2 years and I can't get consent to let any longer. So I thought now would be a good time to buy a second place which I can live in. I am put off by the BTL fees though as my current lender charges £2000 as an application fee.

This is why I was also considering renting. If I rented somewhere affordable based on my wages, then I can use my wages for the rent and bills and living costs. At the same time my one and only mortgage will be paid by the rental income.

As you say cattie, if I decide not to buy again now I might not be able to if the prices keep on rising. It's so frustrating!

Mrs_Soup

Have you looked at a slightly higher price bracket with a view to making an offer. I have just done up to 170K on Rightmove and there are some quite nice places, a number with 2 beds.

http://www.rightmove.co.uk/property-for-sale/property-44200276.html?premiumA=true

I live in Reading and have heard that market has gone mad lately though no experience of it myself.

turtleneck

That's an idea, I guess I could put in offers on higher value places, they can only say no. Don't like the area of the flat you posted, if you go on street view one of the doors has been boarded up and there's a dodgy looking bloke in a high viz standing outside!

Running_Horse

If you can't afford the prices where you want to live, your choices are to change the budget or change your expectations. Are there cheaper areas nearby?

Pixie5740

turtleneck wrote: »

That's an idea, I guess I could put in offers on higher value places, they can only say no. Don't like the area of the flat you posted, if you go on street view one of the doors has been boarded up and there's a dodgy looking bloke in a high viz standing outside!

Dodgy people tend not to draw attention to themselves by wearing high viz clothing.

Mrs_Soup

turtleneck wrote: »

That's an idea, I guess I could put in offers on higher value places, they can only say no. Don't like the area of the flat you posted, if you go on street view one of the doors has been boarded up and there's a dodgy looking bloke in a high viz standing outside!

I was going to say well I've looked in my bit of reading and there's nothing under 160K but it appears there is

http://www.rightmove.co.uk/property-for-sale/property-43926505.html

Caversham Heights- one of the supposedly poshest bits of Reading - in fact there are several in RG4 which includes Caversham/Emmer Green.

But beware this area - Lower Caversham-
http://www.rightmove.co.uk/property-for-sale/property-44527943.html

not so nice but not terrible. Cheaper bits of Reading tend to be Oxford Road area- west of town centre, Whitley etc. Lower Earley can be good value but not how it is for flats, might be more houses.

Pixie5740

Running_Horse wrote: »

If you can't afford the prices where you want to live, your choices are to change the budget or change your expectations. Are there cheaper areas nearby?

I agree with Running Horse. You either have to change your budget, by selling the BTL property or saving more money, to afford the kind of place you want to live in or change your expectations.

I see from some of your other posts you are currently living with your parents. Have you been able to save any money whilst living with them? If not the you probably can't afford the mortgage and all the bills living alone.

You might like the idea of building up a BTL portfolio and working part time but financially it isn't possible for you to own a BTL and live in the area you want to in the kind of property you want.

How big is the BTL property? If there is more than one bedroom could you move back in and then rent a room or two to lodgers?