True cost of renting?

rosie383

We have sold our home (STC) but still haven't found the right house for us to buy. Our buyer isn't going to be patient for much longer but we don't want to be pressured into buying just for the sake of it.
If we were to consider renting for 6 months at a rent of around £850, what is the true cost with fees, professional cleaning at the end etc?
Or are we better to buy something for perhaps a year while we keep looking for the right house? We will be buying mortgage-free which perhaps makes things a bit less complicated.

kinger101

Letting agency fees vary, but are typically around £200-£500. You don't have to get a property professionally cleaned. You just need to make sure it's as clean when you move in. If you can get the "professional" standard yourself, it's fine.

In terms of the cost of renting v selling, you need to compare cost of rent v cost of interest + maintenance.

I wouldn't buy something for a year. Not with all the EA fees and legal costs. Mortgage companies don't like lend on properties purchased 6 months ago, and buyers are sceptical about properties that come back onto the market quickly. They'll think there might be a problem with the house/area/neighbours.

puppey

Agree with kinger101, definitely don't buy for only a year. Benefit of renting means you can try the area out first and if you really like it then find a house in the area, if not then simply buy/rent elsewhere.

franklee

Letting agent fees can be anything from 50 quid per tenant to several hundred pounds. Suggest you ring some in your target area and ask for a list of all their fees including all to get into the property, renewal fees and all at the end of the tenancy. Or you can rent directly with a landlord e.g. see ads in local paper, fees are likely to be less.

Factor in the interest you will get from having your cash in the bank instead of in the house. In the past that used to be enough to pay the rent (four or five percent) these days it'll pay less than half the rent if that.

No maintenance e.g. boiler breakdown when renting. Utility bills and council tax are paid by the tenant so no change to owing (unless in a HMO). Tenant pays contents insurance but not buildings insurance.

Factor in the rise or fall in house prices.

Two lots of buying/selling fees instead of one lot.

Can you afford to buy the temporary property and the right house holding both at the same time? If not then owning the temporary property will put you in a chain which may mean you miss out on the right house if you can't sell in time. IMO being chain free and mortgage free makes you the ideal buyer so you can pounce on the right house. If the right house rises more in price than the temporary house and you are locked out from buying by being in a chain that could cost a lot.

I would rent and remain chain free or make your buyer wait in the current chain.

Other options are a winter let of a holiday property if you are going to be buying very soon or perhaps lodging with your stuff in storage.

rosie383

Thanks for your input. Sometimes it's hard to think completly straight when you have been in this house buying process for months.
Good advice re trying landlords rather than LAs. Our buyer isn't pushing very hard yet but they did offer about a month ago. I know the EA will be desperate to keep the buyer as we had given them notice so this was their last chance for fees from us.
There have been a few more houses coming on the market this week so we are keenly looking on Rightmove and all of the local agents ring if there is anything they know may suit us.

rosie383

Sorry, just having a think. If we were to rent for six months at a cost of minimum £750 pcm, plus costs and removal costs, we would be paying out a minimum of £5k which we maybe should just offer toward the house that we want even though we believe that it is worth what we offered and not £5k more iyswim.

Davesnave

rosie383 wrote: »

Sorry, just having a think. If we were to rent for six months at a cost of minimum £750 pcm, plus costs and removal costs, we would be paying out a minimum of £5k which we maybe should just offer toward the house that we want even though we believe that it is worth what we offered and not £5k more iyswim.

Yes, so long as you are not giving that house an extra gloss because you're in a corner at the moment. Personally, I would pay £5k over the odds for the right house, as £5k in the long term is neither here nor there.

We 'sold' our house several times in the Crash period of 2008. Each time, we began a purchase process, which then fell through when our buyers pulled out. Later, we were glad that it happened that way.

It wasn't necessarily that these houses were sub-standard, just that they were wrong for us. We were trying to make them fit, because there wasn't much on the market in those dire times.

Finally, when we did sell, we rented for 9 months. This put us in a very strong position when a highly motivated seller put their property on the market at a low price for guranteed early completion. In other words, regardless of higher interest rates paid then on our easy access cash, the rental paid for itself.

rosie383

Thanks for that. If we thought that house prices were going to start to drop then it would be more tempting to rent. Unfortunately prices don't seem to be dropping where we are. The house that we do want is the best one that we have found so far and just feels right if you get me.

princeofpounds

If you are in rental accommodation and not part of a chain, you put yourself in a much better bargaining position for buying.

It's always hard to judge without a counterfactual, of course, but as long as you are someone who doesn't fall in love with a particular house then you can probably save yourself thousands on your purchase.

kinger101

One option would be to go for a period tenancy from the start rather than committing to a 6 month AST (or even 3 month AST to periodic). Some landlords, particularly self-managed, may be prepared to do that, and they may be more inclined to do so if they charge a bit more to cover the costs of getting a new tenant when you leave. Might be a viable alternative to committing to 6 months.

rosie383

Thanks Kinger. I didn't think that was possible from all that I have read on here. What is the best way to go about finding such a thing? Independent LL?