Housing Dilemma

clairelh

I am going through a separation. House went on the market and we accepted an offer within 2 weeks.  Price offered was good, and I’ll be left with a decent amount of equity which will enable me to pay off my (considerable) debts and still have in excess of £100k to use as a deposit on another property. 

Where I live is a decent area and house prices reflect this.  We have 3 children and I need to stay in the area because of schools. The houses I will be able to afford will be in the lower end for the area, they do come up, but not in huge volumes. I thought I found a place. Ended up bidding to my max and it got rejected. I could have gone higher - the house needed some adjustments to make it would for us, and I have the budget for that, but the higher I bid the less likely I would be able to do the house. 

So.. it now appears, because of Covid-19, the market is almost crashing in terms of people selling.  There are no other suitable houses in this area in my budget (usually there are 3 or 4 up a week). I don’t want to jeopardise losing the sale of my house, due the the circumstances of having to sell. So what do I do? How long would a buyer expect to be made to wait in a chain? If I look at renting, what the best way to invest my deposit/equity money until I do find somewhere.  

Just as an aside - my job is very secure and I am lucky to know a house will be an ok investment during this strange time. 

 

AdrianC

Take the sale. Rent until the right place comes up.

Put the money into a bank account. Banks aren't going to go bust, and - even if they do - up to £1m is secured for up to 6mo. After that time, move it to a different bank.
https://www.fscs.org.uk/how-we-work/temporary-high-balances/

Davesnave

If you can get your sale through at the agreed price, or close, just do it and rent; don't ask your buyer to wait in these circumstances.

You'll get diddly-squat in the way of interest on your safely banked  money, but the cost of renting for the short term will be offset by the inevitable fall in house prices as the economic situation bites. The fact that you have secure employment will also be a big plus in the near future.

clairelh

Davesnave said:

If you can get your sale through at the agreed price, or close, just do it and rent; don't ask your buyer to wait in these circumstances.

You'll get diddly-squat in the way of interest on your safely banked  money, but the cost of renting for the short term will be offset by the inevitable fall in house prices as the economic situation bites. The fact that you have secure employment will also be a big plus in the near future.

Good point. I do think renting is dead money when you could buy, but I didn’t consider the possibility of prices falling. 

SharkMoney

It’s not dead money, you need a roof over your head and the children need to go to school!

Davesnave

clairelh said:

Davesnave said:

If you can get your sale through at the agreed price, or close, just do it and rent; don't ask your buyer to wait in these circumstances.

You'll get diddly-squat in the way of interest on your safely banked  money, but the cost of renting for the short term will be offset by the inevitable fall in house prices as the economic situation bites. The fact that you have secure employment will also be a big plus in the near future.

Good point. I do think renting is dead money when you could buy, but I didn’t consider the possibility of prices falling. 

Well, you're talking to someone who had a sale agreed at the start of the last crash and subsequently 'lost' around £60k to sell a year later.

However, we got 6% on our equity of around £400k while sitting in the rental, so made a good profit there. You won't have that this time around(!) but it's extremely unlikely that prices at current levels will be sustained, such is the shock to world economies from the pandemic.

Edited to add that we were in our rental for only 9months. Supply dries-up in a crisis, so we were lucky to find what we wanted (fairly esoteric) in only 6 months. The vendor was in a position where she had to sell, so we re-couped most of what we lost by buying well at the bottom of the market

AdrianC

clairelh said:

Good point. I do think renting is dead money when you could buy, but I didn’t consider the possibility of prices falling. 

Why do people think this way? It's a payment for a service - fully-maintained accommodation.

Nobody thinks this when they're deciding whether to buy or lease their new car...