First time buyer - 3rd house fallen through.

FedUpFirstTimeBuyer24

I honestly cannot believe our bad luck in wanting to buy a house. I’m trying to stay positive as we are lucky to be in the situation to be able to buy and we are happy with our rental property, but we’ve lost a lot of money now and have been through this process for over 18 months. 

I am a school teacher but I also own a tutoring agency which I currently run as self employed sole trader. We have been waiting for the last 18 months to change to a limited company as we didn’t want to change legal entity whilst wanting to buy a house. However, now we have had all this bad luck, I’m wondering if I should just change legal entity now, save a lot more money in doing so and then look to buy a house in the future when the market is hopefully a bit more stable?! 

It just feels like something is telling us now isn’t the right time to buy. Surely if 3 houses have fallen through this is telling?
The market is insane where we are at the moment. We are in Berkshire and we are looking at 475k for a 3 bed! 

Any advice would be amazing. I feel totally lost and overwhelmed. 

Thank you! 

Some context: 
1st house - March 2021. Shocking survey. Vendors only willing to knock £500 off for thousands and thousands of pounds of work. Forced to pull out. 

2nd house- January 2022- down valuation of 30k. Forced to pull out as our deposit was already at maximum and again, no flexibility.

3rd House - March 2022. Down valuation of 50k. Structural survey finding timber that had potentially rotted and a strange construction. Forced to pull out as again no negotiation for thousands and thousands of pounds of work. 

K_S

@FedUpFirstTimeBuyer24 Sorry to hear about your torturous FTB journey. Anecdotally, I'm starting to hear from peers about increased instances of down-valuations for clients so perhaps we are looking at a slight cooling-off. But anyways, not going into discussing/predicting house prices, it's against forum rules.

With respect to a future mortgage, given that you plan to incorporate your sole-trader business -

- your mortgage options will be limited as a newly minted ltd.co.Director, though it being incorporated from an already running sole-trader will bring some lenders in to the picture

- once the ltd.co. has been trading for a year and you have your first year accounts, options should open up

- if you don't already have an accountant, I would recommend considering using one from the get-go for the ltd.co. It'll often help with expanding the number of lenders you can use when it comes to buying in the next couple of years. 

With respect to down-valuations -

- if you still would like to buy a property that has been down-valued, it's always worth considering making a second application using lender2 that doesn't share a surveyor-panel with lender1. You'd be surprised how vastly different two mainstream valuations can be a week apart and my clients have often been able to et to offer using this route.

- most mainstream lenders (with the notable exception of Halifax which charge £100) offer free vals, and product-fees (if any) can be added to the loan so in most cases it's cost-free for the client

GDB2222

2nd house- January 2022- down valuation of 30k. Forced to pull out as our deposit was already at maximum and again, no flexibility.

By down valuation, you mean that you over-offered. That’s a real problem in areas where prices are rising rapidly, as valuations are based on completed transactions that were agreed some months earlier. 

If you don’t have a large deposit, you’ll have to be careful not to over-offer, but of course that may mean you don’t get to buy anything. However, at least you won’t be wasting money on fees for purchases that are liable to fall through.

Woolsery

Have you really lost money? It seems to me you've dodged some bullets.

I retired in the noughties and failed to secure an acceptable long-term property in the buoyant market that characterised 2006/7. Most of the time we didn't even offer, because little we saw represented value. We were sometimes laughed-at by agents who were riding the wave of the property boom in Wales, fuelled by the 'mad' English. From my sources over there, it seems quite similar now.

Call it karma if you like, some of those agents disappeared in 2008 as the recession hit, never to be seen again. Even in my highly desirable English city agencies closed down. We waited things out in a rental and eventually found the value we sought in England, moving in during August 2009, just as the economic situation was showing the first glimmer of recovery, though not everywhere.

Will it be the same this time? No one knows for sure, but I'd say the fundametals are much worse. Personally, I'm hunkering-down for a hard time ahead, but at least we're where we want to be.

TheJP

It sounds like you are going for properties that are out of your reach or you are massively over offering. Not sure what relevance your employment or side business entity have regarding the process, i doubt the legal entity of your side business will matter when it comes to affordability? The process of making it a Ltd company likely wont affect your mortgage either.

Could you widen your search area? 

Regarding what the surveys picked up you mention £0000s, did you have the relevant contractors quote for the work? Surveyors are known for giving inflated costs that can be 30-50% higher than the actual cost of work.

K_S

TheJP said:

It sounds like you are going for properties that are out of your reach or you are massively over offering. Not sure what relevance your employment or side business entity have regarding the process, i doubt the legal entity of your side business will matter when it comes to affordability? The process of making it a Ltd company likely wont affect your mortgage either.

For the benefit of others who may come across this thread - if the OP requires the 'side-business' to be considered as income, it needs to meet lender criteria.

For the purposes of a mortgage, a sole-trader with 2+ years of accounts will be treated differently from a shareholder-Director of a recently incorporated ltd.co. The ltd.co. being incorporated from an already running business will definitely widen the lender pool, but it still won't be as wide as it would with a sole trader business that's been running for 2+ years. I hope that makes sense.

simon_or

OP, to add to what KS said above, if you are going from ST->limited company, adding your spouse as a shareholder/director and looking to get a mortgage soon after, your previous profits will be discounted to your % share by many lenders, so that's a pitfall to be aware of.

ProDave

My guess is you are looking at older properties.  I have been saying for a long time now that very much of the UK housing stock is in a dire state of repair.

As a first house you would probably be a lot better looking at new or nearly new where you are less likely to have major faults at survey time.

Gavin83

FedUpFirstTimeBuyer24 said:

I honestly cannot believe our bad luck in wanting to buy a house. I’m trying to stay positive as we are lucky to be in the situation to be able to buy and we are happy with our rental property, but we’ve lost a lot of money now and have been through this process for over 18 months. 

I am a school teacher but I also own a tutoring agency which I currently run as self employed sole trader. We have been waiting for the last 18 months to change to a limited company as we didn’t want to change legal entity whilst wanting to buy a house. However, now we have had all this bad luck, I’m wondering if I should just change legal entity now, save a lot more money in doing so and then look to buy a house in the future when the market is hopefully a bit more stable?! 

It just feels like something is telling us now isn’t the right time to buy. Surely if 3 houses have fallen through this is telling?
The market is insane where we are at the moment. We are in Berkshire and we are looking at 475k for a 3 bed! 

Any advice would be amazing. I feel totally lost and overwhelmed. 

Thank you! 

Some context: 
1st house - March 2021. Shocking survey. Vendors only willing to knock £500 off for thousands and thousands of pounds of work. Forced to pull out. 

2nd house- January 2022- down valuation of 30k. Forced to pull out as our deposit was already at maximum and again, no flexibility.

3rd House - March 2022. Down valuation of 50k. Structural survey finding timber that had potentially rotted and a strange construction. Forced to pull out as again no negotiation for thousands and thousands of pounds of work. 

Did you offer over the asking price for properties 2 and 3?  Also what did the survey for property 1 say? Some surveys have a tendency to over-egg the issues with a house to cover their own backs and over-estimate the costs involved to put things right. If I was a vendor and a buyer told me about their survey picking up loads of issues I knew didn't exist I'd be reluctant to reduce the offer too. Some buyers use the survey as an excuse to drive down the price too so some vendors are naturally dubious. Without knowing the exact circumstances it's hard to know what's occurred.

Unfortunately it's a sellers market at the moment so many vendors are less flexible than they were, plus buyers with cash behind them are willing to offer more to secure the property. You can wait, it might get better, then again it could get worse. It's entirely unpredictable.

I'd carry on looking though but be a little more realistic in what you can afford. 

piglet2017

I'm also a FTB and interested in the comments that say that you're over-offering, or you need to look at cheaper properties.

The market seems to be rather insane at the moment. I'm looking at 2 bed houses in Surrey and it's like every new property that goes on the market is priced at £20k+ higher than the last. It's making me nervous as it feels to me like the properties are a bit over priced, but on the other hand they still seem to be selling quite fast - so you can offer less, but you're unlikely to actually get anything. 

With the OP, if they are looking at £475k properties that have been downvalued £30-50k that's a 6-10% difference. Even if they were looking at £400k properties, if those were downvalued they'd be looking at finding an extra £24-40k - so potentially needing double the deposit they already have?! It feels like the downvaluation issue is one across all types of properties, not just those in their price bracket? Unless you go for a property that is for some reason unpopular and so you can get more of a "bargain" - but I'm not convinced you can do that at the moment as there are hardly any properties to begin with. I'm not sure what the answer is?

TheJP

K_S said:

TheJP said:

It sounds like you are going for properties that are out of your reach or you are massively over offering. Not sure what relevance your employment or side business entity have regarding the process, i doubt the legal entity of your side business will matter when it comes to affordability? The process of making it a Ltd company likely wont affect your mortgage either.

For the benefit of others who may come across this thread - if the OP requires the 'side-business' to be considered as income, it needs to meet lender criteria.

For the purposes of a mortgage, a sole-trader with 2+ years of accounts will be treated differently from a shareholder-Director of a recently incorporated ltd.co. The ltd.co. being incorporated from an already running business will definitely widen the lender pool, but it still won't be as wide as it would with a sole trader business that's been running for 2+ years. I hope that makes sense.

Thanks for adding clarity, i should have made clear i was referencing the houses that fell through not future affordability.