Facing loss on new build flat sale in Clapham, London

propertyrental

and given that prices are falling, you may well find you can buy in your new location at a lower price than you would have done6 months ago. Swings and roundabouts...

https://forums.moneysavingexpert.com/discussion/5180214/tenancies-in-eng-wales-guides-for-landlords-and-tenants/p1

Sarah1Mitty2

LegallyLandlord said:

Sarah1Mitty2 said:

That was before the base rate hit 3.5% though.

True. That’s a very good point, and the rates for  buy to let mortgages tend to be higher than for owner occupiers, requiring a minimum loan to value of 75%. 

Margins were very low for landlords before the base rate went up. I personally sold my flat after 2 years of renting as the yield was too low because of the service charge. 

The economics of selling v renting it out will depend on so many factors, and with base rates higher, being a landlord is less attractive now. But properties in London do tend to have good capital growth over time, if they’re in a good location, something else to put in the mix. 

I tend to think that in this case they could soften the blow of any loss of value by getting a tenant in, but it has to be the right tenant and the landlord has to get the legal/health and safety stuff right nowadays?

Gycraig

propertyrental said:

and given that prices are falling, you may well find you can buy in your new location at a lower price than you would have done6 months ago. Swings and roundabouts...

https://forums.moneysavingexpert.com/discussion/5180214/tenancies-in-eng-wales-guides-for-landlords-and-tenants/p1

Doesn’t really help if they lose all there deposit selling it for a loss though 

SophieLondon

Hi all,

Just thought I would post a little update here. I am over a year on, and the flat is still on the market.

It went up for £400k but is now at £385k (versus £435k I paid for it). I am willing to take £375k but I have not had a single offer. Hoping that the market could pick up in spring/ later this year, especially because its still in mint condition and a great location in Clapham - any thoughts on this?

To answer some questions that came above. I planned on living in the flat long term. I did not imagine I would need to leave London (long term/forever) or that I would get married and now be pregnant, so moving back into a small one bed flat is now impossible and I need to release what is left of my deposit to put towards our next place.

I don't want to let long term because after tax on the rental income, I will be making a loss with everything else I need to pay for. So I will need to take what I can get by about summer, even if it means going to a 'we buy any house' firm.

Appreciate any and all advice!

theartfullodger

Tough, sorry, but prices to drop.  Part of the system.  Good luck 

FreeBear

SophieLondon said: I don't want to let long term because after tax on the rental income, I will be making a loss with everything else I need to pay for. So I will need to take what I can get by about summer, even if it means going to a 'we buy any house' firm.

If you are desperate to sell, bung it a traditional property auction (not that Modern Method of Auction). You can set a reserve so that you don't lose too much if it does sell.

eddddy

SophieLondon said:

So I will need to take what I can get by about summer, even if it means going to a 'we buy any house' firm.

Bear in mind that those companies buy property to immediately resell it at a profit - often on the same day.

Some of them claim they pay 80% of market price.

So it might work like this...

• They might decide that the market price is £350k (i.e. they could sell it almost immediately for £350k)

• So they'll offer you 80% of £350k = £280k

• So they'll aim to buy from you at £280k and resell on the same day for £350k  (making themselves £70k profit)

As you can probably imagine, you'd be better off selling it yourself for £350k.

lika_86

Drop the price now as it sounds like you're willing to accept less. The fact you haven't had any interest suggests it's still overpriced. 

Every month you're paying a chunk of your mortgage on interest (depending on rate etc I'd guess a good few hundred a month?). The longer you hold onto it the more money you're paying in interest, council tax, bills etc, that could very quickly even out any higher price you'd hope to get if the market improves.

ReadySteadyPop

SophieLondon said:

Hi all,

Just thought I would post a little update here. I am over a year on, and the flat is still on the market.

It went up for £400k but is now at £385k (versus £435k I paid for it). I am willing to take £375k but I have not had a single offer. Hoping that the market could pick up in spring/ later this year, especially because its still in mint condition and a great location in Clapham - any thoughts on this?

To answer some questions that came above. I planned on living in the flat long term. I did not imagine I would need to leave London (long term/forever) or that I would get married and now be pregnant, so moving back into a small one bed flat is now impossible and I need to release what is left of my deposit to put towards our next place.

I don't want to let long term because after tax on the rental income, I will be making a loss with everything else I need to pay for. So I will need to take what I can get by about summer, even if it means going to a 'we buy any house' firm.

Appreciate any and all advice!

If there is no interest it is still priced too high for the market, it really just boils down to this, the talk in financial media is of more rate hikes being a possibility in the U.S, this would mean that the BOE are forced to also raise rates again or stay where they are, neither is a scenario that benefits you. I would just drop the price until it sells and treat it as a financial lesson, then get on with your new life! 

GDB2222

In your first post, you said "I would be willing to take a small loss (probably go down to £415,000) ", and then you said another flat was being offered at £385,000.  So, it was obvious that you couldn't sell yours for £415,000.

You then marketed your flat at £400,000, and unsurprisingly it didn't sell.

You are currently marketing at £385,000, and nobody is interested. That's the market telling you that £385,000 is still too high. 

If you want to sell, you will have to accept market price. There's no point now saying "I am willing to take £375k", as you can't dictate to the market. Remember, this is not about you. It's not about what you paid, or what you want, but about what else is on the market and what buyers can afford - none of which you have mentioned.

If you want to sell, drop the price so you have several people interested.