Dilemma…

Maka344

We have sold our current property, but we’re facing challenges in finding a suitable property due to the current high prices and changes in affordability caused by interest rate increases. The estate agent suggested renting temporarily to facilitate the chain thus; we’ve been thinking about this option in great detail. We have a 2-year-old child, which makes us prefer renting in our current area to avoid disrupting her childcare arrangements as the area we would rent in might not be the area we end up buying in, should we decide to rent. We are open to the idea of renting, but it depends on the direction of property prices, I know this is difficult to predict. 

Our situation is we have 38% equity in our property, but there’s a £10k ERC (Early Repayment Charge) and rents in our area are quite high at around £2.5k PCM - 12 months at this price point would cost around £52k - this includes rent; ERC and the money we wouldn’t be paying toward reducing our capital payments on our current mortgage. 

According to the recent prediction reports, property prices are predicted to drop significantly by around 25%. However, if the drop is smaller, it might not make financial sense to rent. Our current desired locations are in Kent, specifically Sutton Valance, Headcorn, and Tenterden, but we’re open to other areas like Tonbridge, Tunbridge Wells, and Sevenoaks.

There’s also the possibility that prices won’t decrease as much as expected due housing demand. We want to make a wise decision for our future, which is why we are considering the rental option for 6-12 months. But this choice comes with significant additional costs and doesn’t reduce capital in that time frame which we’ve included in the calculations above. 

We would greatly appreciate any advice as we are new to navigating this type of situation.

MultiFuelBurner

Firstly you have not sold your property. It's sold subject to contract as I presume you have not exchanged?

Secondly no one for certain can say what will happen to prices or interest rates or any stimulus the Government may bring to the table to keep the building industry going.

I have said this on other threads, we would never leave the property market for more than a year or you risk not getting back on where you were.

It's a gamble, perhaps not one you want to take with a young family and delaying the sale and buying your next home might be the best option....are you a gambler???

Maka344

MultiFuelBurner said:

Firstly you have not sold your property. It's sold subject to contract as I presume you have not exchanged?

Secondly no one for certain can say what will happen to prices or interest rates or any stimulus the Government may bring to the table to keep the building industry going.

I have said this on other threads, we would never leave the property market for more than a year or you risk not getting back on where you were.

It's a gamble, perhaps not one you want to take with a young family and delaying the sale and buying your next home might be the best option....are you a gambler???

Correct, we are SSTC - we have not exchanged yet. You make a good point re what the Government may do (as seen in Covid) which meant prices went even more crazy. 

Somewhat, less so then previously due to having a child. 

Slinky

Did you see the report the other day that the average rental property has 20+ people trying to rent it? The idea of renting might seem an option, the reality may prove very difficult to achieve, particularly if you have children and/or pets as many landlords are putting these applicants to the bottom of their lists as they cannot take larger deposits as a guarantee against damage to the property. Your child may be an angel, another applicant without children wanting the same property may be a better prospect in a landlord's eyes.

ETA found the report

https://www.bbc.co.uk/news/business-66246223

Maka344

Slinky said:

Did you see the report the other day that the average rental property has 20+ people trying to rent it? The idea of renting might seem an option, the reality may prove very difficult to achieve, particularly if you have children and/or pets as many landlords are putting these applicants to the bottom of their lists as they cannot take larger deposits as a guarantee against damage to the property. Your child may be an angel, another applicant without children wanting the same property may be a better prospect in a landlord's eyes.

ETA found the report

https://www.bbc.co.uk/news/business-66246223

I did see that, which is also a consideration. We do have a small dog which would impact us. We would also need an EV charger which again, limits us. 

The agent said that they would assist however, that restricts us to their rentals and the rental market (as you’ve pointed out) is crazy right now.

We have friends/family who have recently needed to rent and some of the stories are also off putting to this regard. 

MultiFuelBurner

I would consider your young family and look to purchase in a good catchment area for Pre and primary schooling and that means whatever is happening with property you are looking at least 9 years time before a move pre secondary schooling (and maybe not at all)

Unless you are thinking private schooling?

I wouldn't rent right now and we rent out 13 properties.

Slinky

Children, dog and needing an EV charger I think could be as much chance of finding a rental property in the area you need, as finding somewhere to graze your unicorn.

Why do you have to move NOW? Is there any chance of extending your current home? Or let this buyer go and only put your property on the market when something you really want appears. If your current home sold quickly, hopefully you could get it sold again when needed. In the meantime you're continuing to pay down your own debt, not paying the early charge and a landlord's mortgage.

Maka344

MultiFuelBurner said:

I would consider your young family and look to purchase in a good catchment area for Pre and primary schooling and that means whatever is happening with property you are looking at least 9 years time before a move pre secondary schooling (and maybe not at all)

Unless you are thinking private schooling?

I wouldn't rent right now and we rent out 13 properties.

This is what we are currently thinking hence the areas we are seeking out. We would be in this house until our daughter finishes secondary school. Thanks for your help. 

Maka344

Slinky said:

Children, dog and needing an EV charger I think could be as much chance of finding a rental property in the area you need, as finding somewhere to graze your unicorn.

Why do you have to move NOW? Is there any chance of extending your current home? Or let this buyer go and only put your property on the market when something you really want appears. If your current home sold quickly, hopefully you could get it sold again when needed. In the meantime you're continuing to pay down your own debt, not paying the early charge and a landlord's mortgage.

I think you’re right. It’s not going to happen. 

The driver for the move is to get our daughter settled ready for primary school and we would very
much like to extend our family. Our current property isn’t right for this. It’s very expensive to extend at the moment with the price of labour and materials plus, we no longer wish to raise our children in Greater London / we are zone 4. 

I think the answer is to carry on searching and re-list if it doesn’t work out this time round with the current buyer. 

CSI_Yorkshire

Maka344 said:

According to the recent prediction reports, property prices are predicted to drop significantly by around 25%. 

Really?

"Lloyds and Halifax expect house prices to fall 8% in 2023, while Nationwide and online estate agent Zoopla are predicting falls of 5%."

"Estate agents Savills and Knight Frank predict that house prices will decline by 10% and 5%, respectively, in 2023."

"The OBR now expects house prices to fall 10% by 2024."

"Property consultancy company JLL forecast house prices in the UK will drop by 6% in 2023."

"Housing expert and buying agent Henry Pryor says he expects house prices to slip slowly through the year ending 2023 down by around 10%."

I can find one prediction from a blogger of 25%-35% drop - the only place outside the usual crash-merchants (who have been predicting a 50% drop every year for more than a decade so far without any luck).

theoretica

As a thought experiment, if you decided to buy now and thought about your top 3 or 4 choices of what is currently advertised in your price range - what would be unsuitable about the properties?  In what ways would they be worse than what you currently have?  It might help work out if your desires are realistic, or if you have your heart set on bargain of the year.