Can't decide next steps - 3 asking price offers collapsed - sell or stay?

annetheman

Hi all,

I'm selling a shared ownership flat and had 3 asking price offers collapse in 1 month (LONG story for another time...!) so have moved to a different estate agent; I'm about to restart my sale process again and confident I will get asking price offers again and they'll know how to manage the sale.

I'm also having a bit of a 'mare with my onward purchase. I pulled out of a purchase (had my mortgage offer in hand and solicitor had just started searches) due to timelines not working for the vendor. A week later I had an offer accepted on another house that was closer to the station but worse condition.

The lender refused to lend on the new house due to single-skin brick extension housing the kitchen - valuer essentially valued the compliant-wall portion only, which therefore doesn't have a kitchen, which was then declined. 

My broker has submitted a new app with a new lender, I've passed affordability again, valuation done Friday, but I'm assuming failure yet again for the same reasons*.

*estate agent told me the reason it has been unsold for so long is due to previous buyers' sale collapse... I think it was due to this non-compliant kitchen extension meaning they couldn't get a mortgage!

I haven't received the new lender decline yet, but I'm preparing for what to do if/when I do. I'm not hopeful at all. My options are:

a) continue to sell my flat, keep looking for a new house and hope I find one
b) pull flat off the market, stay and staircase, look for house in a year+

Issues with (a):
- 0 houses coming up in my price range in the area I'm looking in, even expanding the area by a few miles.
- If I agree sale with the buyer, I will need to keep them waiting until I find the house, which could be a long time.
- If I can't find anywhere, the sale will just collapse and need to start again making (b) inevitable.
- Moving with my current debts and current deposit, so can't increase my budget.

Pros with (a):
- Gives me time to find a house, by some miracle.

Issues with (b):
- Houses in the area I'm looking likely much more expensive in a year+ (London market).
- Shared ownership/leasehold is a pain in the butt so I want out ASAP.
- Staircasing to 100% will mean it is MUCH harder to sell, so staircase to 50% and still paying rent is my best option (i.e. throwing rent money in the wind).

Pros with (b):
- Save up a bigger deposit waiting for a house eventually.
- Building more equity by overpaying mortgage.
- Pay off my debts in the meantime, improving affordability for bigger mortgage.

Would be interested in any opinions. I'm fortunate and grateful that the options aren't terrible either way, but as a solo mover, besides my dad - who says to break the chain and live with him (out of the question for me but thanked him for the offer!!) - I have no other input to throw options around. Really welcome all.

Primary reason for move is company is relocating, but also closer to family and friends.

Thanks!

RHemmings

Clearly you will have your reasons to not live with your father for a bit, and I'm not saying that you should change that decision. But, all the stuff you've been going through made my head spin a bit while reading your post. And, moving in with your Dad would make you chain free and therefore reduce complexity and problems. 

Just going to wish you well with finding a house and completing on it! 

RogerPensionGuy

1st question. 

Flat being sold is shared ownership, who owns this flat?

annetheman

RHemmings said:

Clearly you will have your reasons to not live with your father for a bit, and I'm not saying that you should change that decision. But, all the stuff you've been going through made my head spin a bit while reading your post. And, moving in with your Dad would make you chain free and therefore reduce complexity and problems. 

Just going to wish you well with finding a house and completing on it! 

I love him dearly but long story short he has just signed a Compulsory Purchase Order (forced to sell as they are razing the entire estate to the ground and redeveloping it with multi-million pound flats and houses no one in the area will be able to afford). I am helping him with all the legals etc and looking for a place. He is a ward doctor retiring this year but still going to do a few shifts a month, so he wants to take the money and downsize. I will absolutely be a burden if I am staying there indefinitely, despite what he says. He is so conscientious and over-caring, I think he will make decisions on his onward house with me in mind e.g. staying in his CPO home longer - which I don't want him to do, so he finds a new home that works for him whenever is best for him.

Thank you so much. I'm gonna need all the well wishes appreciate it!

annetheman

RogerPensionGuy said:

1st question. 

Flat being sold is shared ownership, who owns this flat?

I own 28% share. I could staircase to 100% based on my current RICS valuation/salary/equity (I've been overpaying my mortgage), but full-ownership flats here do not sell easily. I've been watching the full-ownership flats really struggle. The shared ownerships sell within a month...

I'll post some links if I confirm I'm 100% out of here!

sheramber

 Could you rent in your new area until you find a suitable house. 

You would have the advantage of not being in chain when buying.

annetheman

sheramber said:

 Could you rent in your new area until you find a suitable house. 

You would have the advantage of not being in chain when buying.

Thanks, definitely a good shout in many cases but I ruled this out because the cons outweighed the pros (chain-break and cheaper commute being the only ones I could find!) for me:
- Will be building no equity = throwing rent money in the wind
- London rents (and the crazy deposit requests) are ridiculous, much higher than my current costs in commuter town even including travel
- I have a cat, sadly most rentals won't allow animals
- Will probably have to put things into storage, as would downsize from 2 bed flat to 1 bed (2 bed flat rent in London is absurd!)

MobileSaver

annetheman said:

sheramber said:

 Could you rent in your new area until you find a suitable house. 

You would have the advantage of not being in chain when buying.

- Will be building no equity = throwing rent money in the wind

I get what you are saying with the other points but on this point you are only talking about renting for say six months or so? 

Realistically any property equity build-up over that period is likely to be minimal at best and could even be negative. In the short term you will probably be better off putting any sale proceeds into a 5% savings account...

grad101

There is a very common view that renting is throwing money into the wind but in reality, you're paying for a service (somewhere to live) that works for your situation (because you need flexibility to buy). It is an option that gives you the flexibility you require which other options do not, and that's why it will cost you - but given your overall situation, is that worth the price?

There are financial pitfalls in your other options too, they are just less obvious. For example you're spending some of your income on the rent share for your property anyway. You may also get a worse deal on the property you buy as you have a chain, or lose out on a good option because your timelines don't work etc. So I wouldn't write it off. Could you also use your dad's place for storage even if you don't want to stay there? Why would you rent in London if you say you are currently in a commuting town where rent prices would be lower?

annetheman

grad101 said:

There is a very common view that renting is throwing money into the wind but in reality, you're paying for a service (somewhere to live) that works for your situation (because you need flexibility to buy). It is an option that gives you the flexibility you require which other options do not, and that's why it will cost you - but given your overall situation, is that worth the price?

There are financial pitfalls in your other options too, they are just less obvious. For example you're spending some of your income on the rent share for your property anyway. You may also get a worse deal on the property you buy as you have a chain, or lose out on a good option because your timelines don't work etc. So I wouldn't write it off. Could you also use your dad's place for storage even if you don't want to stay there? Why would you rent in London if you say you are currently in a commuting town where rent prices would be lower?

I think I’d have the same dilemma which is being a burden to dad if using him as a storage facility when I want him to move freely and without me (or my things) as a consideration!

The previous poster had recommended renting in the new area which I definitely considered. I wouldn’t rent my commuter town, for the previous reasons but also I’d be worse off financially (not just on the lack of equity-building as I overpay my mortgage) but primarily as rent would be higher than my shared ownership costs + commute costs. 

Shared ownership IMO is just another form of more stable rent with extra responsibility. 

Currently 1 beds here are minimum £1,200 - not including storage costs £100 or so a month and deposit - plus I’d have to sign for a minimum period anyway. My 2 bed flat SO is £1,334 - includes mortgage, rent and service charge. 

It just doesn’t work out financially to rent here, worse in London - the main benefit is breaking the chain, noted!

RHemmings

grad101 said:

There is a very common view that renting is throwing money into the wind but in reality, you're paying for a service (somewhere to live) that works for your situation (because you need flexibility to buy). It is an option that gives you the flexibility you require which other options do not, and that's why it will cost you - but given your overall situation, is that worth the price?

There are financial pitfalls in your other options too, they are just less obvious. For example you're spending some of your income on the rent share for your property anyway. You may also get a worse deal on the property you buy as you have a chain, or lose out on a good option because your timelines don't work etc. So I wouldn't write it off. Could you also use your dad's place for storage even if you don't want to stay there? Why would you rent in London if you say you are currently in a commuting town where rent prices would be lower?

Renting worked for me until I had to pay market rates. Then it didn't. It depends on the gap between expenses and income, and how much can be saved.