Should I LET My House?

macaque_2

northie_1 wrote: »

I personally thought house prices would only go up over the long term (10-25 years). I am not naive enough to think that there will be a repeat of the radical price hikes seen in the last couple of years. If the capital could be paid off my mortgage with minimal input from me, then that is where I would gain.

House prices will almost certainly go down over the next 10-25 years. At the moment they are at all time highs and way beyond the affordability of most people. The falls over the next few years may be disguised by inflation but they will still be there. Many home owners have been pinning their hopes on inflation as an escape from crippling debt (as used to happen in the 1970s). The problem is that we are seeing inflation for goods and commodities but wage inflation remains very low. The public sector pay rise for this year has been targeted at 2%. This means that disposable incomes are going down. When disposable incomes fall, house prices go down with them.

northie_1

Appreciate that there is more to pay for than just the mortgage, had already looked at some of the other things...

I am not looking to make instant cash out of this, as said before it would be a long term investment, paying out after a considerable amount of time.

House prices will almost certainly go down over the next 10-25 years.

This quote intrigues me... I have never seen a period of time like this where there has been an overall decline in house prices. I am aware of dips in the housing market, such as the depression of the 80's, but I was under the impression that these things evened out over time resulting in gradual increase.

I think this is something I am going to need to look into a lot more. Maybe sit down and work out some proper figures and go to see a local lettings agency.

m00m00

if your location is mansfield, you also need to factor in that builders seem to be throwing up newbuilds on every bit of land north of nottingham at the moment, with a particular battle going on in Hucknall over 800 new build houses. This will have a big impact on the property prices in all the surrounding areas as the supply is probably greater than the demand at the moment, particularly if the economy 'turns' as it seems to be doing and builders sell at a loss just to free up cash flow

Debt_Free_Chick

northie_1 wrote: »

Appreciate that there is more to pay for than just the mortgage, had already looked at some of the other things...

I am not looking to make instant cash out of this, as said before it would be a long term investment, paying out after a considerable amount of time.

So think about this ... if you would make an annual loss by letting, that reduces your profit from any increase in the capital value.

Whereas if you simply left the property empty, you'd avoid the loss and keep (pretty much) all the capital appreciation.

paradhise

Debt_Free_Chick wrote: »

So think about this ... if you would make an annual loss by letting, that reduces your profit from any increase in the capital value.

Whereas if you simply left the property empty, you'd avoid the loss and keep (pretty much) all the capital appreciation.

I am sorry that doesn't make sense to me? Even if he is making a small loss it would still be less that forking out the mortgage and council to leave the house empty. It is exactly that price range that will not be adversly affected by the slow down in house prices.

I am also confused by the statements that house prices will drop, I think some overpriced areas will face a downturn i.e 1 bed flats in the south east at 300k or more however, to panic people into thinking all house prices will fall is nothing short of scaremongering.

Debt_Free_Chick

paradhise wrote: »

I am sorry that doesn't make sense to me? Even if he is making a small loss it would still be less that forking out the mortgage and council to leave the house empty. It is exactly that price range that will not be adversly affected by the slow down in house prices.

Fair point - it depends on the numbers. The OP needs to do the "Landlord's budget" to see if the loss is "small" or not.

In addition to the financial cost, there's the hassle of being a Landlord. Including, dealing with tenants who abscond or who don't pay and/or who need to be evicted and damage etc etc. If the OP doesn't manage the letting, then he needs to pay an Agent (at, typically, 10-15% of the gross rent).

It's just not clear cut without the full budget. And even with a budget, you are dependant on any gain on the value of the property to cover any loss on the annual rent. Depending on the time-frame, there might not be any gain in the value. Who knows?

Tassotti

Debt_Free_Chick wrote: »

So think about this ... if you would make an annual loss by letting, that reduces your profit from any increase in the capital value.

Whereas if you simply left the property empty, you'd avoid the loss and keep (pretty much) all the capital appreciation.

That has got to be the MOST stupid comment here

Can we have an AWARD for it? You would win hands down

Tassotti

Forget the doom mongers, prices are still rising, well in my area anyway...Place I am looking at is 1/5 Million, bt doesn't have a sauna!!!!!

Turnbull2000

Tassotti wrote: »

Forget the doom mongers, prices are still rising, well in my area anyway...Place I am looking at is 1/5 Million, bt doesn't have a sauna!!!!!

motch

If the property was to be left empty for a year OP would lose about £3600 in interest payments alone to the bank, + house insurance costs - crazy in todays financial climate.