Housing Dilemma: Is Bankruptcy the best way out?

Yorkie1

Dr_Ben said:

Thank you everyone for the advice so far - I think it's boiling down to two options:

2. Find better selling agents:
 - I put it on with Purple Bricks in Nov 2023, they sold it in Feb 2024, fell through in June 2024. (£386k)
 - I then put it on with Foxtons for 3 months in August 2024, they seemed to fake viewings and didn't get any offers. (£386k)
 - I then went back to Purple Bricks and tanked the price to £350k for a fast sale (as I've already paid their fee) - no viewings, no interest.
 - They then pushed me to Modern Method of Auction, priced at £315k, no viewings, no interest.
 - All this aligns with everyone else in the block who are struggling to get interest (Only the 2-beds are selling and then they hit ESW1 issues...)

There are a few other big agencies in the area, but they take such a massive fee and when I spoke to one of them, they said they weren't confident in selling it at £350k (which would cover the mortgage and still leave me with ~£20k in fees to pay)

It might enlighten you to do a search on here for threads involving the MMoA. From a buyer's perspective, they are very costly and the general advice on here to prospective buyers is to avoid them.

If you do continue to try to sell, and consider auctions, then use the traditional method and not MMoA.

Dr_Ben

BikingBud said:

Dr_Ben said:

enthusiasticsaver said:

kimwp said:

@enthusiasticsaver , is it worth moving this to the DFW board?

Do agents think the market will improve in the Spring for the area? 

I honestly think it's a 2-year kind of timeframe, there's an over-supply in the local area (still have new builds on for £388k, with HTB and Stamp Duty changes) and my flat is in the top 25% of prices, so people more likely choosing an older 1-bed for £300k instead, which would be way below mortgage value and not something I can compete with.

I tried Purple Bricks and Foxtons, Purple Bricks were paid long ago, so have no incentive to sell and Foxtons were essentially just faking viewings.

ian1246 said:

If your wife has a job and you can't find one, the solution will be she returns to work early off maternity and you be the housebound one raising the child. Ideally both of you will be able to find work & perhaps both work reduced hours, rather than 1 full time & 1 no hours - allowing better support of each other & ensuring no single person is "housebound".

Have you factored in the childcare fee funding and if you are going to send the child to nursery, are you on the waiting list? Some nurseries have such a shortgage of spaces you need to get on the list prior to the child's birth!

Unfortunately, my earning potential is 4x my wife (I would love to be a stay-at-home dad for a few years!) so I absolutely need to be working in some way to keep money flowing, it's mostly about finding ways to reduce the outgoings as much as possible.

Childcare all factored in - keep meaning to get them on the list, need to do that, good reminder!!

I also have a plan to max out benefits, but I've not factored that cash in yet, as it will depend on working situation.

This is slightly disconcerting as a potential to earn 4 times your wife doesn't cover the outgoings. Also

Adding to this, I quit my job when it was sold originally, as I had no indication that the buyer would pull out and the worst job market for what I do in history means I'm still out of work now.

My savings hit £0 this month and I have some freelance work that will cover me for maybe 3 more months - I'm working on growing this as a major priority.

Income is income wherever it comes from. Perhaps taking any permanent job at 1/4 or even 1/3 of your aspirational wage might sustain that position for longer.

I feel that one of the early suggestions was by far the best but there appears to be some denial affecting rational decision making:

I am in the privileged position of owning two properties, a Flat in London and a House in a small town, outside of London.

Whereas this would indicate you have a liability for 2 properties:

Both properties are 80-90% LTV

One of which appears to have a value way below that loan level. Bought for £406k with a current mortgage of £350k and you put it up for auction @£315!


But in general terms I do wonder if this is a problem about to bubble over; expensive house(s) based on high multiples of two wages, want to set up family, move home, interest rates increasing, so the shift in income to outgoings ratio requires more disposable income to be generated at the time when it is actually dropping due to normal life events.

Affordability coming home to roost?

To clarify, is your job in history, or is it your assertion that the job market is the worst in history? As these are quite different.

Super valid points - I'm probably at about 1/2 of previous wage currently through freelancing, working very hard to get back to what it was!

Seeing similar situations with lots of friends and colleagues (not quite as crazy as mine) so definitely thinking affordability is starting to bite.

ReadySteadyPop

Dr_Ben said:

BikingBud said:

Dr_Ben said:

enthusiasticsaver said:

kimwp said:

@enthusiasticsaver , is it worth moving this to the DFW board?

Do agents think the market will improve in the Spring for the area? 

I honestly think it's a 2-year kind of timeframe, there's an over-supply in the local area (still have new builds on for £388k, with HTB and Stamp Duty changes) and my flat is in the top 25% of prices, so people more likely choosing an older 1-bed for £300k instead, which would be way below mortgage value and not something I can compete with.

I tried Purple Bricks and Foxtons, Purple Bricks were paid long ago, so have no incentive to sell and Foxtons were essentially just faking viewings.

ian1246 said:

If your wife has a job and you can't find one, the solution will be she returns to work early off maternity and you be the housebound one raising the child. Ideally both of you will be able to find work & perhaps both work reduced hours, rather than 1 full time & 1 no hours - allowing better support of each other & ensuring no single person is "housebound".

Have you factored in the childcare fee funding and if you are going to send the child to nursery, are you on the waiting list? Some nurseries have such a shortgage of spaces you need to get on the list prior to the child's birth!

Unfortunately, my earning potential is 4x my wife (I would love to be a stay-at-home dad for a few years!) so I absolutely need to be working in some way to keep money flowing, it's mostly about finding ways to reduce the outgoings as much as possible.

Childcare all factored in - keep meaning to get them on the list, need to do that, good reminder!!

I also have a plan to max out benefits, but I've not factored that cash in yet, as it will depend on working situation.

This is slightly disconcerting as a potential to earn 4 times your wife doesn't cover the outgoings. Also

Adding to this, I quit my job when it was sold originally, as I had no indication that the buyer would pull out and the worst job market for what I do in history means I'm still out of work now.

My savings hit £0 this month and I have some freelance work that will cover me for maybe 3 more months - I'm working on growing this as a major priority.

Income is income wherever it comes from. Perhaps taking any permanent job at 1/4 or even 1/3 of your aspirational wage might sustain that position for longer.

I feel that one of the early suggestions was by far the best but there appears to be some denial affecting rational decision making:

I am in the privileged position of owning two properties, a Flat in London and a House in a small town, outside of London.

Whereas this would indicate you have a liability for 2 properties:

Both properties are 80-90% LTV

One of which appears to have a value way below that loan level. Bought for £406k with a current mortgage of £350k and you put it up for auction @£315!


But in general terms I do wonder if this is a problem about to bubble over; expensive house(s) based on high multiples of two wages, want to set up family, move home, interest rates increasing, so the shift in income to outgoings ratio requires more disposable income to be generated at the time when it is actually dropping due to normal life events.

Affordability coming home to roost?

To clarify, is your job in history, or is it your assertion that the job market is the worst in history? As these are quite different.

Super valid points - I'm probably at about 1/2 of previous wage currently through freelancing, working very hard to get back to what it was!

Seeing similar situations with lots of friends and colleagues (not quite as crazy as mine) so definitely thinking affordability is starting to bite.

Affordability isn`t what it was that`s for sure, but do you really want the responsibilities and possible stress of being a landlord on top of the other responsibilities and difficulties you have mentioned? There are lots of threads on here about the challenges of being a landlord, sometimes it just doesn`t look worth it to me.

pinkshoes

Dr_Ben said:

They then pushed me to Modern Method of Auction, priced at £315k, no viewings, no interest.
 

In which case, you haven't tried selling it via a NORMAL auction. 

The MMoA has such a limited audience with buyers paying all fees. Most "normal" buyers would avoid these like the plague!

Dr_Ben said:

Adding to this, I quit my job when it was sold originally, as I had no indication that the buyer would pull out and the worst job market for what I do in history means I'm still out of work now.

So, you've been out of work for 13 months? Not even a minimum wage job or anything you could get that paid money????

I would focus on firstly finding work, even if that's stacking shelves in a supermarket (it's character building), then secondly listing the flat in a proper auction as one last attempt to find a cash buyer. 

How much is your house worth? You could put the house on the market, then when it sells, move into the flat whilst it goes to auction, pay any short fall with the equity from the house sale, then go into rented accommodation (or move in with family??) back in your desired area in time for your wife to return to work after maternity. You then start again, saving a deposit for a house.

Forget the bankruptcy thing. They'd see straight away you'd transferred your equity to your wife and over-turn it!

ReadySteadyPop

pinkshoes said:

Dr_Ben said:

They then pushed me to Modern Method of Auction, priced at £315k, no viewings, no interest.
 

In which case, you haven't tried selling it via a NORMAL auction. 

The MMoA has such a limited audience with buyers paying all fees. Most "normal" buyers would avoid these like the plague!

Dr_Ben said:

Adding to this, I quit my job when it was sold originally, as I had no indication that the buyer would pull out and the worst job market for what I do in history means I'm still out of work now.

So, you've been out of work for 13 months? Not even a minimum wage job or anything you could get that paid money????

I would focus on firstly finding work, even if that's stacking shelves in a supermarket (it's character building), then secondly listing the flat in a proper auction as one last attempt to find a cash buyer. 

How much is your house worth? You could put the house on the market, then when it sells, move into the flat whilst it goes to auction, pay any short fall with the equity from the house sale, then go into rented accommodation (or move in with family??) back in your desired area in time for your wife to return to work after maternity. You then start again, saving a deposit for a house.

Forget the bankruptcy thing. They'd see straight away you'd transferred your equity to your wife and over-turn it!

Best to keep the house and just pay off the shortfall on the flat, the bank will allow time to pay.

FreeBear

pinkshoes said: I would focus on firstly finding work, even if that's stacking shelves in a supermarket (it's character building)

Shelf stacking is back breaking, and staff in many stores are abused & taken advantage of by manglement. The only thing it builds is resentment and long term back problems.

Herzlos

FreeBear said:

pinkshoes said: I would focus on firstly finding work, even if that's stacking shelves in a supermarket (it's character building)

Shelf stacking is back breaking, and staff in many stores are abused & taken advantage of by manglement. The only thing it builds is resentment and long term back problems.

It's better than nothing when you've got 2 mortgages, a kid on the way and no job.

OP - it sounds like your best course of action is to get rid of the flat and even if it means taking a fairly substantial loss on it it'll still be cheaper than having to pay both mortgages.

The other option is if it's easier to downgrade the house, but given you've got no income I don't think you're going to get a new mortgage if you had to buy another house somewhere cheaper.

ReadySteadyPop

Herzlos said:

FreeBear said:

pinkshoes said: I would focus on firstly finding work, even if that's stacking shelves in a supermarket (it's character building)

Shelf stacking is back breaking, and staff in many stores are abused & taken advantage of by manglement. The only thing it builds is resentment and long term back problems.

It's better than nothing when you've got 2 mortgages, a kid on the way and no job.

OP - it sounds like your best course of action is to get rid of the flat and even if it means taking a fairly substantial loss on it it'll still be cheaper than having to pay both mortgages.

The other option is if it's easier to downgrade the house, but given you've got no income I don't think you're going to get a new mortgage if you had to buy another house somewhere cheaper.

Exactly, just get rid of the flat, the landlord route won`t be worth the hassle judging by some of the landlord threads on here.

ReadySteadyPop

Dr_Ben said:

silvercar said:

The only way to know if you will get consent to let is to ask the lender. You are going to struggle to move mortgage lenders while you are not working.

Mortgage interest costs can be put against the rental income, but is now restricted to the basic rate of tax. If your income in this financial year puts you in the higher rate of tax band it will cost you. Have a play with this calculator to see how it effects you - https://taxscouts.com/calculator/rental-income-tax/

As for estate agents, you have gone from one extreme to the other! Go to a local estate agent, who will be aware of the issues with your block, and ask their opinion.

This is probably the best advice in about 2 years, thank you!

I still can't quite figure out the tax implications, but I have an accountant who I can run it by - looks like I'm going to end up letting it - I do need to chat with the mortgage team again though.

Letting out requires careful thought I think, and a good knowledge of the area and potential rent.

https://propertyindustryeye.com/rental-inflation-drops-to-3-5-year-low-zoopla-report-reveals/

"The number of homes available to rent has increased by 11%, while rental demand has dropped by 17% compared to last year"

Bigphil1474

Is it in an area of London that might be worth looking at AirBnb type renting out? Generally higher income per week but a bit more hassle. Quick search suggests £700 to £1,000 per week is achievable for a 1 bed apartment depending on area. Probably more if there is a peak near the apartment.