We cant sell - thinking of letting and buying..any advice??

katiebot

Hello there
Our lovely flat has been on the market since November and has been reduced twice - quite a few viewings but no offers. Where we live there are many other like properties around and not many buyers.

We need to move area because of kids schools and have been investigating letting ours and buying somewhere else.

We have found a good enough BTL product for ours that matches the rental income/mortgage payments. We have about 25% deposit available for the new house but we are wary of taking on two mortgages in the current climate.

Do we take the plunge and buy somewhere in addition the the home we own already? - we are worried about negative equity & interest rates increasing - and basically making a bad financial decision.
Or do we keep our savings earning interest and rent somewhere in the area we need to live? The mortgage repayments would be less than rent - but not much less to be honest with rates for new mortgages not being that great.

What to do???

Any advice greatly appreciated.
katie

pickles110564

katiebot wrote: »

Hello there
Our lovely flat has been on the market since November and has been reduced twice - quite a few viewings but no offers. Where we live there are many other like properties around and not many buyers.

We need to move area because of kids schools and have been investigating letting ours and buying somewhere else.

We have found a good enough BTL product for ours that matches the rental income/mortgage payments. We have about 25% deposit available for the new house but we are wary of taking on two mortgages in the current climate.

Do we take the plunge and buy somewhere in addition the the home we own already? - we are worried about negative equity & interest rates increasing - and basically making a bad financial decision.
Or do we keep our savings earning interest and rent somewhere in the area we need to live? The mortgage repayments would be less than rent - but not much less to be honest with rates for new mortgages not being that great.

What to do???

Any advice greatly appreciated.
katie

You say there are several other properties like yours, the one worry as I see it is that there could also be loads of them available to rent in the near future, which could hit your chances of getting sensible rent money.

PasturesNew

If you can't sell it, what makes you think you'll be able to find a tenant?

1000s of people in your position are in the same position as you and will also be competing.

Apart from that, there are a whole raft of laws to comply with and costs involved.

OK, you've dropped your price, but have you kept an eye on what prices your competition are at? They will also have been dropping their prices - and the houses previously priced above yours will have started dropping down to be your new competition.

Why not just drop the price to get rid of it and enjoy your new home without the old one coming back to haunt you?

You don't say which area you're in, which tends to help as people can be specific if they know that area well, but the current yardstick is to sell and rent if you want out of your current property. At least once it's sold you're in a strong buying position when you do decide you've found the right house at the right price.

Incisor

katiebot wrote: »

... We need to move area because of kids schools and have been investigating letting ours and buying somewhere else.

...

Do we take the plunge and buy somewhere in addition the the home we own already? - we are worried about negative equity & interest rates increasing - and basically making a bad financial decision.
Or do we keep our savings earning interest and rent somewhere in the area we need to live? The mortgage repayments would be less than rent - but not much less to be honest with rates for new mortgages not being that great.

What to do???

How long are you in this for? It seems to me that by having property in a boom you can make a pile of money, but by not having one in a bust, you are also making money. If you are going to last long enough to ride the bust out until your property values rebound to where they were, then it might be worth buying, if you wish to set down roots.

Otherwise, if you own 2 properties you need to factor in say 25% loss in value on both over 2 years [or your own guess as to what might happen] on top of your mortgage costs. Might make rent look a bargain.

katiebot

Thanks for the responses..
Our current property is in Brighton and at the moment there is a shortage of rental properties in our area especially for students. I appreciate that this may change.
Ideally we really do just want to sell it and move on but our priority is moving house as soon as possible - that's how we came to this possible solution.
It is likely that once we move we will want to stay for about ten years, so we are keen to find the right place.
So do we reduce again and just get rid of it or ride it out and let it?

EdInvestor

Let the existing property and rent at first in the new place until the credit crunch is sorted. Things might get quite a bit better over the next year so flexibility is the best bet at the moment.

SouthCoast

I monitor Brighton with property-bee. As nothing is moving reduce your price.

I have posted this cautionary tale before:

Mum trashes £325,000 home
By [EMAIL="news@theargus.co.uk"]Andy Chiles[/EMAIL]
A nightmare tenant and her eight children turned a woman's £325,000 home into a wreck - while failing to pay rent for THREE years.
Evicted Leslie Cole left an incredible mound of rubbish and destruction in her wake, complete with two abandoned cars in the front garden.
When Helen Godfrey eventually got into the property she found two cats in the kitchen drawers, both ALIVE.

http://www.theargus.co.uk/search/display.var.1985710.0.mum_trashes_325_000_home.php

katiebot

Thanks for this. This makes a lot of sense to me and I think it will be what we end up doing.
This has been very helpful!

fc123

katiebot wrote: »

Thanks for the responses..
Our current property is in Brighton and at the moment there is a shortage of rental properties in our area especially for students. I appreciate that this may change.
Ideally we really do just want to sell it and move on but our priority is moving house as soon as possible - that's how we came to this possible solution.
It is likely that once we move we will want to stay for about ten years, so we are keen to find the right place.
So do we reduce again and just get rid of it or ride it out and let it?

We rented out our family home (London) and then rented in new location (coincidentally; Brighton)...and ended up paying for schools too (but that's another story).
Good flats in Brighton shouldn't be hard to let out (but I wouldn't advise any student letting unless someone experienced can help you).....also you can test out new area first and get the school places.

Just incidentally, I'm in on the gossip with a large chain of EA's in Brighton and they believe the 'London Pound' has left the area (which made prices really silly, considering the local economy).
To sell, you may need to drop price every few wks until you get a buyer....but I'm not saying that is the best thing to do.


ADD ON; IMHO now is not a good time to load oneself up with a double mortgage....even if your jobs are downturn proof.

SouthCoast

(which made prices really silly, considering the local economy).

Having first-hand experience of the Brighton property market in 1989-1993, I would be getting out now.

fc123

SouthCoast wrote: »

Having first-hand experience of the Brighton property market in 1989-1993, I would be getting out now.

I have a master plan but it's going to be v hard to implement.

............never really having thought much about it before, but the local economy seems only to be made up of tourism, call centres and all the HPI stuff.

Our shop landlord (yup; big london invstmt co.) intends to increase the rent again by 70% in June....as recent lettings PROVE the area will continue to go up + up + up.:rotfl: :rotfl: They haven't taken into account the ones that did a runner this winter.