Sell home and rent?

m3aty

I'm on a fixed (discounted) mortgage rate which is 4.87% at the moment. It ends in September this year and obviously i'm going to struggle to get a deal as good as that again! I've lived in my flat for two years and it hasn't really gone up in value and I can't see it doing so in the near future.

Given the above, I'm thinking about selling my property and renting for a while. I'll get back £25k equity I have in the property and I can stick that in a savings account and rent for a while until the market settles down. I can also try and save more on top of that so have a bigger deposit if/when I do decide to buy again. I could just sit it out and wait for prices to go up again, but I kinda want to get out of this flat anyway as I have had numerous problems with it anyway.

This is my first property and I have never sold before. Can anyone offer any advice as to the cost of selling and if the above is a good idea?

caffenero

i am trying to sell up and rent, interest on the equity may be more than growth on the whole thing, but i have to say why are you confident you will sell and for the price you paid? mine has been on the market a while and no luck, no one is really buying, where is the property, what price do you think you would get?

selling, HIP costs 350/400 ish, estate agents fees 1.5% ish sale value and solicitors to sell 500 ish. so quite expensive.

assuming you can sell it at the monent you need to do your sums as to the cost of staying vs renting, there is the deposit to rent etc. you say that you can save if you rent, can you not save while you have a mortgage, would the rent be alot less than the mortgage?

what sort of problems are you having with the property?

good luck with whatever you decide to do but you will be lucky to sell right now, not impossible to be done but buyers are thin on the ground

Zammo

m3aty wrote: »

I'll get back £25k equity I have in the property and I can stick that in a savings account and rent for a while until the market settles down.

Will you?

I think you may have left it a little too late. In my neck of the woods we're already back down to 2006 prices.

m3aty

caffenero wrote: »

selling, HIP costs 350/400 ish, estate agents fees 1.5% ish sale value and solicitors to sell 500 ish. so quite expensive.

assuming you can sell it at the monent you need to do your sums as to the cost of staying vs renting, there is the deposit to rent etc. you say that you can save if you rent, can you not save while you have a mortgage, would the rent be alot less than the mortgage?

what sort of problems are you having with the property?

Hi Thanks for the reply. My flat is a 1 bedroom in Romford (London Borough of Havering), right in the town centre, walking distance to all ameneties, station etc. Easy to get into London (20 mins). I paid £143k in Aug 2006 and there is an identical flat in the same block on the market now for £154, though this one has a parking space which mine does not, so knock off £10k for that and I reckon it's worth about the same as I paid. The flats don't tend to stay on the market for long, quite a few 2 bedroom flats in the block have gone for £170k+ in recent months.

I have been having a lot of problems with the management company to whom I pay my service charge. It makes me laugh that I was told I couldnt borrow enough to buy a house yet when you buy a flat, you have to find more money for service charges and ground rent! If i lived in a house I wouldn't have those costs and could have paid a bigger mortgage! oh well! As you might know, the freeholder of the block can demand money from the leaseholders for reasonable costs and repairs to the building. Last year every flat had to fork out £802 for "redecoration of internal areas".... which I thought was not too bad as it would make the communal areas (corridors, stairwells etc) look nicer to any prospective future buyers.... but the work that was supposed to start in January has still not happened. I have chased and chased and made complaint after complaint but legally I don't have a leg to stand on. They've had £802 of my money since September last year. Also it took them 6 months to fix a broken lock on a main entry door and they are just generally incompetent. My experience of the last 2 years has really put me off ever purchasing a flat again. What a lot of people don't realise is that when you buy a flat, there's nothing stopping the landlord billing you for all kinds of repairs/improvements - and you have no choice but to pay!! You can't afford a house, so you buy a flat and it ends up costing you just as much as a house would have anyway!

tradetime

Very hard question to give a useful answer to,as only you and those who are close to you adequately know your circumstances.
I think caffenero's advice is about as good as it gets , think carefully and do the sums.
I personally wonder whether renting will prove a better option for you, you will still have a management company of sorts to deal with (the landlord) and it is likely to take considerable time to shift your property in the current market. I would have thought London prices would hold up better than most, and recover quicker in the aftermath. Unless I was going to be sustantially better off financially, I think I would sit tight.
Start to source a mortgage now and see what offers are on the table, so you know exactly where you stand.
Whatever you decide, I hope it works out.

pinkshoes

m3aty wrote: »

I'm on a fixed (discounted) mortgage rate which is 4.87% at the moment. It ends in September this year and obviously i'm going to struggle to get a deal as good as that again! I've lived in my flat for two years and it hasn't really gone up in value and I can't see it doing so in the near future.

A 1 bed room flat with no parking space has a rather limited market, particularly at the moment, as those who would have previously bought a 1 bed flat, are probably now looking out for 2 bedrooms in areas where prices have fallen! Are you prepared to accept less than you paid for it? How much will it cost you to rent compared to what you're paying in mortgage?

Just out of curiousity, what DID you expect when your fixed rate expired?? The deals out there aren't THAT bad, and still below the average interest rate!

missile

I am sorry to hear you are having problems with the management company. It is not as straight forward as you suggest, if an owner does not agree that an item of work needs doing you can and some do refuse to pay.

It does sound like yours are incompetent. However it could be the other owners do not pay up as promptly as you do? This can be a nightmare. VERY difficult for the management company, they have to go to court to force owners to cough up and that takes ........ a long time.

jaype

If you are considering it, I'd hurry up! Prices seem to be going one way and the quicker you can shift it the more you will have to bank....