awkwardturtle

Should I just buy?

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So I've been trying to sell my flat for just over a year. Bought in 2010 it's now on the market for 77K (6K less than I paid for it) and I've still had no offers. I'm unhappy here, my neighbours two dogs bark a lot (probably not more than some, but they're loud and I'm highly sensitised to it after 7 years), I don't have a garden I can sit out in, the neighbour above has hardwood floors and quite clearly wears wooden shoes, etc, etc.

Much to this community's disgust I'm sure, I've been exploring the prospect of buying another property and renting the flat out, avoiding crystallising the loss on it.

Terrible idea right? Head says I'd be buying a much larger property at the top of the market and would be left over exposed when the whole thing turns to shit. Heart says "yer but, I wanna live in a bigger house, duhh"

Whenever I seek advice from family and friends they tell me to stop postponing my life, they tell me to drop the price further, take the hit, and buy the big shiny thing. Each time I buy into that consensus and start planning the finance I read more tasty bear food, which makes me think "...if only I can put up with those benefit scroungers next door for a little while longer"

Should I wait it out? What if it takes 10 years? What if they just use more props when things start to slide and this ******** lasts indefinitely?

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27 minutes ago, Dorkins said:

If you buy a second property and don't sell the first one you will now have to pay an additional 3% stamp duty

Very true, but I figure on the other side of the equation I'm losing ~8%+ by selling the flat anyway

I actually think it would've made more sense to tax foreign buyers, and if GO wanted to take the heat out of the BTL market then he should've properly restricted BTL mortgages, and/or put a levy on them. The additional rate was a political cheap trick which has seized the lower end of the market (as evidenced by my situation imho) he should have targeted the finance, preventing people from gearing up 1:20 to speculate on BTL property. He's taken the grease out of the engine but the fuel/air mix is still being pumped in.

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Dorkins   
9 hours ago, awkwardturtle said:

Very true, but I figure on the other side of the equation I'm losing ~8%+ by selling the flat anyway

How expensive is the house you want to buy?

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Dorkins   
11 hours ago, awkwardturtle said:

Roughly 200K

So if you're willing to take a £6k hit on additional stamp duty to be able to move to a larger property, why not just cut the price of the flat by £6k and see if it sells? If it does sell no need to deal with the hassle of being a landlord and the risk of double exposure to falling property prices, if it doesn't sell you've gained information about where the level of the market is at no cost.

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4 minutes ago, Dorkins said:

So if you're willing to take a £6k hit on additional stamp duty to be able to move to a larger property, why not just cut the price of the flat by £6k and see if it sells?

I can't argue with that logic, mainly because I've already applied it! :)

 

23 hours ago, awkwardturtle said:

Bought in 2010 it's now on the market for 77K (6K less than I paid for it) and I've still had no offers

The price has already been dropped below what was originally paid. Unless your suggesting a further drop of 6K, in which case I don't follow your logic other than finding the theoretical market floor. (even if it sells I'm not convinced I'm comfortable with the loss, knowing that everywhere else has risen)

Anyway, all this pedantry doesn't address the main thrust of this post, is the summer of 2017 an acceptable time to upsize/purchase? Philosophically it sounds like you're an advocate of buying now in the current climate given the problem solving nature of your replies. Assume all problems are resolved and the choice is stick, twist or super twist.

Does unhappiness with ones current situation provide enough justification to twist / super twist? Is the price of happiness 6K + the risk of having bought at the top of the country's most inflated property market? It's only money, who cares?

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Dorkins   
17 minutes ago, awkwardturtle said:

I can't argue with that logic, mainly because I've already applied it! :)

 

The price has already been dropped below what was originally paid. Unless your suggesting a further drop of 6K, in which case I don't follow your logic other than finding the theoretical market floor. (even if it sells I'm not convinced I'm comfortable with the loss, knowing that everywhere else has risen)

Anyway, all this pedantry doesn't address the main thrust of this post, is the summer of 2017 an acceptable time to upsize/purchase? Philosophically it sounds like you're an advocate of buying now in the current climate given the problem solving nature of your replies. Assume all problems are resolved and the choice is stick, twist or super twist.

Does unhappiness with ones current situation provide enough justification to twist / super twist? Is the price of happiness 6K + the risk of having bought at the top of the country's most inflated property market? It's only money, who cares?

There is no connection between the price you paid for the flat in 2010 and the price you can sell it for now. The 2010 price was the 2010 price, the 2017 price is the 2017 price. Either you are willing to sell at the 2017 price or you aren't.

If your flat is not selling at £77k but you would be happy to pay an additional £6k stamp duty to move into a bigger place then why not drop the price to £71k, sell it at that price and then buy the bigger house without the hassle of owning two properties? It works out the same on your balance sheet. If you're confused about this reasoning talk to an accountant. £100 of advice now could save you tens of thousands in the long run.

I'm not talking about finding a "theoretical market floor" by dropping the price until it sells, I'm talking about finding the real price at which it will actually sell. This is practical, not theoretical.

What you call "pedantry" I call restatement of facts you have provided and applying some arithmetic to them. I get the feeling you are an emotional rather than rational buyer/seller so probably my line of reasoning won't help you. You will just need to figure out what your emotions are telling you.

Edited by Dorkins

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On 24/07/2017 at 6:57 PM, awkwardturtle said:

So I've been trying to sell my flat for just over a year. Bought in 2010 it's now on the market for 77K (6K less than I paid for it) and I've still had no offers. I'm unhappy here, my neighbours two dogs bark a lot (probably not more than some, but they're loud and I'm highly sensitised to it after 7 years), I don't have a garden I can sit out in, the neighbour above has hardwood floors and quite clearly wears wooden shoes, etc, etc.

Much to this community's disgust I'm sure, I've been exploring the prospect of buying another property and renting the flat out, avoiding crystallising the loss on it.

Terrible idea right? Head says I'd be buying a much larger property at the top of the market and would be left over exposed when the whole thing turns to shit. Heart says "yer but, I wanna live in a bigger house, duhh"

Whenever I seek advice from family and friends they tell me to stop postponing my life, they tell me to drop the price further, take the hit, and buy the big shiny thing. Each time I buy into that consensus and start planning the finance I read more tasty bear food, which makes me think "...if only I can put up with those benefit scroungers next door for a little while longer"

Should I wait it out? What if it takes 10 years? What if they just use more props when things start to slide and this ******** lasts indefinitely?

:lol: 

 

Please, stop it, you're killing us 

 

:lol: :lol: :lol: :lol: :lol: :lol: :lol: 

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Kosmin   
On ‎24‎/‎07‎/‎2017 at 6:57 PM, awkwardturtle said:

Much to this community's disgust I'm sure, I've been exploring the prospect of buying another property and renting the flat out, avoiding crystallising the loss on it.

It's a sunk cost. Say you could sell now at a £10k loss. Invest the money elsewhere (equities for example) and you've made your 10k pay in a few years. Or you hold on to your flat and it takes many years for you to break even. Clearly the first option would be better, so unless you have reason to believe your flat is likely to soar in value, just sell it at the best price you can.

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Si1   
On 28/07/2017 at 8:56 AM, TheCountOfNowhere said:

:lol: 

 

Please, stop it, you're killing us 

 

:lol: :lol: :lol: :lol: :lol: :lol: :lol: 

+1

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Dorkins   
On 7/28/2017 at 8:56 AM, TheCountOfNowhere said:

:lol: 

 

Please, stop it, you're killing us 

 

:lol: :lol: :lol: :lol: :lol: :lol: :lol: 

Must admit my troll detector is flashing bright red on this one.

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@Dorkins Nope, far more terrifying I'm a real person who now feels a little ridiculed, but since you've been so accommodating I'll continue.

Firstly I'd like to apologise for the pedantry remark, it was borne(sp?) out of frustration but nonetheless was flippant and unnecessary.

On 25/07/2017 at 7:19 PM, Dorkins said:

There is no connection between the price you paid for the flat in 2010 and the price you can sell it for now.

I agree with this as written, but is there not an intrinsic connection between the purchase price in 2010 and the sale price in the 2017, the delta of these two figures being the profit/loss. I understand that this is relative to what the rest of the market has done and the effect of inflation, etc, but once you take external factors into account you are left with a real monetary gain or loss, which can only be calculated by using the 2010 purchase price as an anchor point.

On 25/07/2017 at 7:19 PM, Dorkins said:

If your flat is not selling at £77k but you would be happy to pay an additional £6k stamp duty to move into a bigger place then why not drop the price to £71k, sell it at that price and then buy the bigger house without the hassle of owning two properties? It works out the same on your balance sheet. If you're confused about this reasoning talk to an accountant.

I can't understand why it would be an equal comparison to compare the SDLT against the delta between 77 and 71.

77K is an arbitrary figure which the price has been lowered to (from 83K). If sold for 71K I will have still put 83K of my real income into the property, meaning a material loss of 12K, is this not right?

P.S. the 6K SDLT isn't quite accurate as it could be structured it so that the stamp duty liability arises on the flat rather than the on going purchase, so it would be much lower.

Regardless, all that's being explored here are the differences between holding two properties vs a simplified upsizing purchase, both of which are long on property prices. Rephrased, my fundamental question was; is now a terrible time to go long on property, I believe it is from an economics perspective but I have emotional concerns pulling in the opposite direction.

Rather than discussing the merits of option 1 vs option 2 (neither of which I actually believe to be sensible and am now regretting outlining) I had hoped to gather responses explaining what others might do in a similar situation. Stick to a conviction that property prices must start falling soon despite the sacrifice that entails, or pursue a short term strategy, buy now and hope that analysis is wrong.

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Si1   

He's not a troll he's a real person, AND he used the word delta.

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1 hour ago, Si1 said:

He's not a troll he's a real person, AND he used the word delta.

Point taken, if a little antagonistic, would it kill you to be a little friendlier?

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In your position and considering what you are proposing, it may be a viable option to sell the flat to a limited company that you create. Within reason you can sell it for what ever you want , i.e. purchase price plus any capital growth in the area. This sets a high floor for any future tax due on sale. As a private person you no longer own property and can buy as a first time buyer avoiding the 3% stamp duty. I don't know for certain that this is viable but can't see any reason why not as the limited company is a legal entity in it's own right.

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Dorkins   
23 hours ago, awkwardturtle said:

P.S. the 6K SDLT isn't quite accurate as it could be structured it so that the stamp duty liability arises on the flat rather than the on going purchase, so it would be much lower.

How do you shift the SDLT liability onto the flat you already own?

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15 hours ago, Dorkins said:

How do you shift the SDLT liability onto the flat you already own?

You would need to sell the flat to a limited company created for the purpose of owning property (a special purpose vehicle (SPV)) before buying the new place. The SPV would pay the 3% premium.

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On 24/07/2017 at 6:57 PM, awkwardturtle said:

So I've been trying to sell my flat for just over a year. Bought in 2010 it's now on the market for 77K (6K less than I paid for it) and I've still had no offers. I'm unhappy here, my neighbours two dogs bark a lot (probably not more than some, but they're loud and I'm highly sensitised to it after 7 years), I don't have a garden I can sit out in, the neighbour above has hardwood floors and quite clearly wears wooden shoes, etc, etc.

Much to this community's disgust I'm sure, I've been exploring the prospect of buying another property and renting the flat out, avoiding crystallising the loss on it.

Terrible idea right? Head says I'd be buying a much larger property at the top of the market and would be left over exposed when the whole thing turns to shit. Heart says "yer but, I wanna live in a bigger house, duhh"

Whenever I seek advice from family and friends they tell me to stop postponing my life, they tell me to drop the price further, take the hit, and buy the big shiny thing. Each time I buy into that consensus and start planning the finance I read more tasty bear food, which makes me think "...if only I can put up with those benefit scroungers next door for a little while longer"

Should I wait it out? What if it takes 10 years? What if they just use more props when things start to slide and this ******** lasts indefinitely?

You sound like me in 2010. I pulled out of the house move thinking the crash will resume and it never did. Now we are looking at prices way in excess of peak 2007. I'm tired of waiting I've been waiting since 2003. Apart from a small crash in 2008-9 nothing happened. But now the madness this time surely cannot carry on. They are out of props now. You need to hang in there, thats what I'm doing even though I'm tired of waiting. The damage has been done its cost me personally a great deal, I have to sit it out now or it will have all been for nothing.

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On 30/07/2017 at 1:06 PM, awkwardturtle said:

Point taken, if a little antagonistic, would it kill you to be a little friendlier?

This is HPC, people are often not friendly to anyone with a house related dilemma or problem. Its certainly not mumsnet.

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On 24 July 2017 at 6:57 PM, awkwardturtle said:

So I've been trying to sell my flat for just over a year. Bought in 2010 it's now on the market for 77K (6K less than I paid for it) and I've still had no offers. I'm unhappy here, my neighbours two dogs bark a lot (probably not more than some, but they're loud and I'm highly sensitised to it after 7 years), I don't have a garden I can sit out in, the neighbour above has hardwood floors and quite clearly wears wooden shoes, etc, etc.

Much to this community's disgust I'm sure, I've been exploring the prospect of buying another property and renting the flat out, avoiding crystallising the loss on it.

Terrible idea right? Head says I'd be buying a much larger property at the top of the market and would be left over exposed when the whole thing turns to shit. Heart says "yer but, I wanna live in a bigger house, duhh"

Whenever I seek advice from family and friends they tell me to stop postponing my life, they tell me to drop the price further, take the hit, and buy the big shiny thing. Each time I buy into that consensus and start planning the finance I read more tasty bear food, which makes me think "...if only I can put up with those benefit scroungers next door for a little while longer"

Should I wait it out? What if it takes 10 years? What if they just use more props when things start to slide and this ******** lasts indefinitely?

You don't give the area but what is your pool of buyers like? Is it a 1 bed flat? What are average local earnings?

I think 1 bed flats will get badly burned, especially any that aren't 100 percent perfect.

As asked upthread - are there no covenants about pets and floor coverings?

If it was me I and I could afford to do so I would look to sell the flat at whatever value I could get and rent until early next year to see which way the market goes. If you follow the 'countdown to landlords going bust' thread, it looks to me like if anything is going to start a race for the exit it will have done so by next spring. 
 

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