awkwardturtle

Should I just buy?

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@pmf170170 Yes the ltd company approach is the one I have explored (it is definitely viable and well within the rules) and shifts the SDLT focus onto the flat, the only downside is the £800 p.a. accountancy fees, so after a few years it becomes cost neutral. I started to explore the idea of transferring to a parent to cut down on the administrative overhead (they're a legal entity just as an ltd is right?) but I'm not sure if this starts to stray into what's called the 'General Anti-Abuse Rule' which is just as vague as it sounds.

 

On 30/07/2017 at 2:13 PM, pmf170170 said:

Is there no covenant in the lease that prevents pets occupying the property. Dogs and flats don't appear to be natural bedfellows!

The flat is a converted semi, there actually isn't a covenant about pets (from memory) but even if there were it is the adjoining semi who have the 2 dogs so it's no different to any neighbourly dispute.

 

On 01/08/2017 at 1:49 AM, bear.getting.old said:

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.

This is what worries me, it's like they say, it's impossible to time the market to perfection, kudos to you for being brave enough.

 

On 01/08/2017 at 11:38 AM, CunningPlan said:

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

It is by no means perfect, it is a 1 bed ground floor, however the house is built on an incline meaning there are around a dozen steps leading up to the front door thus ruling out a large proportion of the typical demographic: single retirees. Beyond that I'm left with marketing to single professionals who can't afford a small semi. The killer so far has been the fact that there is no garden. But it is in a very nice area. It was all I could afford when I first started working, fresh out of University with 18K debts but now I deeply regret buying it, it would appear I was quite naive and I very probably overpaid for it.

 

On 01/08/2017 at 0:00 PM, bear.getting.old said:

What about selling the flat and renting instead or will your peers and friends think that is even more mad then not buying a house?

If I had an offer and couldn't find anywhere I liked I guess I would. The point that I will concede to my family is that all the while I hedge I am effectively postponing living my life. Putting off furniture purchases, home office setup, a summer garden, having friends over, etc. The 'wasted years' argument is the most persuasive to me against the market analysis. But right now I can't reconcile those conflicting perspectives in my own mind, hence my post :) 

P.S. thanks for contributing, I was beginning to think I was a pariah for having the temerity to seek advice and opinions

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adarmo   
1 hour ago, awkwardturtle said:

P.S. thanks for contributing, I was beginning to think I was a pariah for having the temerity to seek advice and opinions

Hi,

 

The way I would view this is that even if you're making a loss on your existing place by dropping the price further, the gap between what you have now, and what you want to buy has also most likely fallen. One of the things I never really understood about people buying their first home is when they get excited that it's gone up by 25% or whatever. All that means is that the jump to you next house, or your last house has also increased!

Today's price is today's price, you might take a view that even walking away with a loss still means you've enjoyed your own property for all that time, the security that comes with it, and perhaps are still up on having been stuck in rented..... and the insecurity with that. 

I say this as someone who has just taken the plunge with his other half. We feel it's the right time for us (and I'm lucky enough to have a sufficient deposit that even a fair,y scary fall wouldn't mean negative equity). In the long run prices might come down but in the long run we're all dead. What price do you put on your own happiness?

BTW some of the more basic minded on here (generally with huge numbers of posts because they've been calling the crash for 10 years) apply the 'troll' label to anyone with a marginally opposing view. There are also some very good, smart and funny people on here.

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2 hours ago, awkwardturtle said:

@pmf170170 Yes the ltd company approach is the one I have explored (it is definitely viable and well within the rules) and shifts the SDLT focus onto the flat, the only downside is the £800 p.a. accountancy fees, so after a few years it becomes cost neutral. I started to explore the idea of transferring to a parent to cut down on the administrative overhead (they're a legal entity just as an ltd is right?) but I'm not sure if this starts to stray into what's called the 'General Anti-Abuse Rule' which is just as vague as it sounds.

 

The flat is a converted semi, there actually isn't a covenant about pets (from memory) but even if there were it is the adjoining semi who have the 2 dogs so it's no different to any neighbourly dispute.

 

This is what worries me, it's like they say, it's impossible to time the market to perfection, kudos to you for being brave enough.

 

It is by no means perfect, it is a 1 bed ground floor, however the house is built on an incline meaning there are around a dozen steps leading up to the front door thus ruling out a large proportion of the typical demographic: single retirees. Beyond that I'm left with marketing to single professionals who can't afford a small semi. The killer so far has been the fact that there is no garden. But it is in a very nice area. It was all I could afford when I first started working, fresh out of University with 18K debts but now I deeply regret buying it, it would appear I was quite naive and I very probably overpaid for it.

 

If I had an offer and couldn't find anywhere I liked I guess I would. The point that I will concede to my family is that all the while I hedge I am effectively postponing living my life. Putting off furniture purchases, home office setup, a summer garden, having friends over, etc. The 'wasted years' argument is the most persuasive to me against the market analysis. But right now I can't reconcile those conflicting perspectives in my own mind, hence my post :) 

P.S. thanks for contributing, I was beginning to think I was a pariah for having the temerity to seek advice and opinions

You need to change your mindset. I rent. I have a home office (actually almost a home factory!), A lovely garden where I have been breeding Koi, my own furniture and even, unbelievably, I am allowed to have friends over every now and again.

Renting isn't just for loser scum. In fact, if you look back in history, a lot of the aristocracy were actually renters.

 

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20 hours ago, CunningPlan said:

You need to change your mindset. I rent. I have a home office (actually almost a home factory!), A lovely garden where I have been breeding Koi, my own furniture and even, unbelievably, I am allowed to have friends over every now and again.

Renting isn't just for loser scum. In fact, if you look back in history, a lot of the aristocracy were actually renters.

Hehe, yes, sorry I was enumerating the things I've been procrastinating on / not doing due to my restricted space where I am now.

I have undoubtedly been indoctrinated to believe that owner occupation is best. I think renting in this country would be more palatable if there were more 'consumer' protections like in Germany, and if there were less clueless landlords, like me for example :)

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2 hours ago, awkwardturtle said:

Hehe, yes, sorry I was enumerating the things I've been procrastinating on / not doing due to my restricted space where I am now.

The middle ground is to just rent somewhere a bit larger/nicer

If you already have a decent deposit and prices are no longer accelerating out of sight, then you can afford to dial back the frugal lifestyle / max saving, and just spend a bit more on rent to start living your life. Then when prices do fall you will still be in a better place.

Even if prices do start to fall as expected, I think they will take 4 or 5 years to bottom out.

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6 hours ago, awkwardturtle said:

Hehe, yes, sorry I was enumerating the things I've been procrastinating on / not doing due to my restricted space where I am now.

I have undoubtedly been indoctrinated to believe that owner occupation is best. I think renting in this country would be more palatable if there were more 'consumer' protections like in Germany, and if there were less clueless landlords, like me for example :)

Renting can be fine. Remember that the deal you get is the one that you negotiate. I have a five year lease, ending when my kids leave school, with permission to decorate as I see fit. 

Not enough people see themselves as the valuable customer and negotiate accordingly.

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On 02/08/2017 at 7:27 PM, awkwardturtle said:

 

Hi, just a quick bit of extra to add to this topic. Its all very well trying to time the market. When you are young it feels like you can afford to do so, so wasted years won't be many years. But then the years rush by and there comes a time you have to do something. High house prices have actually defined me, made my life choices and I've put off others because of it. I still am planning my future around the next crash

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4 hours ago, bear.getting.old said:

Hi, just a quick bit of extra to add to this topic. Its all very well trying to time the market. When you are young it feels like you can afford to do so, so wasted years won't be many years. But then the years rush by and there comes a time you have to do something. High house prices have actually defined me, made my life choices and I've put off others because of it. I still am planning my future around the next crash

I agree to some extent, and this is true for me, too.

However, those who buy a house with a big mortgage at a young age are also defined by that choice. It's horses for courses.

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How much has the 200k house dropped in price since 2010?

Assuming you "have" to buy, all things being equal the saving on the next place should outway the loss crystallized on the flat so you will be marginally ahead less transaction costs. 

I would discount the flat further and see what offers materialize - you dont have to accept an offer but at least you would then have a 'real' option on the table to talk about - from what you've said even 77k is probably kiteflying in the current market (I appreciate this is not what you would want to hear) so your fretting is over nothing til you find a buyer.

We dont know where you live but if the market has been that weak then why the rush? Buying a 2nd place should be a last resort only (ie only if your must have dream house suddenly fell in your lap).

No doubt there are other people around you with similar dilemmas who might suddenly be forced to sell (death, divorce, job loss/relocation, let alone the economy finally falling over), if they do, at a firesale price, that might drag your paper loss down even more given prices are set at the margins

I'd get out now, knowing you learned a valuable lesson and have a clean slate to start from.

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Sorry, not sure how to delete/edit that rouge post above.

On 05/08/2017 at 8:10 AM, Sugarlips said:

How much has the 200k house dropped in price since 2010?

  • Sold in 2000 for 80K
  • Sold in 2014 for 190K

(it's actually up for 210K now, I rounded earlier)

On 05/08/2017 at 8:10 AM, Sugarlips said:

Assuming you "have" to buy, all things being equal the saving on the next place should outway the loss crystallized on the flat so you will be marginally ahead less transaction costs. 

This is my problem, while my flat would appear to have lost value, all semis & detached have gone up by the typical North West average (circa 15% cumulative since 2010) so rather than saving money I have been hit by a double whammy of falling equity (-7% at current asking price) vs increased prices at the other end. I can only assume this is because the **** has been ripped out of the BTL market which largely comprises of 1/2 bed flats. With those diverging valuations it feels as though I would have been better off not stepping onto the property ladder at all in the first place.

On 05/08/2017 at 8:10 AM, Sugarlips said:

We dont know where you live but if the market has been that weak then why the rush?

The urgency comes from being unhappy with my living standards. As stated earlier the compelling argument made by friends and family is that each year that passes is a wasted year of my life.

On 05/08/2017 at 8:10 AM, Sugarlips said:

No doubt there are other people around you with similar dilemmas who might suddenly be forced to sell (death, divorce, job loss/relocation, let alone the economy finally falling over), if they do, at a firesale price, that might drag your paper loss down even more given prices are set at the margins

This is what has kept me here so far and is the counter argument to the above. If my asking price is unrealistic then so be it, I could be better off staying put and hoping the market falls. Okay that increases my paper loss, but, as you rightly point out at the beginning of your post, that would be more than offset by larger falls at the other end. I figure my property can't have far to fall, since it appears not to have benefited from recent rises.

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If you don't like living in your current flat, and you're motivated to move then personally I'd sell up and move on.

 

I don't follow the logic that the property can't have far to fall, as it hasn't benefited from recent rises.  The market for flats has been hit hard by recent changes, there's also lots of news regarding rents and property prices falling in London, which is likely to spread throughout the market.

 

My advice, have one property and live in it.

 

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OP,

I do not think you fully appreciate what poster Kosmin said about it being a sunk cost. You do not have that money; it is not yours. It is like you never had it. And you cannot correct a mistake you made in 2010 because you do not have a time machine.

Have you ever played roulette, slot machines, or cards for money? You are in that same mindset a gambler has who cannot stop playing until he has got his losses back.

It is really easy to illustrate how myopic you are being with one question. All else being equal, if you had never owned this flat and had £70k in the bank right now, would you buy this flat, the bigger house, or both? Be honest with yourself, you would not even be thinking about the first or third.

If you were fresh out of uni in 2010 you are likely approx late 20s. I bet it has gone quickly. Pretty soon your age will never start with a 2 again. Your 30s will go even quicker. And you are trying to micro manage the timing of changing your HOME because you MIGHT be able to make a few grand in speculative profits if you delay your life a couple of years. (What chance you are even worse off in two years? Bet you cant put a probability on it.) Is it really that significant an amount of money in the context of your whole life, family, job, and happiness? Or are you in a dead end job with little hope for a reasonable middle class future? If so, you have bigger problems than a few grand "loss" and you should not be buying a £200k house. And whatever you work the paper loss out to be, it is not as much as that when taking intangibles into account like those you mentioned.

I promise you, you are way less adept at predicting markets and making profitable "trading" decisions than you think. Long, short, delta, loss.... do you browse trading forums by any chance?

It goes just as much for every single person on this forum, no matter what unaudited trading profits some people allude to. You are not a profitable trader. I promise you, you are not. (If you were you wouldnt be putting off life over a few grand.) You werent in 2010. What makes you think you are now? And such a largely profitable trader that it is worth "delaying life" over? Because it WILL be years. At least two years, best case scenario. Thats if prices start going in your favour immediately. Think about how long you are willing to put it off for. Now think about how realistic it is that what you want to happen in the market, happens in that time period. And put an honest probability on it in terms of your confidence in your predictive abilities. (You dont have any confidence or you would not be asking advice on a message board where everyone has been wrong for 10+ years.)

The fact you are spending so much time agonising over this PROVES you do not have a good enough idea where the market is going to be making trading decisions based on profit/loss, rather than making a satisfying life decision.

If you have any ability to make decisions like these that are worth you spending your time on, then you will have plenty of other "trading/investing" opportunities in your life to make up for it. You dont need to do it on this, where the sacrifices are so significant. And if you do not think you will have other trading opportunities like this, then, as I say, you do not have the predictive abilities to make it worth it this time either.

We dont know your full situation in terms of earnings/potential, significant other, personality type etc.. but I reckon the best course of action is likely to be to dump the sh*tty flat and buy the house, as long as it is a relatively conservative action in relation to your financial situation in terms of salary and LTV. If a down turn does happen, it should not have the potential to ruin you. You dont mention at all about it being a stretch for you financially though, you just talk about not wanting to "take a loss". Sounds like your problems are psychological. If this house is not a stretch, life is too short to delay the important things over a few grand. It is not an investment, it is just a place to live that is going to cost you some money. Shelter costs money. But if you have budgeted for it, get on with your life.

You are much better off spending this time coming up with a long term budget / financial / life plan for maximising your earning potential, recognising waste/chavvy spending decisions, living within your means such that you can save/invest. This few grand will pale into insignificance.

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wsn03   
On ‎06‎/‎08‎/‎2017 at 4:51 PM, AdamoMucci said:

That is indeed a f*cking annoying speech pattern the hipsters have.

Ha ha ha....I'm so glad its not just me who gets driven nuts by it!

OP, you won't get cuddled on here for pretty much anything, but yours is an interesting situation, it shows that the market is turning in some areas when property owners seek refuge in a house price crash site for help and advice.

Some very very clever people on here, so stick with it.

Just don't say "So" again at the start of a sentence.

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Buy the house. 

Agree there are a lot of intelligent people on here but I can't claim to be one. Still just sell the flat buy the house unless it's a 5x income financial **** stretch 

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a j   

How much deposit will you have and how large a multiple of income will you be borrowing? Also, would you expect your pay to increase?

At any rate the flat you are living in at the moment is seriously getting you down - you need to move away, whether by selling or renting out. No benefit in sticking out a bad situation.

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Just picking up on this thread @awkwardturtle

On 8/6/2017 at 1:41 PM, awkwardturtle said:

This is my problem, while my flat would appear to have lost value, all semis & detached have gone up by the typical North West average (circa 15% cumulative since 2010) so rather than saving money I have been hit by a double whammy of falling equity (-7% at current asking price) vs increased prices at the other end. I can only assume this is because the **** has been ripped out of the BTL market which largely comprises of 1/2 bed flats. With those diverging valuations it feels as though I would have been better off not stepping onto the property ladder at all in the first place.

You may not want to hear this but based upon your description of your flat, I suspect that in the coming few years it's value may be badly affected from the fall out of the S24 tax changes affecting leveraged higher tax rate landlords. Unless a property is genuinely desirable, I suspect that there will be a lot of downward pressure on the typical buy to let properties (1 and 2 bedroom flats / terraces) and if you look at Rightmove, it is already starting to happen in the NW (as well as London which gets the headlines). 

I look at the disproportionate growth in the bottom end of the market over the last 20 years of so. As a multiple of their baseline value (say 1998), these properties have increased far more than more desirable family homes. In the NW the former (although not necessarily flats) may have quadrupled whereas the bigger homes may have 'only' have  doubled (if that). 

I hesitate to give advice because the markets have proven that they could stay irrational for longer than many on here could ever have imagined (aided and abetted by HMG and BoE), but I do think that you are best served by selling as soon as you can for whatever you can get unless the clearing price is so derisory that the rental yield makes sense for you to become a reluctant landlord. You would have to suck up the increased stamp duty on your new house. 

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On 06/08/2017 at 3:02 PM, Just_Do_It said:

If you don't like living in your current flat, and you're motivated to move then personally I'd sell up and move on

..............

My advice, have one property and live in it.

 

Wise words.

Life is more fun when it's simple. Sell your flat, buy somewhere else,  avoid the extra stamp duty and move on. 

Good luck.

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On 8/2/2017 at 9:21 PM, adarmo said:

Hi,

 

The way I would view this is that even if you're making a loss on your existing place by dropping the price further, the gap between what you have now, and what you want to buy has also most likely fallen. One of the things I never really understood about people buying their first home is when they get excited that it's gone up by 25% or whatever. All that means is that the jump to you next house, or your last house has also increased!

 

+1

My flat went up by a lot when I moved up the ladder and people told me how lucky I was. Even when I showed them a spreadsheet with my calculations proving that this rise in the market had cost me £32k they refused to get it even though it was obvious.

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