How Can It Be Worth Less Now?

[TwentyOneEleven]

Not usually one for pointing out the woes of those on the MSE website, but just saw the following one and wondered how many more of these stories we might see over the next few months/years?...

http://forums.moneysavingexpert.com/showthread.html?t=410130

Hi. Just wondering if anyone can give me any advice on this? We bought our flat almost 3 years ago for £148k. It was a new flat at the time but we bought from someone who had bought from plan. The surveyor surveyed it and told us it was worth the £148k (it was on as a fixed price). We suspect that the person we bought it from either worked in the estate agency that was marketing it or was at least related to someone who worked there.

We're now trying to sell it and the same estate agency have told us that we will only get £140k for it, if we are lucky. I am furious about this and I can't understand how a flat can lose £8k of value in 3 years. I am wondering if there is anything I can do or anyone I can ask to investigate this. My feeling is that the surveyor valued it for far more than it was worth 3 years ago because they knew the person who was selling.

Less than they originally paid for it, how very dare they!

[ripandcap]

Not usually one for pointing out the woes of those on the MSE website, but just saw the following one and wondered how many more of these stories we might see over the next few months/years?...

http://forums.moneysavingexpert.com/showthread.html?t=410130

Less than they originally paid for it, how very dare they!

Negative equity...?

Nnaaa...i thought house prices only went up.

[music man]

[HenryWeston]

I am furious about this and I can't understand how a flat can lose £8k of value in 3 years. I am wondering if there is anything I can do

errm put some laminate flooring down? sure to put £££'s on the 'value'

[bottletop]

I like the bit where she's got "Total debt at 8.3.07 = £16,200 ", somehow neglecting to include the £140k mortgage in the total....all she has to do is MEW the 16k off the flat and she'll be debt free

I must be sad though as I have been collecting £2 coins as well

[purplemonkey]

I like the bit where she's got "Total debt at 8.3.07 = £16,200 ", somehow neglecting to include the £140k mortgage in the total....all she has to do is MEW the 16k off the flat and she'll be debt free

I must be sad though as I have been collecting £2 coins as well

I know its not nice to laugh, but come on HPC. eveyone is so convinced that buying a property is their key to success. They don't need to study, try, or do anything everybody has had to do thoughout history.

the worst thing is all these people with neg equity will simply blame someone else. and I expect a lot will be compensated because of it.

what ever happened to the stongest survive.

sorry bout ranting, bit drunk

[Guest pioneer31]

I am furious about this and I can't understand how a flat can lose £8k of value in 3 years.

Yeh, I know how you feel, but in reverse.

I am furious and I can't understand how a property can jump from an affordable £95k to a laughable £250k in 8 yrs

[StainlessSteelCat]

Poor lass. Is it too mean to point out that I've paid a total of about £8K to rent a place for 3 years? And I didn't have to pay a mortgage/fees/stamp duty on top of that.

[headmelter]

One of her follow up posts is even more telling.......

"We've changed estate agency now as the original one get pushing us to drop the price even further which is just not financially possible"

[nohpc]

I like the bit where she's got "Total debt at 8.3.07 = £16,200 ", somehow neglecting to include the £140k mortgage in the total....all she has to do is MEW the 16k off the flat and she'll be debt free

I must be sad though as I have been collecting £2 coins as well

I don't consider mortgage as debt either. You have to live somewhere right? So if you rent you should consider your rental outgoings for the next 25 years as debt to be fair.

There are 2 situations where mortgage is debt:

1) when you are in negative equity

2) when you can't afford the repayments

Also, a flexible mortgage basically means that any savings you put into it will give you a tax free return. If I put any money into a savings account the interest gets taxed at 40%.

Edited March 25, 2007 by nohpc

[tahoma]

I don't consider mortgage as debt either. You have to live somewhere right? So if you rent you should consider your rental outgoings for the next 25 years as debt to be fair.

There are 2 situations where mortgage is debt:

1) when you are in negative equity

2) when you can't afford the repayments

Also, a flexible mortgage basically means that any savings you put into it will give you a tax free return. If I put any money into a savings account the interest gets taxed at 40%.

I wonder if your lender considers your mortgage to be a debt?

There are 2 situations where mortgage is debt:

1) Between Monday and Wednesday

2) And between Thursday and Sunday

Savings you put in a mortgage do not give you 'a tax free return'. You could lose the lot overnight. Like all speculatory activity, buying a house in the current market is little better than gambling.

[Nelly]

motgage not a debt? ******inell has the crack drop in centre just got broadband?

So if it aint debt that means you dont oew it to anyone then yeah?

So stop paying it and see what happens

[Realistbear]

Only 8k lost? They will look back in a few months time and say they were fortunate enough to ONLY lose 8k.

[nohpc]

motgage not a debt? ******inell has the crack drop in centre just got broadband?

So if it aint debt that means you dont oew it to anyone then yeah?

So stop paying it and see what happens

My point is that paying your mortgage is equivalent to paying your rent and as long as you can afford the payments it is no different. So if you rent for 1000 pounds a month you should say your debt is the same as somebody with a fixed rate mortgage for 1000 pounds a month. Apart from your mortgage interest payments will reduce as you repay the mortgage so longterm renting is more debt.

[tahoma]

My point is that paying your mortgage is equivalent to paying your rent and as long as you can afford the payments it is no different. So if you rent for 1000 pounds a month you should say your debt is the same as somebody with a fixed rate mortgage for 1000 pounds a month. Apart from your mortgage interest payments will reduce as you repay the mortgage so longterm renting is more debt.

And how about a more realistic example where your rent is £500 a month, and an interest only mortgage on the same property would be £800?

I'm sure all these hard sums are new to you, but think about it.

[Guest AuntJess]

"I am furious about this and I can't understand how a flat can lose £8k of value in 3 years. I am wondering if there is anything I can do"

In contrast to many of us on here, who are watching helplessly as houses ramp up by 25 - 30K a year, often without anyone doing a 'tap' to them.

The pendulum swings..................

Edited March 25, 2007 by AuntJess

[Guest muttley]

"I am furious about this and I can't understand how a flat can lose £8k of value in 3 years. I am wondering if there is anything I can do"

It sounds like she thinks she should be able to sue someone.

[adren]

My point is that paying your mortgage is equivalent to paying your rent and as long as you can afford the payments it is no different. So if you rent for 1000 pounds a month you should say your debt is the same as somebody with a fixed rate mortgage for 1000 pounds a month. Apart from your mortgage interest payments will reduce as you repay the mortgage so longterm renting is more debt.

I broadly agree with the idea that buying is a good idea, as do most bears. The question that this board seeks to address is whether it is a good idea to buy now, whether it is best to wait for somethang called a HousePriceCrash. Your post above is logical, but I would submit that logic departed us with respect to house values five years ago.

For example.

I currently rent a house "worth" 1/2 million quid right next to the sea for the same price as the mortgage repayments on a three bed bog standard semi in chav town. In broad terms, I am having a tough time seeing how the two scenarios are "equivalent".

Also I do somewhat take issue with the assertion "your mortgage interest payments will reduce".

Not so with resetting fixed rates or variable rates. And I would suggest that where your mortgage was 60K higher than it should have been it will cost you more in the long run.

Not being a troll here, fella, but you have to understand not everyone looks at a somplex business like this the same way.

[adren]

It sounds like she thinks she should be able to sue someone.

Perhaps she is a customer of FirstRungNow.co.uk.

The company that gives advice, but erm, somehow doesnt.

[apom]

I wonder if your lender considers your mortgage to be a debt?

There are 2 situations where mortgage is debt:

1) Between Monday and Wednesday

2) And between Thursday and Sunday

Savings you put in a mortgage do not give you 'a tax free return'. You could lose the lot overnight. Like all speculatory activity, buying a house in the current market is little better than gambling.

gambling?

are you sure?

As far as I am aware every single economic bubble has burst since civilisations begun..

Every one..

Did you wake up this morning lying next to jane fonda dressed in a gimp outfit with aa large sumo wrestler massaging your feet?

no!

well it could happen..

and is infinatly more likely then a bubble not bursting..

[nohpc]

1) with a 20% deposit my flat costs 500 pounds a month than renting

2) all my money is still making tax free interest in my mortgage account

3) if the property market crashes I will not lose money unless I decide to STR or trade down - neither of which I want to

Please stop assuming that everybody who disagrees with you is a muppet. It is very frustrating sometimes. I did not buy my current property with capital gains in mind I bought it because I needed a place to live. However, it has turned out to be a very good investment with very little money down. I use my mortgage as a current account and as such am earning the equivalent of approx 10% pre tax interest on all my savings.

I am in full agreement that buying now on a short term basis is not a good idea as I do not expect any significant gains in property. However, if you are not stretching yourself and can repay your mortgage quickly it is a very efficient tax beater and excellent long term investment.

[TwentyOneEleven]

3) if the property market crashes I will not lose money unless I decide to STR or trade down - neither of which I want to

That's assuming you don't HAVE to sell! What if you lose your job and can't afford to keep up the repayments?

[Casual Observer]

As far as I am aware every single economic bubble has burst since civilisations begun..

Every one..

What about the housing bubble/boom of the early 1970's, which was deflated by below-inflation price rises, with no nominal price falls?

[adren]

1) with a 20% deposit my flat costs 500 pounds a month than renting

2) all my money is still making tax free interest in my mortgage account

3) if the property market crashes I will not lose money unless I decide to STR or trade down - neither of which I want to

Please stop assuming that everybody who disagrees with you is a muppet. It is very frustrating sometimes. I did not buy my current property with capital gains in mind I bought it because I needed a place to live. However, it has turned out to be a very good investment with very little money down. I use my mortgage as a current account and as such am earning the equivalent of approx 10% pre tax interest on all my savings.

I am in full agreement that buying now on a short term basis is not a good idea as I do not expect any significant gains in property. However, if you are not stretching yourself and can repay your mortgage quickly it is a very efficient tax beater and excellent long term investment.

I general I agree but again I encourage caution.

Most folks move house every 5 years and there is a charge of sorts whever they do.

Also, the amount you realise depends on where in the cycle you buy and sell.

If you consider a 25 year period, what would include a person buying in 1990 (at a peak).

They might cah in their chips in 2015. Will that be a trough?

Conversely, someone buying in 1995 and selling in 2020 might see a higher differential.

So while in general I concur with the idea that buying==good, my idea is that buying at a peak is less good. So I (personally) won't. We shall see anyway.

Regardless, I dont think its acceptable to be chucking words like "muppet" around on here. it doesnt help. I defend your right to take exception to it.

[nohpc]

That's assuming you don't HAVE to sell! What if you lose your job and can't afford to keep up the repayments?

The only risk is if I become sick but I have a critical illness plan and medical protection to cover such an eventuality and the lump sum would clear my mortgage.

There is always work available in my line of work and as such I do not worry about job security. I cannot be outsourced or replaced by a computer. Even if this was not the case I am too optimistic a person to go through life ever thinking what if. You could think what if the worst happens for every decision you ever make.

Edited March 25, 2007 by nohpc