IwanttobutIcant Posted June 3, 2009 Share Posted June 3, 2009 Just a quick note from the front line. I have been renting a house in Surrey for the last 10 months. Prior to being available for rent it was for sale at £2m but the landlord considered the offers at the time too low ("I know what this house is worth" he said). Last month the property was valued by the bank since he needed a business loan secured against it. The valuer did a full structural survey and sent LL the figure. He was livid with the valuation (approx. £1.3m although I never saw it in print) and he refuses to accept it. I pointed out that the bank will value it at what they think it will sell for in the current market but he was not ready for this information. Ever since I started renting we have been discussing the potential purchase but it would seem that the LL is so far removed from reality that we will never agree a figure unless I move out and it goes on the open market. I have another 14 months to run on my tenancy. I expect prices to be lower still then. P.S. The LL is a good guy. Just deluded. Quote Link to comment Share on other sites More sharing options...
dr ray Posted June 3, 2009 Share Posted June 3, 2009 Just a quick note from the front line.I have been renting a house in Surrey for the last 10 months. Prior to being available for rent it was for sale at £2m but the landlord considered the offers at the time too low ("I know what this house is worth" he said). Last month the property was valued by the bank since he needed a business loan secured against it. The valuer did a full structural survey and sent LL the figure. He was livid with the valuation (approx. £1.3m although I never saw it in print) and he refuses to accept it. I pointed out that the bank will value it at what they think it will sell for in the current market but he was not ready for this information. Ever since I started renting we have been discussing the potential purchase but it would seem that the LL is so far removed from reality that we will never agree a figure unless I move out and it goes on the open market. I have another 14 months to run on my tenancy. I expect prices to be lower still then. P.S. The LL is a good guy. Just deluded. Multiply your annual rent by 20 and it will give you a rough guide what the house is worth. Anything more is speculation. Quote Link to comment Share on other sites More sharing options...
Panda Posted June 3, 2009 Share Posted June 3, 2009 Multiply your annual rent by 20 and it will give you a rough guide what the house is worth. Anything more is speculation. Multiply your annual rent by 10 and it will give you a rough guide what the house is worth. Anything more is speculation. Quote Link to comment Share on other sites More sharing options...
Bearback Posted June 3, 2009 Share Posted June 3, 2009 Multiply your annual rent by 20 and it will give you a rough guide what the house is worth. Anything more is speculation. I'd say it is more like multiply annual rent by 10 to get the value of the house. Quote Link to comment Share on other sites More sharing options...
the_duke_of_hazzard Posted June 3, 2009 Share Posted June 3, 2009 Buy at 12, sell at 20 is what I've heard. Quote Link to comment Share on other sites More sharing options...
SaintJay Posted June 3, 2009 Share Posted June 3, 2009 (edited) I'd say it is more like multiply annual rent by 10 to get the value of the house. that makes more sense - that makes my current rented flat almost sensibly priced - before - maybe silly 2007 prices but still way off. Edited June 3, 2009 by SaintJay Quote Link to comment Share on other sites More sharing options...
Te Mata Posted June 3, 2009 Share Posted June 3, 2009 I'd say it is more like multiply annual rent by 10 to get the value of the house. Buy at 12, sell at 20 is what I've heard. Depends on a few other factors, but broadly correct. A high end house is usually a higher multiple of rent, but 20 is too much. Quote Link to comment Share on other sites More sharing options...
Harry Monk Posted June 3, 2009 Share Posted June 3, 2009 He was livid with the valuation (approx. £1.3m although I never saw it in print) and he refuses to accept it. I pointed out that the bank will value it at what they think it will sell for in the current market but he was not ready for this information. God alone knows what he will think this time next year when it's valued at £800,000 then. Quote Link to comment Share on other sites More sharing options...
Freeholder Posted June 3, 2009 Share Posted June 3, 2009 A multiplier of 20 is a gross yield of 5%. Some BTLs were doing that in the boom but you would be mad to pay that now. Ten to twelve implying a yield of 8.33 to 10% is probably sensible in todays market but the evidence is all over the shop. Quote Link to comment Share on other sites More sharing options...
Deerhound Posted June 3, 2009 Share Posted June 3, 2009 I'd say it is more like multiply annual rent by 10 to get the value of the house. I so wish that that was a hard and fast rule with no exceptions. It would mean that I could buy the four bedroom farmhouse (plus barns and about 18 acres) I live in for £24,000. Somehow I can't see the landlord accepting that offer. Quote Link to comment Share on other sites More sharing options...
the_duke_of_hazzard Posted June 3, 2009 Share Posted June 3, 2009 I so wish that that was a hard and fast rule with no exceptions. It would mean that I could buy the four bedroom farmhouse (plus barns and about 18 acres) I live in for £24,000. Somehow I can't see the landlord accepting that offer. Yeah, my flat would be 130K. 50% off even at today's prices. Quote Link to comment Share on other sites More sharing options...
Guest X-QUORK Posted June 3, 2009 Share Posted June 3, 2009 Just a quick note from the front line.I have been renting a house in Surrey for the last 10 months. Prior to being available for rent it was for sale at £2m but the landlord considered the offers at the time too low ("I know what this house is worth" he said). Last month the property was valued by the bank since he needed a business loan secured against it. The valuer did a full structural survey and sent LL the figure. He was livid with the valuation (approx. £1.3m although I never saw it in print) and he refuses to accept it. I pointed out that the bank will value it at what they think it will sell for in the current market but he was not ready for this information. Ever since I started renting we have been discussing the potential purchase but it would seem that the LL is so far removed from reality that we will never agree a figure unless I move out and it goes on the open market. I have another 14 months to run on my tenancy. I expect prices to be lower still then. P.S. The LL is a good guy. Just deluded. This chimes with our previous LL who had the house valued half a dozen times in our last two months there, they just kept on undervaluing it apparently. Quote Link to comment Share on other sites More sharing options...
Bearback Posted June 3, 2009 Share Posted June 3, 2009 I so wish that that was a hard and fast rule with no exceptions. It would mean that I could buy the four bedroom farmhouse (plus barns and about 18 acres) I live in for £24,000. Somehow I can't see the landlord accepting that offer. Why is your rent so cheap? Perk of the job? Quote Link to comment Share on other sites More sharing options...
dr ray Posted June 3, 2009 Share Posted June 3, 2009 (edited) I'd say it is more like multiply annual rent by 10 to get the value of the house. Wishful thinking I think. Maybe for a problem family or student let in a grotty part of the NE even x10 would be expensive but a 5% return plus the prospect of (long term) appreciation which my x 20 comes to would be more realistic in a nice part of Surrey. If interest rates go up making 5% return unattractive it will be because we have a return to inflation and the property would appreciate. Edited June 3, 2009 by dr ray Quote Link to comment Share on other sites More sharing options...
Harry Monk Posted June 3, 2009 Share Posted June 3, 2009 I so wish that that was a hard and fast rule with no exceptions. It would mean that I could buy the four bedroom farmhouse (plus barns and about 18 acres) I live in for £24,000. Somehow I can't see the landlord accepting that offer. In your circumstances I don't think I would ever buy. What's so good about having a mortgage anyway? Quote Link to comment Share on other sites More sharing options...
SNACR Posted June 3, 2009 Share Posted June 3, 2009 A multiplier of 20 is a gross yield of 5%. Some BTLs were doing that in the boom but you would be mad to pay that now. Ten to twelve implying a yield of 8.33 to 10% is probably sensible in todays market but the evidence is all over the shop. I agree with this at the moment. If interest rates go back up significantly it'll be worse. Quote Link to comment Share on other sites More sharing options...
grizzly bear Posted June 3, 2009 Share Posted June 3, 2009 I'd say it is more like multiply annual rent by 10 to get the value of the house. I am currently renting a house - annual rental is around £33k. 5 bedroom detached house in nice London suburb. The house at peak was worth around £1m. I know this as that is what one on the road sold for. Also we asked the landlord if we could buy and that was his price. Thats around 30 times annual rental and of course thats too high. But at 10 times thats around £330k, and thats was the price of a flat here at peak. At 20 times thats around £660k and thats the price of a 3 bed semi at peak. So those saying 10x annual rental are in the 70% off peak camp! Quote Link to comment Share on other sites More sharing options...
Deerhound Posted June 3, 2009 Share Posted June 3, 2009 (edited) Why is your rent so cheap? Perk of the job? It's a bit misleading to be completely honest, when we took the place on it was a hole, the previous tenents had trashed it, so our rent reflects the amount of work we've done to make habitable again. In your circumstances I don't think I would ever buy. What's so good about having a mortgage anyway? The only worry is that the landlords are "past the first flush of youth" as it were, so our tenure is not all that secure. We've probably got around £100,000 cash if we need it, but, at the moment there's nothing comparable to where we are for that sort of money so we'll probably being staying put as long as circumstances don't change. Edit - Going rate hereabouts, mid-Wales, would probably be closer to £7,500 pa, peak "value" of the house £300,000 plus. Edited June 3, 2009 by Deerhound Quote Link to comment Share on other sites More sharing options...
Roman Roady Posted June 3, 2009 Share Posted June 3, 2009 Well heres a story from the front line in SE London. An elderly relative died some time back, leaving me and my siblings the house (4 bed semi) I had a couple of local estate agents in to value, both gave the same price independently. The key phrases I used to illustrate my position were as follows: 'a house is worth what anyone will pay for it', 'if you had to sell it tomorrow what would you charge'. It had an offer on it by the end of the first day and it sold for 4% below the asking price...which is a shade over 20% off of the peak price. My self and my siblings are now substantially richer and I am watching gold prices for the next few months. I wont buy a house for at least 2 years..I just hope that interest rates go up soon so that I can eventually make a killing. The estate agent was excellent (which really surprised me) and seemed to be relieved to be dealing with a realistic vendor. The new owner is a totally selfish and arrogant *****! I hope they are both reading and recognize the case. Moral? Houses are still selling...for the right price. Quote Link to comment Share on other sites More sharing options...
Houses_Burning Posted June 3, 2009 Share Posted June 3, 2009 P.S. The LL is a good guy. Just deluded. And greedy Quote Link to comment Share on other sites More sharing options...
the_duke_of_hazzard Posted June 3, 2009 Share Posted June 3, 2009 Well heres a story from the front line in SE London.An elderly relative died some time back, leaving me and my siblings the house (4 bed semi) I had a couple of local estate agents in to value, both gave the same price independently. The key phrases I used to illustrate my position were as follows: 'a house is worth what anyone will pay for it', 'if you had to sell it tomorrow what would you charge'. It had an offer on it by the end of the first day and it sold for 4% below the asking price...which is a shade over 20% off of the peak price. My self and my siblings are now substantially richer and I am watching gold prices for the next few months. I wont buy a house for at least 2 years..I just hope that interest rates go up soon so that I can eventually make a killing. The estate agent was excellent (which really surprised me) and seemed to be relieved to be dealing with a realistic vendor. The new owner is a totally selfish and arrogant *****! I hope they are both reading and recognize the case. Moral? Houses are still selling...for the right price. Without too much detail, can you give an idea of the area and the price? Quote Link to comment Share on other sites More sharing options...
Roman Roady Posted June 3, 2009 Share Posted June 3, 2009 Without too much detail, can you give an idea of the area and the price? A2 Corridor, the 2nd stamp duty level was the limiting factor in price. Quote Link to comment Share on other sites More sharing options...
andykn Posted June 3, 2009 Share Posted June 3, 2009 Wishful thinking I think. Maybe for a problem family or student let in a grotty part of the NE even x10 would be expensive but a 5% return plus the prospect of (long term) appreciation which my x 20 comes to would be more realistic in a nice part of Surrey. If interest rates go up making 5% return unattractive it will be because we have a return to inflation and the property would appreciate. Yes, a gross yield of 5% index linked with capital protected lon term is good in today's circumstances. Quote Link to comment Share on other sites More sharing options...
andykn Posted June 3, 2009 Share Posted June 3, 2009 Last month the property was valued by the bank since he needed a business loan secured against it. The valuer did a full structural survey and sent LL the figure.He was livid with the valuation (approx. £1.3m although I never saw it in print) and he refuses to accept it. I pointed out that the bank will value it at what they think it will sell for in the current market but he was not ready for this information. If there's a more incompetent bunch of **** covering charlatans than Estate Agents it's surveyors/valuers. Quote Link to comment Share on other sites More sharing options...
General Melchett Posted June 4, 2009 Share Posted June 4, 2009 In your circumstances I don't think I would ever buy. What's so good about having a mortgage anyway? Unless Deerhound could buy it for 24K..... Quote Link to comment Share on other sites More sharing options...
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