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Dorkins

Brixton Btl

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I've been looking for a room in a houseshare around Brixton the last couple of weeks, budget not crazy (~£100pw) as I'm looking to save a little cash. The last time I did this was in 2005, same sort of budget and managed to get a nice room without too much trouble. There seems to have been a mini BTL boom in the meantime, lots of landlords have bought reasonable quality houses and crammed as many bedrooms and en suites in as they could. Fair enough you might say, but if you're going to lower the quality of the house then I'm not going to fork over as much rent, and I don't really want to pay 10-20% extra rent so I can poo in a stud wall box in the corner of my bedroom every morning.

I saw one yesterday which zoopla says was bought in 2006 for £380,000 (houses like this in Brixton were going for £110k in 1995-6). The landlady seemed a bit of a mess, she kept rearranging the viewing because of unexpected work commitments in the evening and at the weekend. The house was an okay size, but all but one of the 5 'double' bedrooms were really singles with a double bed just about squeezed in up against the fireplace (it's an old house). She'd done a bizarre bit of developing where she'd knocked a hole in the wall separating the bedrooms at the back of the house from the rooms at the front of the house, then built a little box inside the room at the front of the house for an en suite belonging to the room at the back. It was extremely obvious that space was being stolen from one room to give to another as these boxes were quite intrusive and didn't even go all the way up to the ceiling. The soundproofing was terrible, I could easily hear the sink through the wall when the tap was running. For small rooms in zone 2 with crap soundproofing she wanted £500-520pcm.

The arithmetic on this place must be killer, if she's on a repayment mortgage at 5% and borrowed £400,000 then her monthly mortgage costs alone are £2400, barely covered by the rent. She's also paying all utilities and council tax for the house, so if she is on a mortgage like that then she's currently out of pocket each month (actually she's out of pocket anyway since only two rooms are occupied at the moment). If she's only on interest only then it's not so bad (£1700), but her interest rate only needs to go up to 7% for her to be losing even on an IO mortgage. Never mind the fact that house prices are falling. Basically she's right on the edge, with a silly amateur development on her hands which is taking up most of her spare time and cash (she hasn't finished decorating all the rooms), and the minute her interest rate goes up or she has to start cutting the rents because nobody wants to pay £500 for her crappy rooms then she'll be gone. As I was walking away I felt kind of sorry for her, she's trapped living the 2006 dream in 2009.

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she's trapped living the 2006 dream in 2009.

She's living no dream. She has spent a load of money on destroying a house. She would never have got her money back, ever. Worse than doing nothing.

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I've been looking for a room in a houseshare around Brixton the last couple of weeks, budget not crazy (~£100pw) as I'm looking to save a little cash. The last time I did this was in 2005, same sort of budget and managed to get a nice room without too much trouble. There seems to have been a mini BTL boom in the meantime, lots of landlords have bought reasonable quality houses and crammed as many bedrooms and en suites in as they could. Fair enough you might say, but if you're going to lower the quality of the house then I'm not going to fork over as much rent, and I don't really want to pay 10-20% extra rent so I can poo in a stud wall box in the corner of my bedroom every morning.

I saw one yesterday which zoopla says was bought in 2006 for £380,000 (houses like this in Brixton were going for £110k in 1995-6). The landlady seemed a bit of a mess, she kept rearranging the viewing because of unexpected work commitments in the evening and at the weekend. The house was an okay size, but all but one of the 5 'double' bedrooms were really singles with a double bed just about squeezed in up against the fireplace (it's an old house). She'd done a bizarre bit of developing where she'd knocked a hole in the wall separating the bedrooms at the back of the house from the rooms at the front of the house, then built a little box inside the room at the front of the house for an en suite belonging to the room at the back. It was extremely obvious that space was being stolen from one room to give to another as these boxes were quite intrusive and didn't even go all the way up to the ceiling. The soundproofing was terrible, I could easily hear the sink through the wall when the tap was running. For small rooms in zone 2 with crap soundproofing she wanted £500-520pcm.

The arithmetic on this place must be killer, if she's on a repayment mortgage at 5% and borrowed £400,000 then her monthly mortgage costs alone are £2400, barely covered by the rent. She's also paying all utilities and council tax for the house, so if she is on a mortgage like that then she's currently out of pocket each month (actually she's out of pocket anyway since only two rooms are occupied at the moment). If she's only on interest only then it's not so bad (£1700), but her interest rate only needs to go up to 7% for her to be losing even on an IO mortgage. Never mind the fact that house prices are falling. Basically she's right on the edge, with a silly amateur development on her hands which is taking up most of her spare time and cash (she hasn't finished decorating all the rooms), and the minute her interest rate goes up or she has to start cutting the rents because nobody wants to pay £500 for her crappy rooms then she'll be gone. As I was walking away I felt kind of sorry for her, she's trapped living the 2006 dream in 2009.

All true but depends how much she borrowed, shes trapped or cornered :unsure:

If she put enough equity or is willing to dip into salary/savings to meet the interest she can tough it out and is just trapped :(

If she can't meet the interest then she's in a corner... :o

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All true but depends how much she borrowed, shes trapped or cornered :unsure:

If she put enough equity or is willing to dip into salary/savings to meet the interest she can tough it out and is just trapped :(

If she can't meet the interest then she's in a corner... :o

I'm not sure toughing it out is likely to be an option. If she somehow had hundreds of thousands of equity to put in herself (an inheritance?) then her mortgage payments will be less than I estimated and she may be able to make the rent-mortgage equation balance from month to month. However, if house prices fall by 40-50% from when she bought in 2006, then that equity is going to vanish into thin air, although she may only find this out when she comes to sell upon retirement and has to realise the loss. If she has no equity then it will be very difficult to keep going as her mortgage payments will be high (and will increase if interest rates go up) and rents are currently falling and likely to continue to do so in a tough job market. If she carries on pouring £500, £1k, £2k into the property each month from her wages elsewhere then she may be able to keep going, but that's madness. It would be better to hide her savings away in cash and go bankrupt!

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I'm not sure toughing it out is likely to be an option. If she somehow had hundreds of thousands of equity to put in herself (an inheritance?) then her mortgage payments will be less than I estimated and she may be able to make the rent-mortgage equation balance from month to month. However, if house prices fall by 40-50% from when she bought in 2006, then that equity is going to vanish into thin air, although she may only find this out when she comes to sell upon retirement and has to realise the loss. If she has no equity then it will be very difficult to keep going as her mortgage payments will be high (and will increase if interest rates go up) and rents are currently falling and likely to continue to do so in a tough job market. If she carries on pouring £500, £1k, £2k into the property each month from her wages elsewhere then she may be able to keep going, but that's madness. It would be better to hide her savings away in cash and go bankrupt!

In the UK if you sell a property and the proceeds dont cover the loan you took out from the bank you are personally liable for the shortfall if the bank chooses to come after you for quite a few years :o

No "jingle mail" here... :angry:

Thats quite an incentive not to sell at a loss :(

I agree with everything you are saying except the last statement - thats not going to be an "easy" option either

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Great post OP. Hope the house goes repo and someone puts it right. Why poo in a box in your room when you can poo in a box in your housemates room!

The woman is a vandal.

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No "jingle mail" here... :angry:

you just need to go for a personal bankruptcy and you are free of the debt in 12 months ...

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you just need to go for a personal bankruptcy and you are free of the debt in 12 months ...

You need to read the small print ;)

Most professions ban bankrupts :unsure:

Stays on your record for years :blink:

Forget getting any credit for a decade :(

Not a soft option :huh:

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You need to read the small print ;)

Most professions ban bankrupts :unsure:

Stays on your record for years :blink:

Forget getting any credit for a decade :(

Not a soft option :huh:

True. You couldn't even be a legit self employed taxi driver if bankrupt. Also, if you required security clearance for govt. or defence industry work (or a company that did do that sort of stuff) then you wouldn't get that either.

It isn't an easy option indeedy.

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