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C2B

Difficulty In Upsizing

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Hi,

My partner and I are finding it extremely difficult to upsize from our current small mid terraced house to a bigger terraced/semi detached house.

We would very much like this to be our new long term (20+ years .. possibly till we retire) home as we're expecting our 2nd baby next year (1st one is already 2).

We have been fortunate enough to have bought back in 2002 having saved for a deposit and lived within our means. Over these past 8 years, we have been overpaying on our mortgage while the rates have been low and will soon have paid of the mortgage.

Whilst I believe a HPC is forthcoming, our circumstances means we're having to dive in over the 6 months or so. The main drivers for the upsize is space and schools.

The area (SE) we're wanting to move to doesn't seem to have been dropping much and any good properties that ticks most of our boxes are usually snapped up pretty quickly. (We had put in an offer and was outbidded, estate agent tried to get us into a bidding war the b@stards).

So .. my current thinking is we have 2 realistic options:

1) Stay in current property (small but liveable) and keep on waiting for the HPC and keep an eye out for suitable properties to appear and act quick. To be ready, we have now put our property on the market and also have a mortgage offer in place.

2) Purchase a cheaper property we have identified that has potential for extending without having to sell current house. This will mean we can effectively be a cash buyer (well... no chain. i.e. savings and mortgage should cover the price of the run down property) and should give us more bargaining power.

With option 1, there will be chain stress as we need to find a buyer but no DIY/building work stress.

With option 2, bigger mortgage than option 1 and less savings. no chain stress (on my side) but building/DIY work to manage (at least pregnant wife will still have current home to live in while run down property gets refurbished). Once new property has been extended to be our long term home we then intend to rent out current place (or possibly still sell as we're tied in to a 12 week agreement at the moment). This is where I am a bit unsure of things as I have never been a landlord before and there will also be tax implications as I am a high tax earner. It would not make financial sense to be taxed 40% on the rent I get. Is there any way around this?

One would be to release equity on the current home and report the interest I am having to pay to the taxman so the rent is offset against it. (If this was with another lender, would I need to inform the bank that gave me the mortgage for the run down property? What can they do?)

Finally, there is option 3 which is STR - but we have ruled this out :)

Any advice will be much appreciated.

Cheers,

C2B

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The UK market right now is becoming a bit like the US market, where the realtors/estate agents will grill a prospective buyer to ensure they genuinely have the means to buy. The first question they ask here is, "do you have a property to sell?"

If you're a cash buyer or have a very large deposit, are chain free or have a "sellable" house and a realistic asking price, then you're in and they'll cherish your business and treat you like a king. If you don't then you're out, and they'll just treat you like shit.

My advice is make sure you're "in", and then exploit this hard with your offer price.

You're also discovering today what I discovered when i bought and sold during the 1989-95 crash. In a booming market any old rubbish sells, but in a falling market we all get a lot more discriminating. A sizeable percentage of UK property is "blighted", bad extensions, north facing garden, no parking, poor transport links etc. These properties are unsaleable and will languish for months or years even with big price reductions. But the property that genuinely ticks all the boxes in any given price range, that property will still sell with a reasonable 10% haircut. When estate agents ask about your existing property they will absolutely have this fact at the top of their minds, and by judging their reactions you'll find out how wisely you bought in 2000!

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We have ruled out STR because we don't want to have to deal with the stress of moving twice. Also would not want to be at the mercy of landlords now we have a small and growing family.

Regarding being treated like sh*t by the agents, yes we felt that way when bidding. I think they knew they had a property that would sell on their hands, but I'll keep an eye out for it in case it falls through.

Any opinions/advice on the being a landlord bit? Would that be a bad move as I would either be paying 40% tax or the BTL rate (5%+ ?).

Thanks

C2B

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We have ruled out STR because we don't want to have to deal with the stress of moving twice. Also would not want to be at the mercy of landlords now we have a small and growing family.

Regarding being treated like sh*t by the agents, yes we felt that way when bidding. I think they knew they had a property that would sell on their hands, but I'll keep an eye out for it in case it falls through.

Any opinions/advice on the being a landlord bit? Would that be a bad move as I would either be paying 40% tax or the BTL rate (5%+ ?).

Thanks

C2B

Hi, we were in a similar boat having considered renting out and buying another property but by the time we'd factored in LA fees, tax, upkeep of the property and dead time between tennants it just seemed too much work and hassle,

Instead we put the house on the market at a low price and a few weeks later we have a sale going through. (after first viewing) we've been viewing properties but nothing has caught our eye, so we are going to rent for about 6 months to put us in an ideal buying position, when / if we find a house we like we'll be negotiating hard to get the property for the right price.

Like you I don't want to deal with LL's or LA's but hopefully should be worthwhile. Best of luck. :rolleyes:

Edited by chewy75

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  • 150 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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