_SUNDANCE Posted February 15, 2011 Share Posted February 15, 2011 Hi everyone. I have a question about rateable values as a guide to a house i have an interest in. I understand rateable values might not represent a market value for all houses. Some more unique properties are probably undervalued as the formula does not take into account many of the more unique selling points. I share the general view on here that houses need to reach a value of 2005 rateable values minus 10%. The house i am interested in has a rateable value of 105k and the asking price is 110k.Its actually a house i have been renting for a few years. There is no haggling % built into this asking price. I have been told its a fixed price. However, this is the problem. The house i might be interested in is in a small development of approximately 30 houses. As an aside a negative is that i know over half, maybe 60% of houses in this development are presently rented. Getting back to rateable values, there are two other houses in this development which have just come onto the market. One is on for 105 ( rateable value 100k) - guessing i could get this house for 95k. The other is on for 135k ( rateable value 130k)- not unrealistic to think i could get this house for 120-125k. Whether or not you agree with rateable values as being a good guide it stands to reason that whatever houses on the same development were valued at in 2005 in terms of rateable value you should expect that price differential to stay constant over time, allowing obviously for the condition of the house inside. These two other houses have maintained there price differential but the one i am interested in is out of skew in comparison. Basically these other two houses will likely sell for 10% below ratebale value while the house i am interested in has a fixed selling price of 5% above rateable value. Quote Link to comment Share on other sites More sharing options...
eek Posted February 15, 2011 Share Posted February 15, 2011 Well if you can get the house valued @ £135 for £125 I would assume your rented house is worth £97k or so max. Personally I wouldn't pay £13,000 over the odds to avoid the cost and hassle of moving down the road. I think because you have expressed an interest your landlord thinks he can get you to pay over the odds. You may want to go and look at the other two houses, then make very lowball offers on all three on the basis that you will proceed with the first one to agree. Quote Link to comment Share on other sites More sharing options...
_SUNDANCE Posted February 15, 2011 Author Share Posted February 15, 2011 Thank you for the replies. I am a regular reader of this site but have not posted that often. However, i nearly always find advice helpful and knowledgeable. Yes, on the face of it, if i like this particular development, it would seem i should be tempted by the other two houses. However, in all developments, even where houses are identical, in my mind some properties have a better site. Thats the case with the house i presently rent and would prefer to buy. Although to some peoples minds they might see no significant difference in the siting of the three properties. I am happy to pay a small premium for the house i prefer but not that much. Quote Link to comment Share on other sites More sharing options...
eek Posted February 15, 2011 Share Posted February 15, 2011 +1 You need to forget that every house is unique and try to make them look like easily substituted commodities. The less interested you appear in the house the more flexible the seller has to be to sell it. As half the estate is rented how easy would it be to replace you as a tenant? If when you walk away it takes 2 months to let the house that is £1,000 in rent your landlord will lose. Quote Link to comment Share on other sites More sharing options...
2buyornot2buy Posted February 15, 2011 Share Posted February 15, 2011 Would he not save on agent fees? If he sells it to you as the tenant does that mean he won't need to pay the agent their 1-1.5%? Quote Link to comment Share on other sites More sharing options...
_SUNDANCE Posted February 15, 2011 Author Share Posted February 15, 2011 When i made the enquiry the vendor quoted me the fixed price of 110k, but he did not know that two other properties on the same development had just come on the market at prices likely to be agreed at 5-10% less than rateable values. However, when i told him this as a starting point for my thinking he maintained his position and did not seem very flexible. But maybe he will revise his thinking in light of this. He maintained he could sell the property tomorrow to a housing association for 115k. However, if i was to leave this house tomorrow and he put the property on the open market against the other two houses better priced i am not sure anybody is going to be knocking down his door. On a different topic, what do folk think about buying a house in a development with less than 35% of properties owner occupied. Such developments seem the norm in several developments in my area. I have no snobbery against people who rent. I was brought up in a council estate. The difference was that then the same families lived in the same houses for a generation. Nowadays with rented houses in new developments so many new families are moving in and out. You have no control over your next door neighbour. I had a bad experience before of living in an area which was lovely to begin with but two new families moved in and caused mayhem. The police had to be called in several times it took a year to finally get the families removed. Quote Link to comment Share on other sites More sharing options...
_SUNDANCE Posted February 15, 2011 Author Share Posted February 15, 2011 My landord is an estate agent to answer the previous question. That in itself is probably not good for me eventhough i am a first time buyer not requiring any finance. I am thinking in any dealing with a landlord estate agent can i possibly get a good deal. I am prepared to give away a little bit of an edge but not much. Quote Link to comment Share on other sites More sharing options...
_SUNDANCE Posted February 15, 2011 Author Share Posted February 15, 2011 Thanks for your comments eek. Yes, if i was to move out it could take a few months to rent it out again if he did not want to sell and thats £500 lost rent every month its vacant. Quote Link to comment Share on other sites More sharing options...
Shotoflight Posted February 15, 2011 Share Posted February 15, 2011 Thanks for your comments eek. Yes, if i was to move out it could take a few months to rent it out again if he did not want to sell and thats £500 lost rent every month its vacant. & Rates from October! Quote Link to comment Share on other sites More sharing options...
Belfast Boy Posted February 15, 2011 Share Posted February 15, 2011 (edited) My landord is an estate agent to answer the previous question. That in itself is probably not good for me eventhough i am a first time buyer not requiring any finance. I am thinking in any dealing with a landlord estate agent can i possibly get a good deal. I am prepared to give away a little bit of an edge but not much. You need to be very careful. As an estate agent they will know all the tricks. Are the other properties for sale with the same estate agent? If they are, how could you be certain that offers are being passed on? That stuff about selling to a HA sounds like total EA BS. This may be difficult advice to follow - depending on your circumstances - if you want the best price DO NOT get attached to one property. There will be others. And DO NOT allow yourself to be pressured. House prices are not going up any time soon. Infact the latest report suggests that people would have saved over 7% in the last year by renting. It is a buyers market. You are in a very strong position if you can afford to buy. Have you considered finding out how much the property was originally purchased for? The details of how to do this are in the top thread. Edited February 15, 2011 by Belfast Boy Quote Link to comment Share on other sites More sharing options...
Belfast Boy Posted February 15, 2011 Share Posted February 15, 2011 (edited) Have you considered finding out how much the property was originally purchased for? The details of how to do this are in the top thread. I checked the 'Useful Sites' thread and it is not clear how to do this. Here is the relevant post... http://www.housepricecrash.co.uk/forum/index.php?showtopic=68017&view=findpost&p=1550571 IIRC - you can go to that address and pay £3 to find out the details of most house sales. Probably best to phone them first to check the process. Edited February 15, 2011 by Belfast Boy Quote Link to comment Share on other sites More sharing options...
_SUNDANCE Posted February 15, 2011 Author Share Posted February 15, 2011 Thanks for all the replies. I agree with almost everything said. I am in a good position where i am happy to wait. I have not my heart set on this house, but it would be a house i could see myself buying if the price was right. Everything considered including making allowance for future downside ( i dont see any short to medium upturn in the housing market ) there is a price i would be happy with but its not near the asking price. I am not looking to get a house on the cheap, although that would be good. I simly want a house at what i consider a fair price. I was really disheartened by the attitude of the seller considering i have rented this house and been a very good tenant for 5 years. I am not expecting any loyalty discount for being a good tenant but this is the thing. Firstly the house is way overpriced in comparison with two other properties on the same small small development. Secondly, the seller could not wish for a better buyer than myself. I am an existing tenant and a sale with me would mean he would maximise both rental and sale value. If i was to leave next month he would have two options. Put the house on the market or rent it out again. Either option is going to cost him at least 3 grand in terms of missed rent while its marketed or periods of vacany if its rented. Quote Link to comment Share on other sites More sharing options...
_SUNDANCE Posted February 15, 2011 Author Share Posted February 15, 2011 Moreover, if i was to leave and he was to put it on the market he would need to bring the house up to a beter interior finish. The other two houses on gthe market which he would be competing against for a sale are owner occupied. They are finished better inside due to this. As my house has been rented i have been limited to any improvements. My house is far from a tip it was never in my interests to do any work inside which would be dead money. He would need to fork out another few grand to bring this house up to the standards of the other two to even compete on the same level. Even then he is still looking 5% more than rateable value while the other two properties are likely to be sold for 10% less than rateable value. As for his belief that the local housing association will happily pay 10% over rateable value tomorrow i think anyone in that housing association willing to do that should be looking for a new job. Quote Link to comment Share on other sites More sharing options...
_SUNDANCE Posted February 16, 2011 Author Share Posted February 16, 2011 Our dilema in terms of renting or buying is influenced by the fact we have the cash to buy outright without any mortgage. Well, the cash to buy up to a certain ammount. We could buy the house we are renting for 110,00. If we did, over the next 12 months the difference between saved gross rent if we bought now ( approx £6200 ) and net interest earned on the 110,000 we would still have in the bank ( approx 3,000 ) would be £3,200 better off. The actual figue would be close to £2000 better off as if we owned the house we would have things like insurance to pay and other maintenance which the landlord now pays for. However, over the next year it just needs the capital value of the house to fall by 2% for us to be worse off. If capital values of houses stayed the same over the next year being £2000 worse off by renting is not such a big loss considering we will still have the advantage of being first time potential buyers who are chain free. If interst rates were higher and the housing market was such that no capital value increses were expected it would definatley make sense to rent until the time was right. Its just with interest rates so low any money we have in the bank is not earning very much. Quote Link to comment Share on other sites More sharing options...
_SUNDANCE Posted February 16, 2011 Author Share Posted February 16, 2011 From my landlords point of view he is getting just under a 6 gross% yield on a capital asset of £111,000. Although the value of the house in my view is closer to 95k. If i buy the house i am in affect getting the same yield except i will be both landlord and tenant. I value any opinions on my situation. Quote Link to comment Share on other sites More sharing options...
_SUNDANCE Posted February 16, 2011 Author Share Posted February 16, 2011 Thank you kindly doccyboy for your input. I like to think i have a decent grasp of economics but its good to hear advice from people on this site more knowledgeable on the subject and especially how it affects the housing market. Deep down i probably have some of the answers to my own questions but coming on here always seems to confirms them. My own situation is that i would like to buy a house but i am not deperate to do so. I am probably like a lot of potential buyers in that i am looking for more certainty in the housing market. I dont expect to make a big profit nor do i think i should. Ideally, i want the housing market to hit its bootom and then from there on houses will provide a sensible and modest investment as well as being a home. Hopefully, we will not get into another housing bubble and bust again with sensible banking regulations to prevent that. At the moment i see myself as paying for the mistakes of others by having savings eroded due to interest rates being kept artificially low. I dont want to buy a house now for x ammount when i could get it for 5-10% less in a years time. Once again i would be paying for the mistakes of others but this time by choice. Quote Link to comment Share on other sites More sharing options...
_SUNDANCE Posted February 16, 2011 Author Share Posted February 16, 2011 The main concern for me now is not so much buying a houuse now for 5% less than i could get it for in a years time. I could cope with a losing 5,000 on a 100,000 house. Its more that i see the advantage in being first time buyers with no chain ( and cash buyers on top of that ) and this is an advantage i will only have once on the housing market. I want to make full use of this. Quote Link to comment Share on other sites More sharing options...
_SUNDANCE Posted February 16, 2011 Author Share Posted February 16, 2011 Thanks for your advice as always Doccyboy. I bring up the topic of not wanting to blow all the aces i have in the hole of being first time cash buyers as we are kind of caught between two stools in ammount of money we can afford and our ideal home. The home we presently rent which we would consider buying of the price was right would not be our ideal home. We would still have capital left. Its one we would be happy to live in but sometime in the future we would hope to find a house closer to our perfect home. If prices dropped by 10% more over the next year and we are still first time buyers able to act quickly we could get a further discount and then we would be able to affors a home more for the longer term. Quote Link to comment Share on other sites More sharing options...
_SUNDANCE Posted February 16, 2011 Author Share Posted February 16, 2011 God willing we will be having our first child in 7 months time so thats really concentrated our minds the past few months in whether sticking or twisting in the housing market. Quote Link to comment Share on other sites More sharing options...
CS111 Posted February 16, 2011 Share Posted February 16, 2011 Im also in the same boat, FTB, with a big cash deposit 'been saveing hard for years' and not about to give it away cheaply As the previous poster said, we only get one shot at this being a FTB with mostly cash. I almost bought at the height of the market, the house was £180k, recently sold for £90k, exactly 50% For 180k now we are looking at houses twice the size with big big gardens and much better locations. The only house i will move for now is if its perfect and underpriced by atleast 5-10% or i rate at very good value But saying all that, im getting very very itching feet right now. Quote Link to comment Share on other sites More sharing options...
_SUNDANCE Posted February 17, 2011 Author Share Posted February 17, 2011 Its not in my nature or upbringing to like baliffs or banks who repossess homes but if someone bought a house at the height of the property boom as a home the fact its fallen in value by half only means they are unable to move. The price of the house they bought is immaterial if they are going to live there for a long period. Its only a paper value. I really dont know why so many houses are being repossessed. If someone cant afford the the repayments when interest rates are at an all time low how were they going to afford them in normal times. It seems the real reason is that many people bought houses with 100% mortgages and thought owning a house was a license top print money. It was big pyramid scheme and when it collapsed those who bought in late are just handing in the keys. I have more sympathy with families who bought a house in a new development to find out that when they moved in the developers have went bust and they are living in a ghost estate. With just a few families in the estate and the rest of the houses vandalised and rats running all over the place. In terms of the reasons for this housing collapse and economic mess i would never comapre the culpibilty of those ordinary folk who naively bought houses at crazy prices and the bankers who acted with greed and recklessness. In the south of ireland some bankers and politicians should be in jail. Quote Link to comment Share on other sites More sharing options...
_SUNDANCE Posted February 17, 2011 Author Share Posted February 17, 2011 In the two years prior to the collapse the sentiment of many people was that you could buy a house with the banks money and in six months it would be worth twenty grand more. The banks were gambling with depositors money in the same way. Two groups of people gambling with money which was not their own. When it all went wrong only one of those groups is having to pay for their mistakes. When it comes to the election in the south in a few weeks time some of the old parties are likely to be in for a big shock and Sinn Fein could win a lot of seats. Gerry Adams might not be good at the micro economics but his party seem the only ones highlighting the injustice of it all and willing to do anything about it. Quote Link to comment Share on other sites More sharing options...
tinbin Posted February 20, 2011 Share Posted February 20, 2011 (edited) Rateable Value is used alot on these forums as a guide to fair values. Im am just curious to see how what the different views would be as to opinion on this. Would most of you be happy if values returned to this level, or does anyone see a situation whereby values drop below this? Maybe you think rateable values are too low? IMO, Rateable value prob would be a fair guide because at those levels it brings houses into mainstream affordability rather than just the higher earners. FTBers could prob get on the market at a younger age and we may well see a return to a healthy market for the benefit of future generations. I just dont know though ... im not 100% sure. There are so many different factors that influence the market, job security, confidence, affordability etc that I could imagine a dooms day scenario whereby the economy self destructs. We are already having to tighten our belts with the rising cost of living. The cost of living alone is a very real and serious issue. I would welcome anyones elses opinion on this subject Edited February 20, 2011 by tinbin Quote Link to comment Share on other sites More sharing options...
HPCwhen? Posted February 20, 2011 Share Posted February 20, 2011 Rateable Value is used alot on these forums as a guide to fair values. Im am just curious to see how what the different views would be as to opinion on this. Would most of you be happy if values returned to this level, or does anyone see a situation whereby values drop below this? Maybe you think rateable values are too low? I would welcome anyones elses opinion on this subject I agree that rateable value is a good guide but I have a niggling doubt that sometimes it can be a little off-beam. The house I purchased recently had an RV of 130K and I bought if for a 15% discount on that (110K). IMO 130K is a crazy RV for these properties. The reason I say this is because well-presented ex NIHE properties of similar size very close by have RV's of around 80-90K. At present these are going for priced around the 110K mark. The only difference is mine looks different and was built 5 years ago. Not enough to justify such a big difference in RV in my opinion although I could be wrong! I'm not really sure what this tells you. Quote Link to comment Share on other sites More sharing options...
HPCwhen? Posted February 20, 2011 Share Posted February 20, 2011 Possibly your house has better insulation - finish inside? It is hard to tell. Don't know. I wanted to buy my house and I didn't want to buy the others. Do they factor 'desirability' into RV valuations? It would be hard to to put a figure on this I imagine? Just checked size - also mine is 25 sq m bigger so that might make a difference. Quote Link to comment Share on other sites More sharing options...
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