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Garf

Fed To The Back Teeth With Renting - Talk Me Out Of Buying

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I'm thinking of viewing a flat in North London that's been on the market since March this year. Price dropped by 10% since it was first listed. From photos, it looks like a builder tarted it up substantially and wants to sell it on, but overestimated the profit he could achieve. It's now listed with several agents. My savings would come to 50% of purchase price. I would need to borrow the rest. (Just about possible). But half my brain is just screaming "NO!" because I don't want to be locked into a property just as the crash comes ... the crash that I've been predicting for nearly a decade now.

On the other hand, I'm just sick to the back teeth of renting in London - Been in a lovely location for the last two years, for which I pay just shy of 2K per month (sigh). Unfortunately, the landlord is intrusive when it suits him and very unresponsive when it doesn't - e.g. taking two months to arrange an essential plumbing repair. I won't take the risk of being here for another winter - the creaky old boiler is about to break down. I'm sure of it. Prior to this, I was in West London for a year with a crook for a landlord. On balance, I guess my current landlord is better. But I despair of finding a decent place to rent with a decent landlord in this city.

I really miss my old place in Asia. Sadly, work brought me here. My company would be happy for me to move to another country in Europe or to the countryside in England .... but that doesn't work for the missus ... She has started a business that requires her to be in London. It is just becoming profitable. I think we're committed to being here for another three to five years at least.

So ... Tell me what I ought to do?

(Divorce is not an option. Move to the country is not an option. Move to another country is not an option).

Edited by Garf

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dont buy a flat, whatever you do. can you find a freehold property. a tleast then you will be fully responsible for it and not have someone else gouging you with large maintenance fees and the risk of potential problem neighbours very close by

have you considered moving just out of london. you could move to greater london, where you still have good links to central london. approximately where do you need to go in central london. you could for instance consider moving to the west/southern end of say piccadilly line (hounslow) or the district line (richmond, wimbledon). although richmond and wimbledon will probably be very expensive as well. what i am trying to say is that there are some other options if you move out just a bit. of course what you save in rent or buying cost will probably be eaten up by increased travel costs. you may get better choices in accommodation though.

good luck

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Never buy any propery leasehold, it's an idiot thing to do, the leaseholds hark back to the old feudal days.

Also, unless you have some kind of job security then buying a house right now is crazy. If you loose your job and a) can't pay the bills ot B) can't move for work....then you are screwed.

You may or may not have noticed but we are in the mother of all recessions/despressions.

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Its all very simple at present.

You find a house at say £200,000. You put down your 20% deposit of £40,000 which are your life's savings and you take out a fixed rate mortgage.

Then the bubble bursts and your house drops 20% in value. You still have the mortgage so the £40,000 that you put in has now gone, vanished.

But smile, you still have the house which is now worth £160,000 and are still in the same level of debt to the bank. Effectively its now a 100% mortgage and you have no collateral if you wish to move.

Finally the all time low interest rates start to rise and with your fixed rate coming to an end you could see massive increases in your repayments.

So its win / win for the banks.

Edited by bumpy

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Why would you seek advice on a forum where "there is no content - only malcontents"?

http://www.housepricecrash.co.uk/forum/index.php?showtopic=175950&view=findpost&p=3276334

:rolleyes:

How clever of you to remember a witty comment that I made in another thread and another context.

In this instance, I'm not looking for content. I'm looking for opinions. Peter Drucker had it right when he wrote: "Most books on decision-making tell the reader: First find the facts. But executives who make effective decisions know that one does not start with facts. One starts with opinions.." As I expected, I am getting some good, contrarian opinions here.

Richmond (or even further away) would suit me fine, but it doesn't work for Mrs. Garf.

Regarding freehold vs. leasehold / house vs. flat - The place I'm tempted by is a freehold. I doubt I could afford a house.

Job security? - I'm not recession-proof, but this is the second major recession I'm weathering. I still see demand for my skills.

Regarding the price calculation - Thanks for putting it in clear terms. That's exactly what worries me. The stakes are a little higher and thhe deposit is larger. Let me scale up the recipe ... it's more like this:

£400K property

£200K deposit

£200K loan

Property value drops20% - wipes out £80K of equity.

Also, over 5 years, I'll miss out on, say, £30K interest.

So the nightmare scenario is £110K down a rathole?

And I'll have spent the same again in paying off a loan ...

And I'll be spending money on insurance, maintenance etc. that I don't pay as a tenant... How much should I allow for that?

This compares with £100K that I'd spend in rent over five years ...

Hmmm. Am I missing anything?

Edited by Garf

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  • 221 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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