Almost Gave In - But Ftbs Can't Rent And Buy At The Same Time.

[Guest]

Just had a conversation with Nationwide about the possibility of continuing to rent in London but getting a mortgage to buy a small place in Scotland.

Apparently it's not an option - you can't buy a 'holiday home' unless you already have a mortgage. Your first mortgage must be for a house that you are going to live in full-time.

I get a good wage, but there is no way I am paying London prices. All I could probably afford would be a shared ownership cardboard box that isn't worth a tenth of the valuation. Plus I don't particularly want to buy in London - I now doubt that I'll buy more than one house in my lifetime, and most of my close friends and all my family are in Scotland. And I can't think of anything worse than buying a Barratt box in a commuter town.

The double whammy of seeing all my friends over New Year and the fear that 'regeneration' in my target area is likely to price me out soon made me consider buying something. I could easily manage a reasonable mortgage on top of renting - though council tax and buildings insurance for an empty property might have been an issue.

I refuse to BTL.

Despite more than trebling in price over the last twenty years, I really worry that the kind of flats I'm looking at are nowhere near peak asking price yet. There's been hardly a break in the madness my entire working life. The Government intervenes sharpish to prevent price falls, but half-heartedly to provide new housing options. The recent BTL crackdown and housebuilding announcements are feeble when weighed against the props that have kept prices ballooning 10% a year.

The majority of my friends are married, on their second house, and having kids. I've held out because I remember the environment in which my parents housed themselves, and I've waited for the country to wake up to the unfairness. But it seems even many of the people directly affected are still asleep. I'm tired of it.

Lucky escape?

[Sandwiches33]

This is something I have given some thought to doing too, just rent a small house in England but buy a house in Scotland. I floated the idea to my bank and they didn't see an issue with it although I would not be renting a very expensive place and I also was looking at pretty cheap places in Scotland. To do this still worked out considerably cheaper than buying a decent family home in Yorkshire.

What you could do is just buy the house in Scotland and tell them its your main abode then just commute and rent after the fact?

[Kinky John]

I've known somebody commute from Scotland before and if you fly it's not a bad commute. It's not that you have to fly - just that the bank has to believe it and obviously you'd need your name all over the bills/council tax etc. Seems a bit pointless though unless you spend quite a bit of time there or intend to move there later.

Nothing wrong with buying anywhere for your own consumption - enjoy having legal rights and somewhere to live. If a loss of around 50% would be a regrettable incident of life altering importance then it's too much risk for you to stomach. I'd be very cautious when speculating on property as the overheads are HUGE and the markets highly local thus favoring those with fewer principles and local knowledge. If you got 10,000 pounds for every fool that's crossed your path who couldn't work out post-cost performance then you'd be a moron because they never make any money and you can make way more than that out of them.

Edited January 4, 2016 by Kinky John

[thejaksie]

I refuse to BTL.

Why is that? Not all BTL is bad provided you're a "good" landlord- a large proportion of HPC need to rent somewhere!

[Guest]

Why is that? Not all BTL is bad provided you're a "good" landlord- a large proportion of HPC need to rent somewhere!

It's against my principles to be a landlord. I've been exploited for rent my entire working life and I'm not going to use my money to set up and do it to someone else. If I did a BTL my tenants would be in paying at least a chunk of the running costs - until my career let me move back to Scotland and I kicked them out onto the street.

In the current environment landlordism is immoral and I've decided it's a line I'm not crossing. If that means I'll be renting forever then so be it.

Buying and leaving it empty has its own problems - but everyone needs one house, and in London I live in a single room. I don't think one flat is too much to expect for my efforts.

[Crash In The Attic]

I am in a similar position, although I don't pay any rent, and have considering doing something similar. Like you, I couldn't face being a landlord in the conventional sense. But surely renting it out for, say, £100 a month, is a great solution. The place isn't wasted by standing empty; the tenants get a long-term stable home at a fantastic price; you get enough to cover maintenance etc. I can't see anything morally objectionable about that.

[Venger]

This post, your reply on a thread where someone took the position of blaming renter-savers for HPI, made me laugh. Great response irrationalactor.

Great, so not only have I been locked out of home ownership I now get blamed because my efforts to save enough money to escape the trap somehow 'fuel the bubble' because the banks are using my money as collateral against lending even more money to idiots to bid up prices with.

Just how exactly am I supposed to opt out? I have no control over the bank's lending decisions and I have no control over the amount of debt other people are willing to put themselves in.

If only I'd given my house deposit away, or never saved it in the first place! Houses might then be 0.0001% cheaper! That's surely got to be well within reach of the 100% mortgage I'd be needing!

I don't want to be an investor. I just want to be able to save up and buy a flat of my own, like my parents did their house.

Regeneration more HPI+++++++ ?

Sell on the sound of trumpets, buy on the sound of cannons.

Living in London... do you even really want to live/move back to Scotland. And needing a mortgage to do so, whilst keeping it empty? And paying rent in London? Sorry my mind is spinning with that one.

BTL crackdown isn't 'feeble' but we make our own market decisions. If you can't take gathering evidence as something to feel encouragement about....

In other words it's a measure to keep the party going, not end it:

That just doesn't stack with the numbers.

By my calculation, the public domain data supports the contention that well over half current BTL properties are going to be affected by these changes, and that the effect will be to turn them into 'investments' with significant negative carry costs. A significant slice of those properties are going to be part of portfolios where the carry costs will make the borrowers insolvent in no time flat. A close examination of the numbers explains the horror felt by the PovertyLater guys.

If your idea of a party is bankrupting half the guests, don't expect next year's bash to be well attended.

[AC44]

Prices in Scotland dont seem to rise much (or at all). Aberdeen seems to be crashing.

So perhaps the opportunity might be there in the future.

However, the best solution is to find a job north and move sticks from London/SE.

Can you work remotely? Then you can mention to the bank that this is your first home..

[Guest]

Thanks for the encouragement guys.

I agree that the only solution is to get a job up North. Working remotely has come up a few times at work but my employer isn't keen.

I don't think they'll really have a choice, soon. London is now so crazy it's completely impossible to have a normal life here. I think maybe in six months or so I'll be moving no matter what and if they want to keep me they'll have to offer remote working. Or I'll get another job.

I don't earn enough to feasibly commute by air.

I'm in my 30s - living like a student is getting really old.

Edited January 6, 2016 by irrationalactor

[thejaksie]

It's against my principles to be a landlord. I've been exploited for rent my entire working life and I'm not going to use my money to set up and do it to someone else. If I did a BTL my tenants would be in paying at least a chunk of the running costs - until my career let me move back to Scotland and I kicked them out onto the street.

In the current environment landlordism is immoral and I've decided it's a line I'm not crossing. If that means I'll be renting forever then so be it.

Buying and leaving it empty has its own problems - but everyone needs one house, and in London I live in a single room. I don't think one flat is too much to expect for my efforts.

I comend your principled stance and agree emotionally , but rationally taken to the extreme reduced btl would result in further reduced supply and increased prices both in renting and houses for sale? Btl at a fair price in a good house providing stability has its place, also morally.

[ZeroSumGame]

Plenty people who have to work away on secondment for a year or two let their place out for good reason, and it certainly isn't BTL. You could rent it out for a peppercorn rent, and someone gets a roof over their head for a year or two. Nowt wrong with that.

Personally I'd certainly buy in Scotland whilst renting in London if I were able to only afford a lower mortgage. London is so mental it doesn't even bear discussing.

[Starla]

Just had a conversation with Nationwide about the possibility of continuing to rent in London but getting a mortgage to buy a small place in Scotland.

Apparently it's not an option - you can't buy a 'holiday home' unless you already have a mortgage. Your first mortgage must be for a house that you are going to live in full-time.

I'm in a similar situation to you, feeling the full painful horror-show of prices down here, working/renting in the London Kuiper Belt, but planning to buy a house solo in another part of the country where my family are. I'd rent a Monday to Friday crash pad down here during the week, on the cheap (£350ish near work), boyfriend would live in the house full time and I'd travel back on Thursday's every weekend. It would be my home, I'd be registered there and it's not unusual, loads of people at work can't afford to live nearby and do the same. I haven't gone through a mortgage application as I'm not buying yet, but my assumption is that the box that says "monthly outgoings" on the online calculator would include rental costs down here and would just be deducted from total borrowing? I don't understand the Nationwide's definition of "full time?" What's it got to do with them if you stay there 1 day a month or every weekend? It's not a holiday home, or a BTL, it's your home surely. Hope so, otherwise I'm screwed as well.

Edited January 20, 2016 by Starla