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Converted Lurker

Has Selling To Rent Finally Come Of Age?

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Sold to rent is a topic that has not been discussed that much on here lately, although like many subjects it has been done to death ;) Did those who sold 18-24 months ago see the light, or panic sell? My bet is somewhere in between, their sale would have been straightforward and IF they then immediately put the profits into, for example, the footsie 250 then their financial genius is to be applauded.

http://firstrung.co.uk/articles.asp?pageid...articlekey=1329

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Hi CL,

I sold my ex-LA studio flat in end of 2003 (not to speculate but because we needed a larger home). I split the money I got out of my flat 3 ways, some into the FTSE250 (non-isa), some into an ING direct account and the rest I filled my ISAs up (also including a FTSE250 fund). I am no financial genius by any stretch of the imagination but this strategy has done me quite well. I tend not to stick to a single strategy as I think you must change with the times. But there is one thing I will always do and that is spread risk, I never put all my eggs in one basket.

Interestingly, I spoke to the lady I used to live next door to a few months ago, she told me that the person who bought my flat put it straight back on the market with an extra £15,000 on the price tag, but didn't get any viewings. It again went on the market about a year later with a further £20,000 on the price tag and has since been taken off again. The place has apparently been pretty much empty since I sold it (barring the odd tennant) and has had a break in (not suprising really).

I knew the buyer thought the place was a bargin when I said I'd had 9 viewings in 6 days. I had a lot of viewings because it had a new bathroom and kitchen (if you could call the small wall of units a kitchen) and it was the only affordable property on the market in the area. The buyer made the mistake of thinking it was because it was under priced. I know the place was mortgaged and that, coupled with a break in, would equal a hefty loss of dosh over 2 years.

So, I guess I don't regrett selling when I did, I certainly don't miss the place (the area was a dump) and the rent I pay now for a 3 bed house is only £250 more than the mortgage and building insurance I paid of the 'no-bedroom' flat (yes I did have to pay building insurance as it was a "flying freehold").

I think if I'd have sold later I might have got a few more quid out of it, but I hated the place and wanted to move in with Mr Goat. If I'd have sold it in 2005 I probably wouldn't have made anymore than I got for it 2003 and it would have taken much longer to sell. Flats used to fly of the shelves a few years ago, but most are not selling now without serious reductions in price.

LG

Edited by laughing_goat

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I STR'd my 1-bed ex-LA flat in mid 2004. It sold in 1 day because I asked a reasonable price (knowing it might run into difficulties as I'd had to complain about the neighbours in writing to the council - not that any effective action was taken so I won't make that mistake again).

I was lucky because what seemed like the last BTL novice in London was so keen to buy the flat that he didn't bother reading any of the papers, or if he did, he didn't care about the flat's history - a major, life-threatening, fire started by one of the neighbours. Incidentally, if you think this story's unique, it's not. A colleague had an almost identical problem with an ex LA flat.

I had to STR because it was too small for two people - I'd bought it on my own but my boyfriend moved in later. Also I wanted to get out before any other man-made disasters occurred.

I sold for £210k and the landlord could probably rent it out for £250 pw, so his yield at 6% gross is not bad for London. It rented out pretty quickly and the building is still standing so he's probably pretty happy. If I'd tried to sell in 2005 it would not have budged except at a knock-down price, as the good stuff was not selling then, so the dodgy stuff, like my flat, definitely wouldn't be. It had to sell to a BTL investor in a good market.

I reckon it would probably now sell fairly easily now for £230k, maybe more, perhaps £250k.

STR was the right decision for me - in fact I had no choice. We couldn't buy when we sold because the market was too tight - expensive and no choice around. Now, we have more savings (despite paying £360pw rent) and there is more choice. Prices are no lower, however, and seem to be going up at the moment. If the STR strategy had been purely financial, I would have been disappointed. However, as it is, we've had fun renting in a new area close to work and have even considered buying here.

I put the STR funds mainly into an ING-style cash account which has paid me 2.85-3.00% net of 40% tax for much of the period. I also used up my full £7k a year in low-cost index-tracking globally diversified Equity ISAs for 3 years and all 3 have done extremely well with the rising market. I wish I'd taken more risk and put the lot into the market. Hindsight is a wonderful thing, but to be honest I would never take that approach not knowing what could happen. A big terrorist disaster / bird flu mutates - anything could cause a sudden crash. Housing market slides seem to happen a lot more slowly and you have much more time to get out.

Edited by geranium

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We sold 2 years ago. We needed more space as hubby works from home. Now renting a nice detached house. Would our house sell for more now! Not so sure. !! but we have increased our STR fund by working hard and saving.

Sold for £100k more than we paid for it 2 and half years earlier and thought this is madness, searched the internet on house price crashes and found this website!! If I hadn't have found this site we would probably be one of the many with a higher mortgage on IO.!! ( Just like all my family!!).

Now can see us renting for quite a while until this madness is over...

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  • 301 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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