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azzuri

My Situation......

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hi folks - first post here so be gentle!

I'm in a position that by the age of just 23, I luckily (not through foresight!) own my property outright.

The 1st property I bought was in Dundee when I went to University there. I bought a 2 bedroom ex-local authority tenement flat in June 2003 for £55K. Afterwards I found out the previous owner had bought it from the council for just £9K in 1994 - I was miffed! I spent £5K on the flat 'doing it up' myself and was quite glad with the improvements made.

Anyway, upon graduating in June 2005 and leaving the student life behind I decided to sell up and move back to my home town. I put the property on the market and even with the massive price rises expected around £80-85K maximum for the property. I had over 70 viewings in just 14 days and over 25 notes of interest. The chancellor had only weeks earlier put the stamp duty levels up so maybe expected a further £5K maximum from the wave of new house buyers created by that.

Imagine my bewilderment when I received 10 offers over £100,000, the top one being £119,111 (just under stamp duty level)! So I sold the flat at this price and decided to start looking at purchasing a place in my home town. Luckily back home house prices weren't quite nearly as high so I managed to use my profits from the previous property + savings I had to buy a 2 bed flat outright for £85K. I have to admit it feels great having no millstone around my neck as a mortgage at such a young age - but I also fear a crash.

I am wondering whether now is the right time to leave the market? I have visited this site quite a few times over the past couple of years and have been extremely cautious with making sure I never overstretch myself regarding property. Prices seem to have stagnated here over the past 2 years and I'm worried about losing all that equity I've built up if there is a crash - is it better for me to sell up now, wait for the prices to drop 30%+ over the next 2 years and enter the market again when I can get more for my money?

It's a tough one for me because I do like my home but at the same time wouldn't like to sit tight and lose £25-30K on my property just because I didn't want to rent or move.

My second dilemma is with my parents situation. They have a rather strange but valuable property in the country with a smallish brownfield + large greenfield site attached. They are currently investigating selling the greenfield site to developers but this could take years depending on the reecently updated local plan. The property itself without any of the land is worth between £280-300K. They ideally would like to build 3 houses on the much smaller brownfield site (one for me, one for my sister & one for them) pending planning approval. They would give me the plot for free but I would fund the building with the proceeds from my current property. I must stress that this is at a very early stage and nothing has been decided yet.

They are not too sure about the market just now and are thinking about selling up in the summer and holding onto the land. The reason for this is that they believe the market has topped out and if they wait 2 years for planning approval + for the houses to actually be built then they will not receive as much for their property as they would now, meaning they couldn't afford to build the 2 others (due to building costs not dropping) + have a nest egg leftover for themselves. If the house prices round here were to drop between 30-40%, their pensions nest egg of £100K would be gone. If however they sold at the moment and rented a large property (which can be done so locally very cheaply) for the next 2 years while the crash is going on around them they would have the money safe in the bank to build the other 2 houses.

This is all relative to planning of course, but my parents wouldn't even think about putting their own house up for sale without having first gotten outline planning permission for the other properties on their bwornfield land.

My dilemma is basically whether I sell up the flat I own outright, take the gamble and rent for the next couple of years waiting for prices to drop then enter the market at a far higher level for the same amount of money, or sit tight and see what happens?

As for my parents, if they were to sell now and get planning permission on the site they'd be laughing, whereas if they stay put and the prices drop then a large chunk of their retirement money will be lost.

I know I am in a terribly fortunate position given the the shit situation most young people find themselves in these days, but I really need some advice as to my next step.

Cheers in advance. B)

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Why sell it? If you own it outright I'd be very tempted to rent it out. With no mortgage to pay any rent you collect will be pure profit. You could then use the equity to buy another property and your rent money to fund the mortgage repayments on your new place.

:lol::lol::lol:

Selling to rent is a huge gamble at the moment. I would wait until there is a definate trigger for a crash like a large hike in interest rates. IMHO that is the only thing that will bring prices down again.

:huh:

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I'd flog it and move back in with mum and dad or rent. Stick some of it in Cash-ISA, High interest accounts and funds. Probably go up around 8% in a year. Wait five years and your STR fund will be much more. Remember the interest will be compounded year on year too.

Worst case scenario is that if house prices go up constantly in 5 years (extremely unlikely) then you may need to bridge the gap of buying with a small mortgage - thats assuming prices go up 50% more in 5 years!

Then again you might not want to move in with mum and dad or rent cheaply elsewhere.

The most sensible thing to do is not gamble with it. You have a home outright. Save money and invest and leave your house out of the equation.

Edited by OzzMosiz

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I would cash out of property you don't need to own anywhere for now. There are far, far better returns to be had elsewhere.

People in the UK lack imagination when it comes to investment and tend to only think of property (a few understand shares).

If I was you I would think about another avenue for growth until the property market becomes more clear, it's on a knife edge at the minute.

Don't just leave 100K sat in the bank though.

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Houses as pension nest eggs.... who'd have thought it :lol:

Seriously though... its yours, and separately your parents, decision.

Its your risk, and possibly your reward or loss. Make up your own mind.

If people view the equity in their house as money that they have then they are mistaken.

You have only made money from property when you have sold it and banked the money.

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Some of the advice above is crazy!

Are you all seriously saying the OP should sell to rent? If you he owns the property outright?

Surely if he owns it all then a houseprice crash doesnt affect him in the slightest.

Go get on with your life, forget about this site and go live in the real world :)

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Some of the advice above is crazy!

Are you all seriously saying the OP should sell to rent? If you he owns the property outright?

Surely if he owns it all then a houseprice crash doesnt affect him in the slightest.

Go get on with your life, forget about this site and go live in the real world :)

Well not necessarily crazy, but its risky to sell to try and make more money. It might work, and it might fail.

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Why will it take 2 years for your parents to get planning consent? It should take 8 weeks.

Local Planning Authority is undermanned severely and is giving decisions on applications on a ratio of 1:2 of actual applications. Over the past 5 years a backlog of 12 months planning applications has built up. It now takes 12 months before someone actually gets to see your application.

Must be the only understaffed local government department in the UK!

Edited by azzuri

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Guest X-QUORK

Sell now, invest the money reasonably sensibly i.e not high risk and then buy again in five or six years time at the bottom of the crash. Providing you can get a reasonably priced rental and keep saving those pennies, you'll be able to buy a much bigger place later on.

Buy low, sell high...it ain't rocket science. ;)

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dont sell it!

I believe the property market will crash, but what do you care? You have somewhere to live rent free for the rest of your life. You don't really need to work as your monthly expenses are low - you could get a part time job. Or if you do get a full time job then you can save A LOT of money because you don't have the monthly expenses - that will make it easy to move up the ladder.

Mortgage means "death pledge". Who wants one of them?

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  • 302 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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