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Ologhai Jones

Should I Really Str?

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Further to my 'sitting tight' post of a few days ago, I've been wondering whether I should STR.

If a sold my house now, I'd probably make about £45-50k. A reasonable rental property in these parts (equivalent to or better than the house I currently 'own') would cost about £550-600 pm (which is vaguely lower than my mortgage repayments have been lately).

Of course, if I do this, I lose any potential capital gains on my current house. Unless the IRs go up quite a bit, then I won't be saving all that much in terms of monthly payments, so, in the short term, status quo there.

The only way I'd really 'gain' is if house prices get lower (in absolute terms), i.e. a HPC of some kind, or the IRs go up (and the rent remains roughly the same) to the extent where the mortgage repayments increase by a relatively significant amount.

Thinking about it makes me dizzy... ;)

What are your gut feelings?

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Further to my 'sitting tight' post of a few days ago, I've been wondering whether I should STR.

If a sold my house now, I'd probably make about £45-50k. A reasonable rental property in these parts (equivalent to or better than the house I currently 'own') would cost about £550-600 pm (which is vaguely lower than my mortgage repayments have been lately).

Of course, if I do this, I lose any potential capital gains on my current house. Unless the IRs go up quite a bit, then I won't be saving all that much in terms of monthly payments, so, in the short term, status quo there.

The only way I'd really 'gain' is if house prices get lower (in absolute terms), i.e. a HPC of some kind, or the IRs go up (and the rent remains roughly the same) to the extent where the mortgage repayments increase by a relatively significant amount.

Thinking about it makes me dizzy... ;)

What are your gut feelings?

Personally it's not really enough money for the inconvenience. If you intend to buy another house you are just going to encounter costs. Unless you want to go travelling I wouldn't bother.

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Further to my 'sitting tight' post of a few days ago, I've been wondering whether I should STR.

If a sold my house now, I'd probably make about £45-50k. A reasonable rental property in these parts (equivalent to or better than the house I currently 'own') would cost about £550-600 pm (which is vaguely lower than my mortgage repayments have been lately).

Of course, if I do this, I lose any potential capital gains on my current house. Unless the IRs go up quite a bit, then I won't be saving all that much in terms of monthly payments, so, in the short term, status quo there.

The only way I'd really 'gain' is if house prices get lower (in absolute terms), i.e. a HPC of some kind, or the IRs go up (and the rent remains roughly the same) to the extent where the mortgage repayments increase by a relatively significant amount.

Thinking about it makes me dizzy... ;)

What are your gut feelings?

I think STR is a good strategy if you have a good place to rent lined up in advance. The simple (but rarely appreciated) reason is you suddenly crystallise a huge option value: you can decide when you will re-enter the property market and you know exactly how much you can afford. This puts you at a significant advantage versus other competing buyers who are in chains. (Apt description.)

JY

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I think STR is a good strategy if you have a good place to rent lined up in advance. The simple (but rarely appreciated) reason is you suddenly crystallise a huge option value: you can decide when you will re-enter the property market and you know exactly how much you can afford. This puts you at a significant advantage versus other competing buyers who are in chains. (Apt description.)

JY

As well being helped by making your timing easier. It turns you back into a FTB. And one with a sizeable deposit.

This means you'll be a great bargaining position; able to break chains, able to complete and move in a month.

I found when I moved from OO to OO that once I'd got a buyer it put enormous pressure on me to find somewhere to move to. The outcome was that buying became a 'distress purchase' and I ended up with a house that I never really like.

But, ignore me, make your own decision.

Edited by redwing

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Guest wrongmove

Further to my 'sitting tight' post of a few days ago, I've been wondering whether I should STR.

If a sold my house now, I'd probably make about £45-50k. A reasonable rental property in these parts (equivalent to or better than the house I currently 'own') would cost about £550-600 pm (which is vaguely lower than my mortgage repayments have been lately).

Hi OJ - is the £45-50k before or after costs ? (i.e. EA and moving costs when you sell, stamp duty, legal and moving costs when you repurchase). How much do you like your present place ? (i.e. are you going to move soon anyway, regardless of whether you cash this profit). I think these have to be considered, alongside the financial calculations.

The other thing to consider is that you could take a fix now at a pretty reasonable rate. If however you sell and buy back in, you may be forced to take a high IR for a while if the economy is a bit sour. These extra payments will eat into your profits, if this happens. It could be that IRs will be lower when you buy back, but I just can't see low prices and low IRs happening simultaneously in this post-BTL world. There are always people with cash, even in a recession, and if net yields ever get above 1 or 2%, people would be adding to their longterm portfolios, IMHO, with DHSS customers paying the mortgage, if necessary.

Edited by wrongmove

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As well being helped by making your timing easier. It turns you back into a FTB. And one with a sizeable deposit.

This means you'll be a great bargaining position; able to break chains, able to complete and move in a month.

I found when I moved from OO to OO that once I'd got a buyer it put enormous pressure on me to find somewhere to move to. The outcome was that buying became a 'distress purchase' and I ended up with a house that I never really like.

But, ignore me, make your own decision.

i agree with redwing.I str in June,since which time I successfully negotiated three discounts close to 20%.Each time I didn't go through with it.As also mentioned you're not panicked into the wrong house.

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Also if you are in a position where you don't have to sell or can wait for a while to sell - just increase the price accordingly.

Test the water, you never know someone might come and pay over the odds.

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Also if you are in a position where you don't have to sell or can wait for a while to sell - just increase the price accordingly.

Test the water, you never know someone might come and pay over the odds.

No, if you decide to sell, sell at market. Get out. The option is asymmetric.

JY

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I found when I moved from OO to OO that once I'd got a buyer it put enormous pressure on me to find somewhere to move to. The outcome was that buying became a 'distress purchase' and I ended up with a house that I never really like.

As an outsider, it's always baffled me how people here always want to move straight out of the house they own, into the new house that they also own. The notion that one could rent for a few months between purchases is never seems to occur to people. There is all this stress over chains because everyone has to move on exactly the same day. Madness. Of course it is more convenient to get the move over with in one go, but what is so awful about staying in rented accommodation (e.g. off-season holiday flat) while putting your furniture in storage?

Thinking about it makes me dizzy... ;)

What are your gut feelings?

My gut feeling is you should stay put, unless you have other reasons for wanting to move e.g. the house is too small, you don't like the location, you're moving to another town etc.

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I'm thinking of doing the STR thing too. My reasons are pretty sound I think. Ex LA gaff in North Kensington which BTLers are particularly interested in at the moment (I'm told) because of the much higher yields. I think the marketability of these types of property will only last as long as there are only meagre yields to be made on the far more expensive equivalent 3 bed period conversions which cost nearly 40% more.

Just don't wanna watch the pot of dosh - nigh on £120Ks worth - rapidly disappear when the "correction" comes and the market's flooded with well refurbished period conversions which'll make my dive seem far less attractive.

In answer to your question though, if your place is in a good location, you like living there, aren't DYING to move and it ain't ex LA you should stay put. £40K isn't much if costs and so on have yet to be deducted.

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Thanks for all the helpful replies.

I certainly don't need to move, so sitting tight really is a viable option.

Assuming I can maintain my current level of income, I should be able to own my current house within about three years. Then, if I continue saving for another couple of years, I could have a reasonable deposit for a new place.

So, maybe five years from now, I could let out my current place (the one I will own by then), and buy a new place in which to live. Maybe five years from now will turn out to be the right time (in terms of the market) to do this anyway. This is, of course, assuming the whole letting a house is still worth the bother in that future market place...

Do you think BTL has been a very late-'90s/early-'00s craze, or will it possible to make a few quid that way in the future after (and assuming) a next big dip?

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Thanks for all the helpful replies.

I certainly don't need to move, so sitting tight really is a viable option.

Assuming I can maintain my current level of income, I should be able to own my current house within about three years. Then, if I continue saving for another couple of years, I could have a reasonable deposit for a new place.

So, maybe five years from now, I could let out my current place (the one I will own by then), and buy a new place in which to live. Maybe five years from now will turn out to be the right time (in terms of the market) to do this anyway. This is, of course, assuming the whole letting a house is still worth the bother in that future market place...

Do you think BTL has been a very late-'90s/early-'00s craze, or will it possible to make a few quid that way in the future after (and assuming) a next big dip?

If you'll have paid off your mortgage in 3 years then why bother selling?

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If you'll have paid off your mortgage in 3 years then why bother selling?

It's not like I'm 22 years through a 25-year mortgage. If I'm able to pay off my mortgage in three years, it will be due to some pretty intensive saving regime! :)

This regime is something I'd intend to continue whether I stay put or STR, but if I sell, I'll immediately have £45k more in my savings. £45k may be a trifling amount to many who frequent these forums, but it's equivalent to about three years of savings for me.

If I took the STR path, it would be just to realise as much equity as possible (assuming a HPC) to put towards another house in say, five years' time. The alternative, as I've said, is to sit tight, then move in about five years anyway, but maybe with £45k less 'in the system'... but, then, I'd have a house I own that I could let out, so...

Oh no! I'm getting dizzy again! ;)

The only sticking point, I guess, is everyone's dilemma: the questionable certainty of a HPC.

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Further to my 'sitting tight' post of a few days ago, I've been wondering whether I should STR.

If a sold my house now, I'd probably make about £45-50k. A reasonable rental property in these parts (equivalent to or better than the house I currently 'own') would cost about £550-600 pm (which is vaguely lower than my mortgage repayments have been lately).

Of course, if I do this, I lose any potential capital gains on my current house. Unless the IRs go up quite a bit, then I won't be saving all that much in terms of monthly payments, so, in the short term, status quo there.

The only way I'd really 'gain' is if house prices get lower (in absolute terms), i.e. a HPC of some kind, or the IRs go up (and the rent remains roughly the same) to the extent where the mortgage repayments increase by a relatively significant amount.

Thinking about it makes me dizzy... ;)

What are your gut feelings?

I would personally think yourself very lucky to actually have a home of your own and stop speculating. It’s this that has created the mess we now have in this country.

I’m a first time buyer and just want for a home and some security. Having rented for a decade since my students days. When I was in more of a position to buy a home the prices rocketed and I’m now priced out.

I’d like to add that this site was built on speculation just as above and that’s one of the reasons it’s been so ineffective since its launch.

Edited by Ade

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I would personally think yourself very lucky to actually have a home of your own and stop speculating. It’s this that has created the mess we now have in this country.

I’m a first time buyer and just want for a home and some security. Having rented for a decade since my students days. When I was in more of a position to buy a home the prices rocketed and I’m now priced out.

Right, I'll think myself lucky, then. Thanks.

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I would personally think yourself very lucky to actually have a home of your own and stop speculating. It’s this that has created the mess we now have in this country.

I’m a first time buyer and just want for a home and some security. Having rented for a decade since my students days. When I was in more of a position to buy a home the prices rocketed and I’m now priced out.

I’d like to add that this site was built on speculation just as above and that’s one of the reasons it’s been so ineffective since its launch.

Thats why you can't afford a gaff, YOUR fault, not any STR or BTL.

Take some responsibility for your own inaction instead of blaming people who bought at the right time :D

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I would personally think yourself very lucky to actually have a home of your own and stop speculating. It’s this that has created the mess we now have in this country.

I’m a first time buyer and just want for a home and some security. Having rented for a decade since my students days. When I was in more of a position to buy a home the prices rocketed and I’m now priced out.

I’d like to add that this site was built on speculation just as above and that’s one of the reasons it’s been so ineffective since its launch.

I think it has been very effective for those that found it in time and use it correctly. Not only has it opened my eyes in terms of HPI but also market trends, economics and finance in general. I now read artticles and show an interest in the broader markets and global economic dynamics and am actually starting to understand it! It has been a wealth of information for me and I feel a wiser and more rounded individual for it. Well Done HPC!

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Thats why you can't afford a gaff, YOUR fault, not any STR or BTL.

Take some responsibility for your own inaction instead of blaming people who bought at the right time :D

477 posts and that’s your reply...I dread to think what else you’ve written :blink:

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I think it has been very effective for those that found it in time and use it correctly. Not only has it opened my eyes in terms of HPI but also market trends, economics and finance in general. I now read artticles and show an interest in the broader markets and global economic dynamics and am actually starting to understand it! It has been a wealth of information for me and I feel a wiser and more rounded individual for it. Well Done HPC!

I too have learnt a great deal here. Perhaps I could have written it slightly differently. I think that as a resource for information this site is second to none.

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Further to my 'sitting tight' post of a few days ago, I've been wondering whether I should STR.

If a sold my house now, I'd probably make about £45-50k. A reasonable rental property in these parts (equivalent to or better than the house I currently 'own') would cost about £550-600 pm (which is vaguely lower than my mortgage repayments have been lately).

Of course, if I do this, I lose any potential capital gains on my current house. Unless the IRs go up quite a bit, then I won't be saving all that much in terms of monthly payments, so, in the short term, status quo there.

The only way I'd really 'gain' is if house prices get lower (in absolute terms), i.e. a HPC of some kind, or the IRs go up (and the rent remains roughly the same) to the extent where the mortgage repayments increase by a relatively significant amount.

Thinking about it makes me dizzy... ;)

What are your gut feelings?

Why not let to buy?

I have done that twice and so far it's worked out fine

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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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