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LTL, popping head up for the first time to outline my scenario and seek input on our potentially becoming an "accidental" landlord

I live in Leeds

Lived in current house since 2001. It is a 2 bed semi with garage and was / is "a FTB" house.

Back then it cost £46,250 and it was just me.

I paid the mortgage off completely in 2008

There has been a Mrs ReluctantMover since 2010 (she isn't so reluctant to move, but that is another story). House has been in joint names since 2013.

Next door sold in November 2015 for £267k

The house we have bought (exchanged contracts yesterday, complete Friday) is £400k. We are putting down £200k deposit from our savings and have a mortgage in place for the other £200k.

The question is this: What to do with the old house?

We could sell it. Maybe for as much as the £267k that the one next door sold for back in November

We could rent it out and I am leaning towards this just now. Appreciating that the general view here is that being a landlord is bad, I am expecting to hear the arguments against doing so here.

Similar properties have been advertised for rent at between £650 and £695 recently and they are occupied now. That is only 3% gross on the potential sale proceeds.

But, when I add up everything I spent to buy the house and improve it to its current standard (including mortgage interest), that comes to £99,500. If, by some convoluted maths, I calculate the yield on that figure (the actual cost) and ignore the potential capital gain that might arise from the the sale, it is a more respectable 8.4% gross.

Only one house on the street is currently rented (only 14 houses in total and I am nosy)

If I did rent it, I would aim to use the rental income to reduce the mortgage on the new house more quickly.

In today's climate I think I prefer to hold an asset (the house) rather than have the cash in the bank(s), in case the banks go pop. Also, if I sell the house and there is that much more money sloshing about somewhere, Mrs ReluctantMover and I might be tempted to spend it on frivolous purchases, which wouldn't be ideal.

So, that is where I am with it. No conclusion reached just yet, but I would like to decide what to do with it by the end of March. I am leaning towards renting it out.

Can you present the facts in a way that shows the upside of selling it and / or the downside of renting it please.

There is no such thing as an accidental landlord.

Seeing as you have so quickly accepted 'landlord yield maths' I don't think there's any hope for you. You also seem to have completley ignored income tax on the rent unless you plan on mortgaging it to the hilt. But then what do you do with the money? Sounds like you're a rich man, pay 40% income tax perchance? Look up clause 24 and sell now, sell everything.

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thanks "willie" and "25 year mortgage 8itch" you are clearly on the sell it side

Also, input from a friend of mine has given me something to think about that really tips the scale towards selling

She says that keeping the house is taking a gamble on prices increasing at a very significant pace into the future. The stake is the CGT that would arise on selling the property in the future, rather than selling it CGT free now under the PPR rules.

At 3% gross rental yield, subject to 40% tax and letting agent fees, maintenance etc., the net yield is likely to be close to nil. Say 0.5% for argument's sake, though that could be optimistic

How many years rental income is needed to make it worth giving up the chance to sell the house now and taking the capital gain (£220k between two of us) free of CGT?

That calculation alone is quite scary.

She suggested this question is the key one

"Assuming that the house breaks even as a rental, do you think house prices are going to keep increasing at a rate that makes the future, taxed, capital gain more valuable than today's tax free capital gain?"

If yes, keep it and rent it out

If no, or not sure, sell it

I think she has made it very simple for me

I will be looking into tepilo tonight....

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I think she has made it very simple for me

I will be looking into tepilo tonight....

You've got the CGT wrong. No part of the gain that occurs whilst it was was PPR will ever be chargeable to CGT. Hence you need only consider the CGT on any future gains.

Also, wow, that HPI :D:D:D Get in you beauty! B) £46,250 to £267,000 between 2001 and 2015 is annualised HPI of more than 13% :) . Even Kensington and Chelsea are only up at 9% annualised over the same time span.

Hence, I'm begging you - hold onto that property!

Look at the facts. All the immigrants, the lack of supply - plus they are not making any more land. As you've also got hold of a house that has HPI of 13% per annum in a Leeds market that is showing 4.8% per annum over the same period, you'd be totally insane to give it up. It's just a shame that you didn't think to use some of your savings to grab next door when it was offered for sale, then it would be double-bubble. Get in!

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Well, completion and moving went smoothly. Just about got the everything unpacked yesterday and this morning and I nearly know how to work the heating and hot water in the new place already! Grabbing a chance to put our feet up for an hour or two.

The Tepilo valuation for our old house is less than the neighbouring property (which had the loft converted to a bedroom / bathroom, had a nice big 'orangery' extension to the kitchen built on and still has a larger garden and sold for £267k back in the Autumn)

The valuation offered by Tepilo on ours is £195k. Two other agents coming to take a look at it this week and we will see if there is much variance between the three valuations and then it will be on sale.

Given that when I bought the house, the graduate starting salary at my employer was £17k and that this year it has just been decided that it will be £28k, on any measure of affordability it is ridiculous.

But, now I have spent a few hours reading some of the stuff here and linked from here, affordability has been ridiculous for something like 10 years now hasn't it? Would I have thought it possible that prices could rise so much faster than wages for 10 years? No. Do I think prices can rise faster than wages for another 10 years? No.

But I have to think that it is possible that a few more help to buy initiatives and inter-generational mortgages could work a pincer movement to prove me wrong. We have considered that scenario and, even if that is how it plays out, and we miss out on further capital gains, it won't bother us.

If it sells for anything like the Tepilo guide price, we will pay down half our mortgage, spend a bit each on frivolities and use the rest to replenish our savings that were well and truly battered by this move. Overall, we think that is a better place to be than worrying about the boiler breaking down, voids, deposit protection schemes and the rest of it, all for little or no net rental profit.

I am pleased I found the time to dig in to this forum a bit more than I ever have before - it is full of interesting stuff.

In a way though, I am glad I didn't dig in too much previously, otherwise it might have made me think long and hard about not moving with the market in the state it is in and moving was definitely the right thing for us at this stage of our lives.

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Two other agents round, both valued at same £195k

We decided to go with Tepilo

I called up the first of the other two agents to tell him no thanks and he said he had a buyer that would buy and, even though I wasn't going to instruct him to market the property, could we do a deal where he brought this buyer round before I signed with another agent and, were she to buy it, I would pay him his 1% fee. She is a 'big player in buy to let round here' and is 'on a buying spree just now.'

As he said he could show the buyer round this afternoon, it didn't seem like too long to wait.

She has been and looked and offered the £195k. She wants to get it done quickly due to the stamp duty changes. She is very familiar with the process and is ready to pay her deposit tomorrow. I have instructed my solicitor this afternoon on the basis that he needs to get this done in time for the stamp duty. He has spoken to the buyer's solicitor and they seem confident it can be done.

I have advised the buyer, the agent and my solicitor that the deal happens at £195k or not at all. No price reductions at any stage, or I simply withdraw from the deal.

We will see how it unfolds.

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Hello all. I've been reading and lurking since 2006 and thought it might be polite ten years on to get a login of my own.

It's been a tricky decade, as far as global financial sanity goes. Hoping that gravity will win out in the end and what goes up must finally come crashing down.

I'm a mortgage holder and would love to see prices decimated so I can get a slightly bigger house for my family without having to sell a kidney. Thanks for keeping me sane over the years, HPC.

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  • 2 weeks later...

The buyer's solicitor has asked our solicitor if we are ready to complete tomorrow

We are - there isn't much to do as the seller really.

How has she got things done so quickly? The searches and stuff for the house we bought took way longer than this.

Anyway, if she is ready to pay, we won't stand in the way. We will be calling in after work to sign the papers at our solicitor's and, if the money arrives in their client account tomorrow, that will be that

I have set up a rightmove search to see if comes up as available to let

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Hello all. I've been reading and lurking since 2006 and thought it might be polite ten years on to get a login of my own.

It's been a tricky decade, as far as global financial sanity goes. Hoping that gravity will win out in the end and what goes up must finally come crashing down.

I'm a mortgage holder and would love to see prices decimated so I can get a slightly bigger house for my family without having to sell a kidney. Thanks for keeping me sane over the years, HPC.

Yep, welcome, glad you got around to posting eventually ;)

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  • 3 weeks later...

Hi All

Another decade long lurker here!

My tail of lifetime woe is as follows...

I grew up in a small village near the Darling Buds of May part of Kent so that bit of life was fun and I’m very disappointed that barring a lottery win my son won’t have the same. I messed up my A ‘levels but didn't really want to go to Uni anyway (I'm 42 now so I'm talking the days when only the minority went).

In 1992 I followed my older sister and brother up to London and had a great time clubbing while working in clerical jobs (with hindsight I would of course have bought a flat and now be worth a fortune). By the late 90's I had the mid 20's mind set to sort my life out a bit so I studied accountancy at night school and eventually joined the Civil Service in 2000. I had in mind to buy a flat but like so many others was looking on in disbelief as prices were going up between 10 to 20% a year. How very socialist of new Labour to vastly improve the wealth of asset owners! Despite 3 promotions in the following decade, the value of these were more than wiped out by increasing house prices.

By 2010 I was still in rented accommodation, working very hard (a team reduced from 4.5 employees to 1.5 in three years), suffering from insomnia due to stress, mothers health deteriorating and then finally left my girlfriend of 2 years only to get a phone call two weeks later to say that I had somehow made the world’s most emotionless and frigid female pregnant. In August that year I snapped when the hot water in my flat didn't work. The boiler often stopped working being ancient and once condemned but the landlord would only get it repaired rather than have a new one put in. That day was one time too many. I woke up on the Sunday with the feeling that my brain was dead and had severe depression. I didn't used to believe it was real but trust me you know it when you've got it.

Anyway by chance a voluntary redundancy round came up and not having returned to work I was not surprisingly accepted! I moved to my Mum's now in East Sussex for some R&R with her looking after me. Eventually this turned around to me looking after her and becoming a carer. My sister (seemingly the only person to lose money on their own home in the last 20 years!) and her young daughter have recently moved in to take over the caring so I have (fingers crossed) got a job starting in a few weeks.

I have long given up all of my youthful dreams in life (nothing fancy) and my medium term plan is to get a job in a much cheaper part of the country (ie. somewhere north) and get a small property in the country or by the coast with an easy job and the plan to go part time asap. Should I meet a non-deluded and non-scrapper bird, plans may change!

Politically I hate all parties. Some views will be considered lefty and some very right wing. A moral form of capitalism would be nice if the human brain would allow such a thing. I will be voting out in the EU referendum.

I think that real change for our children / grandchildren will only happen with a complete fail of the financial system or a violent revolution. In reality, one day they will probably come at the same time.

That’s the end of my novella. Sorry to bore you!!

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Not boring at all, and welcome to posting after an impressively long lurk :P

If I were single like you then I'd be doing the same, or better still, heading off to a different country altogether. It's only my wife and her unshakeable desire to be close to her family that keeps me here. Best of luck with it all, and at your current posting rate, I'll look forward to an update from a very happy man in 5 years or so ;)

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Not boring at all, and welcome to posting after an impressively long lurk :P

If I were single like you then I'd be doing the same, or better still, heading off to a different country altogether. It's only my wife and her unshakeable desire to be close to her family that keeps me here. Best of luck with it all, and at your current posting rate, I'll look forward to an update from a very happy man in 5 years or so ;)

Bonkers. It is almost as if our connections to the people we love were worth something. If I understand matters correctly, the economists have a name for that - externalities. ;)

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Hi All

Week long lurker here, came across this site whilst researching the possibility of an HPC / financial crisis in the UK in 2016. Decided to register as it's nice to have found somewhere where the conversation can deviate from "put it all into bricks and mortar, mate, you can't lose."

A bit about me; I'm early 30s, recently married with a kid on the way this summer, graduate, making £32k per year (household income £45k), bought a house in our lovely-but-not-so-quaint-and-small-as-it-likes-to-make-out-to-tourists-and-wealthy-commuters Midlands market town in early 2014 and, personally, am not feeling the FTB (assume this means first time buyer right?) love right now.

Essentially, we bought a "fixer upper" (small 1 bed, no parking or garden) in a great neighbourhood for just a shade over £100k (NB that's not me being sarcastic, it really is a great place to live) back in 2014 (wife had just gone self employed at that point so we decided to get somewhere smaller and plough the cash into doing it up), spent £20k doing a loft conversion and other improvements (the usual, stick a log burner in, wood floors, etc; father in law's a builder so got a good deal) and are now hoping to sell for £140k to fund somewhere bigger for me, the Mrs and the bambino (looking to spend around the £220k mark for a 3 bed with a garden in the same neighbourhood). So far, so peachy creamy, right?

Here's the downside; it's essentially been two years of non-stop stress doing the place up, we've done a lot of it on the cheap so have saved money by me and my wife doing a lot of the work (did I mention I'm an accountant?) so some of the decorating is of dubious quality, it's still not quite finished and we now find ourselves with the twin pressures of the impending birth of our child and now a potential HPC just around the corner. Our mortgage is dirt cheap and, by the standards of our area, we're fairly well paid yet I'm skint all the time. There's always something needs paying for. We put down a 10% deposit (£10k) and spent approx. £12k we had saved on doing the place up but guess what? It wasn't nearly enough (despite familial promises to the contrary) so, a quick credit card and constant monthly outgoings for two years later and I reckon we've sunk closer to £25k into the place. Once we've paid off the credit card and our fees, etc, I hope we'll have about £30k - £35k left for a deposit on our next place (assuming we can get the asking price of £140k that is). Fundamentally, we could have just bought a ready made place in the same area for a little bit more and we probably would be left with the same net benefit if we'd just bought it and done nothing with it, we just wouldn't have had the stress. Still, everybody's convinced we're geniuses for being able to shift up to the next size up Hamster wheel. Property market, eh?

So, my advice to FTBers;

1. unless you know for sure you're under no time pressure (ie not newlywed with a baby on the way and facing up to economic uncertainty) and have the patience of a saint, don't go down the "fixer upper" road. It will inevitably take much longer and cost much more than you think, leaving you exposed if events change and you need to jump ship sharpish. We went from living in a huge, awesome loft conversion flat in the centre of town to a building site; as someone who likes their creature comforts, it's not been a great two years and, at times, has put a strain on me and my wife's relationship.

2. don't get family to do the work for you. Even if they offer you a great deal, chances are you'll be being fitted in in between jobs so you'll be left staring at a lot of unplastered walls for a long while. There are times when you just want to be able to pick up the phone and demand to know why the agreed work hasn't been completed; can't really do that with the in-laws.

3. being a home owner is honestly not the promised land; at its worst, it's a whole load of extra stress you don't really need.

My dilemma and why I'm spending my time on the internet researching the property market? Essentially, after two years with a 10% deposit, we don't have a great deal of equity in our place. If prices outside of London go down by 25% (as suggested they might by the Investor Chronicle) by the end of 2017, we're literally right back to square one and probably stuck in a small 2 bed house with no garden for the first five years of my child's life. That said, if we cash in and buy at the top end of the market to ensure we can get into somewhere long term we're stuck in negative equity for the same period (ultimately doesn't really bother me though, tbh, as long as we've got somewhere decent to live).

Like I said, great being a homeowner isn't it?

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  • 3 weeks later...

Hello. I've been following this site since 2006-ish. Had a house at the time that needed a lot of work, wasn't sure whether to STR. Eventually decided to sell at the beginning of 2008 but it took well over a year to get rid. Rented from 2009-end of 2011 when I bought a small two up, two down terrace but in good condition. Owned outright. In the meantime partner moved in. Wanted somewhere slightly bigger with parking. Sold that house feb last year. At the same time a family members house was empty as they moved for job so moved in there for a bit and then have been privately renting for six months. I think prices are crazy and lots of property is poor quality. Having had a house which needed constant work I'm not in a hurry to go down that route again. The house we're renting is lovely albeit the rent quite high. Being pressured to buy. Looking to have kids as well and will be an 'older parent' so don't want loads of debt. Have explained you can do these things without owning a property. Just interested to follow the debates and views on this site :)

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Hello. I've been following this site since 2006-ish. Had a house at the time that needed a lot of work, wasn't sure whether to STR. Eventually decided to sell at the beginning of 2008 but it took well over a year to get rid. Rented from 2009-end of 2011 when I bought a small two up, two down terrace but in good condition. Owned outright. In the meantime partner moved in. Wanted somewhere slightly bigger with parking. Sold that house feb last year. At the same time a family members house was empty as they moved for job so moved in there for a bit and then have been privately renting for six months. I think prices are crazy and lots of property is poor quality. Having had a house which needed constant work I'm not in a hurry to go down that route again. The house we're renting is lovely albeit the rent quite high. Being pressured to buy. Looking to have kids as well and will be an 'older parent' so don't want loads of debt. Have explained you can do these things without owning a property. Just interested to follow the debates and views on this site :)

Another impressively long lurk - welcome :)

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Cheers. I did set up an account years back but never posted, but have followed the site with varying degrees of regularity. Want a home to stay in for twenty years so in some ways price should not be so important but have seen so much greed in terms of asking prices and now they are becoming unaffordable anyway.

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I try not to think of it as greed (although I often fail miserably) because nobody in their right mind is going to sell anything for less than they can get in the open market. What I hate is that people are able to achieve these insane asking prices simply because of all the various tax payer backed schemes - we simply don't have a real market.

What we do have is successive governments that take our taxes and actively and deliberately use them against us.

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I understand what you are saying about greed V market value but I'm thinking about the houses that sit on the market for ever because the seller doesn't want to take 'less than it's worth'. I offered on a house a while back before I stopped looking-8% off an overally inflated value. It had been on the market six months and needed a complete refurb. Yes, it's their decision to make but it's still on the market and probably will remain there. They explained it was a probate and were in no hurry to take a 'low offer'. I think that was the point I gave up.

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Yep, I'm not actively looking at houses any more but I see the sorts of kite flyers you're talking about in the Rightmove search emails I get on a daily basis. Once we made the decision to not even bother viewing any more, I became a lot less hassled about the whole thing, and I now consider the opportunity value of my capital to be far too great to blow on an overpriced house regardless of whether nominal prices drop in future or not.

We are lucky in that we have no kids, in a nice solid rental house in a beautiful area. I realise most people don't have this luxury, and I'm very grateful for it. I still hope for an almighty correction, and I'm still certain we will get one. I just don't know when.

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I'll be happy renting for another year and will review the situation again then. I'm a bit of a homebody and having somewhere nice to live is important but as long as it meets requirements in terms of cost/comfort/accessibility to work I'm really not that bothered if I own it. It's only security of tenure that's a problem with renting if what you've got meets all the other criteria.

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I'll be happy renting for another year and will review the situation again then. I'm a bit of a homebody and having somewhere nice to live is important but as long as it meets requirements in terms of cost/comfort/accessibility to work I'm really not that bothered if I own it. It's only security of tenure that's a problem with renting if what you've got meets all the other criteria.

We're in a similar boat - we have an excellent rental which is far more secure than most, in a lovely area, and very handily placed for my work. Every now and then I look at what I've spent in rent here and start to wish I'd just bought a crap house somewhere else instead. Then I look at the quality of life that we have and there is just no comparison, even before you factor in repairs and maintenance.

The less bothered I become about owning a house, the happier I seem to become generally, and the more foolish it seems to throw all your money (or commit your future earnings) at a crappy pile of bricks. Which is a good thing, because things have gone so mental around here in the last 3 years that there's no way I'd be happy about buying even if I decided to just go for it for the security.

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We're in a similar boat - we have an excellent rental which is far more secure than most, in a lovely area, and very handily placed for my work. Every now and then I look at what I've spent in rent here and start to wish I'd just bought a crap house somewhere else instead. Then I look at the quality of life that we have and there is just no comparison, even before you factor in repairs and maintenance.

The less bothered I become about owning a house, the happier I seem to become generally, and the more foolish it seems to throw all your money (or commit your future earnings) at a crappy pile of bricks. Which is a good thing, because things have gone so mental around here in the last 3 years that there's no way I'd be happy about buying even if I decided to just go for it for the security.

Ditto

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Just wanted to come in and say hi. I've posted elsewhere but a few of my comments are still in mod.

Is there a topic anywhere that outlines how to use the forum format, eg how to quote, how to insert images?

I've found since I logged in that the mobile user experience isn't as good as when not signed in and just reading. Eg every thread now thinks it's unread, so puts me to the start of the thread. I can't see a skip to end button, so end up typing the number of pages into the url to take me to the last page!

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  • 433 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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