Jump to content
House Price Crash Forum

Off-plan Nightmare...am I Alone


Recommended Posts

Dear HPC members,

Please dont laugh, I am not alone here and I want people in the same position as I am to start admitting mistakes they have made. I have and I have learnt from it. Here is my story...

I am losing money (£659 per month) because I bought an off-plan apartment in Manchester that has been vacant since completion (2 months ago). I am about to complete (June) on another apartment I bought in 2003. The rent I was told to expect was £850-900 a month. I cant get viewings, let alone tenants, at £750 a month and am going to drop the rent to £700 - although letting agents have so many two bed new build flats its going to be hard work. The apartment that I am about to have to complete on will fail its mortgage valuation as the rent is now 100% interest cover (my mortgage deal says i need 125% interest cover). That means I will have to put another 12% (£17k) equity in order to complete.

I went on a few (free) workshops and decided instead of paying exorbitant fees I would go it alone. I negotiated a 10% and 14% discount on the two deals directly from the developer. Even this 'cushion' - which I thought was a built in profit on the deal for me - has not protected me from the fact that rents have fallen and tenants are few and far between. If I cant remortgage on the first one I will have to pay standard variable rate which is 6.75% - that means I will be paying £860 a month mortgage interest and receiving if i am lucky £700 a month rent. Then there are the lettings/management fees etc. What I thought was going to be a relative no-brainer is turning into a nightmare.

I want to talk to people in a similar position (I know I am not alone) and see what they are doing and what the options are.

Any help would be much appreciated. (jxxxxx@xxxx)

Posting your email address is not a good idea, mate. You'll get flooded with spam and email from jokers. Please communicte through the PM system

Edited by Bubble Pricker
Link to post
Share on other sites
I really want to believe that this is a real post, but I'm unconvinced.  Apologies though if you are genuine.

Identifying the problem is the first stage to solving it.

IOM

Me Three

How about becoming a PIMP - its recession proof!

Use your purchases for your girls/boys, free Nookie on tap

Voila, pay your mortgage off in a couple of years!

Apologies though if you are genuine.  :blink: 
Link to post
Share on other sites
I really want to believe that this is a real post, but I'm unconvinced.  Apologies though if you are genuine.

Identifying the problem is the first stage to solving it.

IOM

I have met other people who are in the same boat when I went up to see the flat and went round to local agents. Not many are willing to talk/admit it. Heads in sand. I hope that some of the readers of this site may be more willing to talk about it.

I am probably very lucky in that I can afford to take a loss by selling or by holding on and subsidising it. But being a man who likes to win (and counts his pennies) I would rather I wasnt throwing good money after bad. Do you think rents will pick up 15-20%, thats what I need to happen and I'm not convinced they will.

Problem...lack of tenants and empty property.

Problem two...cant sell it for what its worth? Therefore its not worth whats its worth if you get me. But dropping the price and selling means I lose capital. Holding on means I lose income.

Do you see the dilemna?

Link to post
Share on other sites

OK,

On the assumption that you are genuine:

My personal opinion is that the only way is down for the market. Your problem is one of classic regret that is common to every investment decision that has ever looked like starting to go wrong.

I don't know the manchester market, but generally when the housing market is set in one direction it takes a lot to change it. Consider what plausible set of circumstances could possibly combine to provide reasonable capital gains in the next few years on flats that are likely in oversupply, suffering from lack of demand, and no longer brand new. Combine with this rising interest rates and a faltering economy.

I suggest you consider cutting your losses. You would do well to consider that if you sell now you are still largely ahead of the curve, and in a better position than others who are not so bold as to come to HPC!

Good luck.

Link to post
Share on other sites
Out of interest...why do you not think I am genuine. I'm not looking for sympathy or any charitable contributions!

Is my case so extraordinary or am I just unusual in being happy to admit my mistakes?

Hey guys I think Jonhague is genuine, couple of other postings on the subject on other boards.

Jon,

Doubt if you are alone at all, upside is at least you seem to have the property - some didn't even get that, they lost the lot in companies that were supposedly buying up the properties for them, so could be a lot worse.

Have you contacted colleges / LA / local firms about getting on accomodation lists?

As for selling, that seems all over the place, some areas there seem to be sales some areas seem dead. Most of us here are expecting significant falls so don;t expect many bright outcomes on that score.

Edited by OnlyMe
Link to post
Share on other sites

this site is full of paranoia. even if you are close to genuine the anti - troll busters are out to get ya.

dunno why - is unlilkely that anyone here is about to look foolish :rolleyes:

Link to post
Share on other sites
Have you contacted colleges / LA / local firms about getting on accomodation lists?

As for selling, that seems all over the place, some areas there seem to be sales some areas seem dead. Most of us here are expecting significant falls so don;t expect many bright outcomes on that score.

I am supposedly the proud owner of a property aimed at "young professionals" the trouble is so are hundreds of other buy-to-lettors. Students/HAs are a good idea but why rent my place when you can get a 3 bed house round the corner for similar rent and 2/3rds the price to buy. There are "young professional" tenants out there but the supply has far outstripped demand since I looked into the market in spring 2003. I can get the place valued at £180k (I paid £150k) but no-one is buying because they can get one from the developer with incentives that make the price similiar. Developers have marketing budgets that suck in potential buyers far better than estate agents. So if I drop the price to £150k (break even) I will sell but after costs and mortgage payments will make a loss.

Who else is in a similar position!

Re. my the second 'mistake' what are the alternatives if you dont want to complete. I am tempted to forfeit my 5% deposit on the other deal but am unsure as to the consequences. Have only started looking into this an option.

Link to post
Share on other sites
I am supposedly the proud owner of a property aimed at "young professionals" the trouble is so are hundreds of other buy-to-lettors. Students/HAs are a good idea but why rent my place when you can get a 3 bed house round the corner for similar rent and 2/3rds the price to buy. There are "young professional" tenants out there but the supply has far outstripped demand since I looked into the market in spring 2003. I can get the place valued at £180k (I paid £150k) but no-one is buying because they can get one from the developer with incentives that make the price similiar. Developers have marketing budgets that suck in potential buyers far better than estate agents. So if I drop the price to £150k (break even) I will sell but after costs and mortgage payments will make a loss.

Who else is in a similar position!

Re. my the second 'mistake' what are the alternatives if you dont want to complete. I am tempted to forfeit my 5% deposit on the other deal but am unsure as to the consequences. Have only started looking into this an option.

Well, the "young professionals" are coming out of college, 40% or is it 60%? don't even think they can get a graduate job. That and the debt they have racked up means that demand for some of this sort of development could be weak to non-existent. If you have throroughly tested the market then more likely the latter.

If it were me I'd get shot and quick and get yourself a solicitor to check your obligations on the second purchase immediately. All IMHO as a long time disbeliever of what has been going on with housing.

Link to post
Share on other sites

there are not many young professionals who are not professional enough to find their own loft flat. plus why would they rent off another young professional when they could buy their own.?

this market only exists in london, and even then - not that much i reckon.

have you tried advertising for a lodger at £350 (twice ?)

Link to post
Share on other sites
there are not many young professionals who are not professional enough to find their own loft flat. plus why would they rent off another young professional when they could buy their own.?

this market only exists in london, and even then - not that much i reckon.

have you tried advertising for a lodger at £350 (twice ?)

Nice idea with the lodger x2. That might work. Will try it out and let the board know. Although I will try at 400 (or 395) as well as 350 and see if i can at least make some monthly profit!

Thanks.

Link to post
Share on other sites
Nice idea with the lodger x2. That might work. Will try it out and let the board know. Although I will try at 400 (or 395) as well as 350 and see if i can at least make some monthly profit!

Thanks.

Which is why I didn't suggest this as a possible solution. Personally I don't wish you ill jonhague but why are you asking advice from a housepricecrash. If you get your way prices will stay out of reach for the average person.

Link to post
Share on other sites

Ouch..! sorry to hear you story there must be a lot of people in your position

Unfortunately they don’t post here, maybe another forum somewhere ?

What would be the difference between an official let ( Taxman and Bank knows about it )

and an unofficial let ( Don‘t get caught! ) in your area, in terms of income made?

You have to do your research and possibility cut your loses like Ides of March said

Are you committed to the other apartment?

Any chance of a partner going in with you?

taking lodgers might help short term, but long term situations could change

best of luck

Link to post
Share on other sites
Guest rigsby II
I am losing money (£659 per month) because I bought an off-plan apartment in Manchester that has been vacant since completion (2 months ago). I am about to complete (June) on another apartment I bought in 2003. The rent I was told to expect was £850-900 a month. I cant get viewings, let alone tenants, at £750 a month and am going to drop the rent to £700 - although letting agents have so many two bed new build flats its going to be hard work. The apartment that I am about to have to complete on will fail its mortgage valuation as the rent is now 100% interest cover (my mortgage deal says i need 125% interest cover). That means I will have to put another 12% (£17k) equity in order to complete.

What made you do it in the first place ?

Was it watching Kirsty & Phil nonsense ?

Was it the developer with over optimistic (lying) about rentals ?

I'd sell now. Maybe small profit/loss now big loss later.

You can't put a price on a good nights sleep.

Link to post
Share on other sites

Jon, are you from Manchester? It just seems a lot of BTL oop here are southern jessies with far too much money....lol

Anyway,

this is going to sound harsh, but I am sympathetic...upto a point.

You entered BTL to make money didnt you? Now I am pretty sure that you didnt really have any thought for...say a FTB who simply cant afford a hovel in his hometown did you? This is the difference, I have friends who have/ and are buying right now at vastly inflated prices and I dont want them to suffer..and indeed anyone else to suffer....but for them not to suffer means me NEVER being able to buy my own home... what an awful situation...I am dependant on my friends being financially castrated simply to get on with MY life.

I enjoy a bet... and I bet to make money.... I chose an "investment" that is going to increase my wealth over the short term...or the medium term if its a football divisional bet....no long term for this punter thanks. Now, when i lose...i lose everything "invested" but what i dont do is bemoan the fact that my "investment" was a loser. It is accepted that some/MOST "investments" are losers. This is the current problem with property and especially BTL this fact is simply not registered. Property can never lose! Sloblock!

My advice is to cut your losses asap. Never "invest" in property again, but buy a home for you and your family. Maybe this housing fiasco can be avoided in the future if people realise that playing with peoples homes cannot be a good thing.

I wish you all the best...i really do. And i hope you can see where I am coming from. Remember I may educate your children one day and a happy and "settled" teacher is a good one!! Trust me

Regards

Bott

Link to post
Share on other sites

It seems to me that you will have to accept a negative cashflow for sometime. That could just be worth it if you think eventually that property prices will eventually rise again.

I assume you bought these flats as long term investments so the question is: what is your likely return after say 10 years?

This really depends on where you think property prices are headed. When you bought your flats you presumably had a fairly bullish view on where property prices are headed.

If you still believe that property will rise in the long term then hang on in there. I wish you the best of luck!

Personally however I think property will fall at least 30-40% in value and will take at least a decade to return to todays prices. Given the negative cashflow and other costs you will have such as maintenance it may well be cheaper to get out now, rather than throwing good money after bad.

Link to post
Share on other sites

Newbie BTLers think there's a perpetual money machine where you borrow shedloads of money from the bank and some sucker decides to pay your mortgage, with profit, while you smile at the capital appreciation. Does that sound sustainable?

This failure to see that BTL has been nothing more than a spent pyramid scheme for at least a couple of years now, has had devestating social and economic consequences as the boom has been elongated far past its natural conclusion.

The new money lent into the system has, of course, caused hyperinflation in housing which has stolen the quality of life for many people. Money-for-nothing culture has also led to a massive consumer boom, which now threatens to collapse causing utter chaos.

I'd sell if I were you and get out. Hopefully, you'll offload it onto another BTLer though, not a misty-eyed FTB that's still terrifed of another round of price rises.

Link to post
Share on other sites
Dear HPC members,

Please dont laugh, I am not alone here and I want people in the same position as I am to start admitting mistakes they have made. I have and I have learnt from it. Here is my story...

I am losing money (£659 per month) because I bought an off-plan apartment in Manchester that has been vacant since completion (2 months ago). I am about to complete (June) on another apartment I bought in 2003. The rent I was told to expect was £850-900 a month. I cant get viewings, let alone tenants, at £750 a month and am going to drop the rent to £700 - although letting agents have so many two bed new build flats its going to be hard work. The apartment that I am about to have to complete on will fail its mortgage valuation as the rent is now 100% interest cover (my mortgage deal says i need 125% interest cover). That means I will have to put another 12% (£17k) equity in order to complete.

I went on a few (free) workshops and decided instead of paying exorbitant fees I would go it alone. I negotiated a 10% and 14% discount on the two deals directly from the developer. Even this 'cushion' - which I thought was a built in profit on the deal for me - has not protected me from the fact that rents have fallen and tenants are few and far between. If I cant remortgage on the first one I will have to pay standard variable rate which is 6.75% - that means I will be paying £860 a month mortgage interest and receiving if i am lucky £700 a month rent. Then there are the lettings/management fees etc. What I thought was going to be a relative no-brainer is turning into a nightmare.

I want to talk to people in a similar position (I know I am not alone) and see what they are doing and what the options are.

Any help would be much appreciated. (jonathan.hague@gmail.com)

I think you will have appreciated by now that there are some very strong feelings about BTL on HPC, but ignoring that for a minute, there is a lucrative lettings market for short term (days or weeks) lets of good flats in London. Does that exist in Manchester ? Obviously that means many more turn arounds for you and was not your original business plan but I thought I'd point this out. I'm not a landlord of any sort so this is a comment from a property outsider.

Link to post
Share on other sites

I have been seeing arguments in this thread about making money over the long term - 10 year period. I would say, for any investor - long-term or short-term, it is better to sell now. Even a long term investor is much better off selling now and then buying in 3 years the same property or a bigger one.

Of course, if you can't afford to crystallise your built in "negative equity" - but can afford to lose monthly cash, then staying put could be better..

Link to post
Share on other sites

Im one of those young professionals your supposedly targetting, 26 currently single, earn between 30-40k PA including bonus, work in birmingham. I dont want to live in one of your flats, and i dont rent a house. AT 3.5x in i cant afford to buy one of those flats or a house i would want to live in.

What do i do then... well i currently house share with other young professionals and save shed loads of money... rent is £225 a mouth inclusive for a very nice house share with 4 other people in a very posh house in a city centre, got off street parking for my car, and my rent includes council tax, electricity, telephone, gas, water.... Why should i pay 700 quid a mounth for a scummy flat?

One last thing remember MR Tax man will probably want to take a cut of your rent as it is classed as an income, you need to factor this i, or you will end up with a nasty tax bill/supprise.

Edited by moosetea
Link to post
Share on other sites

And since no-one else seems to have responded specifically;

Yes, you should walk away from the second flat and lose the 5% deposit. By continuing with the purchase you will be paying at least 10% more than its present value, so think of the 5% loss as the lesser of two evils.

Some investments fail, others go gangbusters. You have learned valuable lessons from this experience, and you may be better positioned to make money from property when it is next rising (although I believe this is at least 7 years off).

It's pretty brave to post about this on a bear-pit like HPC, but I think most of the advice so far has been fair and constructive. Basically, cut your losses, and consider selling up and walking away.

Link to post
Share on other sites
Im one of those young professionals your supposedly targetting, 26 currently single, earn between 30-40k PA including bonus, work in birmingham.  I dont want to live in one of your flats, and i dont rent a house. AT 3.5x in i cant afford to buy one of those flats or a house i would want to live in.

What do i do then... well i currently house share with other young professionals and save shed loads of money... rent is £225 a mouth inclusive for a very nice house share with 4 other people in a very posh house in a city centre, got off street parking for my car, and my rent includes council tax, electricity, telephone, gas, water.... Why should i pay 700 quid a mounth for a scummy flat?

One last thing remember MR Tax man will probably want to take a cut of your rent as it is classed as an income, you need to factor this i, or you will end up with a nasty tax bill/supprise.

Yeah, same here. I rent a large house in Bristol with 3 other young professionals, we get a very good deal (only £187 per month each) and that is in one of the posher areas in Bristol. We've got off street parking and two large gardens. I dont know why anyone would want to rent a 2 bedroom flat in our area because the total monthly rent for a flat is that same as for a house with more bedrooms.

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    No registered users viewing this page.

  • 440 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.