ProperCharlie

Hello,

Just thinking about this - it would make sense if the huge property market crash that some people are predicting materialises. As I haven't been in rented accomodation for a long time, can someone advise me who normally pays for what? E.g, say if your mortgage is £1,000 pcm, and you sell and rent somewhere for £1,000 pcm, obviously there would be some other savings, wouldn't there? Buildings Insurance, for example. Anything else? I take it that the tenant has to pay council tax?

tia.

boxst

Hello

The problem is that you are gambling, which is fine if that's your thing. The property crash has been happening a long time.

There isn't that much difference in bills between owning and renting accept that if something goes wrong or needs redecorating then it is the landlords responsiblity to do it.

Steve.

davegtt

I was told in 2001 when I bought my first house to hold out as there'lll be a crash soon. thanks **** I bought is all I can say. As Boxst says the crash has been happening for ages. if it was as easy as sell up, pocket cash and wait for the crash everyone would be doing it. its a big risk.

TopBanana

Agree with above. We are currently renting, and it isn't cheaper. We're renting because it suits our circumstances currently I didn't see the property market racing up. If it drops, it's a bonus but I'm not counting on it.

ProperCharlie

That's a good point. I wouldn't consider it if I wasn't thinking about selling the house in any case.

My reasoning was along the lines of:

Sell house - rent for 1 year.

If no property crash has materialised, my capital will still be there, plus approx 5% interest, it's highly unlikely that prices will have gone up by significantly more than 5%, so just buy a house at this point. If the crash has got underway, then there is a potential gain.

davegtt

True but then you have the rigmarole of what happens if you dont have that well paid job which means finding the morgage you previously had a little harder to come by plus interest rate MAY have gone up which means higher payments next year when you could remorgage now on a safe fixed rate. then you have to find a house that suits your needs, you current house may be decorated to your exact requirements but a new house may require more money spending to get it to your standards. lots to think about really.

ProperCharlie

dave - i agree that it's a lot to think about. I'm not rushing into anything, just trying to figure out what my options are.

Jamo

iTrader: (23)

I really cant see the point in renting tbh,

the way I look at it is, your paying x a month and all your getting is a temporary roof?

you pay your mortgage and your paying towards something you own?

why put the money in someone elses pocket?

just my thoughts on it anyway?

jamo

ProperCharlie

Basically, because at the moment many properties are rented for considerably less than it would cost to buy them on a mortgage (assuming high loan to value etc). This is one of the reasons why many people consider a "correction" in the market likely. Many places are already experiencing -ve growth on house prices.

davegtt

PC. more of a slight correction rather than a large profitable drop IMO

Petem95

But youre missing the point here, he plans to rent whilst house pricing are falling (and maybe even crashing), therefore he can in theory buy back his house at a lower price in future, even after taking into account the rent paid out in the meantime.

House prices are likely to continue falling for some time - it looks like interest rates may well rise after easter due to manufacturing output showing unexpected rises. It is possible a crash in prices has begun - prices have been falling since the end of the summer. Many BTLer's are probably hanging onto their properties on the assumption that these recent falls are just a blip, but if the falls continue then it may tripper panic selling when these people start to worry and get out before prices get even lower, and yet more properties onto the market.

ProperCharlie

It could well turn out that way. Like I said, I'm not proposing to sell my house purely to take advantage of a possible house price crash. I am thinking about selling it in any case. If we move into rented accomodation, it means a smaller chain to deal with. We can then spend as long as we want looking for another place to buy (again being in a better position to negotiate with vendors as we won't be dependant on a sale), and if house prices go down at the same time, so much the better.

Dracoro

Well, it's a 'gamble' either way. You just have to do what's right for you. Renting has flexibility in that you can change house/flats quickly when you want/if neighbours are from hell etc. If in long term then owning is the best bet, short term is harder to say.

I couldn't afford to buy the place I rent. To buy, I'd have to 'trade down' effectively to a place with less rooms/parking/quality etc. I will buy in a few years maybe but not at londons current prices or while I'm on my current wage. g/f and I will probably leave london at some point and return to the country so may buy then.

davegtt

Not missing the point at all. just some people ill be more reserved on their gamble. if it was that obvious I think Id be looking to sell too. personally in my area Ive noticed alot less houses for sale atm (probably a mixture of prices and the housing market slowing) but there is no sign of a drop. and if you are correct that all these BTL people shifting their houses quickly as a get out before the crash happens (remember they'll still be trying to sell them at a top-ish price thats unaffordable to most) then all these people who have been hanging on will want to jump on the ladder quickly hence pushing up prices again. end of the day its a big circle and if there will be a crash in the future tbh I think you'll have to time it perfectly to get a decent return.

The crash will only happen (IMO off course) if the interest rates rise to an unacceptable level and those living beyond their means already wont be able to afford the morgage, house taken off them/and or sold off cheaply and quickly pushing prices VERY low.

ProperCharlie

That possibility, whilst a remote one, had occurred to me.

richardg

there is a general cycle with the housing market which shows peak of activity in the spring and shortly after the spring to take account of those committing to a purchase during that period, but then taking longer than average to complete for a variety of reasons. then in the summer, things tail off as most people are on holiday. obviously deals are still being done, but this eases off even more towards oct/nov. dead in dec, jan and then picking up again in feb. this tends to happen every year.

can't see a "crash" coming as with previous cycles in the 70's and early 90's as the economy is very different now. interest rates are still comparably very low and employment is high. i would expect things to either fluctuate with the seasons as usual for a year or two, or to see minimal growth in the market. obviously some areas more than others.

ProperCharlie

fair point about seasonality. tbh a crash wouldn't necessarily benefit me that much, i'm just trying to work through different scenarios. the worst possible scenario for me is being forced to sell at a disadvantagous time, through some change in my financial situation. selling now would be some sort of insurance policy against this.

Dales2

Have people considered the impact of SIPPs (Self invested Personal pensions). From April 06 my understanding is that you can invest in residential property with significant tax relief. An extreme example being a £100k house only costing £60k due to 40% tax relief. Rental income is tax free too.

I think this could have an impact on residential house prices (due to demand increase). Maybe not in a years time, but certainly say 2-5 years.
I tried short term renting in 2002/3. Big mistake - not just from a financial standpoint, but also the hassle / disruption of moving twice. Also having to live in a house that you want to mess with but can't as it doesn't belong to you is annoying.