john banks

3 weeks before our planned move, the sellers of the house we were moving to have pulled out for inexplicable reasons.

There is nothing on the market in the area that takes our fancy at present, and it is only likely to thin out over the autumn/winter.

We are committed to moving out of our house in 3 weeks anyway. As an alternative to living with the in-laws with no end in sight, I wondered about renting. I've found what appears to be quite a nice property at a rental that is I would estimate only about 5-6% of the value of the property per annum and actually looks very good VFM.

We will never know if property prices will go mad over the coming months

We have no mortgage so would have savings from our present house to stash away, although I can't think of a tax efficient manner that allows quick access. We don't really want to start letting out property that we own, so would need to find something sensible in which to invest a house sized sum of money.

I am really posting this thread to see what sort of minimum/maximum agreement length is likely on a typical house let. If one stayed there long term, what rights does the owner have to sell up? If you exceeded the minimum period presumably then a lease would be renewed with a further notice period? I have no idea about letting at all...

TopBanana

Good time to get out of the property market in my opinion.

In answer to your investment question, it depends on your attitude to risk and the amount of time over which you intend to rent. Bonds and savings accounts are likely to be the best choice for a short term.

In England, the minimum notice is two months' I think.

john banks

Just realised that the legal fees, stamp duty and other estimated costs for the move to the house we were purchasing would pay rental for two years on a nice 4 bed detached with sea views, garage, balcony, gardens. Some of these costs will of course be incurred because of the legal work on the sale and the failed purchase, but I'm struggling to see the flaw right now except to secure a good return on savings.

So are we saying that the rental agreement could be open ended with just a mutual notice period?

TopBanana

What normally happens is you have an initial period of 12 months or so, with the notice period decided by the tenant and landlord. Under English law, if this rolls on without another agreement being signed, you are on a Periodic Assured Tenancy, with a mutual two month notice period. In practice, it is very hard to get a tenant to leave within two months!

Mitchy260

Most are 6 month leases with a rolling contract thereafter! Only 1 months notice is required to move!

Kev_turbo

A landlord can get their hands on a property instantly if by you staying it made them homeless.

e.g a couple who own 2 houses but live in one who split up, they can take charge of the house they own instantly. The law says why should the homeowner be the homeless one.

imlach

Sorry to hear your bad news.

As for your prospective rental, negotiate hard on the rental. In Edinburgh, 5% of a £150k flat would be £7.5k (£625/month) which is on the average to slightly high side. Lots of competition in the 150k (typically 2 bed flat territory).

5% of a £350k house would be £17.5k (£1458/month) which is WAY above market rental value.

Respectively, for each of the above, £550 and £900 would be seen as moving towards bargain territory, and you should negotiate lower. Certainly, in the upper price ranges, prices are FAR more negotiable. Just ask, and you'll probably get. The nature of your profession will lower a landlords perception of risk too. Everyone just wants to avoid the DSS/chancer tenants

In Scotland, you'll sign a Short Assured Tenancy (SAT) agreement. This is usually for a 6 month minimum period, with a 1 month notice period after that. The notice period can be adjusted higher subject to both parties agreeing. As tenant, you have many more rights than the landlord

2000TLondon

In my experience, the more secure you appear to be to the landlord, the better. Most landlords will want a minimum twelve month contract. Notice either way is generally a month after the first six months. Most landlords will want to keep you in there as long as possible, albeit with a small rise in rent annually, as an occupied house is worth much more than an empty house. Therefore if you suggest to the landlord a potentially longer term contract for a lower monthly sum, you should be able to work a good deal. Plus with the right account, your interest will cover your rent, hopefully!

john banks

Thanks all.

imlach, am I right then is saying that in Scotland in a larger house where the rental yields are lower than typical, that the capital growth on the property is effectively subsidising the rental price? In which case renting this sort of property is not necessarily the money down the drain typical view of rental?

imlach

Correct. Rental prices have NOT risen in line with property inflation in Scotland. Yields have lowered.

john banks

Thanks.

Like many, I do feel we've crested a wave of house prices for too long. The percentage of FTBs and the house P/E is alarming. Climbing off the property ladder for a while could I feel be offset by looking into property investments in unit trusts (not particularly UK). Something to look into. I'm tempted to hold UK stock investments for now as they don't appear over-valued, but I wonder what a house price crash would do to the market.

imlach

It's a difficult call. House prices have looked over inflated for years now, so always difficult to call the top of the market. Historically, property prices have stagnated rather than fallen.

UK equities are not on all time highs right now, but they have seen a sustained period of growth in the last year. They may continue to rise into the end of the year, but next year COULD either bring some recessionary action or a softening of the economy. Be wary.

Mitchy260

Rental prices have not risen in line with property inflation full stop! England included.

My brother and his wife have just moved into a 3 bedroomed detached house in N.Yorkshire for £600 pcm.
The same house next door to him is up for sale, it has a smaller front and back garden and is on the market for £170,000

You try getting a £170,000 mortgage for £600 per month! It is not going to happen, your speaking at least £1000 per month to buy.

Renting as such is not throwing your money down the drain.