We have to make a compromise, but which?

[Joise10]

We’re first time buyers and buying in this market is going to be difficult, no question.
We live in a safe area with good schools and would like to stay here or in a 2 mile radius. We live in the north so historically it’s not always been expensive but prices have risen in this area.

5 years ago, on our income we could have bought a lovely modern 3 bed semi detached house or small 3 bed detached with off road parking (checked back on the Zoopla listing for previous sale prices in 2018). Those same houses are now 50-70k more in some cases, far too expensive for us and beyond our agreement in principle not to even think about how high repayments would be with current rates.

We would be lucky now to get a back to back terrace or one bed flat. Possibly a renovation project but we really don’t have the time or money to do one up. If we bought a very small home we would outgrow it very quickly and then would have to face the extortionate costs of moving, stamp duty and the stress of doing so with young children. Never mind the real risk of negative equity the way things are going.

So, we continue to rent, our two bed is lower than the average rental and I’ve worked out that if we bought a two bed and needed to move, the costs of selling and buying another place with legal fees and stamp duty
would mean we might as well stay renting and at least know that if anything goes wrong with this house the landlord will fix it.

We are going to have to make a compromise. Either

a) We move 30 or 40 miles out of area where you would get more house for your money. This would make getting to work and seeing family extremely difficult plus the areas are not the safest we have heard from friends who live there

b) We buy in this area and buy somewhere much smaller, deal with the ££££ of selling and moving in 2-3 years and run the risk of being trapped/negative equity

c) We look for a buying scheme like shared ownership. Doesn’t free us from the renting trap but it’s security, knowing we would never have to move and buying a big enough house in a good area

Answers on a postcard!

B

C was wonderful for us. We could paint, change the flooring, have security. We had a repayment mortgage on the part we owned so it meant we built up a bit of equity. After about ten years we sold and bought a non-shared-ownership place in a different area.

They say buy the worse house on the best street as you can never change location.
Is there any properties in your preferred area that you have discounted due to needing work ?
As long as it's nothing major, perhaps you could do the work When you can afford.
Good luck.

Best of luck! After having done shared ownership two times in a row, I'm looking forward to getting out of it - ground rent, service charge and managing relationships with the housing association. There's nothing wrong with the housing association per se, it's just another party to constantly liaise with is all. Whatever you choose, just remember to also think of what the future plan might be.
So if you opt for shared ownership, will you ever want to staircase and buy a bigger share later down the line - how will you do that (stamp duty, legal fees, value of property etc.)

If really feel you're in the right area, I'd look at a back to back terrace with two beds if you can afford. That way you have a spare room for study, guests staying or if you have DC - my BIL managed with two DC in their single bedroom - admittedly beds were squashed together - thing that tipped the balance was a third child. Also, if it has a spare bedroom, there could be the option of converting the roof into another floor at some point in the future, giving you two more rooms upstairs.

Thank you

B or C. Look for both and see what you can get.

Any chance of finding somewhere with potential for extension?

Having been caught out by negative equity after the 2008 crash, I wouldn't advise risking that - unless you're extremely and realistically confident that you won't need to move and will be able to continue to be able to pay the mortgage.

So A or C.

Thanks for your insight

Could do but again £££

I'd go for A. You say you have some friends there already and really a 30 mile drive usually would only take 30 minutes or less.

Do you have kids? Or is that a future plan?
I wouldn't do C.

I would start with a 5 mile radius around your current location, and see what it throws up.

Nothing wrong with a terrace.

This is what sounds appealing

Surely that depends where you live? I can't average 60mph on the roads round here because they are too narrow with lots of blind bends, when I put the address of the nearest hospital into my satnav it shows travel times of around 55 minutes despite it only being 27 miles away.

I'd go for an option C if at all possible. We got into negative equity back in the 1990s and we never recovered from it.

That would be exactly the issue. We’d be removed from better train connections, no buses to work, so if cars were out of action we’d be scuppered. It’s cheap generally to live there as employment prospects are low and there’s a high level of deprivation. Thank you. I am most worried about negative equity, particularly as we’d be moving in 3 years or so.

Very true.