to think DH should sell this flat and take the loss

[whitsunday]

ARGH

DH bought a flat in London for 275k at the absolute peak of the bubble, right before we met. He's always said it makes no sense to sell (he thinks it will regain its value), and he lets it out. It's a shitpit in a shit area and it's let illegaly (no BTL mortgage, interest-only), for £1200 a month total (three students sharing).

Mortgage is about 800pcm, he can't get a new mortgage because of the ltv.

He left his bank statements out - he's paying £900pcm on top of the mortgage for a major works bill he was stiffed with after buying.

So it's at a minimum a 500pcm loss - but he's also spent 5k on a new kitchen 'to help the resale or get better tenants'.

AIBU to think he should cut his losses and either find a way to get a proper BTL mortgage (will need 40k, don't have it, might be able to get it on credit), and better tenants or to sell it and take the hit (the value can't be more than 260 and that's being hopeful).

ATM we're living in my parents' property but they are returning to the UK in 4 months.

I am floored by this fucking mess and ready to throw him over for the lying and ostriching.

What could you sell it for? What is the mortgage?

260 if lucky. 247,500 mortgage.

If the works bill is transferable to the new owners, then are you sure you have a chance of getting 260 for it? And if it's not, you're in a worse situation with now 900pcm loss?

do you need to be out of your parents house when they come home.

if so where do you plan to live

So, basically this property is costing you £6000 per year. It needs to appreciate in value by that amount per year or you need to cut that cost.

I read out your question to DH & DD. Their comments were:

• DH - why arent they living in it?
• DD (16) - it's a sunk cost, write it off and walk away (that's my girl, I'm an accountant!)

So, IMO, live in it (as you need a home) or sell it if you cant afford the loss.

Gnome I agree with your DD. I think it's a bad debt.

260 if we are lucky. There's 8 grand left on the major works bill apparently, so say 252.

We could live in it, sort of. It's a two-bed in a sink estate in a really dodgy area of London. Atrocious schools. We'd be looking at a commute to the schools the DCs are settled in (near my parents' house), plus three DCs in one bedroom.

Or (my choice), we cut our losses - I THINK we could do this with what savings we have - and either rent or buy outside of London.

Is your DH filling out a tax return for this income?

DH though, let's remember, has hidden the MWB from me. He wants to hold on in case it regains its value (+MWB, kitchen etc), in seven years - capital gains??

I think it'll lose value or if it gains never gain enough to make up for the 6k a year loss.

He is filling out a tax return but so far it's a net loss. Which is carried forwards so if the rent is ever less than the mortgage etc etc.

...he says. It's obvious he's had his head in the sand massively.

How long will he be paying off the works bill? If you can afford to take the hit in the short term, it may be worth it for the long term profit?

until november.

I don't think there will be any longterm profit, especially given interest rates are likely to rise. We'd need to sell for 300k+ to break even.

my area you could get

www.rightmove.co.uk/property-for-sale/property-14021274.html

for less than 260 thousand

my area you could get

www.rightmove.co.uk/property-for-sale/property-14021274.html

for less than 260 thousand

Gnome - your DD is truly wise.

I've heard a few folk today going on about not selling until the Market picks up and they can get what they paid back. Without wishing to sound all Robert Peston about it how long are they prepared to wait while life passes them by in the meantime?

Time for a fire sale I think.

Yes, if you ever get to the point of the value appreciating above 275+repairs+kitchen then you will get to the point of capital gains (I assume he is a higher rate tax payer so 28% over the £10100 allowance).

It is possible that in 10 years time it will turn a profit but in the mean time it will have cost you many 10s of thousands. IMO not worth the stress and anxiety of finding the money each month plus the risk of being homeless when your parents return to reclaim their property.

Where precisely does he think you will live when they return? With your lodgers?

McHappy okay but dh works in london.

Gnome exactly.

He thinks we'll buy somewhere else?!?!?!!? Come on. Ridiculous.

Sorry whitsunday's DH but not with that albatross round your neck you wont.

exactly Gnome.

I'm not sure what he thinks will happen. He thinks that getting rid now would mean the maximum possible loss.

He thinks I am being unreasonable. Perhaps I am - his property, his choices? But we can't afford to rent somewhere AND cover the shortfall and if (when), interest rates rise, what then?

But he gets irritated. Dunno.

perhaps see a financial advisor.

when DH and i wanted to buy to get out of the flat, her advise was not tto bother buying once we took in every single outgoing and ingoing

260,000????? you'll be lucky!!

I'm an estate agent in london and you need a serious reality check if you think since the peak of the housing boom til now a property has on lost 15k.

Go on rightmove and see what other properties in the postcode area are selling for and you will get a realistic idea how how much shit you are really in.

It isn't illegal to rent out without a btl mortgage, just breaking a term of the mortgage contract. He can't get sent to jail or anything for it.

Can he up the rent and spread out the works bill over a longer period?

Tbh it sounds like he/you have plenty of cash to spare (most people couldn't survive a £500pcm outlay) so you probably are better keeping it on in the long run.

stilldazed, this www.rightmove.co.uk/property-for-sale/property-21772242.html is v comprable.

Sounds like sensible advice.

If you sell now you will take a loss but:

A) that avoids the whole CGT issue and

B) whatever you buy will also be cheaper. When the flat regains its value, an equivalent property will have gone up similarly.

At least if you are living in your own property it's your home and you are enjoying it. Good luck.

The link you have sent me is for a property that is for sale. you need to look at the price that properties in that area have sold for. A sale price can be anything you like, doesn't mean that is the value, the value is what someone will pay.

The property you linked is for sale and who knows how long it has been on the market, a long time possible because it is overpriced??

I'm just saying I think the situation is slightly more pressing. My advice, sell up. it could easily be another 10 years before things improve.

there were 8,000 houses repossed in 2011 there are 45,000 reposessions predicted for 2012.