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.

stilldazed, I'm not arguing with you, in fact I agree. Just showing you a vvvvvvv similar property on the market atm. A 1-bed in the same block as DH's flat (v good order though), was sold for 240k almost exactly a year ago. That's all I can see without special knowledge.

Hey- it could be worse. Spare a thought for my DB (why this thread struck a chord):

• 'property developer' mate in Spain advised him to buy a property he'd never seen in Spain in 2007 for £90k.
• Despite being in horrible condition, the plan was mate's Czech builders would live there and pay rent
• Happy days for 6 months or so then the crash
• Mates business folded, builders went home, uninhabitable flat vacant and now unsalable due to market
• At last count 6 months ago, DB was £27k in negative equity, and has had no tenants since and is unable to re-arrange mortgage AND prices still dropping.
• He pays £500 a month mortgage which is never going to be recouped in rent or a property rise
• Like your DP, I only need to say 'Spain' and he goes up like a Catherine wheel.
• DSIL refuses to join up her money with him or help him on the matter.

was the property that was sold last year, sold for 240k or was it on the market for 240k and you know it was sold ? unless you know the buyer/seller or have researched you won't know what it actually sold for in the end.

sorry, but at the moment properties are getting about 70% of their asking price. So if you advertise at 260,000 you have little chance of getting that which is the point I was trying to make.

I really hope I'm not coming across as too harsh, it's just that the market is a lot worse then many people believe.

good luck with whatever you decide to do.

Perhaps it is now spreadsheet time for your DH. As you know with an interest only mortgage you are very vulnerable to interest rate rises. From the numbers you gave I guess you are paying around 3.85%. So, interest rate rises will mean the following for you:

3.85% = £794.06
4.1% = £845.62
4.35% = £897.19
4.6% = £948.75
4.85% = £1000.31

Your mortgage will go up by around £50/month with each 0.25% interest rate rise.

As this is a normal mortgage you are trapped because it means that you cant get another mortgage with this one in place (not without telling lies anyway). I can understand your frustration. Your DHs Micawberish 'something will turn up' attitude must be very annoying.

Do you know if you will be on the streets when your parents return? IMO you need to get your facts straight (eg you need to be in a new home by X date, you can afford Y rent). Can you get the flat realistically valued? Can you get some idea of how long it would take to sell?

With these facts you then need to sit your DH down and get him to start thinking like an intelligent and educated man. He needs to face facts.

More facts to be faced:

What year are the tenants in? What type of institution are they at? Student numbers are falling and the way that students attend university is set to change with more students studying part time and staying at home.

Making a loss for tax purposes means making a loss for real. The tax man is not generous about things like this. What is the value of that loss each year? This cost is coming out of the family coffers.

Is the flat properly insured with landlord insurance like that nice Sarah Beeny advertises. If there is damage to your flat or to the flats around your flat because of your tenants then you could be facing a big bill.

You are servicing a huge debt at the moment you may well be better off crystalising the loss even if it means having to use some savings to make up any shortfall between sale price and mortgage. At least that way you will start with a clean slate.

Student let property is likely to become less saleable as student tenant numbers fall and landlords look to sell up and get out.

Not really getting why there are only two options on the table here (sell or not sell).

Mortgage £800 out, rent £1200 in, the excess £400 goes towards paying off another loan total leaves you £500pcm short until November then £400 in credit.

Sell now pay off mortgage leaves about £10K to pay off the other loan leaves you about even but with savings that earn a pittance in interest.

Use savings to pay off the works bill loan and that leaves you £400pcm profit.

Then you seek permission from your lender to have tenants in (not all lenders insist this is a BTL mortgage some will allow it and make sure you have proper landlord insurance etc.

If you can't get an agreement or BTL mortgage then sell as the ramifications of something going wrong for which you are not insured/covered are huge.

You could live in it for a few years. There are some VERY good state primaries in Bermondsey and access to decent secondaries (My god daughter has done REALLY well). Unless your kids have sen (when this is a Tribunal happy authority) school isn't a reason - sorry. Museums and great parks etc in the area. Without approval from the mortgage company this maybe your only option. At least commuting costs will be neglible.

Most of the London Councils and Uni's do a 5 year leaseback rental on 2-3 bed homes where you rent it to them for 5 years and they take full responsibility for maintenance. This at least fixes your costs so you know exactly where you stand and is a popular option among familes I know who need extra living space, but are having trouble seling.

What I wouldn't do is continue to lie to the mortgage company - that was lies serious trouble along the road. Lying to rent in any form is a dangerous game, especially in the current climate. Insurance and all sorts are affected, not just the primary mortgage.

apparently there is no chance of consent to let or a fixed rate because of the LTV. I don't know exactly how that works, apparently, but DH did enquire and came back saying we'd need to put 40k into the flat to be able to let it out legally.

We're not in credit after the MW bill if you take into account the 5k renovations (new kitchen etc); will need more work soon.

No insurance of any kind.

The nearby state schools are atrocious, I searched for what's in catchment. Also the DCs are settled. I am not pulling them out of school unless I have to. We'll live there if we absolutely have to but it's not what we want (either DH or me or the DCs). It's a two-bed on a sink estate where crime is a factor, there are five of us, DS1 does have SEN, they are happy and settled in the schools they are in now.

My main concern is the interest rates. It wouldn't take much of a raise to fuck us over completely - ditto voids in the tenancy, which is inevitable as time goes on.

But this is a new situation to me, so I don't know as much (anything), as I should about it.

Time to talk to DH in practical terms but also be conciliatory. I am sure that your DH will have gone into this in the belief that he would make a profit. However, hindsight makes fools of us all. You are where you are. Selling now will crystalise your loss but will also allow you to move forwards with your lives.

Oh yes - YANBU!

OK I'm gonna go out on a limb here - Southwark is my idea of a potential nightmare for parents of SEN kids - 4 or 5 tribunals per child is not an uncommon scenario to get them the help they need. There aree just too many kids needing help and not enough resources to help them all iykwim.

I've done quite a bit of research on relocating to get help for my own kid and Southwark was deffo on my personal SEN "blacklist", though I'll maintain is some very good mainstream provision within the borough. ( London catchments are always nightmare so I restricted my research to borough level).

Sell up. Sadly lots of us are gonna lose out with the way the property market is. Not being properly insured for a rental is potentially catastrophic to your family security.