Pulling out a house near to exchange

[HappyKite2067]

We are near to exchange of our new build house and I’m now having huge doubts about going ahead with it. I’ve had a bad gut feeling throughout but as it gets closer it’s getting stronger!

Reasons:

1. Estate management fees and people telling me to ‘run away’ as they are life ruining
2. The cost of the mortgage is so much higher than our rent, and I’m genuinely worried we can’t afford it- I’ll only have £200 disposable income after all bills, petrol and food, and other half £500. At the moment, we have around £1500 left over between us.

Reasons why I’ve talked myself into going:

1. I need to move for my new job
2. We’ve been renting for 2 years and have secured an okay fixed deal
3. There’s very little choice in the area we are moving to and new build is probably (even with mgt fees the most cost effective)
4. We are TTC (although how we can afford one I don’t know)
5. We are both going to have pay increases next year and the year after.

Am I being unreasonable to pull out and stay renting, and maybe choose to rent closer to work to have more disposable income and wait for an older new build which needs less work?

If it’s a residents run Management Company who can hire and fire the Managing Agent I wouldn’t worry. The disposable income, or seemingly lack thereof, would concern me.

It is a RMC and how much disposable do you think is enough DI?

For my flat it’s £250 per month/£3k per year!

£700 disposable income after absolutely everything else is LOADS.

If you get pregnant, can you afford nursery fees? It's £65 per day here.

It went up 200% from £100pa to £300pa.

I can't remember how many houses were in the build.

The disposable income, or seemingly lack thereof, would concern me.

Are we reading the same thread?

Management fees really aren't life ruining. I have a house with management fees. Been here for 8 years and they haven't really gone up. £700 isn't a bad amount to have left. It's about what we have. You need to look at what the figures are like if you go on maternity leave, will you go back full time? What are childcare costs in your area? How will you split the money if you don't go back full time/ when on maternity leave.

I don’t think estate management fees are as bad as people think. We pay £350 a year for ours and every Monday they’re here mowing lawns, weeding etc. our estate looks so much better than other estates. It’s also barely increased and last year we got £79 back as they were under budget.

My main concern for you is the disposable income and TTC. Just doesn’t leave you with much especially with nursery fees.

That’s how much they’d lose pulling out now not the estate charge. Estate charges for freehold properties are pretty low.

I think this is what I’m worried about but then we probably wouldn’t C straight away and we will both go up in pay before I’d take maternity, so there would be some DI then. I get 6 months full maternity pay, then 3 months SMP (I think, I just know it’s 6 months occupational maternity followed by something), so we would be fine for 9 months, it then depends what I would do at that point? I’m extremely career oriented so I don’t really perceive me wanting to be a SAHM although I’m assuming that could change.

700 a month spare sounds ok to me. You could save that for a year or so or maybe more before your child is born and then also for the first 6 months of maths leave. You'd then have another 12k or so. Babies don't really cost anything other than nursery fees and lost earnings. £1500 would be more than enough for pram, car seat plus second hand baby equipment and clothes.

If you are serious about buying (especially as you really like the house) I would do it before you have a baby otherwise it will be a long delay and much more inconvenient

You don't say how much savings you have but if it's more than 10k or so I would put it towards your deposit. Unless your savings account pays more than 5%.

But that doesn't take into account the insecurity of renting in the UK. Rents can go up by any amount at any time. You can be asked to leave with a month's notice at any time. You aren't allowed to do anything to the house, can't decorate or even put pictures up often. Rented properties are often damp and in poor repair. And then you are stuck in poverty in retirement when you have to keep paying rent - if you have paid off a mortgage life is much cheaper.

Unless in social housing, renting is not ideal even if financially it looks slightly better

you would be really daft not to buy!

why pay someone elses mortgage? you have paid thousands so far - if you cant afford it in 12 months - sell!

with a 5 year fixed mortgage and deprecation on a new build?

Estate management fees are just the norm on lots of developments these days. It's not the same as ground rent, they are accountable and have to be spending the money on the estate and produce accounts. That wouldn't worry me.

Can you extend your term on your mortgage? This may give you a lower payment and breathing room when a baby comes along but also allow you to overpay. Buying is better in the longer term for you - more secure and you are actually buying an asset - and it sounds like this is a decent house so it's just making the finances work!

OP, you might want to watch the piece done by Matt Allwright on the BBC's Morning Live program today. It was all about what he call 'Fleecehold' homes, which is what you're planning on buying.

The article aside, if you've had your doubts all the way through, that you're getting in above your head, then please pull out of this purchase. Our gut tells us things for a reason, and there's something in the back of your mind warning you against making this sort of financial commitment right now. Please listen.

Yes I’ve done so much research around fleeceholds, and raised many enquiries. I think we have one where it’s a bit of a better situation than most, it’s resident ran and we can get rid of management agency. I’m not sure what my gut says! I think it’s my head telling me to pull out, the fear of the unknown, I’d rather everything be in my control and no unknown variables (which is what I feel
estate management fees are). But there are unknowns with old builds, we could end up needing, x, y and z done. I’m also moving areas and fixing for 5 years for a new job which feels scary! I wanted to go an rent first for a while to get to know the area, and the job but OH said we’ve rented long enough and if we want TTC we should get in a house and sell later down the line if we hate it or need to move.

What exactly think the solicitor should say beyond making you aware of the current cost and the fact they are uncapped? They not going to speculate about future price rises or whether you can afford the.

Exactly. The solicitor has done their job, many solicitors don’t event pay much attention to it! They can’t identify every cost increase.

I honestly don’t know a single person that’s lost money on a new build, I made 90k in 4 years in my last new build and we’ve been here 2 years and the valuation was £150k over what we paid - it was actual valued at £60k more before we even moved in! ( plus we didn’t pay stamp etc so the actual outlay was less) the sold prices might seem high on new builds but the actual cost is often significantly less.

In the area we are moving to, the phase 1 houses which have gone up for sale (as non new builds) have sold so quickly even with newer phase 2 houses available, compared to the older builds in the area which keep getting reduced. People want the family layout which comes with a new build. We want to run a mile from estate management fees but run to what? The old build down the road which needs a new heating system? Which we are lucky if has a second bathroom attached at the back which is cold and damp. Not all old builds are bad, but in our area it’s extremely rural and it really is a rock and a hard place, and I see investment wise, even with new builds being priced higher they will resell easier. Even if we had the money to do an old build up, it’s still veneering something which still doesn’t have the right structure for an en-suite etc- which people want!

Well the person I bought a flat from definitely did. They bought it at 80k. A year and a half later I bought it at 36k.

They obviously had it repossessed or done a runner and it was empty for a few months before I moved in ( property was still less than 2 years old at that point)

I know a bit about repossession and it takes a long time to repossess a property, there would have been several warnings, court cases, repayment schedules. And this would definitely mean they weren’t paying from day 1 of moving in- even if this was true it can take years to get someone out. The bank also wouldn’t have repossessed to then sell at a 50% loss.

Well maybe they just did a runner then. As I said was one or the other. They was damage to the flat- fitted furniture having doors ripped of and burns in some of the carpets. But I do know they sold them originally for 80k ( I lived in the next road at the time and was astounded at the costs - my childminder lived in the house opposite) and obviously I'm aware what I paid

I'd go ahead but stop TTC