Renting out flat in order to upsize - anyone done this?

[LittlePickleHead]

See my thread with the reason we are considering the move www.mumsnet.com/Talk/primary/1502825-Confused-by-catchments-is-it-OK-to-do-this

We could easily sell our flat according to the few agents who have valued it, but our issue is there being nowhere to buy in the area we want (the properties in our price range are coming on the market extremely rarely at the moment). We need to move before January due to DDs primary school application (we are just out of catchment currently for all our closest schools) and as we want a 2nd DC as soon as possible so need to upsize.

We have spoken to our mortgage provider who will allow us to rent on a short term (2 year) basis and we have found a property in (IMO) best part of our area, in catchment for the best school. I've spoken to the LA and they have said as long as we have actually moved and are pay CT and utilities etc then they will count this as our address.

The downside is that we would be paying around £900 more a month than we currently are (I've taken into account rental tax, letting agent fees etc). We can afford this, but we are just wondering if it is madness to in essence throw this money down the drain rather than investing it in mortgage repayments (in the offchance a house does come up for us to buy)

What is everyone's thoughts? Has anyone done this? We would be hoping to buy in our new area after a couple of years

sorry!

www.mumsnet.com/Talk/primary/1502825-Confused-by-catchments-is-it-OK-to-do-this

We've done exactly this, admittedly without the added complication of children.

Rented out my single-girl flat (which was then too small for the two of us when we married), and rented a house round the corner. I was reluctant to leave my local area -which I love- but there are very few houses for sale around here which we can afford to buy. By contrast, tons available to rent.

Renting hasn't all been plain sailing - it's very difficult to adjust to renting when you're used to owning your own home as you can't redecorate to suit your own tastes, or make repairs immediately. Letting agents are rip-off merchants extraordinaire.

But we get to live in a lovely house in a lovely area, and to get on with our lives with space for us, our friends and family, and a garden. It's well worth the money to me!

We currently do the same - my single girl studio flat is rented out whilst we live in a rented 1-bed up the road. But it's only £200 or so more. And I'm selling up now so DP & I can buy a place as a family. It's worked out fine.

There are such huge transaction costs to moving I would say better to "throw money away" renting than to rush a less than perfect purchase for a couple of years then want to move. On a £300k house it's costing us nigh on £20k for the pleasure of selling / buying before we've done anything to the property or bought any furniture. You need to stay a good few years in this market before you recoup that in capital appreciation.

Rent while you wait for the right property to come up.

Ecuse that is a really good point with regards to fees etc, I hadn't thought of it like that. We would be paying a similar amount in fees, and I just know that any house we got would be a compromise in some way.

I think we will go for it. It's the only way we'll get to live in such a fab area at the moment and I think the extra money is worth it for the lovely life we will have/DDs school place. It's comparable to the size our mortgage would be on a new house anyway, and if we were renting without the small amount of profit we'll be making from our flat rental, well it would cost us even more.

It's good to hear from others who have done similar.

We just have to hope we get the house now!

Yes, we did similar (rented out the place we owned in order to move into rented accommodation in location where we wanted to be). Definitely allowed us to gauge whether we wanted to live here in the longer term, but without stepping off the property ladder. Just about to buy here, so it was a good move for us

So in general are you hoping prices of property go down? Then it would be a good idea. But if property goes up then what. Are you taking that into consideration. It's certainly better than rushing into a house that isn't right.

No I am hoping it goes up as then our flat will go up in value as well (at the moment falling prices don't seem to have affected this area at all, quite the opposite). We are also going to be able to continue to save a small amount so the couple of years of renting would allow us to increase our deposit, as well as hopefully increasing the capital in our flat.

There have been a few probate properties in the area in recent months in our price range, but they were sold before we seriously started thinking about moving. That's probably going to be the kind of property we go for, but I think these kind of properties (sadly) come on the market in winter months more often. Not saying one wouldn't come up, but it is a risk.

Thinking about it, another positive would be being able to complete on the sale of our flat first, and then having 6 months in which to buy, making us chain free. Even better if we can negotiate a longer time with our mortgage provider. Yes that will still give us time constraints in buying, but we will be more attractive and hopefully a much quicker process than being in a chain (especially if buying probate).

I'm feeling a lot more positive that this is the right thing to do all round (unless someone can come along and tell me I have spouted rubbish above!)

We did but my little house was in negative equity so we saw it as a way to be able to buy our family home. It's worked out well though

Littlepickle If your flat increases in value, won't houses become proportionately more expensive too?

We are thinking of selling our flat and buying a house. Unfortunately, in our part of London, flats don't seem to have risen in price for years, and there are now hundreds of them on the market. We've been told even more are likely to come on in the next twelve months because of the housing benefit caps resulting in landlords selling up.

So prices for flats are depressed.

By contrast, family homes are now selling (not merely going under offer) at a massive premium on the supposed 2007 peak, because there are fewer of them on the market.

Our estate agent told us many people in houses are mortgage prisoners who simply can't afford to move - they can't come off their fixed rate or even SVR because they would no longer be able to obtain such a good mortgage rate. Many wouldn't even qualify for the mortgage again, since deposit requirements were raised and income tests became more thorough.

We're now going to let our flat and rent a house nearby. We'd get £1500pcm for our flat but a house three times the size in the same postcode is available at only £3000 a month - because few tenants want to "waste" money renting a lot of space. The law of supply and demand in action!

I was thinking the same about property increases. The more expensive property will increase in value more if it is proportionate. And then you will need more deposit or mortgage. It's really difficult. But that's interesting about flats not selling and there being loads of them on the market.

Do you think the reason might be this. Years ago people bought a first house/flat, lived in it for say five years and then moved on to a bigger one. Now they realise that wouldn't be easy so are holding on and not buying till they can afford the bigger house. Does that make some sort of sense?

We sold our house and are completing on a purchase chain free. Not having to tie to up all together is a really big bonus (and makes it much less stressful all round!)

Vivienne, people can't afford to upgrade to houses. The 'rising' market has made fools of us all, and made bankers rich at our expense

Wow this is all fairly depressing, perhaps this is going to have to be a longer term plan for us (initially we were thinking 3 years tops as after that we'll have to pay capital gains tax on selling our flat). Maybe we need to rent until we are at the stage of wanting to move out of London into commuterville where property is cheaper. Problem is I'm not sure that's ever what I'll want to do :(

I suppose I hadn't really thought about the proportional raise in larger properties prices compared to flats.

On the plus side we signed on the rental today and I love it! The bit plus is its allowing us to live in a house and area out of our reach through buying.

Thisoldgirl - out of interest which part of London are you in? Those prices sound crazy!!

Couldn't agree more kensingtoncat. . I was just trying to work out logically why there was lots of flats for sale and not many houses. First time buyers can't afford to buy and nobody can move to a better house.

Littlepickle We are in W6 but I'm also looking in SW4 and SW12 and the same story there - on a square footage basis, houses are much cheaper than flats. I guess if people can't "afford" to sell they're renting out their houses, and then renting bigger or smaller places themselves???

I'm aware so many threads on Property are tediously turning into rants about the state of the housing market, but honestly, how long are we supposed to go on like this, all renting to each other when what we really all need and want is a permanent home?

After I posted my last post I realised the same is true for us - we are renting our 2 bed flat for £1200 and getting around double square footage in a house for £1700. It is a depressing thought that this is the only way to upsize now for so many people.

And I expect the thought of interest rate rises puts a lot of people off taking on a larger mortgage. It really has got into a mad situation. What I can't understand is why prices are so high when people can't sell. (Hope I've not turned this into a rant about the state of the market!) But who is exactly benefiting from this. I wanted a bit more room but the jump was just too big for our cirucmstances at the time.

Vivienne, unfortunately many London Zone 2 houses are selling, and often at 2007+10% prices. These are the houses that tick every box for most of us - not needing major refurbishment, period features, good local schools, decent sized gardens, room to extend in future.

I have no idea who's buying these houses, mind, because we certainly don't have £800k despite both now being senior staff in supposedly high earning professions.

One thing we've seen is that vendors in the same postcode, with superficially identical houses that, for whatever reason, are not box tickers still expect to achieve the same price as those houses that are. These houses sit on the market for months with no interest and no price cuts to reflect the cost of the work they need for modernising etc.

Sometimes there is just such a huge gap between houses. A lot of houses at a certain price and then a huge huge jump to the next price level with nothing much in between. And that's really frustrating. And also vendors sitting for ages moaning about not selling but not prepared to negotiate very much on price. Something will have to give eventually surely.

We are going to do this. We spent a lot of money on our flat and we wouldn't get enough put for a decent deposit. In our area like most flats are particularly depressed, as they are unusually downsisers or first time buyers and there aren't many of them.

For an extra 150 a month over the rental value we can get a lovely house.

I'm really excited about it!!