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Original poster

Regret buying this house. Was it a massive mistake?

34 replies

TheConsultant1889 · 24/10/2013 16:48

Two years ago after lots of hard saving I decided I was ready to get on the property ladder. However I was living and working in London and rather depressingly realised I could not afford to buy in London (and would never realistically be able to afford anything nice in London) so I ended up buying a buy-to-let house in the northern town where I grew up. At the time getting on the property ladder seemed grown up and sensible.

The rental income covers the (interest only) mortgage, but I am currently between tenants so have had a month with no rent so have basically had to pay the mortgage myself and then there are the agents fees for finding tenants (I manage the property myself so no monthly agency fees) which basically is another month's rent ........and there seems to be constantly things going wrong - I have had to have various gas and electrics work done as well as the annual landlord's gas inspections etc. I have had to replace the oven and washing machine.... The rent does not cover all these things as well as the mortgage so I am out of pocket by quite some way.

Based on what other houses on that street are currently selling for (ie prices haven't risen over the last couple of years) , if I sold the house now (which I can't do anyway as tied into a 5 year fixed mortgage) I would be out of pocket by a few thousand, and I am just wondering whether I am just going to get more and more out of pocket as currently this house just seems like a bottomless money pit, not to mention causes me lots of stress.

Was buying this house a massive mistake? Should I have just kept my deposit in savings or done something else with it?

Should I sell when my five year fixed mortgage comes to an end (in 2.5 years) or do you think if I keep the house longer term things will improve? Just feeling like it's all been one big, stupid mistake.

OP posts:
DontCallMeDaughter · 24/10/2013 16:57

You can still sell even in a fixed term mortgage, there will just be an early redemption fee, usually a couple of thousand.

No one can predict the housing market, and there are bubbles that happen in localised areas.

I don't think anyone will be able to answer your question... There are so many contributing factors. All you can ever do in life is make the best decision based on the information you have at hand. Find out from your mortgage company what the redemption fee will be and add to that the cost of selling, legal/estate agent etc. then work out how much money you've lost in no occupancy and agency fees. See how you feel when you have all the numbers in front of you.

Original poster
TheConsultant1889 · 24/10/2013 17:16

Thanks. Yes there is an early repayment fee in my mortgage, which is quite high. If I sold now I would lose out big time.

OP posts:
deepfriedsage · 24/10/2013 17:53

If I were you I would hold on until you fixed rate ends. With the new scheme from the government, more people will be able to buy and prices will slightly improve. If you wait you may not end up out of pocket. You just got unlucky.

specialsubject · 24/10/2013 18:13

regret it sounds like poor research. None of the things you mention should have been a surprise to you.

but no, you would not have been better off with savings which are being destroyed by poor rates and high inflation.

stick with it.

Original poster
TheConsultant1889 · 24/10/2013 18:31

Thanks all. I am the first to admit that I didn't research it enough - I think I was just too eager to get on that property ladder Blush and I suppose I didn't anticipate the property being vacant (even if only for a short time) plus problems with boiler, needing a new oven etc all at once. Thankfully I earn a decent salary so I can afford it, but just feel like I am pouring money down the drain that is this house rather than saving Sad

OP posts:
DontCallMeDaughter · 24/10/2013 18:37

If you've decided that you have to keep it for now then I wouldn't suggest attempting to decide what to do in 2.5 years time. So much will have changed, new government etc.

Can you maximise your rental income (any home improvements you could do?) make sure you're happy with the estate agents and they're doing their best to keep it occupied. Negotiate on the fees if you can. Pay off extra on the mortgage if you can and you'll be in the best possible place to make a decision when the time comes.

DelGhoul · 24/10/2013 18:40

If it was me I would suggest getting an agent to manage but get recommendations. I know you pay a % but trust me, it's worth it. I rent 2 flats and mostly have no worries with them, the agent deals with any problems. Plus you should be able to offset some of the outgoings against your income tax, on top of your interest payments and management fees. Even when I lived in the same town, I still used an agent.

deepfriedsage · 24/10/2013 18:40

When you next buy, you will not make the same mistakes, just an expensive learning curve for you.

Littleredsquirrel · 24/10/2013 18:44

Have you ever lived in the house yourself as your primary residence? If not then even if the house gained in value you would also pay capital gains tax on any profit. Keep this in mind when making your decision.

Original poster
TheConsultant1889 · 24/10/2013 19:13

Nope I have never lived there. I did once think I would move into it once I had enough of London, then I met DP and ended up in another city.......

My sister is hoping to buy in the area where my house is over the next couple of years, so one option could be to come to some agreement for her to have it.

It is a really nice house, and in good condition, I just think I made a mistake thinking buy to let was a good investment for me

OP posts:
K8Middleton · 24/10/2013 19:29

Are you not offsetting the loss against your income tax? Surely you must be doing that when you self-assess?

RedHelenB · 24/10/2013 19:41

You might strike lucky & find a tenant who also wants to get on the property ladder & will buy it off you, thus saving on fees. I wouldn't keep it for the sake of it as you may find when you want to buy your own property it is a negative to you getting a mortgage. Fingers crossed your sis wants it & will pay you a decent price for it.

ethelb · 24/10/2013 21:10

which northern town? I may know some possible tenents.

FrameyMcFrame · 24/10/2013 21:15

stick with it.
I sold my rental flat and I now regret it....
You'll get your money back later :)

Original poster
TheConsultant1889 · 24/10/2013 21:20

Thanks ElthelB but I have tenants now Smile

OP posts:
HaveToWearHeels · 24/10/2013 21:50

You should never look at a BTL as a short term investment, the out lay in the early years wipes out any profit. Stick with it, I am sure in 4-5 years time you will be glad you did.

RCheshire · 24/10/2013 21:51

Sounds like it was mistake. Given it's an IO mortgage and the rent only covers the interest payment the whole thing is a gamble that you'll be able to sell the house when you need to and for at least what you paid - even then a loss I presume after maintenance. Sell it now and you have the penalty payment from the mortgage, or hold and hope it rises in value. Don't know the answer to that one.

You're certainly not alone though. When I first had some real disposable income to save in my early twenties all the buzz was about shares - if you wanted to make money it needed to be in shares. I followed the herd and the market crashed shortly after - my 4.5k became 2k, a big drop for me at the time. Of course I could have left them until the market recovered two years later but I'd put all my eggs in one basket and ended up needing the money therefore realising the loss.

Everyone makes mistakes and learns Smile

HaveToWearHeels · 24/10/2013 21:52

RedHelenB having a BTL should not hinder the OP from getting a residential mortgage.

passedgo · 24/10/2013 21:58

Your rent should really cover your outgoings including replacement cookers etc. Perhaps you should charge more rent - is there anything you can add to it to make it more desirable?

Itscoldouthere · 24/10/2013 22:46

Two years isn't very long especially as the housing market has been in the dulldrums in this time (apart from London of course) hang on in there.

Perhaps you could try and increase the rent, but surely if you can hang on another 8/10 years you will be in a better position.

If you earn more perhaps you could start to pay off the loan instead of just the interest?

RedHelenB · 25/10/2013 07:23

Havetowear- it will be a hindrance getting a mortgage if it is costing her money each month, would be different if there was profit & sizeable equity in it bit on a IO mortgage that is unlikely.

thesaurusgirl · 25/10/2013 07:48

12 months ago when I was researching buying my own place, I lurked on this forum a lot. It was full of property people in the trade - agents, developers, landlords - saying the market was dead and prices were stagnant.

Now London's housing market is crazy again and the asking prices are 30% higher than they were in February.

A lot can change in 2 years and you should stick with it. There might be a drop, of course. If that happens, put it down to experience. Other good things will happen to compensate. Sometimes you're up, sometimes you're down, most of the time we all manage to muddle along.

LaurieFairyCake · 25/10/2013 07:51

Not a mistake, long term capital growth will sort out any minor issues over maintenance.

You'll just have to wait longer to 'realise' it but no house bought 25 years ago has been a shit investment

Original poster
TheConsultant1889 · 25/10/2013 08:40

Thanks all. Don't think I could increase rent and there is not much I could do to improve the house - already has modern kitchen, bathroom etc.

OP posts:
K8Middleton · 25/10/2013 09:22

Are you declaring this on your tax return? I only ask because I and another poster have twice made reference to offsetting your losses but you haven't replied. Not that you have to reply to each post of course...