Regret buying this house. Was it a massive mistake?

[TheConsultant1889]

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.

Again, you don't have to reply to every post but please do remember about the capital gains tax. My BIL was stung when he forgot about it, kept the property for too long after moving out and suddenly the £10k he thought he'd made was slashed due to the capital gains tax.

Property is often a good short term investment (doing up and selling on quickly) or a good long term investment (when you can ride out the fluctuations in the property market and hope for long term market rises). Its not so good to dip in and out of and its not good to do it without knowing the tax implications unless you want to suddenly find yourself landed with a big income tax and capital gains tax bill.

Laurie - that's not actually correct. I know some areas of the country where they struggle to sell at any price & my ex mil lost out big time.

The market is expected to go up by 18% by 2018. Who knows if this will really happen though. I do think you need to be in it for the long term to see a return but you may prefer to sell up and buy more local now.

The experts that say the London housing market has gone up by 30% are deluded. Perhaps there is more movement and certainly big inner london houses worth over a million have more demand than supply. But ordinary 3 bedroom homes in outer London are not skyrocketting by any means. They are not lower but not much higher either.

Big inner London houses worth over a million? You'd pay a million for a three bed round my way which is Zone 4 in the 'burbs. It's also why I'm stuck in a weeny 1 and a half bed place

It's all relative to where you actually are and what people are doing and what the prospects of a place are. Anyone who bought 25 years ago should be seeing a return on their investment and there are companies who promise to buy although well below market rate but still profitable after 25 years.

Are you renting in London now yourself?
Option one - keep it and wait, perhaps try and save for deposit for your future home.
Option two - sell it, take the loss and buy whatever you can afford to live in. Early repayment fee may be thousands; rent wasted during another 2.5 years while waiting for the fixed deal to end will be your monthly rent x 30 months; it could be well over 20k.

K8 I did a bit more research and it seems that round here the semi-detached surburban properties have taken a bit of a jump over the past few months, I think it's to do with the planning laws changing - these properties have big gardens so developers are after them.

I was under-exaggerating about the million pound inner London homes, but you could get a 5 bed in Camden for 1m 2 years ago, not any more.

I think these anomalies are behind the headlines, but there are still enough properties that are maintaining a reasonably sensible increase.

Yes aware of tax implications thanks, although at moment no tax to pay as making a loss but like you say can set that off on tax return.

At the moment I live in a house which DP owns - we are having the legal docs drawn up though to reflect my interest. All above board and water tight from legal perspective, have taken advice.

For a teeny moment I thought I might be able to move in passedgo

Well op if you're not making a loss because of the tax benefit I'd be tempted to sit on it. You won't lose anything doing that but it sounds like you will if you sell up prematurely.