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Original poster

Underpriced neighbour affecting me

31 replies

theoriginalgin · 14/08/2019 04:37

I own a flat in London. I bought it 3 years ago for 380k.

Given the market i dont expect to make any money on it, but I dont expect to loe anything either. I've had 2 valuations from separate estate agents in different areas for it this week and they both value it at 400k. No problem.

However, there is 1 other flat in my building which is the same spec as mine. They are unique as they were built with the option to adapt for disabled access and are therefore signficantly bigger than standard flats. Over 800 sq ft 1 bed flats in fact.

However, this person has theirs online on rightmove with a different agent for 370k. That's a massive underpricing given that nobody is paying asking price right now.

So I called up the agent advertising it. Turns out its been on the market for rent OR sale since october. It's now tenanted with another 4 months to go until 2m notice can be given. Mine is not tenanted (family member staying there while we decide what to do) so no chain or tenant issues, but i would hope its a more attractive prospect... however I'm not sure - maybe people would wait 6 months. What do we think? Is it worth trying to get 380k for it?

OP posts:

HennyPennyHorror · 14/08/2019 04:45

Well how desperate are you to sell? Only you know if you're prepared to wait.

Knitclubchatter · 14/08/2019 04:49

Sounds like the agents assessed value is a bit high for the market.

Sandybval · 14/08/2019 04:55

What is there's like inside? What is the description like online? People might have had surveys and found stuff wrong, or perhaps are suspicious of why it is underpriced Maybe they just haven't had many viewings or something. If you aren't overly desperate to sell, maybe hang on for a bit? Or, depending how much fees are, chance your arm and see if you get any interest. Are you and selling neighbour on different floors?

Mileysmiley · 14/08/2019 05:24

I personally would wait until after Brexit

GotToGoMyOwnWay · 14/08/2019 05:44

I wouldn’t be buying anything at the moment until after 31st October tbh.

Original poster

theoriginalgin · 14/08/2019 05:55

But surely i risk losing even more value if i wait until then? The very reason you're waiting to buy is the very reason it's risky for me to do so!

OP posts:

HennyPennyHorror · 14/08/2019 06:27

You've answered your own question in your last post op.

Starstar7 · 14/08/2019 06:36

If the other flat has been on since Oct and isn't selling at 370k then it's overpriced, however that price should reflect that a flat with a tenant in it isn't a good option for a buyer. It can take up to 6 months to get a tenant out if they refuse to leave.

Is the family member living for free in your flat? In this case you're losing money every month so surely you'd want to get it on and get it sold? If they are paying rent then you're a landlord and I assume you're meeting your legal obligations.

YobaOljazUwaque · 14/08/2019 06:37

The value of any item isn't a fixed or real thing. It is simply the number that a willing buyer is prepared to pay that a willing seller will accept.

If a buyer comes along wanting a flat in your block to live in themselves then they would probably be willing to pay £20k more for the fact that your flat doesn't come with the nightmare of a sitting tenant. To a buyer intending to but to let the other property is more attractive.

The chances of either buyer coming along in the next 10 weeks is low.

Henlie · 14/08/2019 06:37

Op - do you need the money out of the house now? If yes, I’d put it up on the market this week. If not, just sit tight for a while and properly rent out the flat to cover your costs. Re; Brexit, who knows what’s going to happen. It’s only potentially an issue if you need to get your money out now.

Bluntness100 · 14/08/2019 06:42

Do you need to sell now? Yes prices could decrease, but it would be a short term slump. And by short term I mean anything up to a couple of years. They may also increase. No one knows.and it's impossible to predict.

Property is a good investment if you're in it for the medium to long term. Yours is short term. This isn't the best time to sell.

If you can hang onto it and rent it out I would. If not, then yes you risk loosing money simply due to timing and uncertainty.

lboogy · 14/08/2019 06:43

Your house is only worth as much as someone is willing to pay for it. Your neighbour clearly wants to sell and has priced accordingly. For them the 40-30k (depending on the negotiations ) is a hit they can afford to take.

If you're not desperate to sell then I'd wait at least until Brexit happens. Prices I think will fall another 10% and then remain stagnant for 3-5 years. If you can wait it out then I would, only problem is servicing the mortgage debt . I'd turn it into a BTL and get some paying tenants in

AgeBeforeBeauty · 14/08/2019 06:57

So ... it's not a good idea to go on the market now? Because of Brexit?

Original poster

theoriginalgin · 14/08/2019 08:05

THe big issue I have is that the mortgage term expires, as does my consent to let in March. I recently moved abroad, so I have to remortgage to a BTL in March - if the value drops another 10% i wont be able to afford to make up the equity for a BTL mortgage as not only will i have to put another 10% in for the LTV but I would also have to make up the value shortfall when the mortgage company values it at lower than I paid, and will be forced to sell at a stupidly low rate to get rid of it... losing money in the process.

OP posts:

Bluntness100 · 14/08/2019 08:09

But March is a long way off. We should be clearer on what is happening with brexit, right now you're trying to sell in the middle of uncertainty.

Property as a short term investment is always risky. I'd assume your mortgage is lower than the value now, as you must have put s deposit down, and you'll have paid some off. So I can't see why you can't renew.

Original poster

theoriginalgin · 14/08/2019 08:37

Because im now an expat and my lender doesnt do mortgages for expats unless they have 25% deposit. I dont have that much extra money to plough into the mortgage.

OP posts:

mumwon · 14/08/2019 08:39

flats with tenants are on sale for less and are less attractive to buyers - put your house on the market for the price you want & see what happens - it may go easily you wont know till you try

stucknoue · 14/08/2019 09:15

The value is what someone is willing to pay, if the other property didn't sell at the lower price then it is sending a clear message, it's overpriced

Winebottle · 14/08/2019 09:16

I don't think there is any point putting it up unless you are willing to price competitively. The fact they have it on for £370k indicates they would be willing to sell it for less than you so there is no point starting a race to the bottom.

The no tenant thing is a bonus but I wouldn't pay half a year's wages extra for the sake of a couple of months. Maybe they would go with you if you will match the price but if you are asking for 380 they will be pointing out an identical flat is going for 370.

stucknoue · 14/08/2019 09:17

As far as your mortgage, when the term expires you automatically go onto the variable rate, it's higher than their deals but if you rent it that shouldn't matter

Bluntness100 · 14/08/2019 09:19

Hang on, I was an expat. I rented out our house, And there are absolutely companies who will provide mortgages to expats, there are a ton of over seas landlords.

munemema · 14/08/2019 09:19

It sounds like their flat is over priced for its current status (or it would have already been sold)

Your flat is probably overpriced too, as you need a quick sale.

The particular circumstances of each vendor affect the value.

Haz1516 · 14/08/2019 09:21

What is it like inside?

We sold our flat in london last summer. There was another one in the same complex on sale at the same time for 20k cheaper, exact same layout and both ground floor, but ours sold before it. All I can think is that ours was more modern in its decoration and style.

lboogy · 14/08/2019 23:49

I'm not sure why you think you won't get a lender. If I was you I'd speak to a specialise lender. If you can't get a rate that allows you to break even on a btl then maybe just leave it as a residential mortgage? Hopefully the variable rate won't be so high as to make the mortgage unserviceable. If your relative could pay you a caretaker rent - maybe not full market then that might help close your financial gap.

If you're not willing to take the risk of a further fall in prices then I'd put it on the market now and hopefully you might get lucky. Make sure you dress your property to help achieve maximum value

Original poster

theoriginalgin · 15/08/2019 03:37

The current mortage is 1350, rent yield is 1300 (which the relative is paying). On a variable rate the mortgage will go up to 1900. The service charge is payable on top of this so it's unserviceable at that rate.

The consent to let expires next year - so post that if i dont change to a BTL, i am technically in breach of my mortgage and the bank will know this.

OP posts:

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