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Original poster

In a horrible situation and figure a way out - help

26 replies

ShowgirlnamedLola · 10/05/2020 09:56

Hi all, I’ve just had another horrible nights sleep, lying awake most of the night worrying and panicking about my house situation and I need to find a solution as I can’t live like this.

I bought a house in 2006 on my own to live in. Obviously I didn’t know at the time that this was the height of the property boom. Since then I’ve got married and had two kids. My husband (or I, if I’m honest) didn’t want to stay in my house together and decided to buy something else together (although it’s in his name as I already had a mortgage).
I’ve tried to sell my house twice but only got very cheeky low offers that would leave me still in debt.
So I had to rent it out but now I have a tenant paying a very low rent as a kind of unspoken agreement that they won’t bother me every 5 minutes. The house is a good 30 minute drive away and I have a job and two kids under 4 so I simply don’t have the time to keep going over there to fix every squeaky door handle etc...
I worry every day about this house. The mortgage is interest only and I don’t earn enough to get a good repayment mortgage. The LTV is too high too. It’s always costing me money, last week it was £100 for the toilet to be fixed, last month it was a new washing machine. It’s an old properly so I feel like it’s going to start becoming a big money pit at some point too.

I just don’t know what to do. I wish I could just get rid but it has a tenant and I don’t want to rock the boat with her plus I can’t afford for it to be sat empty whilst waiting for it to sell. Also I know now isn’t going to be a good time to sell.

Does anyone have any ideas or do I need to just sit tight for a bit longer?

OP posts:
FiveShelties · 10/05/2020 10:00

Is it costing you more to rent it out than it would if you sold it and ended up with a loan to clear the negative equity?

Original poster
ShowgirlnamedLola · 10/05/2020 10:03

No the rent is still covering the mortgage which is a bonus. But after insurance, gas safety checks, maintenance etc I’m not making any money on it....

OP posts:
Lightsabre · 10/05/2020 10:07

I'd sell it or raise the rent to market levels. You can't afford by the sound of it to subsidise your tenant and they haven't 'left you alone' as you are buying things and maintaining the house (as you should). Is the tenant interested in buying it? Will they allow viewings?

Bristolbitsandbobs · 10/05/2020 10:09

@Showgirl you need to get agents round, work out the market rent and start approaching this as a business. If then it’s a viable rental you can wait until the prices pick up. At some point the value will increase.

It’s that or cut your losses and get out. Personally I’d sit it out but on a more business like footing.

happyjack12 · 10/05/2020 10:10

So are you breaking even? Is it COSTING you anything to keep it?

How much debt would you have if you sold it?

Has it always been on interest only? Do you have an endowment for it to pay off the capital?

FiveShelties · 10/05/2020 10:11

I can see the toilet would be 'your' problem, but the washing machine? Is it let out furnished?

If you are just breaking even then it might be wise to hold onto it for a while, but if you are losing money then you might as well try to sell, clear your mortgage and put it behind you, Not the best time to sell, but depends on area/price and also what price you out on peace of mind.

bluejelly · 10/05/2020 10:18

Not a lot you can do until lockdown properly eases. Then I would get an estate agent round and get a valuation for both sale and rental. Decide which makes best sense. Then give your tenant notice.
Try not to worry too much - it doesn't sound an awful situation (though appreciate these things can prey on your mind)

Original poster
ShowgirlnamedLola · 10/05/2020 10:19

Thank you for your replies. My husband thinks I need to raise the rent too and that it’s ridiculous that I’m subsidising her. My argument is that she does know she’s on to a good thing and only bothers my about the bigger stuff. I guess it’s not working though.... I don’t think she’s in a position to buy but I could ask
We spoke to a financial advisor about it a few years ago and he thinks we just sit tight as it’s not costing me anything but he had a business head on, whereas I’m such a worrier that it’s affecting my mental health (I know that’s lame)

I did put down £15k deposit. The best offer I got (about 5 years ago) would have covered the mortgage and left me just to pay solicitees fees. I probably should have taken it...

OP posts:
fortifiedwithtea · 10/05/2020 10:22

Property is the long game.

Early ‘90s I bought a New build flat for £52,000. Property crashed. At the lowest point one of the other flats sold for £32,000. In the meantime I had met and married my husband. We were early 30’s and I was aware of my biological clock ticking. It felt hopeless.

As my husband had never had his own property we bought a repossession 3bed house for £46,000. In effect we had a huge mortgage on a 1 bed flat we couldn’t sell and a dump of 3 bed house. We rented the flat out for years.

After having our first child I decided it was too risky to keep the flat. My husband was the only one working.The housing market had improved and we made a small profit.

With hindsight we should have held onto the flat longer. If we had we would be mortgage free and comfortably off.

My advice is wait.

Soontobe60 · 10/05/2020 10:24

You need to up the rent so that it covers the expenses, which include mortgage, insurance and general repairs. Either that, or put it on the market again and give your tennant notice.
You don't have to be at the tenants beck and call!

Original poster
ShowgirlnamedLola · 10/05/2020 10:24

Thank you everyone. I know I’m being a bit of a drama queen and having some pragmatic advice has helped. Once the lockdown eases I need to just address the situation, instead of ignoring it. I’ll speak to some agents and see what they think

OP posts:
mencken · 10/05/2020 11:22

old property? Is the EPC still legal? Are you 100% on all the documents that the tenant should have, smoke alarms etc etc etc...

landlording is not for those prone to stress.

Original poster
ShowgirlnamedLola · 10/05/2020 11:50

@mencken yes I’ve got the right documentation in place and manage it all myself. But yeah it is a stress and thats why it’s not something I want to keep doing

OP posts:
Loofah01 · 10/05/2020 12:30

Get everything issued formally that is required for renting. Issue a section 13 to raise the rent. Issue a section 21 if the tenant gets narky!

I'm staggered that a house bought in 2006 won't clear the debt on it if sold now so unless you're willing to take the hit financially then you'll have to address how you manage the rental property. Plenty of letting agents to do this for you although they do take the mickey frankly and when it comes to chasing rent they're worse than useless

Cottipus · 10/05/2020 12:57

Have you spoken to a mortgage broker to see if you can get a better deal?

I assume you’re on a repayment rather than interest only mortgage so the debt on it is reducing all the time. Agree with your plan to get it revalued after lockdown.

Mosaic123 · 10/05/2020 13:32

And if you do raise rent you can then use can use a letting agent (We pay 8% and 10% of the rent) to the agent. It takes all the worry away. No communication between you and tenant at all.

Quartz2208 · 10/05/2020 13:35

How low rent is she paying for the area. As the PP said I would find a managing agent who takes a cut of the rent to sort all of that and start having it work for you

Original poster
ShowgirlnamedLola · 10/05/2020 13:36

@Loofah01 yeah I did use an agency originally but they were hopeless when a tenant they placed wasn’t paying. I ended up having to sort it myself. She owed me thousands... after that I decided that I may as well manage the rental myself and I like being able to choose a suitable tenant myself too

OP posts:
maddy68 · 10/05/2020 13:40

You need to rent it properly at the proper rate using a property management company they will sort repairs etc . Pay the mortgage off.

Original poster
ShowgirlnamedLola · 10/05/2020 13:44

I just did a bit of online research and it looks like the rental value in the area has decreased a bit so I think I’m only undercutting the going rate by about £100... If I increase the rent it would cover an agent to manage it but I don’t then want a tenant asking me (via them) about every little thing... I have had tenants treat me like their own personal concierge in the past...

OP posts:
Palavah · 10/05/2020 13:55

If the property is only on an interest-only mortgage, do you have a repayment vehicle?

Original poster
ShowgirlnamedLola · 10/05/2020 17:28

@Palavah no... I guess that’s why I feel so trapped by it all. I have a vague plan that once the kids are older I’ll increase my hours at work etc and with no nursery fees I can start paying back some of the mortgage

OP posts:
Bristolbitsandbobs · 10/05/2020 17:38

It’s normal not to pay off B2L mortgages

Neverending2020 · 10/05/2020 17:41

I would just sit tight for now and try to put it to the back of your mind. You are lucky it is tenanted and the rent is being paid. You could be in a much worse position!
Even if the difference in market rent was more than £100, I would still say to sit tight! By the time you got a new tenant, high agency fees plus probable void for s couple of months - or more - would rapidly wipe out the value of any increase for many months.
As a previous poster said, it is very unusual for a house value not to have increased for 13 years. Is there a reason for this?

Seeingadistance · 10/05/2020 20:33

If the OP bought when the market was very high, it may not have recovered yet to that level. I checked the sold prices on Right Move for a town near me, and this year prices there are still 58% down on the 2008 peak.

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