Buyer wants us in rented - seems a colossal waste of money

[ChainStress]

Our buyer is eager to move into our house but our vendor isn’t ready and doesn’t seem to be in a rush. Buyer has asked us to go into rented while we wait for our vendor. But the maths on this isn’t great.

Current outgoings - £1700/month on a low interest mortgage comprised approximately £1350 mortgage, approx £350 interest.

Potential rental - at least £2250 (we have three kids and both work from home - we need at least 4 beds). So each month we’d lose £1350 on rent that could have paid off our mortgage loan plus an additional £800 in rent (£2500 rent - £1700 current monthly outgoing).

Over 6 months that would cost us £12,900, plus another £3000 in additional removal costs. About £16k all together! And if it falls through with our vendor we’re stuck for even longer in an expensive rental paying off someone else’s mortgage until we find a house.

What am I missing? Why are people willing to break the chain if it’s so expensive?

This

I would tell your buyer that it's not financially feasible. And I'd start hassling the EA to start hassling your vendors. If you're not getting anywhere I'd stop committing more cost to the purchase and start actively looking at alternatives.

A friend spent £11k on all the surveys etc. Later discovered that the same couple had marketed their house every year and pulled out at the end. No intention of ever selling. They just found a new EA who didn't know they were doing it as a hobby every time.

For those asking, we accepted the buyers offer in early March (4.5 months ago) BUT our buyer only applied for their mortgage at the end of May! I think they were still viewing other properties. So they have only really been in a proceedable position for 2 months. I will put a timeline on our vendor and if the chain collapses so be it. I won’t be going into rented. Even the 4 bed £2225/month houses aren’t in the location we need and the thought of being stuck there indefinitely is too much!

When was the survey done? They might have been waiting for the survey report and searches before applying for their mortgage. Anyway, I agree it doesn't sound as if they were in a rush to begin with, but I think you will just have to suck it up and accept they will pull out if your vendor isn't willing to proceed.

Wow you haven't put a timeline in your vendor yet?

Why would your buyer submit the mortgage application before your vendor has had an offer accepted?

Your buyer sounds flaky. I’d be very reluctant to commit to anything for them. There’s a risk that you could end up in rented and then the buyer pulls out so you’re stuck with a 6 month contract on a home you don’t want or need.

I had similar, my buyer was going to pull out, my home wasn’t ready
thankfully it’s just me but I ended up in a b&b for 5 months with all my stuff in storage

Is this not the way chains work? The buyer does their searches and applies for a mortgage as soon as they find a property. Their seller does the same when they find a property. And so the chain grows.

Never seen anything for shorter apart from Airbnb type places

Why do they sound flaky?

Sorry missed that vendor was looking for upward, not you.

Mortgage offer last 6 months, there was no reason for them to do it straight away if they knew chain isn't completed. It can also trash your credit score a bit

Putting a time limit on your vendor is pretty pointless and rarely works. What will you do if they exceed the time limit? Pull out? But what if you still want the house and by waiting slightly longer you could still get it? Would you lose the house you want by a couple of weeks just because you’ve put an arbitrary time limit on it?

Your vendor will probably have the same attitude as you. They won’t move till they’ve found the house they want and they won’t go into rented in the mean time.

I think you should start actively looking for other properties to buy, preferably with no onward chain.

I guess a year or so down the line you'll be able to judge whether it was worth it or not!

In your shoes I'd look for another property to buy and push it through as quickly as possible or I would rent. The market isn't good at the moment and you might struggle to get another buyer.

When I sold I rented for a while and whilst it was expensive it was the best thing for me.

So the people who accepted your offer haven't themselves found a house to move onto? That is madness, why did they even accept your offer ??

It's not mad at all, it's how the system works. You won't be taken seriously as a potential buyer if you're not proceedable. If you have a property to sell, you need to be under offer.

It's what we did and what everyone does. Find a buyer for your house and make it clear when accepting an offer that it's subject to finding an onward purchase.

The other cost to factor in when weighing your options is how much will it cost if you lose your buyer or have to find a new property to buy.

if you lose your purchase, you will lose search and survey fees at least and potentially also legal fees depending on the agreement with your conveyancer.

if you lose the sale, you may not get the same price from the new purchaser, so your LTV amount will change and you will need a new mortgage offer. Depending on how long it takes to find a new buyer your searches may have expired and the mortgage company might also insist on a new valuation.

So when modelling the best outcome for you, you should factor this in.

Also worth considering that you can probably stay in an Air BNB (even if it’s not ideal) for approximately 3 months for the same cost as 6 months in an AST, and can end the Air BNB early so a higher monthly rental might not be terrible in the long run.

You are welcome to say no, but equally they may walk away, I had to because i needed to move for work, after 7 months stuck in a chain we rented and sold to someone else in 8 weeks!

@ChainStress maybe I have missed it, but when did you offer on the house which you want??

Personally I'd rent. Market is slow & and you could loose your buyers & you'd be able to pounce on your next house chain free.

What? You accept an offer subject to you finding a house? Who on earth is going to accept in those circumstances?

You should be starting your house search and making a short list as soon as you launch your house. Once you have s solid offer you then proceed to choose and offer yourself. You really should not be leaving the house search to the last minute!

I would pull out of a situation like yours. There is too much risk that you won’t find a house in time, and the legal fees alone would deter me, never mind the stress. It’s all too precarious.

You need to start looking immediately - so you do not hold up or collapse the chain. Do you give any thought whatsoever to anyone else??

You need to make it clear how long you’re prepared to wait. Maybe book some viewings of other properties through the same EA so you have something else lined up if it doesn’t go ahead? That’ll also put pressure on the EA.

I don’t necessarily think you should go into rental, but maybe the vendor should? We did, didn’t much choice as it was a long distance move and we needed to be there by a certain date for jobs/school place. Yes, moving twice adds to the costs and stress, and I wasn’t keen on the rental but it did really pay off in the long run by keeping our options open, turning us into chain-free buyers, letting us get to know a new area before buying and, eventually, do a house renovation before moving in.

Short term it was really awful. Long term it was a very wise move which has more than paid off.

Don't be stupid. No one "leaves the house search until the last minute". DH and I started actively searching (ie viewing houses) before we put our house on the market, although it was pointless because we weren't in a position to make an offer. Obviously we continued looking once our house was on the market, when we had viewings and offers etc. The problem is that you can't magic a house out of thin air! There are very few properties on the market in the area we want to buy in, and there's a lot of competition for them. So it's not our fault we couldn't find a house to buy. We were open and honest with our buyers and it was their choice whether to go ahead (with instructing a solicitor, getting a survey, etc) before we had found an onward purchase.

Maybe book some viewings of other properties through the same EA so you have something else lined up if it doesn’t go ahead? That’ll also put pressure on the EA.
More pressure if you view also with other agents.