Why, if you can't sell, would you let- and thus see the value of the house fall yet further in 6 months!

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Seriously, I don't get it! ASSUMING most of us can only really only hope to own one house at a time, to me the maths just don't stack up!

If you've failed to sell (becasue you're possibly asking too much?)- why would you then commit to letting the house out for what would be a MINIMUM of 6 months. I don't think I need a crystal ball to state house prices will be a fair bit lower in 6 months time! IF they're thinking 'I'll let the place and use the rent to pay rent on another house which I'll live in so I can buy bigger and better in 6 months time, surely they're STILL buying and selling in the same market? Where's the advantage?

I'm looking at a 278K house next week. It's also 'to let' for 1350!! Dream on, I'd say. Probably worth 950-1000 as a renter (I do know, I have done extensive homework and the rental market is still considerably more stable than the sales one!). I will be interested to see exactly what it's like inside BUT it's on a huge estate so the house itself is replicated ad infinitum hence my assertion the rent is overpriced.

FWIW, I wouldn't consider renting a house that's also on the sales market.

Hope springs eternal..

Seriously?

Presumably because the market will pick up in the long term and the lettings market is still pretty strong (presumably being buoyed by those who have lost their homes or have sold and are waiting for the bottom of the market to buy).

You are right about buying and selling in the same market, ie the house to be sold will have gone up by the same % as the house they will buy if they buy & sell at the same time. BUT those who are letting their houses out are generally buying another property to live in so they will have bought during the dip and will be renting out their other property (and hopefully covering the mortgage payments on it) and will sell when the market has recovered. Very few people rent their own house out to go and rent another house instead.

"BUT those who are letting their houses out are generally buying another property to live in"

....IS there that amount of equity out there? The type that allows average people to own 2 houses at once?

"bought during the dip"- what dip? THIS one? Where their own original home is also losing the same %age value?

As for the lettings market being strong- that may be the case but depends whether you measure that in pages and pages of renters now on the market.

I'm not poking you here, I'm asking serious questions as I still don't get the thinking- or maybe I don't get how seriously cashed up everyone is!

for some people it isn't an option - they can't afford to pay the mortgage, but can't sell so rent out their house, and find a smaller cheaper one to rent and live in themselves.

I would agree that that MUST be what people are thinking, but I don't understand why you'd indulge in such a risky exercise? I mean, you'd only need 2 or even one month's void in your rental income (a distinct possibility given the vast numbers of renters on the market) to blow that plan out of the water. They say most people in the UK have a matter of weeks, not months 'savings-cushion' available to them in the event of a financial emergency. You couldn't wear the cost of void time! Professional landlords factor this in, amateur failed-to-sell landlords usually can't.

There's always an option: Sell for less.

Also, a Q: if your owner occupied home suddenly becomes an investment property, doesn't your mortgage company change the terms of your loan?

People who bought 8+ (maybe fewer) years ago are still n the black with their properties and many do still have a decent amount of equity in their homes. E.g. an average family who purchased their 3 bed home in 1999 for say, £80k, are still looking at getting £170k in my area, therefore they are looking at almost £100k in equity for their next move (even if they took out a 95% mortgage originally). Those figures are not made up, they are RL figures from the purchae/sale of a friends property.

Those who bought more recently but had a large deposit or were cash buyers are the same, obviously. Not everyone has a crippling 95% mortgage and is staring down the barrel of negative equity.

On the flip side, presumably perhaps some of the sellers with ?unrealistic asking prices are just being greedy in this market ?

There are rental companies which guarantee an income on the property, even if no tenenant is in place. They take their % cut but it is a safety net. Mortgage terms do have to be re-negotiated, yes.

Tenant sorry... Depends on 'rentability' though. They are not going to take risks with their money!

Many mortgage companies let you rent under your current terms. They will issue you with a letter that you have simply notified them (for the estate agent). Ours did for eg. Nationwide.

Is it only me who thinks that sellers are understandably very nervous of making a "bad" deal in a buyers market, and think that things may be a little more settled in 6/12 months? Seems to me that everybody is struggling to work out a fair market price at the moment.

It's a complete replay of the late 80's exactly the same thing happened and many people who moved into the rented houses then lost their jobs and couldn't pay the rent.
Therefore the owners of the house couldn't pay their mortgage and the keys got posted back to the banks.
If people have any equity in their houses and need to move then they should be slashing the price and getting out now whilst they still can.
You can be pursued by mortgage debt for 12 years so if the bank sells your house for less than your mortgage you are liable for the difference, for 12 years.
It's going to be messy.

Well, one good reason for letting out a property you can't sell is so that you can move for a new job - you don't have time to hang around hoping to sell. A friend of mine who has just emigrated was thinking she'd have to let her house when the sale fell through for the 4th time three weeks before they were booked to leave. Luckily one of the previous 'failed' buyers was able to go ahead by then & it went through with a day to spare.

I think people have all sorts of reasons - almost as many as there are houses! Our landlady is renting out the house we're living in because of an appalling personal tragedy - she used to live there, can't bear to get rid of it yet, though will at some point when she is emotionally able to, but for now needs the income from the rent.

Also, though, don't underestimate the extent to which people make stupid financial decisions that don't make dispassionate logical sense. Happens all the time.

There is no guaranteeing for sellers that, even if they slash their own asking price right down, they will find another house to buy at a proportionally low price.

This forum and others is full of despair at sellers "not being realistic". If the ones who are prepared to "be realistic" are few and far between and the sellers who are still overpricing are in the majority, then the realistic buyers don't get much of choice in terms of properties to select from for their onward move.

If you still think the rental market is more stable than the sales market you need to do some more recent homework.

JimmyMcNulty - you are so right - people almost never make decisions for purely rational reasons, so why should selling our homes be immune to that. DH tells me that this is the fatal flaw in many an economic theory...

MrsStig- why do you think the rental market is unstable? (meant as a real question, not a 'Don't Be Ridiculous!'-opener!) Of course any one of us can only speak from local experience but I guess for us we've seen the long term, investment type houses ask for sensible rents, as always, whereas the 'failed to sell'/ 'not selling in THIS market!' brigade are asking silly money, thus getting those nasty voids.

Would you say one type is overshadowing the other? That there are suddenly SO many more rentals on the market?

Maybe they don't need the money from the house straight away? My Grandma passed away in July 2007. Her solicitors acted as executors and they farted around for so long that by the time the house went on the market the value had fallen a fair bit from when it was valued for death duty. Understandably, her children (my parents and aunts) don't really want to sell it for less than it was valued for when she died, they don't need the money right now, so they're renting it out until house prices pick up again. House was let out very quickly on a long term let.

Don't understand though why people who are trading up don't sell at the reduced price on the basis that their next house will also have fallen in value lots, thus saving them a fair bit of money