Summoning my courage to say YES to a renter and not hold out for a purchase!

[faraday]

The old school catchment thing.

We need to be IN by the end of Oct 09 so DS can start St Desireable's in Sept 10. Been looking at both renters and buyers (often the same house!). We've noticed the cheaper renters go quickly, the sub 1000 pcm, and needless to say missed out on the very first we viewed in mid January thinking 'there'll be others!"- well, the competition is definitely hotting up for school entry purposes.

We looked at some quite nice buyers BUT we still feel house prices have a way to go. We have a good slab of cash sitting in an overseas account earning INTEREST (remember that?!) so the old 'buy now as the house may depreciate BUT your savings will also, effectively' doesn't hold so true. AND I did find myself suddenly going 'Hang one- this 4 bedroom family estate based house is on the market for well over a third of a million quid (and perhaps 10x our income...)! It ain't THAT desirable!"

So today we're looking at one which IS 1200pcm and HOPING the owner will agree to 1100 (has been 'on' since early Dec)!

What DOES bother me is locking ourselves into a 6 month deal (though we will have to INSIST on 7 to ensure in-catchment compliance!) then during that time watch house prices either fall, and/or then stabilise and or begin to rise again!

BUT I also don't want to keep moving! Never happy, am I?

I guess that realistically there are no factors in place to cause house prices to rise any time soon, quantitative easing notwithstanding BUT this area has a real dearth of property in that it isn't first time buyer land (thus no repossessions) and isn't, apart from a few hardy souls, London Bonus land either. So should we lock in for a year to prevent the 6 months tenancy (7!) then the place is sold from under us as the owner may cut'n'run if prices continue to fall. Fwiw I wouldn't buy it- tiny garden!

What I want is a crystal ball.

I am not sure if you heard on the television last week about the predicted interest rates. They don't reckon they will drop much lower, they can't drop any more really !!

The prediction was a while ago that the property would start to stabilise in 2010 and look forward. I don't think property can go back to the prices they originally were. But I don't think they will drop a great deal further now we are in 2009.

If you are unsure, why not rent for 6 months, it won't make that much of a difference to buying in 6 months time and there might be the ideal house come up in 6 months. If you see a house after 4 months in a rental and want to buy, then the process to buy can take some time anyway.

Good luck

Figures out today show that houses in some areas (including mine) have dropped over 25% in the last six months and I'd reckon they still have a fair bit to drop. (I remember the last time round, but then we had interest rates of 15% too. )

I personally think house prices are getting back to a sensible price.

We were last year trying to purchase a house that was priced at £279k, we only offered £230k as that was what it was worth.

It has recently been sold for £220k in the last couple of weeks. The agent at the time told us it was only worth what we offered but the owners insisted on pricing it at that price. It has taken them over 2 years to sell in a desirable area.

We sold our house last year for £240kish, thinking back, we would have never bought our own house for the price. It wasn't worth it and it was in a desirable area too.

I think house prices got really silly in the last few years and are getting back to a sensible price.

If it's on at £1200 since December, I think you could negotiate far more than £100 discount. If you are prepared to go for a year with no break clause, the landlord will probably bite your hand off. If he has had it on long enough to try renting it out as well as selling it, it means that he has been asking too much for it and has not lowered his price - if he has a decent tenant in, then he will probably be wise to sit tight for a few years.

Thanks everyone.
We've been to view it. To be honest, it didn't REALLY light my fire. The upstairs is OK, 2 OK sized bedrooms, one with a built in wardrobe, 2 small bedrooms (one only really any good for a study!). There's one bathroom newly refitted (but AM I greedy expecting an ensuite for 1200?!) but the electric shower, end of the bath has a flappy (new) curtain around it which is OK but again, I would expect a glazed panel for that sort of money. But the downstairs- well, the kitchen though newly refitted IS tiny- to the extent there's no room for an upright fridge freezer and the washing machine goes in the garage across the patio (which is plumbed but still breeze blocked- not a utility at all!). The place had a burst pipe in the loft in Jan and they've had a total insurance funded refit so tbf they couldn't have had tenants til now (Bet they claimed the loss on the insurance, too!). The garden is a small triangle and boggy underfoot (moss-central!).

It's been entirely newly carpeted (oatmeal) and painted (Magnolia). The dining 'room', open to the kitchen has a wood laminate floor.

The area is fine (and in catchment, of course!).

Anyway, we said we might consider 1000pcm and a 12 month tenancy. We currently pay 825 for a 3 br bungalow with ensuite, study, 1/4 acre of land, double garage and a living room you could land a plane in... but it's 1 1/4 miles out of the damn catchment!

Part of me IS thinking soddit, just BUY (no mortgage needed) an (as yet) overpriced house and get on with living in it, but the problem with THAT is it would wipe us out financially or at least in terms of savings, and both of us are in our late 40s and need to consider pensions! A year hence buying might seem like a whole better deal and we'd wish we'd held out!

This is it- I've put the sale one on as it's more detailed.

here

Surely something else will come up before October? Traditionally tenants move on in the summer...

True. DH and I had more or less decided (in the past hour) to not offer on this place right now- but the agent called back and said sorry, he's now selling not renting it!!

So the decision has been made for us.

But surely if you rent for a year then you are going to waste £14500 anyway.

Yes but rather than "waste" £14,500 in rent, if they bought now and the house fell another 10%, they would waste £29,000 plus they would have exceeded stamp duty threshold if they paid asking price adding another £9,000 onto the bill.

I just can't get into this mindset of seeing houses purely as commodities that go up and down in price. To me, if you like the house and can afford to buy it then you do so - in 20 years time it will have gone up anyway, if you need to move then the next one you buy will have changed in line. It's a home IMO, not a share portfolio. But that's just my opinion.

The thing is, no-one knows when the bottom of the market will come. They may bottom out in the next year, and then you would be worse off not better. Or, they may crash and if you can be bothered to move twice then you will save a few thousand. If it was me I'd just buy the house unless I was worried about ending up in negative equity, which I don't think is the position.

I actually agree with you all things being equal but the poster says that buying now would be a stretch and she would prefer to wait. I'm living in a place where the value has definitely fallen but it's my home and it's comfortable and I don't need to remortgage so I'm just not going to worry.

Luckily the money we have is sitting in an account overseas bearing 4.75% APR. Thankfully.

I agree entirely that the reason we in the UK are in this...um... 'rather volatile' situation re the housing market is that so many folks did use their home as an ATM machine. Many others completely lost sight of the fact the 2 up 2 down they snapped up was actually costing 5x their joint wage in the rush to own, own, own.

We chose not to get involved. No, I'm not smug at all. Seriously. We were 'fortunate' in that we came onto this crazy house-price scene 6 years ago from abroad, 'cold' as it were therefore were perhaps better placed to take a more dispassionate view of the lunacy laid before us, so we Just Said No. And rented (with all the hassle and privacy invasion THAT entails!). And I recall the LAST crash and the misery of negative equity (and 18% interest rates!)- all around. It is purely the fact that we DON'T see a house as a commodity that places us so well to buy in this falling market but common sense suggests we'd be stupid not to capitalise on our 'good fortune'.

I CAN see the "soddit, buy now" thinking- BUT how daft of me would that be in the KNOWLEDGE that prices WILL fall further yet, that the houses we're looking at just are not WORTH 350,000 pounds of anyone's money whether we can afford that or not; and, in the big picture, what's another year renting?

Also, I can't see that house prices will shoot back up in 12 months. There are no factors in place despite the government's best efforts to cause house prices to rise (and I suspect any government will seek to 'dampen' any excessive upward house pricing in view of THIS fiasco!). Yes, it is a bit of a 'gamble', I guess, but I believe we may not see house prices up near the July 07 crazy levels again for maybe 20-40 years- if ever. Our banks have been seriously burnt, though they don't have long memories. For me, the 'bottom' of the market will be signalled by 3 months of sale prices not going down any more. Then they may begin to rise. But I'd be prepared to bet that a) not in the next 9-10 month, minimum and b) they'll not rise up the 10-15% they're set to fall over that period!

I definitely think it is true that they aren't going to shoot up in the next year.

What is a house WORTH though? An interesting debate could be had about this!

My answer would be:

What you're prepared to pay!