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We have sold out home and are going into rented as we want sometime to think about different areas and to not have to rush and buy the first thing that comes along. I am very concerned that if house price growth continues at it's current rate then unless we can get a similar return on our equity then we will be in a worse position.
Anyone have any ideas on house best to hedge the risk of being off the market?
Anyone have any ideas on house best to hedge the risk of being off the market?
Win the lottery, don't be off the market or be happy with increasingly crappy areas.
I'm afraid that's about as sensible a set of answers as I think you'll get.
Just pop your sale funds into Bitcoin
[EDIT]
I’m afraid that’s about as sensible a set of answers as I think you’ll get.
Beaten to it...
How long do you expect to be renting for?
Honestly I think the only answer is to not take too long deciding what you want. If there was such a financial vehicle we’d all use it!
How long do you expect to be renting for?
6 - 12 months
The economy's about to tank big time (Brexit-related labour shortages, Covid disruptions), and Boris' stamp duty holiday ends in a month. I think you might be okay.
The economy’s about to tank big time (Brexit-related labour shortages, Covid disruptions), and Boris’ stamp duty holiday ends in a month. I think you might be okay.
With your cast-iron conviction, shall we assume you're also selling up and using the proceeds to short the FTSE?
12 months rent could easily be 10k depending on where you live.
It's not something I'd be doing.
you can put your money into property funds which would track (to an extent) the property market, however given you have lost your leverage (ie : if you have a 20% deposit, the gap you have to fund grows by 4x this amount, even if your fund tracks the market completely). The market might go down, but people have been saying that for years and it just stubbonly rises. I would go into this assuming its going to cost you ~5% of the cost of your old house plus whatever renting costs - if its less than that then you've won
We're about to do a similar thing. I've thought about it too and can't come up with a foolproof solution. It would be nice to be able to invest in a fund that tracked the housing market. You could always use your cash to buy a rental property then use the income from that to pay the mortgage on your new house.
STOP. Don't do it. Really don't. We did it 8 or so years ago and it was the worst decision of my life.
Not so much the financial side, we only lost around £70,000 during the period we rented, but the hateful loathesomeness of how renters are treated in this country.
Many many nights with both of us in tears about vile things that we could do nothing about.
Don't do it. Keep your house. Keep your dignity.
12 months rent could easily be 10k depending on where you live.
Based on sales in the last few months mine has gone up 50%, (two in same row) in three years
A quick look on Rightmove says it's not just me
If you move out of a nice area and rent it's going to be hard to get back in
Might be too late, but maybe rent yours out while you decide and then sell it later?
Let's not forget that any rent you pay is money down the drain. A years rent must be knocking on £20,000.
the "sensible" option financially is to move back in with mum and dad whilst finding a new home and pay no rent.
This works doubly well as after a week back home or with the in-laws that pock marked character property in kabul will look very tempting and its an absolute bargain at the moment.
In true STW fashion, I won't answer the question (ok, I will - I would not do what you're doing). I will ask this though - why didn't you do the thinking about location and property type before selling up?
Have you considered the what if's? ie What if house prices rise another 10 - 15% in the next 12 months? What if one of you loses your job in that time? What if 6-12 months become 2-3 years?
https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/march2021
It's all been said - don't do it.
On a £300,000 house
Rent at £1,000 per month = 12k
House price inflation at 5% = 15k (conservative estimate)
= 27k in 1 year
Moving costs at maybe 2% of house price = 6k
What was the reason for selling the original house? Could you not have rented that out for 12mths to provide the income to cover you renting another property? Would have covered you for increase and decrease in the market values
You're better off driving round and round the area of your choice with one recording comments as you go. We've just sold up and thought about it but the numbers don't stack up. A storage unit is £1560pa plus everything mentioned above. You're better off bidding over the odds than incurring those non-returnable losses and getting turned over for a year.
If you get into bidding, try to kill off the opposition with a hefty chunk but not your max. If it goes to full and finals/sealed bids then think about what it's worth to you not what the market is doing. Be ready to move fast. I phoned up about what turned out to be a hellhole but the EA said 'we've just got one come up in blah', we were in the car 7.15 next morning. Two bids and a bit of recalculating and it's done, it didn't even make it to Zoopla. If the exchanges don't tie up perfectly we shall AirBnB in a few fun places and then it's housey housey.
Did exactly this (12m rental with 6m break clause). It helped we were trying out a new area (which we didn't like as much as expected), we had a house we desperately wanted to get out of, and after a few months we got very lucky finding a 'motivated' seller in an area we preferred. Having funds and nothing to sell helped us strike an incredible deal.
That said like mentioned above renting was shit, 6 months through a cold winter with unreliable heating and hot water was no fun, especially when all advice to us was to keep paying and keep complaining. We left that hole with nothing at all fixed and our landlord (local vicar) many thousands richer.
On balance it was a total win but it just as easily could have gone the other way with us spending more cash and longer stuck in the rental. Would we do it again? **** no, not in a million years.
There wasn't enough time to do much with the 'cash' from our sale though. Most investments would do naff all over 6 months other than introduce a lot more risk, and our appetite for risk on that sum was zero. It sat in a bank earning next to nothing but critically was there for when we did need it, same amount and no delay in transferring when buying.
Yeah don't do it.
Unless you know exactly what you want and will jump on the next one that comes along.
If you have a nice house in a nice area it will always be easy to sell.
The rises will (have?) plateaux and the market will slow down.
Inflation will rise the next few years, due to labour shortages and supply chain obstructions, that will be the signal to stop printing money and all of a sudden those that feel rich now on higher wages and savings will start to feel poor as inflation rises.
You could stick the money into diverse equity funds, but without a crystal ball who knows if it will outperform the housing market.
Best to leave the money in a house as least you won't lose out against another house....
What boombang says, if it's only 6-12 months, you'll still be in the prime position as a cash buyer. We did this, had some dicks moved in next door, gave us the kick up the arse we needed to move on, rented for 6 months, but our current house came up within 3 months.
Worked out better in the end than trying to close a sale and a purchase on the same day, I'd do it again.
@nobeerinthefridge - might have unfairly edited mine to say we would never do again after you posted. In our case it was a win I concur but the risk is massive IMHO. Being somewhere we love with mostly great neighbours and being near family it is very easy to be rose tinted now though.
Lol, no worries, can only post our own experiences, it worked for us
We did it for 8 months. Our purchase fell through so moved in to rented to be cash buyers for the next one. Rented a lovely 2 bed house in Clifton Wood opposite a pub. The freedom it gave us was brilliant - ended up moving to Cornwall and starting my own business.
It’s all been said – don’t do it.....
Rent at £1,000 per month = 12k
Oh yes, forgot the rent side of it. OK, looks like we lost closer to a hundred grand, not £70. But that still pales into insignificance compared to the hell that is renting in the UK
Oh and don't believe the cash buyer bullshit. When we came to buy again every single seller wasn't the slightest bit interested in the fact we were a cash buyer. They made it quite clear that if our offer was £1k less than anyone else in a chain they'd go with the higher offer.
Also, don't forget that you'll need to distribute your cash through various different banks to keep it safe from the £85k limit (I presume)
Ooh, coming up to Christmas. I well remember trying to get our landlord to fix the crackling electricity in the flat and trying to get some traction on the fact that the neighbours upstairs felt drowsy every time we switched the gas fire on and that our gas safety certificate was faked.
The sheer joy of a family of four with young kids getting an eviction notice just before Christmas.
Oh and the deposit protection basturdsuckingscum who refused to refund our deposit or discuss anything with us as the landlord had filed it incorrectly.
Did I mention, don't do it.
Currently doing it although just handed notice in on rental, breaking the rental at 6 months and will be completing on purchase at the end of the month.
Had the plan last year to sell first and rent until we firmed up where we wanted to be and for the right house. Then the stamp duty holiday added to the frenzy that was the housing market and having completed on our sale in march this year we basically stressed ourselves out worrying what we'd done. In the end we think we've found a nice property but not a happy period and there's no right answer as I'm still concerned we bought at top of market given the potential impact of end of furlough/brexit/etc.
Selling first did put us in a strong position with sellers but equally the gap between agreeing the price on our sale and agreeing the price on our purchase was about 8-9 months and prices went up a lot in that time.
Personally around us i think the market has cooled slightly but the 'right' properties are still attracting a lot of interest and selling quickly but who knows how it will be in 6-12 months....wish id had a crystal ball
Rent at £1,000 per month = 12k
It's not really as bad as that, you'd be paying some to service the mortgage anyway.
The problem really is (as someone else pointed out), leverage. If you've got a 50% LTV mortgage, you need to beat house price inflation by double to be in the same position.
Oh and don’t believe the cash buyer bullshit. When we came to buy again every single seller wasn’t the slightest bit interested in the fact we were a cash buyer. They made it quite clear that if our offer was £1k less than anyone else in a chain they’d go with the higher offer.
In your experience. We've lost out in closing date auctions to cash buyers, so it is a thing (Scotland).
Storage locker and a year of van life!
It’s not really as bad as that, you’d be paying some to service the mortgage anyway.
2% interest on £200k mortgage = £4k
On the cash buyer bit, we got outbid by a bit on a place in the same road but the main consideration was that they literally had the cash whereas we had cash buyers. On this one the EA phoned our local EA to establish our bona fides. In a tight market, vendors can and will swerve chains.
I haven't had a proper night's sleep in weeks.
2% interest on £200k mortgage = £4k
Yes. "not as bad as £12k", not "free".
There's this misconception that renting is throwing money away, but it isn't. You're getting something for it. Whether you're getting value for that money is a different question.
8k worse off for renting property vs. renting money (probably less than 8k, when you consider that you'd otherwise be paying for buildings insurance and maintenance). It's kinda subjective as to whether it's worth that much for the freedom it provides.
Buy a house and live in it rather than renting. You'll save a lot of money on rent and the property will obviously track the housing market. Can't really see what renting gains you unless you plan to move every month to try out different areas. You can buy a cheaper house as its only temporary, still probably be nicer than a rental. You can always sell it when you are actually ready to move and still be a cash buyer if it sells quickly.
#1. Buy a cheap small place.
#2. invest the rest in ftse all-share tracker index.
Gives you some hedging. IF you want to be a bit safer spread between #2 and may a ftse 100 tracker
sorry to be the same as the others but don't stay in rented for one day longer than you absolutely have to - house borrowing is way too cheap and it's too easy for rich people to own more than one house without penalty so this is why house prices are going up. Covid/Brexit won't stop this. Make your decision and buy quick because nothing else investment-wise will get even close to keeping pace with house prices.
It's a bad situation and no-one likes it (apart from the super-rich who have all to gain) but nowt to be done about it.
I'm on the opposite side of this equation.
I recently seperated from my wife and am looking to get back on the ladder with my own place. The fact I am a cash buyer seemed to have little impact on whether my offer was percieved favourably.
I have however agreed with my vendor that they will move into rented in Nov (when my current lease expires) so I can be in by Xmas. Hope that they don't see the above advice.
Our prices are going up faster than I care to consider given I am currently shelling our £1k per month on rent and effectively restarting on the ladder.
Yes. “not as bad as £12k”, not “free”.
There’s this misconception that renting is throwing money away, but it isn’t. You’re getting something for it. Whether you’re getting value for that money is a different question.
8k worse off for renting property vs. renting money (probably less than 8k, when you consider that you’d otherwise be paying for buildings insurance and maintenance). It’s kinda subjective as to whether it’s worth that much for the freedom it provides.
The OP is concerned about not losing money whilst renting in the interim. There are other types of value, but this is about cold hard cash. It might not be 8k, and is likely to be less than the loss due to house price inflation, but it does still matter.
I’ve said this many times on here over the last few weeks; demand is massively outstripping supply. We may see an uplift in listings this month as people return from holidays, but the changes in sdlt haven’t played too big a role in the market.
If you want to rent to wait for the perfect home at the perfect price then you might get lucky but the general feeling is that things won’t be changing drastically in terms of stock on market. It’s a gamble I wouldn’t take and you could (very likely you will) find yourself in a worse position in January.
We are on market at the moment and will have to compromise on our next purchase - mostly for price, somewhat for stock.
Thanks for the replies. Not what I wanted to hear, but it is what it is. The issue for us is that we put our house on the market and it sold within a week. This caught us off guard and so has the lack of rental properties and associated extortionate rental prices.
Just hoping the market will cool so that we don't find ourselves in a bidding war. Hoping the tax rises announced today along with the other austerity measures that are bound to come along will help cool things.
I don't mind spending 12k in rent if we can find a property we actually like.
I read once that house price increases are not dictated by supply and demand, but by the availability of credit for mortgages.
I have friends in the finance sector and they can't explain why despite brexit, covid and europeans moving back to Europe, house prices are soaring.
I read once that house price increases are not dictated by supply and demand, but by the availability of credit for mortgages.
I have friends in the finance sector and they can’t explain why despite brexit, covid and europeans moving back to Europe, house prices are soaring.
Yes, folk are leveraged up to the eyeballs and if and when they have to raise rates by some meaningful amount then there will be one hell of a fireworks show.
this probably won't work for everyone but my sister and husband just sold their house and instead of throwing money away in rent just bought a widebeam canal boat. cost about £140000 and they apparently don't depreciate much at all so if they're in there for 12 months say before they buy a proper house then they've only spent the depreciation and the waterway fees etc.
It works for them as they have so much equity that they can buy somewhere decent without having to sell the canal boat first, so they're in a great position when the right house comes along. They can then rent out , or more likely sell, the boat.
it beats my position, I've seperated from my wife and left the matrimonial home - so now im renting a mid terrace for £460pcm for the last 12 months. Im up sh*t creek
Jamz - at the moment it’s both. Borrowing is cheap, probably will be for a while, and demand is high with low stock so prices increase.
What you will see is the current situation tapering to flat, but as was said elsewhere on this forum, we won’t see a crash like the 80’s or 2008 under this government.
Also, we need 2million homes built in this country and the builders are doing about 100k a year. Demand will remain strong.
Good luck not ending up in a bidding war 🙂
I ended up selling a 1 bed flat in Feb, was going to rent for 12/24 months (to find my "ideal" location) but got scared, and got back on the ladder asap. In the meantime I moved back in with parents so managed to spend a bit of time saving
Being a cash buyer helped a bit, but not for the really really really nice properties - they were gone in days with multiple offers 10-25k over the asking price.
I basically moved into an area that wasn't in my plans...cheaper and less desirable, but ended up next to the sea, which I think I now love 🙂
OP - it is entirely up to you - your "sale" has not completed nor is it very far in process.
In light of the comments why not just cancel the sale with genuine reason that you have you need more time to plan YOUR FUTURE! You are not obligated to sell , .
Take some more time to plan and put the house on the market when you are ready, the prices and trends will then closer match your financial risks , right now is a very bad time to be uncertain - reset and take control!
I don’t mind spending 12k in rent if we can find a property we actually like.
A budget of twelve grand for 6-12 months? I'd be looking at buying a static caravan.
A budget of twelve grand for 6-12 months? I’d be looking at buying a static caravan.
You've not looked at static caravan prices recently then.
Or the site fees of at least 3k for a year....
Jamz – at the moment it’s both. Borrowing is cheap, probably will be for a while, and demand is high with low stock so prices increase.
What you will see is the current situation tapering to flat, but as was said elsewhere on this forum, we won’t see a crash like the 80’s or 2008 under this government.
Also, we need 2million homes built in this country and the builders are doing about 100k a year. Demand will remain strong.
Yes but the interesting question is how much of the demand is a product of low rates? How many are buying second homes because of cheap mortgages? How many are relocating and renting out their old houses (my 29 year old family member and his partner are - they are not even interested in the captial gain, they just like having the bit of cash which is the difference between the rent and the mortgage payment!!) How many more are buying as investment properties? If Lloyds bank are now doing it for the first time you can bet that plenty of cash rich folk are, right from the middle classes all the way up. Why would you not when it's so cheap to do and demand is so strong?
Honestly, i wouldn't worry about it, house prices may, or may not increase over the next 12 months, the data points more to a slow rise than any dramatic movement, so effectively you're not going to feel any real pain i would guess.
The benefits of course are when you do hunt, you are no longer in a chain, so more wiggle room to get a house for a better offer, you will have 12 months to investigate areas, so more time to work out what you want, what prices are and more time to check over properties, the rush aspect of moving isn't there, you can change plans in the next year or so as well, so more flex if anything else in life is affected, plus you should save some money via renting to get finances in a better position come the mortgage application.
The negatives for me, well yes, house prices could increase, but after a tax increase yesterday, and the nation coming out of a nightmare 2 years i would hedge against huge increases. The other negative could be getting a decent mortgage, i can see interest rates going up, it almost has to happen after the last couple of years, so more expensive mortgages and more difficulty in getting them.
House prices will go up by me as we now have the joy of Chinese investors buying up properties to rent out, good for the trades bad for everyone else. Good luck.