Covid property mess (buying and renting)

[mashaka]

Hi All, we have been renting a family house in West london for the past 3 years and our rental agreement is currently set to expire on June 9th, 2020 and our plans were to renew for another year. To our surprise, the landlord decided to sell the house in Jan 2020 and with 24 hour notice the agent started bringing through dozens of buyers every day. We do have a 9 month break clause allowing him to do that. After a few days of living under viewing stress we took a decision to make an offer on our house, which was accepted. We’ve done a detailed financial analysis and the only way this investment would make sense is if the house prices continue to rise and we could sell the house in 5-10 years, or potentially keep it as a entail property (the taxes would into most of the profit though).
Shortly after our offer was accepted, the markets went falling down significantly affecting our finances, the lockdown froze the property market, and also we found out we are expecting another child - which means we may need an extra bedroom in the long term. This entire time (Jan to April) we have been slowly moving through the process and now have everything lined up to start taking about completion. We are having serious doubts - we made the offer when the market was at its peak in Jan, the house is very expensive for what you get (that’s London for you) and with the overall uncertainty in the market, we are really nervous about taking on so much risk knowing that the house prices will likely dup and take a while to recover. The agent said he could give us a weekend to think about it and the the house is going back on the market. My question is what are our options? If we are not buying, ideally we would like to stay in the property throughout the summer at the very least, preferably for another year, as there are no options available for us to move to in the area, where we need to stay due to our kids school). We are paying rent on time every month and will continue to do so. Can the landlord kick us out in June or is there any extra protection with Covid? If house goes back on the market, how will it sell without any viewings? I’m so confused! Also, is it worth considering negotiation based on the market state (nothing significant was found during the survey). Any advice would be greatly appreciated!

 

[Anthony007]

I’m sorry if this has already been posted, but what are people’s thought on this? Will people be more frugal and build smaller homes? Or will they shun social events, public shopping, etc. and build larger homes to spend more time in? Will home offices have bathrooms, since more people may work from home? Larger pantries and room for large freezers? Will mother in law suites become more popular? Will they be separate from the main house to protect the elderly in case of an infection in the home? Room for home schooling? Any thoughts? Or maybe nothing will change...

 

[totallyproperty]

Hi All, we have been renting a family house in West london for the past 3 years and our rental agreement is currently set to expire on June 9th, 2020 and our plans were to renew for another year. To our surprise, the landlord decided to sell the house in Jan 2020 and with 24 hour notice the agent started bringing through dozens of buyers every day. We do have a 9 month break clause allowing him to do that. After a few days of living under viewing stress we took a decision to make an offer on our house, which was accepted. We’ve done a detailed financial analysis and the only way this investment would make sense is if the house prices continue to rise and we could sell the house in 5-10 years, or potentially keep it as a entail property (the taxes would into most of the profit though).
Shortly after our offer was accepted, the markets went falling down significantly affecting our finances, the lockdown froze the property market, and also we found out we are expecting another child - which means we may need an extra bedroom in the long term. This entire time (Jan to April) we have been slowly moving through the process and now have everything lined up to start taking about completion. We are having serious doubts - we made the offer when the market was at its peak in Jan, the house is very expensive for what you get (that’s London for you) and with the overall uncertainty in the market, we are really nervous about taking on so much risk knowing that the house prices will likely dup and take a while to recover. The agent said he could give us a weekend to think about it and the the house is going back on the market. My question is what are our options? If we are not buying, ideally we would like to stay in the property throughout the summer at the very least, preferably for another year, as there are no options available for us to move to in the area, where we need to stay due to our kids school). We are paying rent on time every month and will continue to do so. Can the landlord kick us out in June or is there any extra protection with Covid? If house goes back on the market, how will it sell without any viewings? I’m so confused! Also, is it worth considering negotiation based on the market state (nothing significant was found during the survey). Any advice would be greatly appreciated!

Hello and welcome to the forum

It sounds like quite a stressful situation, and i'm not surprised you're having doubts and considering your options. I think there are a few things to consider here... firstly, even though the property market might take a dip at this time, ultimately, it will eventually recover (especially in a market as strong as London) so i would look at buying the property as a 5+ year investment anyway. Quite often, a monthly mortgage payment is cheaper than a monthly rental payment on the same property - is that the case for you? If so (and it would be costing you less per month to actually be buying it) then it sounds like a more sensible option for you?

That said, i do think you have some room for negotiation because the impact of Covid-19 happened after your offer was accepted. If the property goes back on the market, and (i assume) they will only be doing virtual viewings, then the property will likely take longer than usual to sell. Most people aren't looking to buy at the moment (for the same reason that you are nervous about completing)... because they are waiting to see what happens to the property market. So it could be a case that you could be in a strong position to negotiate a sensible price reduction, because going back on the market could open the seller up to lots of low offers and a lot of wasted time.

But then if the house no longer works for you with a new baby on the way, is it what you really want as a property? Will it work for you in 1 years' time? If that answer is no, and you're not looking at it as a long term investment, then it might not be the right time to buy it.

Is there not much rental property available where you are at the moment?

 

[imiS]

Its impossible to predict what will happen with property prices of the specific house that you live in - it may decline in line with the country average, London average, postcode average, street average OR it might actually increase (assuming its in a high demand area and there are little others on the market on sale).

In these sort of circumstances I would suggest having a chat with the LL - if you are a good tenant that pays on time and treats the property like your own home - there is a good chance the LL will extend your tenancy agreement (which is what I would and am doing with many of my tenants).

 

[mashaka]

Hello and welcome to the forum

It sounds like quite a stressful situation, and i'm not surprised you're having doubts and considering your options. I think there are a few things to consider here... firstly, even though the property market might take a dip at this time, ultimately, it will eventually recover (especially in a market as strong as London) so i would look at buying the property as a 5+ year investment anyway. Quite often, a monthly mortgage payment is cheaper than a monthly rental payment on the same property - is that the case for you? If so (and it would be costing you less per month to actually be buying it) then it sounds like a more sensible option for you?

That said, i do think you have some room for negotiation because the impact of Covid-19 happened after your offer was accepted. If the property goes back on the market, and (i assume) they will only be doing virtual viewings, then the property will likely take longer than usual to sell. Most people aren't looking to buy at the moment (for the same reason that you are nervous about completing)... because they are waiting to see what happens to the property market. So it could be a case that you could be in a strong position to negotiate a sensible price reduction, because going back on the market could open the seller up to lots of low offers and a lot of wasted time.

But then if the house no longer works for you with a new baby on the way, is it what you really want as a property? Will it work for you in 1 years' time? If that answer is no, and you're not looking at it as a long term investment, then it might not be the right time to buy it.

Is there not much rental property available where you are at the moment?

Thank you so much for your reply. Yes, our monthly mortgage cost (part and part) would be lower than monthly rent. However the stamp duty is so high (nearly £90K) that it will take several years for us to start to see the cost savings. In addition to this, house maintenance will now be our responsibility, so that adds to the monthly cost.

The house will work for us for around 3-5 years if we have kids sharing the rooms, but because of the gender mix we have (boy/girl),we can't do this when kids get older. Our plan would be to move abroad and keep this house as a rental property for a while, that is if we can at least cover our mortgage after all of the taxes and agency fees, hoping that the value of the house will eventually go up and we can sell.

This is our first property, hence all the additional anxiety!

 

[NewOrleansHomeBuyer]

Hi All, we have been renting a family house in West london for the past 3 years and our rental agreement is currently set to expire on June 9th, 2020 and our plans were to renew for another year. To our surprise, the landlord decided to sell the house in Jan 2020 and with 24 hour notice the agent started bringing through dozens of buyers every day. We do have a 9 month break clause allowing him to do that. After a few days of living under viewing stress we took a decision to make an offer on our house, which was accepted. We’ve done a detailed financial analysis and the only way this investment would make sense is if the house prices continue to rise and we could sell the house in 5-10 years, or potentially keep it as a entail property (the taxes would into most of the profit though).
Shortly after our offer was accepted, the markets went falling down significantly affecting our finances, the lockdown froze the property market, and also we found out we are expecting another child - which means we may need an extra bedroom in the long term. This entire time (Jan to April) we have been slowly moving through the process and now have everything lined up to start taking about completion. We are having serious doubts - we made the offer when the market was at its peak in Jan, the house is very expensive for what you get (that’s London for you) and with the overall uncertainty in the market, we are really nervous about taking on so much risk knowing that the house prices will likely dup and take a while to recover. The agent said he could give us a weekend to think about it and the the house is going back on the market. My question is what are our options? If we are not buying, ideally we would like to stay in the property throughout the summer at the very least, preferably for another year, as there are no options available for us to move to in the area, where we need to stay due to our kids school). We are paying rent on time every month and will continue to do so. Can the landlord kick us out in June or is there any extra protection with Covid? If house goes back on the market, how will it sell without any viewings? I’m so confused! Also, is it worth considering negotiation based on the market state (nothing significant was found during the survey). Any advice would be greatly appreciated!

If you are thinking from an investment perspective you should absolutely not buy this house. The old adage that you make money when you buy is very true in real estate. The fact that you are making an offer that requires the property to grow in value over the coming years is not a good investment decision, particularly given where we are at in the market cycle. From an investment point of view you should be able to get a much better deal on a house that you are not emotionally attached to.

If this is more of a personal reason then investment criteria doesn't apply and you need to make your own decision. If you have been living there and love this place and will upset if you don't own in year to come then that is a different motivating factor. If you make a decision based on this that is understandable, just don't confuse it with making a property investment decision.