Time to cut and run?

Time to cut and run?

9:21 AM, 1st December 2021, About A year ago 7

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Like many we were attracted to the idea of property ownership, ‘another way of hedging’ was our MO, we could keep the property for 10 years and then sell make a few bob, pay some tax and all’s well that ends well.

Unfortunately, we made several beginners errors, although our biggest mistake was simply the wrong year, 2007. Our flat dived 50% in value and has barely recovered. We are now less than 9 years from mortgage completion yet we are still way short of the final sum owing.

However, given the recent upsurge in the housing market, is it time to cut and run?

We would be left with a substantial debt to our lender, probably £20,000 – 30,000. However, given we might have to upgrade the flat in the next 9 years to keep it market proof and values could suddenly drop, allied to likely interest rate rises is it worth considering a sale?

We have generally been well served by good tenants, so there is no reason to think we won’t be in the future, but the uncertainties and exposure that flats seem to have over houses is making me think – sell

Any thoughts welcome!

James



Comments

Blodwyn

11:28 AM, 1st December 2021, About A year ago

Excellent timing for this query! Tenants have rarely let us down but we are getting older and the political landscape is rockier, time to sell, consolidate, whatever we may call it?

Neilt

11:38 AM, 1st December 2021, About A year ago

Stay with it. Property always comes good in the end. Just look back in time to see how bricks and morter has performed over time. Remortgage if you need to, but don't sell until you're in profit.

Tim Rogers

11:42 AM, 1st December 2021, About A year ago

There are others wiser than I on the subject, but I'd suggest there are many more factors to consider.

Your age and time to intended retirement?
What percentage of your total portfolio of assets does this property represent?
Your location?
Possible/Probable Gov changes.
Possible Taxation changes
Is the property in a company or not.
The stability of the household employment?
The level of household other income, now and future?
Remembering that property tends to double in value over 10 years. Looking at the underlying trends, thereby stripping out the oddities caused by stamp duty tweaks etc, most of the analysts that I've read seem to feel that the property market has been moving back to the 10 year norm after market crashes and now pandemics. That said so much is location dependant.

My thoughts are crunch the numbers for all the options, look at the projections, decide on your risk tolerance and then make your decision. There really isn't a 'fits all' solution.

If it's any comfort, most folks are doing the same.
You need to take a Holistic approach.

I wish you well.

JB

12:06 PM, 1st December 2021, About A year ago

If you believe in the 18 year property cycle the next crash is due in 2026. So if you're selling do it by 2025!

https://www.thisismoney.co.uk/money/mortgageshome/article-9601221/The-18-year-property-cycle-tips-house-price-boom-crash-2026.html

Rob Crawford

14:49 PM, 1st December 2021, About A year ago

It really depends on your personal and financial position. Everyone is different and hence there is no single solution that will suit everyone. There are also many unknowns! Will Labour get in? What legislation and HMRC suprises are there around the corner etc etc. If your not comfortable riding the waves, it's time to move on!

Paul Chetwyn

15:24 PM, 1st December 2021, About A year ago

I sold a problematic flat about six years ago at a loss of approximately £30.000 and have just sold the second one in the same development but different block for a £34.000 loss.
So I don’t believe that all property comes good if you wait it depends on the property, depending on how long you’ve got to wait and how long you have to wait. My two properties where both purchased in 2002 I sold to keep my sanity and stay alive, as some one else has commented you have to look at the whole situation from your own perspective and circumstances, if you can afford the loss and by selling makes your life easier then sell money isn’t everything, and it’s nothing to be ashamed about, it’s just a bussiness deal that wasn’t the best

Matarredonda

17:31 PM, 1st December 2021, About A year ago

Flats have an awful habit of being first to fall when market rises and last to ride when market on an upward curve
I bought a flat in 1994 and in the intervening period its value has been up and down like a rollercoaster but the income has always outstripped both the mortgage payments and management charges.
My gut feeling, being a retired financial adviser, is you should never ever purchase an investment of any kind, thinking in a predefined period, you can sell at a profit.
I always advised my clients to spread what they invested over as many asset classes as possible because history shows, when one or more are down in value at least one will be hugely up
So depending upon your overall range of investments I would never recommend you sell at a loss as that amount has to be either repaid from savings or, a loan taken out, further depleting your asset base
Try to pay more off the mortgage, as most lenders will allow, so you get rid of the debt sooner putting you in a better position to be in charge rather than outside forces.

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