To sell or not to sell?

by Readers Question

14:05 PM, 28th November 2013
About 7 years ago

To sell or not to sell?

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To sell or not to sell?

First of all thank you for all your suggestions and opinions. I have a property in negative equity, which I don’t live in, in a different area of country to where I am now located. I owe the mortgage lender £130,000 and I have it on sale now for £103,000. I have a buyer and I am now 5 months in to the process. However, I am considering withdrawing because it has taken this long to get to this point in sale ans we still have not exchanged contracts. This is mainly due to everyone assuming I have an abundance of time at my expense. I have been paying out about £700 a month in mortgage and council tax. To Sell or Not To Sell

The property itself is a 2 bed which lets at about £550 a month. It is near a good school, hospital, small shopping area, 15 minutes drive from a big ASDA. Decent local transport links as it is in the West Midlands. It is a nice area near a big park, 15 minutes drive to a motor way which you cannot see or hear from the property. It has private parking. The main issues is that there is probably an excess of similar properties in the area.

Running costs are £1,000 a year management fees, £150 a year ground rent, £650 a year consent to let fees as the mortgage lender does not do BTL mortgages and won’t cut me a special deal so far.

If I sell I probably stand to personally lose £20,000 to £30,000. If I keep it I’ll lose £3,000 a year, possibly more if maintenance is needed. I have lost about £5,000 (over 6 months) so far just in the process of this current sale as currently there are no tenants as the estate agents don’t sell with a tenant in-situ.

I know the markets will recover eventually….. well maybe.

The question is should I just get rid of it or keep it and hope for the best?

Thanks

Dan


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Comments

Jeremy Smith

20:14 PM, 10th December 2013
About 7 years ago

This sutuation is still leaving me a little confused.
I can see that if prices have dropped, then you may be selling for a loss.
You may have bought it for £130k or more and now only worth £103k.
But have rents gone down ?
The base rate has dropped, and not risen since, so the mortgage has not gone up...
If Mortgage and C.Tax are £700, then mortgage is at least £600...
were you buying a property just to break even, or run at a loss to start with, hoping you would profit from rising prices ?
All I can think is that you drew more cash out of the property later in the good times, increasing your mortgage payments to more than the rental income, and now you've ended up in the trap....
Please put me right if I have missed something here.....

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