Updating post from Reddit.

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Posted by Spirited_Computer114 3 weeks ago
Nightmare property for 19 years!

Sorry in advance if this sounds confusing, if anyone has a plan on how I can get out of this I would be so happy.

When I was in my early 20s, my partner, who worked in the property industry, bought us a new-build flat off-plan in Ipswich. The property was purchased in both our names for £250,000, which was a significant amount at the time. However, this happened during the peak of the property market, which I didn’t realise back then as I was young and had no guidance.

Shortly after buying the flat, I realised we wouldn’t be living there since we were based in Watford. Then we broke up, and I was left tied to this flat. We rented it out and the rent from tenants didn’t cover the mortgage payments, so I’ve always had to contribute toward the mortgage—except during lockdown, when the interest rates dropped, and the rent covered the mortgage along with some of the service charges and ground rent. Unfortunately, after COVID, interest rates rose again, and now I’m paying an extra £800 per month, though my ex does pay half of that now.

The flat also had major cladding issues. We’ve been fighting for years to get the cladding fixed, which made it impossible to sell the property as no one could secure a mortgage on it. Thankfully, the cladding work is now complete, and I should receive the EWS1 form in January, meaning it will finally be mortgageable. Ironically, the flat is now one of the safest properties in the UK because of all the work that’s been done.

I really want to sell this property, but it’s been in negative equity for almost 19 years. Despite being purchased for £250,000, the flat is currently worth around £175,000. Additionally, the mortgage is interest-only and will run out in six years. I’ve never been able to switch to a different mortgage because I had been a low earner, and my ex hasn’t been willing to help.

Now that I have my own business in the beauty industry, I’m wondering if it’s possible to transfer the flat into my limited company’s name. Could I secure a mortgage through the business, even though it’s not a property-related company? If this is feasible, I’d be able to handle the expenses through the business.

Ideally, I’d like to sell the flat, but the property market in Ipswich hasn’t improved much. If anyone has advice about whether transferring the property to my limited company is possible—or if there’s another way forward—I’d be so grateful! I just want rid of it and rid of dealing with my ex!

I need to add that I have a mobile home in my name that my mentally unwell mother lives in, it’s why I’ve never let the flat get repossessed because I’m scared she would end up homeless if the bank sees it as an asset.

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Posted by Clean_Performance_21 3 weeks ago

In my honest opinion, just sell and move on. You have to consider the opportunity cost. Atleast if you can sell and reinvest the money in a better place you’ll be ahead. Are you still in negative equity?

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Posted by Spirited_Computer114 3 weeks ago

Yes it’s about £70k in negative equity but I’ll be splitting it with my ex, unfortunately I don’t have £35k to pay back to the bank though. Hopefully I’ll get a loan

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Posted by Clean_Performance_21 3 weeks ago

I know it’s a tough pill to swallow, but I think the capital growth may take many years to recover, and sometimes it is just better to cut your losses and move on. Atleast the money you’ll be saving will be able to be invested and I would say it would be best to just put it inside an isa and investing in a global index tracker. Sorry it’s probably not the answer you’d hoped for

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Posted by Spirited_Computer114 3 weeks ago

I appreciate the advice, I will put it up for sale and do what you say, it’s better than having a flat that just stresses me out.

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Posted by Lit-Up 3 weeks ago

try posting this over in /r/UKpersonalfinance

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Posted by Spirited_Computer114 3 weeks ago

Thank you I’ll do that

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Posted by South_Plant_7876 3 weeks ago

I think you'll just be throwing good money after bad by transferring it into an LLC. Mortgage rates are higher and you'll need to play stamp duty. On the plus side it seems like you wouldn't need to pay CGT but still, the costs involved will take years to recoup through rent, especially if you're on the basic tax rate.

You might just need to sell up and cut your losses.

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Posted by Spirited_Computer114 3 weeks ago

Thank you for replying, I hope it sells 🙏🏼

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Posted by Jakes_Snake_ 3 weeks ago

There was a lot of those flats built then. And stories of various actors and pop stars buying £1m penthouses, often in the regional cities.

As it’s a liability why not gift your share to the partner.

The problem is that they are unaffordable to the local market and these cities are not London. You will have to wait a long time for its value to increase above 250k.

And it may never, as such buildings depreciate at pace. That by the time the market is back up to 250k other new build flats will be the ones selling. Yours will be somewhat aged and dated.

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Posted by Spirited_Computer114 3 weeks ago

Yes, I tried to gift it to him many times but he’s not interested, am I able to force the gift on him? It was a stupid mistake I made which I’ve paid heavily for. Thanks for the information, you’re so right about it never going up in value, locals can’t afford it, I don’t think they’ve built many other properties in the area so they are probably due some new ones. My flat is right on the waterfront, and lots were built at the same time.

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Posted by Jakes_Snake_ 3 weeks ago

You can’t force a gift onto anyone.

By any chance did you get joint ownership 50/50?

But what proportion did you put in?

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Posted by Spirited_Computer114 3 weeks ago

It’s 50/50 we are equal in the property

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Posted by Jakes_Snake_ 3 weeks ago

What about one of you moving into the flat, get a lodger, and rent a room. Would be more tax efficient. Then when you have recovered some funds sell.

You best choices are going as is, hope for the best.

Or accept a loss and sell and move on.

No company arrangement will change the situation.

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Posted by Spirited_Computer114 3 weeks ago

Great advice thank you ☺️

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Posted by Delicious_Shop9037 3 weeks ago

What an awful situation. You’re in negative equity and have been paying an interest only mortgage for 19 years. This is a massive money pit and you have my sympathy. Why has it lost so much value? Was it overvalued or has the local market dropped?

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Posted by Spirited_Computer114 3 weeks ago

It was overvalued and we tried to find the criminal who did it but it’s impossible 🙅

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Posted by scouse_git 3 weeks ago

Might it be possible to relocate your business to Ipswich and live in the property with your mum?

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Posted by Spirited_Computer114 3 weeks ago

That would have been good but my mum has to stay in her safe location and can’t move from her community

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Posted by Academic_Guard_4233 3 weeks ago

I'm absolutely stunned at how a property can be worth less than you bought it for 20 years in. If careful consider what similar flats without cladding issues currently go for and make sure you aren't timing both your entrance and exit badly.

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Posted by Spirited_Computer114 3 weeks ago

Thank you! That’s a good point

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Posted by bluenosewrx 3 weeks ago

I don’t have any advice but just wanted to wish you the best of luck in a rubbish situation.

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Posted by Froomian 3 weeks ago

Can I ask what you have been doing with the rental income? Have you at least managed to save any of that?

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Posted by Spirited_Computer114 3 weeks ago

It goes towards the mortgage payment

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Posted by Froomian 3 weeks ago

Of course. Sorry, I hadn't computed that with the interest only mortgage you can be making your repayments and still leave owing money. What a nightmare. Sorry.

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Posted by Froomian 3 weeks ago

(I'm tagged as a tenant here as I rent a second home but I also own another home, so I am quite savvy about mortgages and investments).

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Posted by Big_Ad7014 3 weeks ago

Sounds like a place I used to live in cardiff

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Posted by SSMicrowave 3 weeks ago

Was that in the Bay? I know loads of people who didn’t break even for well over a decade from the late 00’s.

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Posted by Mammoth-Raisin7429 3 weeks ago

How could you lose money on a piece of real estate buy 19 year ago

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Posted by whatyoudoingponchi 3 weeks ago

Is the property currently on a residential mortgage or a buy to let mortgage?

If residential and you didn't have consent to let, that could pose an issue. When moving residential property to buy to let, it becomes a regulated buy to let, which limits the lenders.

If it has always been a buy to let you have options. You can even use a day 1 company, doesn't have to be a business you already own. In fact I would keep them separate. Generally for affordability they will look at the rental income, if the rental income is not enough, you can top it up with your own income, its called top slicing, but this only works if you earn upwards of 75k.

Or you could sell and get a better investment.

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Posted by NinjaSufficient8999 3 weeks ago

People really should learn what they can afford.

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Posted by SissyLaurenLovecock 3 weeks ago

People should not be dicks

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