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As a follow on to my "homeless in 3 months" thread, would you buy in the current climate?
Thinking about buying an interim house, something we could either do up and flip when our new house is built or something we can do up to a student let standard (ie good and tidy but robust rather than anything remotely fancy). We live near to the Vet school, know the area and market very well (rented my old town flat to students) and both have strong ties with the Uni.
Have put together a buying budget of £250-300k as the deposit and mortgage (for current 2 years fixed) would be fine, 5% would pinch. The purchase would be seen as purely a financial investment and to save us having to find a rental with all our animals and the freedom around how long the build lasts.
Flipping and selling is more likely at the moment due to the LTV on a buy to let we would need to switch to being around 60% and that would mean a £100k total investment which we would need to get from remortgaging the new build when finished. But I would see planning to rent to students as having much less risk than planning to sell for a profit at the moment.
oh, another option was a shared ownership option at £100k which my partner could mortgage in her own name leaving me to take out the mortgage for the self build in my name.
Only problem with that is it is on a new estate and I am very wary of the resale of those later down the line. I did the calcs with all fees and rent on the other 60% and mortgage interest and it works out as £400 a month assuming the value stays the same and we can sell our 40% easily.
I wouldn't if I was looking at an investment, but might if it was a "forever" home. I reckon there'll be another very big readjustment in the housing market and you could end up losing a huge chunk. Upside is rates will likely stay relatively low...
Would have to be an extremely long term investment currently and one that you could sustain if mortgage rates increased substantially. I think you have to assume a circa 20% drop in property value on the back of a poor brexit outcome and count your chickens if it does not happen rather than the other way around. Conversely having a house worth of cash banked now ready to buy in 18 months time could see you buy a bargain (in a ****** up country - so not sure that counts).
It is so hard to call, but I reckon:
Brexit in any format probably equals house price crash proportional to the hardness of the brexit.
Remain probably means a fat boost.
Stick or twist?
If it was me I'd sit on my cash, as if there was a crash it would kill me, if they start to go up post 01/04/19 then just buy in asap and ride the wave.
Stamp Duty from a quick check on £300 is £5k, Estate agent fees to sell would be 1-5k? depending on how you do it?
Solicitors on top?
It's a risk to be stuck with it and you have fee's to clear both ends and if you need to move it fast the price will suffer unless the market is going well.
How does that compare to local renting options?
I'd go for it personally. I don't think anything will be happening that quickly and having the back-up option for a steady rental income would be handy. There may be a property price adjustment but if you buy well and add value it shouldn't hit you hard and I doubt it'll have much impact on the rental market. If things do get messy with brexit then a weak pound will attract foreign buyers and I would expect to a slow down in house building both of which will keep prices up. Its all guesswork and trying to second guess the markets is a mugs game (unless you are lucky). If the investment is sensible and well planned it'll ride out and dips long term.
As a follow on to my “homeless in 3 months” thread, would you buy in the current climate?
I think you could well see a house price 'correction', but the amount will vary significantly. The other issue is that some lenders may well simply stop lending if there is a chance that too much of their book will go into negative territory. Uncertainty would be just as bad as actual falling prices.
Personally I wouldn't take on unnecessary debt in the present circumstances. I think the prime period of flipping houses and making a stack off BTL are fading away.
I'd go for it but consider it a 5+ year investment - go for a family let tho not students IMO - for students yo9u need to make it an HMO to do legally and that involves a fair amount of work.
We seem to be reaching levels of "how much?!?" around here with regards to house prices (NW England). Not sure I'd want to buy short-term. Plus, going into rented does mean that you potentially can be a chain breaker - maybe twice.
I'd have thought that there would be an influx of cash from investors if and when the pound crashes, but I'm not sure they'll be looking at residential properties in shitsville.
Mortgage lenders pulling out / stopping lending is an interesting idea.
I'm still sat on a flat in Highlands we bought in 2010, thinking the market had 'bottomed out'. It's still barely worth what we paid.
Remortgage is April next year. I might wait a few months on base rate to see what the market does.
On the other hand our current house, bought in 2013 looks like a total bargain, with houses on the street now selling for +20% over what we paid, for a smaller house.
IMO don't assume any kind of national pattern due to Brexshit, go on local conditions.
And a house with land, wood burners and greenhouses like mcmoonter are going to rocket post Brexshit.
You've got to live somewhere so you wither buy or rent and renting can never be a good idea if its for the long term. So any time is a good time to buy a house.
If its a second home for renting then depends if its a long or short term investment.
Stamp duty will be small as the OH is a firs time buyer. Only needs one person to be one to get the lower rate.
Estate agent fees I forgot about. Just didnt look at them when I sold my flat but tbh they did get me £15k over asking as they ended up best and final after a single open house viewing. Yes I felt guilty but at the time prices were going up daily in Bristol so I had 3 close offers and I had put a lot of effort into that place and previously rented out for a fair price to students.
HMO should not come into it as most are rented to a group with no locks on internal doors etc.
A price correction concerns me. As does not being able to shift it.
when I bought my flat I was nearly seduced by a not that old top floor flat in a newish estate on the edge of town. In the end I opted for an old Georgian conversion. When I checked the price of the newer flat when I sold mine it hadnt gone up at all as it never recovered from the adjustment back in 2008ish. Mine had almost doubled. Location is everything and this is one thing that is on my mind. A smaller property in one of the desirable villages like Chew Magna or Blagdon will do a lot better for selling, but ones in the villages near the vet school will be easy to rent.
Where we are now is big for families, good schools, good transport etc. Loads of new housing estate being built on all the farm land though. £350k for a 3 bed with no character.
I'll keep looking at rentals but looking at £1000 a month and most not accepting pets. We currently pay £800 and have a field at the back we use for lambing the sheep in April and have our ram lambs in there at the moment feeding them up and getting them tame. I also have my big wooden workshop there. Been a bit spoilt by our current landlord unfortunately. the house is very expensive to run though as it's very leaky and disjointed with lots of extensions from the original 1650's cottage.
I'd still say put it down to simple maths, get the spreadsheet out and work out how much renting will cost you and how much realistically the fees for buying will be - things like getting 15k over the asking price sounds like either poor pricing or a rising market rather than skills from an estate agent 😉 come up against one when you are buying and your could be that much down before you start!!
Then stick a figure down for how much you are willing to walk away from if you have to.
Stick that against the timetable of when you need your cash out potentially and when you will move into your new place.
It's a business transaction then, not an emotional question and if it then becomes an investment opportunity then you have the chance to price in your risk and how long you are willing to sit it out for.
Estate agent here has had the busiest month in a few. The bottom line I think is we all need to live somewhere, we’re all a bit fed up with brexit and it won’t be that bad if the media would just do one for a bit.
For context, I sold at the peak of the last rise and feeling very smug, didn’t buy again for a few years. The weeks wages of interest a month was quite nice too when it was a decent rate. Having bought again a few years ago - well if I’d stayed on the market and rode the crash out I’d not have a mortgage now. If you can afford to buy, trying to rent out the next 3-5 years of uncertainty is never going to be financially beneficial imo.
Don’t do it.
No, no, do it.
No, don’t.
No, yes do it.
Sorted.
I would buy somewhere to live in medium term. I wouldn't buy somewhere with a mind to rent it out.
I currently rent out our old house, which currently returns a very healthy amount of money each month (mortgage = £280, rent = £1250) - however, I'm getting out at some point over the next year (when it's convenient for my tenant).
This was always sort-of-the-plan - it was my first home, we bought a nicer house, and thought we could make a few quid keeping hold of the old gaff for a couple of years. This has worked out fine - however, the last few budgets have tightened the screws on landlords - specifically - the changes to rental income and it's classification on your income, plus, more recently, the reduction of CGT allowance. none of these are things which I think are inherently unfair, and none are things which affect my finances massively, however I feel that with each year the screws are getting tightened, and no-one is complaining (who cares about landlords after all??) - so this trend will continue till things get too tough. In my opinion, I'd rater be out before that happens.
As much as I would like for property prices to drop a good 20%, I have the feeling this is not going to happen. The artificially constrained supply of the housing market will probably substantially reduce the drop.
If house prices do tumble it will just make them cheaper for foreign people to buy .
This ultimately will put prices back , up further shafting the British people.
Even if your house devalues at £800 a month it’s no different to losing £800 paying rent.
Even if your house devalues at £800 a month it’s no different to losing £800 paying rent.
Just to check on the op's timescales as this is somewhere to live while his house id being built. You need to absorb all of the buying and selling costs before you get to any price change in the property.
HMO rules vary but do check - here its any dwelling with 3 or more unrelated people in it and needs mains wired alarms and full fire, gas and electrical safety certificates. I have never heard it as no locks on internal doors means not an HMO