Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Bhoddhisatva,scotia,Anonymous,Cornytiv34, for Donating to support the site

Is now the right time to buy?

Covering Market, Trends, and Practical (but see LEMON-AID for Building & DIY)
hiriskpaul
Lemon Quarter
Posts: 3852
Joined: November 4th, 2016, 1:04 pm
Has thanked: 682 times
Been thanked: 1489 times

Is now the right time to buy?

#173869

Postby hiriskpaul » October 15th, 2018, 1:21 pm

My daughter is fed up with renting and would like to buy a house and let one room. She is living in Manchester and would like somewhere with easy access to the University, such as West Didsbury or Chorlton (yes I know these are fashionable areas!). She is looking to spend around £250k-300k and so gain the first time buyer stamp duty relief. I understand that Manchester prices are sill on the rise, so this kind of makes sense. She would save on rent and gain a tax free income through the rent a room scheme. However, there are of course some dark clouds on the not too distant horizon that risk tipping the UK into a very long and deep recession which could make now a very poor time to buy. My instinct is to say leave it until at least after Brexit when her money may go a lot further, but what do others think?

gryffron
Lemon Quarter
Posts: 3607
Joined: November 4th, 2016, 10:00 am
Has thanked: 551 times
Been thanked: 1587 times

Re: Is now the right time to buy?

#173970

Postby gryffron » October 15th, 2018, 6:48 pm

I think there are far more unknown unknowns than known ones. If we have a "good" brexit (whatever that means) the economy could soar. I think you could wait forever for the right moment to buy, and still not know if it was. Go for it.

Gryff

hiriskpaul
Lemon Quarter
Posts: 3852
Joined: November 4th, 2016, 1:04 pm
Has thanked: 682 times
Been thanked: 1489 times

Re: Is now the right time to buy?

#173997

Postby hiriskpaul » October 15th, 2018, 9:02 pm

gryffron wrote:I think there are far more unknown unknowns than known ones. If we have a "good" brexit (whatever that means) the economy could soar. I think you could wait forever for the right moment to buy, and still not know if it was. Go for it.

Gryff

Ok, but is there more downside risk than upside? I live in SW London and around me prices are well off their peaks.

Chrysalis
Lemon Slice
Posts: 736
Joined: November 4th, 2016, 10:58 am
Has thanked: 247 times
Been thanked: 230 times

Re: Is now the right time to buy?

#174001

Postby Chrysalis » October 15th, 2018, 9:07 pm

I don’t know about Manchester, but in my part of the north the housing market is nothing like London. Basically prices haven’t gone anywhere for 10 years. If they go down after Brexit, which they might, i would expect more of the same gentle stagnation.
Your daughter might have a better idea of the Manchester economy and housing market!

tea42
Lemon Slice
Posts: 440
Joined: March 9th, 2017, 8:28 am
Has thanked: 77 times
Been thanked: 169 times

Re: Is now the right time to buy?

#174005

Postby tea42 » October 15th, 2018, 9:33 pm

Put our place in the SE on sale on 3rd Sept. Only two viewings so far. Great time to buy especially for a renter. Ta very much Mr Carney…

hiriskpaul
Lemon Quarter
Posts: 3852
Joined: November 4th, 2016, 1:04 pm
Has thanked: 682 times
Been thanked: 1489 times

Re: Is now the right time to buy?

#174050

Postby hiriskpaul » October 16th, 2018, 9:23 am

tea42 wrote:Put our place in the SE on sale on 3rd Sept. Only two viewings so far. Great time to buy especially for a renter. Ta very much Mr Carney…

That's the experience my friends and neighbours have had. Nothing shifts unless the price is heavily cut. Many just take their house off the market.

Manchester does seem to be active though with lots of decent 3 bed places under £300k and they do turn over reasonably quickly.

hiriskpaul
Lemon Quarter
Posts: 3852
Joined: November 4th, 2016, 1:04 pm
Has thanked: 682 times
Been thanked: 1489 times

Re: Is now the right time to buy?

#174052

Postby hiriskpaul » October 16th, 2018, 9:26 am

Jabd2001 wrote:I don’t know about Manchester, but in my part of the north the housing market is nothing like London. Basically prices haven’t gone anywhere for 10 years. If they go down after Brexit, which they might, i would expect more of the same gentle stagnation.
Your daughter might have a better idea of the Manchester economy and housing market!

Interesting, thanks. So in investment terms, the North provides lower capital returns, but with much lower volatility? So less downside risk in a downturn?

UncleIan
Lemon Slice
Posts: 954
Joined: November 4th, 2016, 3:35 pm
Has thanked: 616 times
Been thanked: 456 times

Re: Is now the right time to buy?

#174058

Postby UncleIan » October 16th, 2018, 9:56 am


hiriskpaul
Lemon Quarter
Posts: 3852
Joined: November 4th, 2016, 1:04 pm
Has thanked: 682 times
Been thanked: 1489 times

Re: Is now the right time to buy?

#174073

Postby hiriskpaul » October 16th, 2018, 10:50 am

UncleIan wrote:You love a graph right?

http://landregistry.data.gov.uk/app/ukhpi

That looks really useful thanks. Strangely it says the prices where I live have risen this year. Not what I was expecting to see.

GrandOiseau
Lemon Slice
Posts: 529
Joined: November 5th, 2016, 12:18 am
Has thanked: 31 times
Been thanked: 76 times

Re: Is now the right time to buy?

#174083

Postby GrandOiseau » October 16th, 2018, 11:21 am

I think you are better off asking the question "Is now the wrong time to buy?".

Is the supply of properties, particularly in the locality you are buying, going to increase markedly, in the near term?
Can you foresee a shock of some kind in the near term that effects supply or demand?

JonE
Lemon Slice
Posts: 398
Joined: November 11th, 2016, 11:35 am
Has thanked: 25 times
Been thanked: 97 times

Re: Is now the right time to buy?

#174100

Postby JonE » October 16th, 2018, 12:07 pm

hiriskpaul wrote:So in investment terms, ...
I find that my attitude and the factors I take into account are not the same when considering moving home as when I'm appraising an investment property for BTL or FHL (Furnished Holiday Lettings) purposes.

The latter purposes are proper investments and assessed accordingly whereas spending on the former is 'dead money' in investment terms: it's not all working to generate money for me. Sure, it eliminates outgoings on rent but also introduces specific outgoings previously covered by rent and transfers to me risks such as the exposure to property value variations but a purely financial evaluation "in investment terms" doesn't, for me, really cover all the bases.

One might take the view that movements in values in either direction could be tempered by the changed value of one's home still being enough (or only enough) to purchase the identical house next door (subject to frictional costs): one is still on the same rung of the local ladder for that size/type of property. Of course, as charlottesquare recently reminded us, there are actually many different housing markets and they behave in different ways so choosing to, or needing to, relocate to a different area and/or to a different size/type of property will expose those differences.

Cheers!

Chrysalis
Lemon Slice
Posts: 736
Joined: November 4th, 2016, 10:58 am
Has thanked: 247 times
Been thanked: 230 times

Re: Is now the right time to buy?

#174107

Postby Chrysalis » October 16th, 2018, 12:22 pm

Looking at that link to the data, then yes it does show that both north east and north west regions have barely increased in last 10years and have shown less volatility than London. Obviously there will be local variation within each region.
But in general if you are talking about a house which is someone’s home, then the thinking is surely quite different from an investment? It’s illiquid for a start, and there are many non financial considerations in the purchase.
I’d say, pretty hard to predict which way prices will go in the medium to long term. Or even in the short term :-)

hiriskpaul
Lemon Quarter
Posts: 3852
Joined: November 4th, 2016, 1:04 pm
Has thanked: 682 times
Been thanked: 1489 times

Re: Is now the right time to buy?

#174118

Postby hiriskpaul » October 16th, 2018, 12:46 pm

Yes, lots of other considerations when buying a home, the investment angle was purely about the risk of buying now or in 6-12 months. If it was London with bigger sums and higher volatility and a lot of downside risk I think I would want to hold off for 6 months. OTOH Manchester prices seem affordable and with lower downside risk.

Another complicating factor is that she is confident of being in Manchester for the next 4 years, but could go anywhere after that.

Chrysalis
Lemon Slice
Posts: 736
Joined: November 4th, 2016, 10:58 am
Has thanked: 247 times
Been thanked: 230 times

Re: Is now the right time to buy?

#174176

Postby Chrysalis » October 16th, 2018, 3:56 pm

Who is buying the house? And is the rent a room scenario going to become a potential issue?
It is tricky, deciding whether it’s worth buying for a few years. Mind you I look back to when I was young and I didn’t want to stay renting for longer than I needed to. House prices then meant the stakes were not quite so high; I think our first mortgage was not even 2x earnings.

RececaDron
2 Lemon pips
Posts: 190
Joined: January 17th, 2018, 1:10 pm
Has thanked: 10 times
Been thanked: 50 times

Re: Is now the right time to buy?

#174177

Postby RececaDron » October 16th, 2018, 3:58 pm

Who's going to be maintaining/improving this house?

Hariseldon58
Lemon Slice
Posts: 835
Joined: November 4th, 2016, 9:42 pm
Has thanked: 124 times
Been thanked: 513 times

Re: Is now the right time to buy?

#174206

Postby Hariseldon58 » October 16th, 2018, 5:33 pm

What the housing market does in general is not very relevant.

The first question is the OP's daughter intending to buy and keep the house for 5 to 10 years ? If the answer is no, then rent don't buy.

The housing market is not subject to any great hysteria at present, there are plenty of visible risks. It's probably as good a time as any provided the local market is not running away at the moment.

Is the proposed house affordable ? If so, she can probably lock into a a fairly lengthy fixed term mortgage. Go for it !!!

hiriskpaul
Lemon Quarter
Posts: 3852
Joined: November 4th, 2016, 1:04 pm
Has thanked: 682 times
Been thanked: 1489 times

Re: Is now the right time to buy?

#174245

Postby hiriskpaul » October 16th, 2018, 8:31 pm

My daughter is buying the house. Not much point me buying and paying stamp duty and potentially capital gains tax on disposal. How long the house will be kept is uncertain, but she is likely to live in it for at least 4 years. Mortgage is not necessary, but might be worth having if she can lock in a very low rate. She would plan to let 1 room under the rent a room scheme so she does not lose PRR, preferably to a student so she does not have to pay council tax.

p.s. Am I right in thinking that if you let more than 1 room, PRR is affected and some proportion of any gain on disposal would become subject to CGT? I thought I read that somewhere.

Lootman
The full Lemon
Posts: 18681
Joined: November 4th, 2016, 3:58 pm
Has thanked: 628 times
Been thanked: 6564 times

Re: Is now the right time to buy?

#174246

Postby Lootman » October 16th, 2018, 8:37 pm

hiriskpaul wrote:She would plan to let 1 room under the rent a room scheme so she does not lose PRR, preferably to a student so she does not have to pay council tax.

One of my kids rents rooms on the rent-a-room scheme but, from what he tells me, there is no limit or restriction about only renting one room. Rather it is the total rent that matters. So the first 7.5K a year of rent is excluded from tax. According to him it doesn't matter whether that is 2 people paying 3.75K a year or one person paying 7.5K a year.

From the owners point of view one tenant would be better. In London 7.5K a year would be cheap but up north?

hiriskpaul wrote:p.s. Am I right in thinking that if you let more than 1 room, PRR is affected and some proportion of any gain on disposal would become subject to CGT? I thought I read that somewhere.

CGT is unaffected, from what my son was told.

hiriskpaul
Lemon Quarter
Posts: 3852
Joined: November 4th, 2016, 1:04 pm
Has thanked: 682 times
Been thanked: 1489 times

Re: Is now the right time to buy?

#174249

Postby hiriskpaul » October 16th, 2018, 9:01 pm

Yes I realise that the rent a room scheme can be extended to multiple rooms, but I thought I read somewhere (quite some time ago) that if you did that you would be considered to be running a lodging house and so lose a chunk of PRR. Might still be worthwhile though even if some PRR was lost, but starting to get complicated!

Rental income for 1 double room in a shared house, convenient for the university is about £450-£500 PCM, with bills included.

gbjbaanb
Lemon Slice
Posts: 582
Joined: November 4th, 2016, 1:17 pm
Has thanked: 192 times
Been thanked: 126 times

Re: Is now the right time to buy?

#174359

Postby gbjbaanb » October 17th, 2018, 9:52 am

tea42 wrote:Put our place in the SE on sale on 3rd Sept. Only two viewings so far. Great time to buy especially for a renter. Ta very much Mr Carney…


Not just Carney, but....

Brexit suggests many East Europeans have decided the gravy train has run its course and so now it's the time to go back home with their savings they made over here.

Interest rates are going up, as everyone knows from the last week's share prices.

Stamp duty was bumped up by 3% for foreign buyers.

All of which puts a dampener on anyone wanting to buy, and i imagine if you're an investor in property, you'll be sitting on your hands waiting to see what comes of Brexit and immigration demand too, and of course, any weakness in the market will cause them to sit on their hands a little longer, this making the market even weaker.

But whether any of this feeds back into house prices, particularly in Manchester, is another question.


Return to “Property Investment Discussions”

Who is online

Users browsing this forum: No registered users and 4 guests