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    • Mark1987
    • By Mark1987 9th Jul 17, 11:25 AM
    • 78Posts
    • 1Thanks
    Mark1987
    Help, first time buyer in London with £55k/year
    • #1
    • 9th Jul 17, 11:25 AM
    Help, first time buyer in London with £55k/year 9th Jul 17 at 11:25 AM
    Hi guys!

    I'm a 30yo IT professional guy currently living and working in London (Farringdon).
    My current salary is £55k/year, which could reach £60k in the next 1-2 years, and I could use savings for £140k, no more.

    I am single and at the moment I am renting a 1-bed flat for £1300/month (bills included) so I was thinking to buy something to avoid this big waste of money.

    I am very confused because I am not sure I will stay in London in the next 2-5-10 years but everything can happen, I may change mind. I would like to invest my money to buy something to avoid to pay the rent and to have a profit, when reselling this property in the future. What would you advice me? I don't have any idea where I can start. Should I consider flats or houses with my budget? What is a realistic price for a house I can afford?

    I like west London generally and it's very convenient for IT jobs, in case I will leave my current company.

    Also, do you think it's a good period now to invest in properties?

    Thanks a lot for your help!
    Last edited by Mark1987; 09-07-2017 at 11:30 AM.
Page 1
    • economic
    • By economic 9th Jul 17, 11:56 AM
    • 1,581 Posts
    • 737 Thanks
    economic
    • #2
    • 9th Jul 17, 11:56 AM
    • #2
    • 9th Jul 17, 11:56 AM
    i wouldnt invest in london right now if you dont have a lot of money until there is a meaingful correction. with your savings and salary i think you could afford upto 450k in value. that doesnt buy much in london. maybe a 1 bed flat in a good area within zone 2-3. obviously further out you get more for your money.

    if you think about even if you were to buy all for cash london offers a gross yield of 4% at best for a decent property. compare this to a stock like british land where its diversified, has no other costs you get 4.5% at least now.

    does not make sense to buy london where growth is now questionable in short-medium term and rent is not enough for illiqudiity and other costs.
    Last edited by economic; 09-07-2017 at 12:00 PM.
    • Mark1987
    • By Mark1987 9th Jul 17, 11:58 AM
    • 78 Posts
    • 1 Thanks
    Mark1987
    • #3
    • 9th Jul 17, 11:58 AM
    • #3
    • 9th Jul 17, 11:58 AM
    Honestly I don't mind to find something in zone 4-5-6 or even just outside London. I saw a few decent houses around £350k. Would anything change in your opinion?
    • Pixie5740
    • By Pixie5740 9th Jul 17, 12:04 PM
    • 10,641 Posts
    • 14,614 Thanks
    Pixie5740
    • #4
    • 9th Jul 17, 12:04 PM
    • #4
    • 9th Jul 17, 12:04 PM
    Do you want to buy a home or do you want to invest?
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • Mark1987
    • By Mark1987 9th Jul 17, 12:09 PM
    • 78 Posts
    • 1 Thanks
    Mark1987
    • #5
    • 9th Jul 17, 12:09 PM
    • #5
    • 9th Jul 17, 12:09 PM
    I want to buy a home but keeping in mind that I may leave London in a few years so at that point I would like to have a profit from my sell. But as I said I am single and young al everything could change. I may decided to remain here.
    • economic
    • By economic 9th Jul 17, 12:22 PM
    • 1,581 Posts
    • 737 Thanks
    economic
    • #6
    • 9th Jul 17, 12:22 PM
    • #6
    • 9th Jul 17, 12:22 PM
    I want to buy a home but keeping in mind that I may leave London in a few years so at that point I would like to have a profit from my sell. But as I said I am single and young al everything could change. I may decided to remain here.
    Originally posted by Mark1987
    then i wouldnt buy. you will be punting. unless you have a reasonable level of confidence at least that you will make a profit. such as buying to develop.

    if i were you i would perhaps look into buying where you are looking to move to. if you have no idea when and where you will move then a combination of savings and stock investments is best. what combination is impossible to say and only you know as you know what is likely to happen in your life.
    • economic
    • By economic 9th Jul 17, 12:25 PM
    • 1,581 Posts
    • 737 Thanks
    economic
    • #7
    • 9th Jul 17, 12:25 PM
    • #7
    • 9th Jul 17, 12:25 PM
    i myself am 34 have my own property in highgate (340k equity) and also stock investments (250k worth) and some cash/p2p (180k). the key is to remain diversified. i would not put everything in a property unless its your home in the long run.
    • Mark1987
    • By Mark1987 9th Jul 17, 12:30 PM
    • 78 Posts
    • 1 Thanks
    Mark1987
    • #8
    • 9th Jul 17, 12:30 PM
    • #8
    • 9th Jul 17, 12:30 PM
    If I leave London I was considering to transfer the mortgage to another property or rent the house I bought. Is it a bad idea? Even though I buy something around 300-350k?
    The problem is that i am spending too much for renting because I am single and i would never consider again to move back to a house shared
    • economic
    • By economic 9th Jul 17, 12:39 PM
    • 1,581 Posts
    • 737 Thanks
    economic
    • #9
    • 9th Jul 17, 12:39 PM
    • #9
    • 9th Jul 17, 12:39 PM
    you pay £1300 rent incl bills. bills are what £300? so rent is £1000. if you buy assuming you borrow 300k (which you will need to), then interest payments are like £500 a month. so you are only "wasting" £500 a month (1k - 500). if you stay london for 5 years thats 30k "wasted". however you dont need to pay stamp duty, solicitor fees, agent fees when you sell etc which all adds up plus dont need to worry about making a profit when you sell. so it makes no sense whatsoever to buy and sell when you leave.

    to let out is another story but one in which i mentioned above does not make sense. and all to just say you own a property in london and be proud of that fact. its really not all that. imo stocks will outperform london property over the long term.
    • Mark1987
    • By Mark1987 9th Jul 17, 12:53 PM
    • 78 Posts
    • 1 Thanks
    Mark1987
    My rent is £1500 and the bills £150.

    Currently I have my money invested which return me roughly 4-5k net a year but the problem in my mind is that house prices rise more than 4-5k a year so every year I will always be a few thousands pounds less able to buy a house. Especially considering the fact that these 4-5k that I earn every year don't go all into my saving but I spend some of them for car repair, holidays, etc..

    If I am able to find a decent property around 250-300k, which means borrowing only 150k do you still think it is not worth?
    As I said it may happen that I will remain in London and in that case the risk I take now will be worth.
    • Mark1987
    • By Mark1987 9th Jul 17, 12:55 PM
    • 78 Posts
    • 1 Thanks
    Mark1987
    Even if I will leave London at some point I would like the idea to have a base here where I can come back anytime so renting the house that I buy could be a a valid option.
    • agrinnall
    • By agrinnall 9th Jul 17, 12:59 PM
    • 17,919 Posts
    • 13,591 Thanks
    agrinnall
    Even if I will leave London at some point I would like the idea to have a base here where I can come back anytime so renting the house that I buy could be a a valid option.
    Originally posted by Mark1987
    If you let the house that you buy then you won't be abe to "come back anytime" as it will be somebody else's home until they either leave or you are able to legally evict them.
    • Mark1987
    • By Mark1987 9th Jul 17, 1:05 PM
    • 78 Posts
    • 1 Thanks
    Mark1987
    Isn't enough 1-2 months notice as it is for most of the contracts?
    • Mark1987
    • By Mark1987 9th Jul 17, 1:17 PM
    • 78 Posts
    • 1 Thanks
    Mark1987
    If we consider the idea that I will stay in London, how would you suggest me to proceed with house buying?
    • gettingtheresometime
    • By gettingtheresometime 9th Jul 17, 1:28 PM
    • 2,486 Posts
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    gettingtheresometime
    Isn't enough 1-2 months notice as it is for most of the contracts?
    Originally posted by Mark1987
    I have to say if you presented me with a contract that said you could give a months notice then I'd tell you where to stick it.

    What would you do if the tenant said that they weren't moving once you'd given notice?
    Lloyds OD / Natwest OD / PO CC / Wescott cleared thanks to the 1 debt v 100 day challenge


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    • Mark1987
    • By Mark1987 9th Jul 17, 1:58 PM
    • 78 Posts
    • 1 Thanks
    Mark1987
    The notice on my current contract is 2 months for the landlord and one month for me.
    I am sure there is a why to kick them out. It is not legal staying in a house if you have to leave after a notice. It is not even so difficult to find a new house to rent in two months
    • Jimmy_Neutron
    • By Jimmy_Neutron 9th Jul 17, 2:23 PM
    • 157 Posts
    • 132 Thanks
    Jimmy_Neutron
    Ok, I'll ask the question seeing as you keep mentioning leaving London in the future - Why?

    Are you from London, what's making you stay there if you are not from London. If it's because you can earn more money then carry on renting to build up your savings and then when you finally do leave you'll have a much bigger deposit and a wider choice of places to live. You may earn less but your mortgage will be less.

    You never know while you are renting you might meet someone and want to live together so your combined wages/savings will get you a better property.
    • gettingtheresometime
    • By gettingtheresometime 9th Jul 17, 2:30 PM
    • 2,486 Posts
    • 5,439 Thanks
    gettingtheresometime
    The notice on my current contract is 2 months for the landlord and one month for me.
    I am sure there is a why to kick them out. It is not legal staying in a house if you have to leave after a notice. It is not even so difficult to find a new house to rent in two months
    Originally posted by Mark1987
    But what if the tenants aren't as morally minded as you and decide to play hard ball?

    So two months notice turns into however long it takes the courts / bailiffs to get them out.

    There was a huge thread on this board a few months back where the tenant had received notice as husband landlord wanted to move back in - the LL had made a right pigs ear of everything.
    Lloyds OD / Natwest OD / PO CC / Wescott cleared thanks to the 1 debt v 100 day challenge


    Next on the list - the Argos Card!
    • economic
    • By economic 9th Jul 17, 2:36 PM
    • 1,581 Posts
    • 737 Thanks
    economic
    My rent is £1500 and the bills £150.

    Currently I have my money invested which return me roughly 4-5k net a year but the problem in my mind is that house prices rise more than 4-5k a year so every year I will always be a few thousands pounds less able to buy a house. Especially considering the fact that these 4-5k that I earn every year don't go all into my saving but I spend some of them for car repair, holidays, etc..

    If I am able to find a decent property around 250-300k, which means borrowing only 150k do you still think it is not worth?
    As I said it may happen that I will remain in London and in that case the risk I take now will be worth.
    Originally posted by Mark1987
    where have you invested the 140k to get 4-5k return?
    • Mark1987
    • By Mark1987 9th Jul 17, 2:48 PM
    • 78 Posts
    • 1 Thanks
    Mark1987
    Ok, I'll ask the question seeing as you keep mentioning leaving London in the future - Why?

    Are you from London, what's making you stay there if you are not from London. If it's because you can earn more money then carry on renting to build up your savings and then when you finally do leave you'll have a much bigger deposit and a wider choice of places to live. You may earn less but your mortgage will be less.

    You never know while you are renting you might meet someone and want to live together so your combined wages/savings will get you a better property.
    Originally posted by Jimmy_Neutron
    Because I am tired of this stressful life but I recognise that now it is a good boost for my career living here. I don't see me having family in London in the future, but I am still enjoying it now.
    No, I am EU citizen but not from London
    Yes, exactly. Saving now thinking to move to a cheaper place could be an option but as you said you don't know what happens. I am just tired to live without plans in a temporary state so if I buy I would feel like building something concrete.
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