Time to buy a house??

6022tivo

I have around 100,000k sitting in crappy NS&I accounts and bonds (Have to be tax free due to tax credits). I did plan to Buy to Let a cheap house, but put this on hold at the beginning of the year.

Due to crappy rates, I had a look in a estate agent window this morning and was surprised at how much my target houses have dropped this year.

Also a lot are going to auction in a few weeks.

I do have a reliable tenant ready to move into a house.

I am tempted..

What do you guys think..

Thanks in advance.

gozomark

I had a look in a estate agent window this morning and was surprised at how much my target houses have dropped this year.

- how much in %age terms ?
- what area ?

on average across the UK prices may have 10-20% more to fall (ie 25-35% from peak), so get it cheap enough, it might be worth buying now

opinions4u

I think even after we find the bottom for the housing market it will be at least a couple of years before prices start to rise.

The main problem then is what will fuel that price growth?

Banks will have less money to lend and will be less willing to lend to sub-prime, near-prime and buy to let clients.

This will dampen demand long term - so don't expect anything significant investment wise for at least 5 years.

(I had a look in an estate agent window earlier too - they'd closed down and emptied out the office).

gozomark

I do have a reliable tenant ready to move into a house

what yield would it work out at ?

bazster

Strong nerves and a long-term view required I would suggest. No doubt rents are following house prices down.

Me, I'm ploughing some spare cash into making my house substantially bigger: not only are the builders getting cheaper by the day, but our lovely government has just given me another 2.5%! Thanks guys!

greenface

would having a BTL affect your tax credit status some can !!

bazster

Geez, he's got £100,000, he's planning on becoming a property tycoon, and he's claiming tax credits! Just what the hell is wrong with this country?

6022tivo

bazster wrote: »

Geez, he's got £100,000, he's planning on becoming a property tycoon, and he's claiming tax credits! Just what the hell is wrong with this country?

I agree, totally wrong. Yep, I own a house, have enough for another, and claim tax credits as I earn less than £12k.

On top of this I get free dental care and prescriptions..

IT IS WRONG... The system is wrong.

My savings are all in Tax free accounts. ISA, Premium Bonds, NS&I bonds.

Sad thing is for tax credits, only taxable savings income over £300 is classed as income.

I wish a government would come in and sort all this out, paying child allowance to millionaires, and state pension and winter fuel allowance to millionaire pensioners. I have also been reading how drug addicts are getting signed onto disability living allowance at the full rate...

We need to get this country sorted, and stop throwing money away.

6022tivo

greenface wrote: »

would having a BTL affect your tax credit status some can !!

Yes it would, after costs it would be classed as a income.

I have not looked into it totally, but I assume from the rent, I can take out repairs, charges, insurance. It will be the "profit" or whats left for me that would be declared as a income for tax credits..?

6022tivo

gozomark wrote: »

I had a look in a estate agent window this morning and was surprised at how much my target houses have dropped this year.

- how much in %age terms ?
- what area ?

on average across the UK prices may have 10-20% more to fall (ie 25-35% from peak), so get it cheap enough, it might be worth buying now

In a area with lots of previous buy to let, quite a few up for sale, around 25% less than 12 months ago.

edwinac_2

6022tivo wrote: »

In a area with lots of previous buy to let, quite a few up for sale, around 25% less than 12 months ago.

I've often heard 8% cited as a reasonable gross yield from rental property, but that's looking ridiculous now with an average UK house price of £230k (i.e. £1500 a month rental..)

I expect you've already seen propertysnake.com.

It lists the most dramatic price reductions of houses for sale in a given town or area. There's a two bed terraced cottage in Rowley Regis for £40k - was £75k!

There is a piece in today's FT about property investment. A whole road of new builds in Portsmouth were sold for just 90k a piece. They were previously on the market at £180k+..

House prices have a lot further to fall, IMVHO.. I wouldn't rule out a 50% drop over the next 18-24 months, effectively wiping out all gains since 2002.