Buy before going abroad for work, or keep saving?

bitsandpieces

nm123 wrote: »

- We have nowhere to move into when we get home, expense of renting, then perhaps moving again.

The property that's best to rent out may not be the same as the one that's best for you to live in on your return. Also, what happens if the tenant is still within the 1st 6 months of their tenancy when you need to return, or if they don't move out when you give them notice that you want the place back?

Will you necessarily be returning to the same town when you come back to the UK? If you're working abroad, other opportunities in the UK may open up

This doesn't mean that you shouldn't do it - there are definite pluses, e.g. if you're confident prices will rise - but it's a v risky way to try to get a place to move into on your return to the country.

nm123_2

Quizzical_Squirrel wrote: »

I think it depends on what you think house prices are going to do.

I've lived abroad several times, sometimes with a property in the UK, sometimes not. I'm still on the fence about it.

I'm still kicking myself for not buying something in London in 1999 before I left for one country.
I decided not to because I didn't want the stress but by the time I returned from that country everyone I knew had made a fortune and today the difference between us is really noticeable even though we earned the same!

But that boom was probably a one off and won't happen again.

I'm abroad again now and currently renting out two houses I own in the UK. One I just can't sell because I love it and can't bear to part with it, the other I'd sell like a shot if I could because I don't want the responsibility of it.

Another thing to consider is that unless you absolutely adore the house, as I do one of mine, the chances are you won't return to it because it's like a step backwards in your life.
Living abroad will change your perspective on many things and the thought of going back to something you were doing before could feel all wrong. I had this feeling the first time I went abroad - after a while I knew I could never go back to that house. Things that happen with tenants in the house will also change your feelings even about a house that is your home.

If you sell the house while you are abroad (as I did once) you won't be there to present it properly, a constant turnover of tenants will affect the look of it and these things will have a big impact on your price.

It's hard to sell an empty house as the rooms look small, every defect shows and there's no lifestyle to buy into.

If you sell it while tenants are still in it (assuming they allow viewings) you should consider that tenants furniture rarely suits the house - it wasn't usually bought to fit that particular house and can look awkward, be the wrong sizes, quality, colour or style for the house and this won't help your sale at all.

So to sum up, I would say don't do it unless you anticipate another price boom or you so totally love the house that you can't bear to give it up.

Funny that you talk about loving the place. We've been expecting to buy somewhere that is functional and that we could cope with living in upon our return. So I'm pretty much expecting that we'll buy somewhere that we think is ok. In essence we're trying to do a buy-to-let I suppose, but don't have a big enough deposit to get a BTL mortgage.

And that whilst we're away, someone is contributing to our mortgage and when we get back we'd be contributing to our mortgage and our equity, rather than renting and paying someone else's.

I'm going to try and put some hypothetical (and basic) numbers to this, let's pretend we're in Oz for 18 months and we go in Feb and won't include Oz start-up costs:

Buying somewhere
Savings = £32k
Property = £165k, deposit of £16.5k with £2.5k in fees etc leaves us with £11k.
Mortgage = £900pm
Rental income = £700pm (according to similar properties)
Loss = -£3.6k
Ideal level of savings whilst we're away = £1.5k joint pm, total = £27k

Come home to: £11k + £27k - £3.6k = £34.4k savings + £16.5k = £50.9k + any additional equity in the flat

Not buying somewhere
Savings = £32k
Ideal level of savings whilst we're away = £1.5k pm, total = £27k

Come home to: £59k

Put like this it would seem that unless we can get £9k equity in the flat in 18 months (which is guess is unlikely seeing as I imagine the first few years of the mortgage will be interest), we should theoretically have "more" if we don't buy somewhere before we go.

I'm coming around to the idea of not buying before we go............:cool:

Fire_Fox

nm123 wrote: »

Eeek, I'd hope to get the sale done before the end of the year to avoid the stamp duty.

I've read lots of forums where people have wondered if they can get away with not getting a Consent to Let, but what if my step-sister and her family were just house-sitting for me? Mortgage is still paid by direct debit to lender........ Just thinking out loud...

Is it likely that I wouldn't get a CTL?

We could afford the mortgage for 6 months, begrudgingly.

I must say I'm almost more inclined to not bother and stick our savings somewhere decent and wait until we get back. But, OH still won't be a decent mortgage applicant if he comes back and is self-employed with less than 1 year of accounts! Essentially we'll be in the same position we're in now but just with bigger savings - ie still unlikely to get a 3 bed house on just my salary.

Perhaps all this is just nice in theory, but more hassle than its worth in reality :rolleyes:

If it's a leasehold flat it can take weeks or even months to get all the necessary queries from the freeholder/ management company back, don't bank on completing before Christmas. My flat took almost a year to complete and I was a cash buyer for a vacant flat! My ex's (nearly) flat dragged on five months before he pulled out - again the flat was empty and he was an FTB with finances in place.

If someone is house-sitting they would not be paying you rent! You will need to inform the buildings and contents insurers, register for income tax, get safety certificates, they will need to be registered to vote and on the council tax ... whether or not you have a written AST the powers-that-be will see this as a tenancy. You may well not get CTL as the timeframe is so small - others have been refused as they have only been in a month or two.

If anything goes wrong with the property whilst you are away who is going to organise repairs? Who is going to inspect the place to see your tenants aren't running a cannabis farm or a brothel? Who is going to do check-in and check-out inventories? Anyone who is paying you rent has the right to expect a professional service which costs time and/ or money. If you take on a private tenant you cannot guarantee to have possession by the time you return. If you give two months notice and they don't move out how are you going to start eviction proceedings from abroad?

Fire_Fox

nm123 wrote: »

Buying somewhere
Savings = £32k
Property = £165k, deposit of £16.5k with £2.5k in fees etc leaves us with £11k.
Mortgage = £900pm
Rental income = £700pm (according to similar properties)
Loss = -£3.6k
Ideal level of savings whilst we're away = £1.5k joint pm, total = £27k

Come home to: £11k + £27k - £3.6k = £34.4k savings + £16.5k = £50.9k + any additional equity in the flat

I'm coming around to the idea of not buying before we go............:cool:

You should account for rental income for an average of ten months of the year. You then need to factor in the costs of buying and selling, letting agents fees, service charges/ ground rent/ buildings insurance, repairs/ redecoration, income tax and capital gains tax. Don't forget we have a general election soon and many expect mortgage interest rates to rise after this.

JellyIcecream

hi there. was very interested when I read your story as I am in almost exact situation:

we (OH and I) were/are in process of buying a house when I told (after 4 months from applying) that I was succesful in getting an overseas 'posting' which will be for 3 years from next year.

we had a long discussion about the house and have finally decided to buy it - that is, pending no more hassle/delays from sellers!

i am fortunate in that my overseas package provides alot of allowances so effectively, they are paying for everything on top of my salary. if we chose not to buy the house, all my wages (as they stand currently) could theorectically be put in savings. so say with a figure of 2k each month, after 3 years, i would have (theorectically) saved 72k.

having a house means i have to however pay the mortgage which say is 1500 a month, so even from my 2k, i could still save some money each month.

the area we are buying in has always had more demand than supply and we felt we were really lucky to get a house we liked for under 250k. this has been a major factor in our decision to buy the house as we 'hope' it will rise in value after 3 years (not guaranteed i know)

if however, i was in your position and the house buying process hadnt gone as far as mine had, i would be tempted to say buy when you come back. in all honesty, if we were just looking at houses and hadnt gone as far as we had, i would not have bought. it has been a stressful experience, so much so that i have threatened to pull out if nothing is sorted by end of this week!

good luck with your job abroad, and hope you make the decision that is right for your circumstances

nm123_2

Thanks Jelly. Ironically I relocate people for a living, but as my request to go to Oz is purely on a personal basis (ie, no business benefit), I'm going on a "no-frills" basis. Best of luck with your move too - where are you off to?

This thread has given me some good food for thought and I think jotting down some rough figures has helped me see that it's not likely to make a world of difference either way - so I reckon we probably won't worry about buying somewhere before we go.

As others have said, who knows what will happen whilst we're away, and with any luck, prices won't have increased that much, so we'll be ok when we get back.

JayZed

I bought my current flat just before relocating overseas a few years ago - not a deliberate decision, in that we didn't know that we were relocating until we were well into the purchase process, but we ended up completing about a month before we moved.

Based on our experience, I would very strongly advise not buying a place before you go overseas. Moving overseas is stressful enough, withough the added hassle of finding tenants and/or letting agents, dealing with gas certification etc etc. Even once you've gone and you have a tenant in, there will inevitably be hassle with things like leaking pipes, faulty boilers etc. As well as the stress, there's all the costs - I certainly wouldn't bet on it being profitable or even covering the costs of your mortgage. We certainly found it to be an expensive experience overall. We also had a complete !!!!!! for a tenant.

We ended up coming back to the UK a bit sooner than expected and have enjoyed living in our lovely flat for a couple of years now. But I wouldn't want to go through that again.

Besides, are you sure that you're going to come back to the UK? Lots of people go out to Oz for a year or two and end up staying...

PipPip

We went to Australia in 2001 to 2003 and were in the exact position you are in, I think we even had about the same deposit money as you. We opted for an easy life and chose not to buy before we went. During our time in Oz prices in the UK shot up and we came back to renting and felt quite sad about what we could afford relative to when we left.

Currently we are half way through another overseas posting, this time in France. We bought our house in 2006 so were already on the housing ladder. I have to say that the hassle of owning whilst abroad is quite high. We have had trouble with tenants damaging the property. It was empty for a few months between tenants and was broken into. The costs of repairs, particularly for our creaky plumbing/heating, seem to routinely wipe out the rental income.

So overall my conclusion is that it depends what you expect for the property market. Personally I doubt that we looking at a boom over the next few years and I would advise saving yourself the quite significant hassle.