Well that's £35k down the drain

SurreyBear

Just had some valuations done on my flat and, since I purchased it four years ago, the value has dropped down by £35k to the stamp duty threshold.

I understand that the properties I'm interested in have also seen drops, maybe not as dramatic, but drops none the less.

But £35k is hard to swallow. Of course I don't have to move but relocating would help with commute / lifestyle. Realistically I don't think I could lose that £35k but perhaps in reality have already lost it with no hope of the market reaching that height again.

No real questions here. Just me writing down my situation and one which I'm sure many others have also experienced: shock!

skid112

sorry, is it your home? or an investment?

tomatoe_2

Its not a loss unless you sell. Its swings and roundabouts though. The person you bought it from sold at the peak and probaly made good money.

SurreyBear

skid112 wrote: »

sorry, is it your home? or an investment?

It's my home. I have been considering relocating closer to work. This would actually enable me to get more for my money because it is further out of the Greater London bubble - my 2 bed flat suddenly becomes a four bed house with garden and views.

But no, I don't have to move just now.

GDB2222

tomatoe wrote: »

Its not a loss unless you sell.

It's currently showing a loss in value. That loss becomes crystallised on sale, but it's still there right now. It becomes more of an issue if the OP is currently in negative equity or couldn't realise enough on sale to put down a decent deposit on a new property.

GDB2222

SurreyBear wrote: »

It's my home. I have been considering relocating closer to work. This would actually enable me to get more for my money because it is further out of the Greater London bubble - my 2 bed flat suddenly becomes a four bed house with garden and views.

But no, I don't have to move just now.

As long as you get £35k off the place you are moving to, compared to 4 years ago, does the drop really matter?

Catblue

Well, you need to factor in what you would have paid in rent over 4 years if you had not bought.

You can easily spend £9K per year in rent I would think. Of course you also need to factor in what you've spent on buying costs, decoration, maintenance etc that you would not have incurred if you had rented.

In general, I suspect that you might not have "lost" as much as you think you have.

Also, the reality is that other houses have dropped as well, so if you do have some spare cash then it could actually be a good time to make the jump up to the next property.

SurreyBear

Thanks Catblue - yes I was thinking that I would have paid around £1400 pcm in rent so yes, it's relative. @GDB222 thankfully not in negative equity so absoultely things could have been much worse!

Catblue

You're in a good position - you can now afford a much better house with a garden that is closer to work (thus saving on commuting costs also).

If house prices had rocketed in the last few years, the better house would have been out of your reach by now.

If you can comfortably afford the better house closer to work then you'd be daft not to go for it now if you feel that your job is quite secure. And if house prices plummet again, then great! If you have saved up some cash then you will be able to afford an even better house again.

hazyjo

This is my major bugbear around the stamp duty levels - those priced just above drop like lead balloons to below the stamp duty level in a falling market. Saying that, they do tend to rise very quickly above it too in a rising market!

I was 'lucky' as I bought my last place in 2006 for £228,500. A year later, it would have cost me around £40-50k more and I'd have been in a similar boat to you. I did lose out as had spent a lot of money on the house, but sold this year for the exact price I'd bought it for.

We bought at the next stamp duty level so it went hugely in our favour as the value of the house we bought had taken a huge clobbering.

It's why I always say try to buy on or just under a stamp duty threshold than just over it.

I strongly believe these thresholds are hugely responsible for the falling house prices! Arghhh! Why can't they just charge the higher amount on the sum over the threshold, not the whole blinkin' lot!

Okay, it's not an 'investment', but it is damn annoying to see the properties near these thresholds hit so much harder than others.

Jx

brit1234

hazyjo wrote: »

I strongly believe these thresholds are hugely responsible for the falling house prices!

Clearly not, the reason we are having continuing price falls is that house prices are far too over priced. Prices went up 300% in just over a decade far higher than wages caused by mass fraud, irresponsible lending, too low interest rates, greedy buy to let investors etc.

The price falls are now just a correction to this and nothing to do with stamp duty.