FTB - 2 bedroom house on SDLT threshold at £250,000.Will it ever make more in future?

Chelsea123

Ahhh Dukesy - this has been our dream scenario as we have builders, plumbers etc in our families. The thing is that in the year we have been looking about 5 of these types of properties have come on the market and all get sold for more than asking price to cash buyers . Houses are moving very quickly where we are looking and every house seems to have an open day or sealed bid arrangement.

I think I will hold out and wait for a possible forever home to come on the market.

Dukesy

Chelsea123 wrote: »

Ahhh Dukesy - this has been our dream scenario as we have builders, plumbers etc in our families. The thing is that in the year we have been looking about 5 of these types of properties have come on the market and all get sold for more than asking price to cash buyers . Houses are moving very quickly where we are looking and every house seems to have an open day or sealed bid arrangement.

I think I will hold out and wait for a possible forever home to come on the market.

Honestly, sometimes it really is the best option to bide your time. We fell in love with a complete wreck of a farmhouse a couple of years ago, and were totally gutted when it sold for an absurd amount after an auction in which it didn't sell. Our offer was around £70,000 less than the eventual sale price, and we were offering sensible money!

A few months later, a house that had been on the market for a year had its price reduced by £20,000, which meant that it suddenly dropped into our price bracket. No-one had been prepared to pay the initial asking price given the scale of the project, and we snapped it up for £10,000 less than the reduced price, as the vendors were so desperate to sell. Fully renovated, it will make a huge profit.

What I'm trying to say is that places DO pop up from time to time that have, for whatever reason, slipped under the radar. Keep a good eye out and you may well find somewhere perfect and get it for a song, but just don't be too impulsive.

hazyjo

If the price does increase by say 20% (ie was £250k, now £300k), the price of something that was £300k would now be in the region of £360k.

So don't think you will 'make' enough to move 'up the ladder'. Chances are, you won't. You'll have to either save, overpay your mortgage, or extend the term or amount of your mortgage.

I bought my 2nd from last house for £227,500 in 2006. Sold in 2011 for £228,500. In 2007-2008, similar houses were going for over £280k.

You take your chances with anything around the SD level, IMO. If prices rise rapidly, sometimes it can jump that much quicker. Unfortunately, it works in reverse too lol. Anything 'worth' £270k is more than likely selling for around £250k.

Prices used to roughly double every 10 years. As above, I doubt we'll be in a static market in 10 years' time, although that's not to say they won't have shot up then hit another recession!

Jx

JimmyTheWig

hazyjo wrote: »

If the price does increase by say 20% (ie was £250k, now £300k), the price of something that was £300k would now be in the region of £360k.

So don't think you will 'make' enough to move 'up the ladder'. Chances are, you won't.

I think the OP's concern is that if prices rise by 10% then theirs will be worth £275k and the one they want to move to will be worth £330k.
But it is hard to sell for £275k because of the threshold, so theirs would sell for £250k. But would still need to buy at £330k.

OP, I think LazyDaisy has it right when they say to buy a house that suits you now and in the future. If you do that then you are buying yourself a home. If you make money on it then great. If not, you've still had somewhere to live for that time.
The thresholds might be scrapped (hopefully!), or might change. They might increase the threshold to £310k, in which case using my example figures above you'd probably end up quids in!
The property you are looking at might already be "worth" £270k, but is selling for £250k (no offers) due to the threshold. In which case, arguably at least, any future increase should be on the £270k and even a small increase means you'll be beating the threshold trap regardless.

If you like the place, if you can afford it, if you think it is worth it and if you can see yourself staying there for the next 5-10 years then forget about the threshold and why not go for it?

phoebe1989seb

Dukesy wrote: »

Honestly, sometimes it really is the best option to bide your time. We fell in love with a complete wreck of a farmhouse a couple of years ago, and were totally gutted when it sold for an absurd amount after an auction in which it didn't sell. Our offer was around £70,000 less than the eventual sale price, and we were offering sensible money!

A few months later, a house that had been on the market for a year had its price reduced by £20,000, which meant that it suddenly dropped into our price bracket. No-one had been prepared to pay the initial asking price given the scale of the project, and we snapped it up for £10,000 less than the reduced price, as the vendors were so desperate to sell. Fully renovated, it will make a huge profit.

What I'm trying to say is that places DO pop up from time to time that have, for whatever reason, slipped under the radar. Keep a good eye out and you may well find somewhere perfect and get it for a song, but just don't be too impulsive.

Similar experience here - only the farmhouse we missed out on actually sold for less than we would have offered if we'd been in a position to offer (accepted an offer on ours a day too late ). It was a total wreck and sold for less than £250k......fast forward two years it's been renovated and is for sale at around £450k. Would have been worth more but unfortunately most of its land was sold off to developers. Last house we sold we bought in 2007 for £280k, renovated it tastefully to the tune of £40k but only achieved £260k in 2011. It's definitely swings and roundabouts as the house before that we bought for £117,500 and sold for £600k :D

Just hoping that the house we eventually bought in 2011 (paid £250k) is a better buy than the last one - it was unmortgageable so vendors were struggling to shift it. We spotted it on RM the day it was re-marketed after failing to sell at auction, drove 200 miles to view next day, offered and had the deal done and dusted about four weeks later. We've extended it and are in the (lengthy) process of restoring it, but if we were to sell - which isn't the plan - we believe we'd make some money this time especially as similar (unextended, but renovated) houses are selling for £400k+

It definitely pays to be patient and not rush into something that's causing you to have doubts. Having been bitten once with buying close to a SDLT threshold, I'd advise proceeding with caution if the intention is to sell on soon and not lose money.........

moneyshoe

Totally different area but we bought in 2006 in Edinburgh during the boom for £250,000. We did nothing much to the flat (a bit of painting and decorating but no new bathroom or kitchen) and sold 18 months ago for £270,000. We didn't really 'make' money but as we had been overpaying the mortgage for several years + saving lots we are now looking at spending £350,000 on our next property so I think you can break the stamp duty barrier and also move up the property ladder just with very careful budgeting.

I also noticed that they guy who bought it from us did some further cosmetic work and got planning permission to convert the basement (which both the next door flats did and then couldn't sell) and has recently sold the flat on at offers over £270,000 so he has actually made money provided he got has asking price.

InMyDreams

Chelsea123 wrote: »

The thing is, if I buy for £250,000 now and luckily make the same back in 5-10 years time (as I don't see anyone paying over this amount and hitting the 3% stamp duty) is this a bad thing? How would I be able to move up the ladder and get a larger property as I won't have made anything on the house?

I wouldn't get too hung up about what the value of your house might be in 5 to 10 years time compared to STLT tax brackets, even if the thresholds stay the same.

I would imagine your best bet *now* is a house that would possibly achieve a little over a threshold if it was not for the threshold *now*. That way, you are already getting slightly more for your money.

The thresholds do skew things slightly, but trying to second guess that skew 10 years in advance is completely pointless.


PS:

Chelsea123 wrote: »

Thanks Holly, I'm aware of the 1% stamp duty but I'm also aware that in future no-one will want to buy the house for anything more than this as it will mean paying the 3% stamp duty - meaning that it will stay at this value for the foreseeable future.

I think this logic is flawed. This is true if prices don't rise, but any increase in prices will inevitably push some properties into the next tax bracket up. Similarly, if prices fall, there will be some who had to pay a higher bracket STLD when they bought but when they sell, their home now falls in a lower tax bracket.

hazyjo

JimmyTheWig wrote: »

I think the OP's concern is that if prices rise by 10% then theirs will be worth £275k and the one they want to move to will be worth £330k.
But it is hard to sell for £275k because of the threshold, so theirs would sell for £250k. But would still need to buy at £330k.

From my experience, when prices are rising, houses are snapped up at £260k+ and, if anything, they jump massively from the SD threshold. People just don't knock down when prices are rising like they do in a falling market.

Obviously it depends on area, but I do remember in E4 seeing the prices shoot up. Houses were going from selling at around £235k to £280k within a matter of months/a year. Unfortunately, it does mean they shoot down too in a falling market!

Jx