Should I buy a flat in London right now?

markyjames

I've got 100k deposit and am thinking of investing in a 2 bed property for around £450-500k. I'm a first time buyer so I'm currently wasting lots of cash on rent (1200 per month.)

I'd probably buy in East London (Hackney/Finsbury Park etc).

Would this be financial suicide or is it a great time to buy right now?

Thoughts?

rob404uk

Nobody has a crystal ball. My advice would be for you to only consider buying somewhere if you would enjoy living there and you can afford it. Buying a property on the hope it will increase in value is the wrong way to go about things. Also how long are you planning to stay there for. If it is only a couple of years before you plan to sell I would not bother.

Fletchasketch

Great time to buy, prices have stabilised and stamp duty has been reduced. Add that to buying in anew up and coming area and I'd say you're onto a winner.

Good luck.

stator

London is a property bubble. It may not burst for another 100 years though, no-one has a clue.
Only buy a house if you can afford the repayments with increased interest rates and want to stay there and live in it.
If you know you will need to move in 3 years it's a risk, so plan accordingly.

agrinnall

Fletchasketch wrote: »

...stamp duty has been reduced.

The break even point between old and new stamp duty is £500K, so the OP will either save a small amount or nothing. But selling at a higher price in the future will mean the buyer paying more stamp duty than they would now.

Running_Horse

Buy it if you want to and if the figures stack up.

Don't be told what to do by a load of strangers on the internet.

ViolaLass

markyjames wrote: »

I've got 100k deposit and am thinking of investing in a 2 bed property for around £450-500k. I'm a first time buyer so I'm currently wasting lots of cash on rent (1200 per month.)

I'd probably buy in East London (Hackney/Finsbury Park etc).

Would this be financial suicide or is it a great time to buy right now?

Thoughts?

Have you considered how much you'd be paying in interest, ground rent, fees, maintenance etc?

Fraise

ViolaLass wrote: »

Have you considered how much you'd be paying in interest, ground rent, fees, maintenance etc?

Interest rates are so low so that's hardly an issue, and even if they rose to, say, 3%, his mortgage repayments will still be less than his rent. And rent is dead money. Rents also rise, whereas mortgage repayments come DOWN over time with inflation. It's a win win situation.

And why would he be paying ground rent? He might buy freehold. No ground rent then.

Of course you have to pay solictor and surveyor fees when buying, but that's viewed as an investment. You're buying an investment, and you recoup that money with all the equity you make.

If he buys a property that has maintenance fees, that should cover all maintenance to the property, maybe even extras such as gardeners, window cleaners etc, so that should come to about what you'd pay yourself if you have to foot the bill to maintain your own property. Yu just need to check what the maintenance costs are and what they include. If you feel they're too much for what you get you can go to the First Tier Tribunal and 99 times out of a 100 they get reduced.



I think he'd be silly throwing rent away when he could be investing that money into HIS own property.

ViolaLass

Fraise wrote: »

Interest rates are so low so that's hardly an issue, and even if they rose to, say, 3%, Gosh, the heady heights of 3%! his mortgage repayments will still be less than his rent. And rent is dead money. Rents also rise, whereas mortgage repayments come DOWN over time with inflation. It's a win win situation.

Yes, 'might' buy freehold but if you don't, you need to think about the fees. Maintenance 'might' cover gardening but it might not cover new windows etc.

My point was that the OP didn't appear to have considered these factors.

And they need to be able to cope with interest rates being a lot higher than 3%!

agrinnall

Fraise wrote: »

Rents also rise, whereas mortgage repayments come DOWN over time with inflation. It's a win win situation.

That's unlikely to be the case with any standard mortgage product, where the point is that your repayments are fixed (assuming no change of interest rate) throughout the life of the mortgage. The proportion of the repayment allocated to capital and interest will change but the total amount stays the same.

Bluebirdman_of_Alcathays

agrinnall wrote: »

The break even point between old and new stamp duty is £500K, so the OP will either save a small amount or nothing. But selling at a higher price in the future will mean the buyer paying more stamp duty than they would now.

You mean £937k of course, unless the OP pays £500k to the penny they will "save" money.

http://www.thisismoney.co.uk/money/mortgageshome/article-2859114/Stamp-duty-cut-homebuyers-Osborne-kills-hated-slab-tax.html