Worth selling now? Thoughts on London property market in 2017?

Nike79

Hello everyone,

I own 1 bed flat in London on residential mortgage which i bought just over a year ago for 340K and has around 30% equity at the moment.

I heed to move out of the property now and rent another one (personal reasons, so no questions here).

I may not move back to the flat myself in the nearest future and I'm contemplating now what to do with it:

1. I can sell it now but i will still make losses (considering SDLT, mortgage redemption fee initially paid etc) moreover i may still need the flat in some distant future for my very elderly parents to live in (this is still under consideration though).

2. i can rent it now and the the rent will (barely) cover mortgage plus expenses at the moment and keep it until decide what to do the next however I'm very concerned about additional SD tax and tax hikes on property lets from 2017 as given new way of taxation i may make losses if the rents won't rise.


I appreciate noone has got a crystal ball and even top tier analysts can't predict the market trends for sure but any thoughts on the property market in the next 1-2 years after budget changes implemented? will it push property prices down? Is it worth selling now or just leave it there hoping for bigger rise?

Mike

alchemist.1

Personally don't think the budget changes will push property prices down in London over the next 1-2 years. For the lower end of the market there is a huge amount of demand in London.

Whether this balances off with costs of renting it out/mortgage etc is one for your consider.

monkeyman1974

prime central London prices are falling and some areas (SW8 in particular will be a car-crash), but it would seem there is massive demand at your price point

you correctly reference the changes to tax relief which are coming in. Additionally it is likely MMR will be extended to BTL mortgages (you may need to switch as presumably your OO mortgage will not allow subletting).

The 3% extra stamp should not apply to a future purchase of a primary residence

Oh, and interest rates... If these go to 4%, and you're paying 6%, plus repayment..

Good luck either way, very tricky decision

AdrianC

Rental yield on a £340k London flat is likely to be a very low percentage - will it even cover the mortgage payments?
Can you get consent to let anyway, so soon after buying, or will the lender think you're pulling a fast one to avoid a BtL mortgage?
Will your lender allow you to let it to your elderly parents in the future, anyway?

As far as the 2017 market - anybody who says they're not just guessing is lying.
Anybody who says they're giving a scientific guess rather than a wild wet-finger-in-the-air one is either seriously wealthy or lying. Or, of course, both.

The only thing that is certain is that "London" would be nowhere near enough information to give any kind of even mildly scientific guess. London is mahoosively location-dependent. Postcode/suburb, plus more information on the kind of property - if not actual street - would be needed. £340k in one area might be bubble-tastic, in another it might be good value and on the rise.

robatwork

Prices will continue to rise on average in London.

And then they will fall.

This will happen at some time in the next 30 years.

I am super-confident.

If anyone tells you they know more accurately, they have ulterior motives.

agrinnall

What will happen to the property market in 2016?

For what it's worth...

Nike79

AdrianC wrote: »

Rental yield on a £340k London flat is likely to be a very low percentage - will it even cover the mortgage payments?
Can you get consent to let anyway, so soon after buying, or will the lender think you're pulling a fast one to avoid a BtL mortgage?
.

thanks for advise.

At the moment the rent will cover mortgage payment plus expenses but i won't make any profit. the property is in a nice leafy part of London and it is quite in demand rental -wise.

I'm not planning to keep it to make profit, but if i sell now i will end up making loses (initial SDLT, early mortgage redemption fees, etc).

If i wait for a few years and market will continue to rise, I can at least sell it at no loss given the rise in price will cover initial SDLT paid and other expenses and I'm also going to free up myself from early redemption fees in 3 years time.

i have explained the reasons i need to move out to the lender and even sent them some docs in prove to justify the reasons and i have got CTL but limited in time (hoping they will extend it further).

Im just worried if i continue to wait and i will lose even more if i need to sell it in the next couple of years as i bought the flat at the top of the market.:eek:

economic

if you start letting it out, and if you don't then sell within 18 months of letting it out, you will start incurring capital gains tax in proportion to how long you let it out for compared to total length of ownership.

tricky one about the London property market. I think its topped out and will start declining in REAL terms from now (potentially for a long time) but I'm just guessing. no one really knows for sure or even with high certainty. its a market with so many factors and does not have a way to calculate a fundamental value unlike stocks which there are methods.

if you want/have to sell I would just sell, you may not be able to sell it so easily later. how big a loss are we talking about?

Nike79

economic wrote: »

if you want/have to sell I would just sell, you may not be able to sell it so easily later. how big a loss are we talking about?

25 K loss minimum. this include SDLt, mortgage redemption fee and EA fee on sale plus some improvement works inside the property (updated kitchen), also got quite a nice furniture in it:) planned to live there till retire:o

im not so worried on CGT as i understand i can deduct all the initial expenses like SDLt and cost of improvement works and expenses on sale like EA fee so its a tax on pure profits which i dont mind to pay.

Nike79

agrinnall wrote: »

What will happen to the property market in 2016?

For what it's worth...

thanks. I think by now i have read all the news on property and as someone mentioned its still hard to predict what will happen.

I can sense some market price corrections but as some mention the problem is still supply/demand at the bottom level so i still have little hope the prices will continue to rise may be not as fast

economic

news/media is just that - news and media. you shouldn't listen to anything they say.

supply problems have always existed in London. its just that demand went up a lot over the last few years. and demand can easily collapse again - driving prices lower.