Buying 2nd home for child’s future

sal_III

amnblog wrote: »

Bit baffled by all this negativity here.

What's the baffling bit?

If the reason is to secure a home for your kid - buying one so early in their life with no input from them in terms of location is a bad idea.

If the reason is to invest in your kid's future - paying for education like College/Uni instead of letting them take on a massive debt so early in their adult life is IMHO better value for money. At the very least S&S ISA is likely to provide better return over 15 years and is completely passive, unlike BTL

foxy-stoat

If you have a spare £1000 of disposable income you would be better off keeping it in savings accounts, in 15 years you should have minimum £180,000 + interest, rather than buying a property, spending 25% straight away and hoping for no voids and good tenants and keeping up with the income tax....so in 15 years time your hoping the value has increased as at that point you will have to sell it to your child and pay the capital gain tax or keep it rented out until the mortgage expires then sell it.

amnblog

The Nationwide UK House price index has risen 45% over the past 10 years.

If our original poster invests £37,500 to buy a £150,000 property a similar rise would lead to a £217,500 property value in 2029 - giving an 180% pre-tax return on capital.

Even with the potential impact of taxation I don't see this as a bad deal for their offspring.

Suggestions above amount to 1.7% p.a. from an ISA at current rates giving a 19% return over 10 years.

SouthLondonUser

amnblog wrote: »

The Nationwide UK House price index has risen 45% over the past 10 years.

If our original poster invests £37,500 to buy a £150,000 property a similar rise would lead to a £217,500 property value in 2029 - giving an 180% pre-tax return on capital.

Even with the potential impact of taxation I don't see this as a bad deal for their offspring.

Suggestions above amount to 1.7% p.a. from an ISA at current rates giving a 19% return over 10 years.

So your crystal ball tells you that house prices will behave over the next 10 years like they did over the previous 10.

If you are sure that's going to be the case, by all means, go for it, but how can you be so sure????????

Even before 2015, the UK was full of places, where house prices barely kept up with inflation, and sometimes not even that.

London and the South-east behaved very differently, but London house prices are, if I remember correctly, mostly flat vs the 2015-2016 peaks (in nominal terms, which means down in real terms, i.e. net of inflation) and down in nominal terms in quite a few cases (riverside newbuilds, super-prime, etc.)

I am not saying I know what the future looks like - I am saying that anyone who claims they do is, well, don't make me say the word...

[Deleted User]

amnblog wrote: »

The Nationwide UK House price index has risen 45% over the past 10 years.

If our original poster invests £37,500 to buy a £150,000 property a similar rise would lead to a £217,500 property value in 2029 - giving an 180% pre-tax return on capital.

Even with the potential impact of taxation I don't see this as a bad deal for their offspring.

Suggestions above amount to 1.7% p.a. from an ISA at current rates giving a 19% return over 10 years.

I would imagine that the 45% HPI is heavily skewed by London and the South East where £150k will buy you SFA.

Given the changes in taxation for additional residential properties and landlords there the very real possibility that a rental property won't even be able to wipe its own face, and those are tax changes introduced under Conservative governments, Christ knows what's in store for landlords if Labour get in.