Advice for buying 2 bed apartment

steampowered

Purchasing a BTL as your first property is a really bad idea:
- You will not be able to claim first time buyer stamp duty relief (could be worth £thousands once the stamp duty holiday has expired).
- You will not be able to claim the government bonus you can get using a Lifetime ISA (worth £thousands).
- There is no guarantee that the tenants will move out when you want them to. It takes months to evict tenants.
- You will have to fill in a tax return and pay income tax on the rent, and dealing with letting agents. 
- You will need to put down a minimum 25% deposit and pay a higher interest rate than on a residential mortgage.

Instead, you should continue saving a deposit - making the most of government schemes benefitting first time buyers such as the Lifetime ISA - and buy when you are ready to move in.

You really should not be becoming a landlord if you don't own your own property. You shouldn't be taking tenants in unless you are happy for them to be there a few years. 

NinjaTune

krish123 said:

dimbo61 said:

There are some very serious issues with flats at the moment.
Grenfell ! 
I read in the paper that hundreds of tenants/owners moved out of flats in London this week due to fire safety fears.
Owners cants sell the flats they own due to new fire safety form EWS1.
Only 130 surveyors in the country to check thousands of high rise buildings which will take years.
The costs of inspections, checks and removal of the old cladding must be paid by the owners 

My Father advises against going for a flat for all of these various issues that come with flats. however i just dont think i will be able to afford a 2 bed house. I will have to have a deeper look though.

I will be buying in the midlands area, god forbid it was london!

You father is correct imo.  Flats are more difficult to sell and will come with a service charge/ground rent that can add considerably to your outgoings year on year. 

I've had an offer accepted on a 2 bed maisonette but it has no service charge just £10pa ground rent and buildings insurance of around £120pa paid to the freeholder.  Lease has recently been extended to 170+ years so no worries about hitting that marriage value any time soon.  All the flats I looked at were £100+ per month in terms of service charges and most were sub-100 year leases.

If you can't afford a freehold house then take a look to see if there are any maisonettes in the area as they don't usually have communal areas adding to service charge (though some do have fees for communal gardens or parking spaces).

krish123

sound advice guys. I really dont want any extra hassle than what is already required so i think i should steer clear of flats.

As i say there is no need for me to move out in a hurry, i am happy at home and am able to save my money.

The reason i was exploring this option is because iv had a wind fall of circa £40K from an investment (with half still invested) i used 20K to pay off my car and 20K surplus, which is being moved into saving accounts or other investments if i see fit.

I will continue to keep saving and if my other half of my shares continue to go higher i can explore my options at that point.

Slithery

Do you work? If so then then one of the best things to do is maximise your pension contributions and live off your savings. It's literally free money from the government, and the younger you are the greater the benefit.

krish123

Slithery said:

Do you work? If so then then one of the best things to do is maximise your pension contributions and live off your savings. It's literally free money from the government, and the younger you are the greater the benefit.

Yes, i match my employers 5% so total 10% going into my pension and its salary sacrifice.

I also have a HTB ISA which is maxed but im still contributing to that monthly as the 1.7% interest is better than elsewhere!

MovingForwards

@krish123 the suggested minimum is half your age is the percentage to put away each month.

Also, it may be worth revisiting your older threads, as you've been looking to buy a property / investment property for several years, discussed various savings / investment options and are still no further forward.

If you are comfortable in the family home, it would probably be worth saving for a decent deposit then when you do want your own space you will have several options.
Also, adding extra into your pension(s) as it's easier to do when there isn't a mortgage and the costs associated with being a homeowner (or even when renting).
Plus get 6+ months savings as a safety blanket, which probably seems strange when you live in the family home, but again puts you in a good financial position for when you do move out.

krish123

MovingForwards said:

@krish123 the suggested minimum is half your age is the percentage to put away each month.

Also, it may be worth revisiting your older threads, as you've been looking to buy a property / investment property for several years, discussed various savings / investment options and are still no further forward.

If you are comfortable in the family home, it would probably be worth saving for a decent deposit then when you do want your own space you will have several options.
Also, adding extra into your pension(s) as it's easier to do when there isn't a mortgage and the costs associated with being a homeowner (or even when renting).
Plus get 6+ months savings as a safety blanket, which probably seems strange when you live in the family home, but again puts you in a good financial position for when you do move out.

Yes, on top of my pension contributions i put £110 into investments each month, plus add hoc investments i make throughout the year comfortably takes me over 15% saving per year.

Im now saving £600 monthly towards a house deposit. 200 in HTB ISA (that is already maxed) and 400 into a regular saver that pays 1.5% interest.

Previously alot of money has gone into my stocks portfolio which is currently at a value of around £60K.

Because i knew i didn't want a house i aggressively invested my money. Im now planning on saving more of the money and see where i go.