DarrenC

As above, the wife and I are looking at the possibility of buying a second property.

We are in a very fortunate position considering out age (both very early 30's), i.e. very low mortgage (<50k) and a property value of approx 300k.

Do you think this is a good time to buy, and possibly let out?

Any advice would be appreciated.

Cheers
Darren

TelBoy

Nope. Just my opinion.

Davyboy, what do you reckon?

imlach

Hmm....you need to do a lot of research first.
It is certainly not the BEST time to buy now. However, that's not to say that a property in the right area for the right price is a bad buy.

It's not as easy as some buy-to-letters bandwagonners would make you think. There is work involved in being a landlord, and sometimes a bit of hassle.

Right now, the rental income is probably only going to cover your costs, so you really have to be in it for the longer term to either :

a) start making rental income profit as the capital on the loan reduces
b) hope for some capital growth.

Clarebabes

Davyboy is on his way to the airport now, so he cannot comment at this time. Please leave a message after the beep....... BEEP!!!!

camk

In the current housing market make sure your are capitalising on all your pension and tax free ISA allowances before you start making a foray into buy to let. These can be done in a reasonably risk averse way as well and you will get tax relief on all your pension contributions up to the legal maximums.

Even if the housing market stays stagnant which is IMHO the best that will happen then you should be in no hurry to buy. There are lots of up front costs to buying not to mention the ongoing ones that all need to be offset agains the income. Currently inflation is a big risk due to oil costs and increasing consumer demand. This means continuous upward pressure on interest rates, which will pressure house prices down. As Imlach says, its dependent on the house and the cost and the rental market but the balance of probabilities is not in your favour at the moment.

Imagine buying a house today for 220K that you could buy in 12 months for 190K, thats a lot of rental income to make up the capital loss.

corradoboy

We've just looked into this and being that we are at the peak of a sharp rise in property prices and interest rates are forecast to rise by upto 1% before the year end then I would say no. I have also noticed a lot of To Let boards springing up as properties become harder to let out in a saturated market, 6 months back you never saw any. If the base rate rises have the desired effect and curb borrowing, then property prices should level off or even drop. Estate agents are already using the "Guide Price" or "OIRO" instead of simply "PRICE", suggesting that people are more open to offers as property sales slow. The economy is much more stable than during the 80's Tory boom & bust era so variations are less pronounced, but it may be wise to hang on a year or so and see if the rates stabilise and prices drop at all IMHO.

DarrenC

You lot are absolute stars :-) and never fail to impress me with your knowledge.

Any more opinions, before I report back to the boss (wife !)

Thanks again
Darren

Iwan

http://www.housepricecrash.co.uk

unclebuck

The way I see it is we are in uncharted waters now. Nobody really knows what's going to happen. My belief is that we are in a Boom and Bust cycle, just are mucher longer one than we have previously seen. When the bust comes this time around it will be *catastrophic*.

UB

- good website btw. The clock is ticking -

Bajie

What about a second property abroad?

Just to upset myself a little more, I bought a flat in '89 for 80k.
The market crashed and the flat lost half its value ... ouch ... This may have had a lot to do with repossessions [not mine].
Flats in the same block are now selling for 160k.

I guess a lot of it depends on how long you can tie the money up for.

I'm sure [and certainly hope] there will be some more comments here regarding long term rather than short term [less than 5 years] renting.

unclebuck

Bought my first property in 1990 - a reposessed flat for 30K. Sold it for 96K

UB

corradoboy

Bought my 1st in '96 for £35k, sold it yesterday for £94k Then bought another today for £137k Not massive amounts, but I seem to be moving in the right direction. I was hoping to keep the £94k property and use as a rental, but it just wasn't the right time.

Faire D'Income

You could, as has already been mentioned, buy abroad in countries such as Spain for example, on a buy to let basis. You get a much better return than in the UK plus you can ride on the back of rising property prices over there which are remniscent of the rises seen in the UK up until the end of last year.

You also get the benefit of cheaper money if you take out a Spanish mortgage which will lessen your exposure to interest rate rises in the UK and would still mean you have significant equity in your UK property.

Purchase costs are higher out there and you will be liable to CGT of between 15 - 35% depending on your tax/residency status but you will also get a holiday home in the sun.

Worth thinking about.

DarrenC

Again, cheers for all the comments.

A few of you mentioned buying cheap, and selling high. This is one reason I am in this fortunate position. Both my wife and I had our own properties, both bought approx. 8 years ago, then sold both about 4 years ago. I made approx 80k profit and the wife 70k.

I note the comments about buying abroad, and especially the foreign mortgages, but to be honest, it does sound like a lot of hassle. Does anyone have any experience of this ?

Cheers
Darren

Faire D'Income

Yes. That's why I recommended it.

CrisPDuk

Be very careful buying abroad, and look into it properly, don't just take advice of mates & bbs forums Going off experiences (good and bad) that friends and relatives have had you need somebody on board that is intimately familiar with local property law (this even applies in Jockland). MrsD's sister didn't do this, and lost her first property, because her muppet husband thought he could outsmart a local villain

Plus I know that in one of the regions (Andalucia?) of Spain, the local government can confiscate land under an 'affordable housing' scam. Which actually means if a local property developer thinks he can squeeze a few apartments in the back garden of your newly aquired property, there is f**k all you can do about it. The council will give him the land (without recompense to you) and grant his permits

A mate of mine is currently trying to get me to join him in investing in some property in Croatio or Kosovo Despite another mate having worked out there (for the UN) and telling him that mafia activity is rife, he's still blundering on in the belief that 'it'll be reet'

rb5_336

I have a good few properties and my opyion right now is not a good time to buy. I'd keep the cash in an high rate interest account. Give it 12 months and re-evaluate.
Sean

BedHog

I'm waiting for a crash - then I'll move house

Faire D'Income

CrisPDuk,

some of your advice is good - you should indeed do your homework and use a local abogado who is fluent in English to advise you accorgingly when buying a property in Spain. The only horror stories you hear are from people who have ignored this advice and headed straight for a disaster!

The confiscation of land you refer to is incorrect though. It applies to the Valencia region, known as the LRAU law (Ley Reguladore de las Actividad) and allows property developers and not the local Government to appropriate land and/or build infrastructure improvements that existing property owners may or not need and thus have to pay for.

Unfortunately, it was a law that was passed with good intentions to provide low cost housing but it has been abused by unscrupulous developers who have hijacked the system. However, it looks as if this law could soon be repealed as the Ombudsman has sent a list of 13 recommendations to the Junta that will protect the interests of existing property owners and the EU is also now involved. This does not apply to Andalucia, which if anything, has far stricter planning laws which do more to protect owners than anywhere else in Spain particularly in rural areas.

If you did decide to buy in Spain, the be prepared to put in more cash than you'd need to in the UK as it is more costly than here but ultimately if you're prepared to do some hard work you will get a much better return on your investment.