bromleygirl

It would seem from this report that house prices are beggining to slow down.

This would be such a relief as I do not want to pay rent and at the end of the day see no return from my money. I am hoping to start looking for somewhere to buy as soon as I get back.

http://news.bbc.co.uk/1/hi/business/3806961.stm

What does everyone else think? Do you take the plunge and buy as soon as you can or wait to see what the market will do over the next year or so??

Iain Mc

Lots of things happening over the next few years that may affect house prices. New legislation from the Chancellor, interest rates liable to continue rising, Europe, etc.

House price rises have also been "slowing down" at various points all over the last year but such news is invariably followed with a "prices still rising at 20% a year" story a month later. No-one really knows, alas.

Unfortunately the best time to buy a house is always "three years ago". Buy when you can, as you say, at least with a mortgage some of that money ends up benefiting you rather than your landlord.

Although there is some evidence to suggest it's a renter's market at the moment....

Cheers, Iain

donglemouse

I would say buy now - let's be honest no one knows with certainty what will happen to the market.

If you're buying for the long-term to live in the house rather than to try and sell it a year later for a quick return - you're unlikely to lose on the deal.

Wiggle

Alot depends on your own personal point of view and circumstances. As has been pointed out, if you're buying for the long term, then who cares if prices come back for a year or so .. overall, you still have a house and will probably get your money back if not more when you come to sell it.

However, as a property developer, I am now liquidating all my houses as I think "the top" is in. But .. I can be wrong. But don't forget, that even with more rate rises looming and a gradual increas in doom & gloom reports just over the horizon, it will still take along time for the house-price bubble to come to a halt.

Just don't over stretch yourself on the mortgage and then if prices do come back, you wont fall into -ve equity as so many did in the early 90's. If you would have to over stretch yourself to get a house (cos of the area you are looking at) then I would consider renting to avoid that trap at all costs.

dunroving

I'm looking to buy a house in the UK when I go back in July (for a vacation), just to get on the ladder. House prices where I live in the US have been stagnant for over 5 years, and the UK market is more buoyant in the long-term. I think the risks of NOT getting on the ladder are, in the long term, greater than the risks of buying now. I don't want to go home in 2, 5, or 10 years and be unable to buy a place at my age.

Even if there is a slow-down or even a drop, I don't see it plummeting in the same way it did in the late 80's and early 90's.

There is a regional pattern also - I think the effect will be greater in areas like London where prices have become silly, compared to areas further north.

Also, I'm assuming that interest rates will increase by 2% over the next couple of years - by doing so I hope not to overextend myself to the point that I wuldn't be able to afford the mortgage payments in a year or two.

Wiggle

I can't falt your logic, but if you are going to let/rent it out while you are still in the states, be aware that the UK govmt will tax you on the income. How will they know? .. well with the boom in the "buy to let" industry the conveyancing solicitor now has to notify various govmt departments. And I guess even if you are resident in the States, the tax will still have to be paid.

So you may want to factor that into your math, but it will still be worth it and i'd probably do the same.

CaliforniaBride

I'm intigued by your post. I let my UK property when I moved to the US and the letting agent gave me a form to fill out for tax exemption. The tax office have since sent me a letter exempting me from tax.

Am I doing something wrong?

donglemouse

This is only guess but perhaps you are referring to a letter which permits overseas landlords to receive the income gross (i.e. with no tax deduction).

However every year you still have to complete the rental section of self-assessment and be taxed on any "profit" you make.

donglemouse

To clarify even if you reside overseas and are non-resident status if the property is in the UK you still have to pay UK tax on any profit you make.

CaliforniaBride

Thanks for your reply. I have only been renting my property for one year. I'm a bit concerned now. Will I automatically receive the self assessment forms or should I request them? And if so, how would I do that?

donglemouse

You should automatically receive self-assessment forms however it could take them a while to realize and send them.

You can download the forms however from the Inland Revenue website or give them a call and ask for them to send you some.

Note the dates are as follows:

For the tax year ended 5 April 2004 you need to file by:

30 Sep 2004 - if you want them to calculate the tax for you

31 Jan 2005 - if you are going to calculate your own tax liability

Regards
The Accountant

bromleygirl

Thanks for all of the replies.

I am definitley leaning to Dunrovings thinking on the matter.

I too feel that even with the higher prices right now I do need to get on the property ladder sooner rather than later. Who knows what the intrest rate may do in the next couple of years.

I think the prices will go down slightly and won't increase at the same pace as they have over the last year or two.

I am really looking forward to owning my own place in the UK and if I ever go abroad again I know I will not sell.

MikeUK

Becareful about buying...

Remember the UK has been doing the boom bust cycle on average every ten years....

If its close to the end then You have a choice jump on and hope or ... don't jump...

Check the historical data.. that last time they said it won't fall that far... and guess what they said the same thing the time before.... each had people enjoying the fun of negative equity for about a three to five year period before the market recovered...

MY advice.... read up on all the data.. and remeber alot of people have a vested interest in keeping prices high... so they'll tell you what they want you to hear....

But the common sense approach is down to the maths...

Take the average wage

then take average house price

and then take the expected interest rates...

and work out if the average buyer can afford the average house...

if he can't the the market is heading for colapse..again ?

however guesssing when is the hard part....

Don

More like 7-8 years.

dunroving

Do you mean profit as in capital gains upon selling, or profit as in rent income minus outgoings (mortgage, repairs, etc.)? If the latter, I don't expect I'll make much profit; and if I do I'll be so happy about it that I won't mind paying tax on it.