{"id":2904,"date":"2017-09-20T15:15:23","date_gmt":"2017-09-20T15:15:23","guid":{"rendered":"http:\/\/poseidon-gp.com\/property\/?p=2904"},"modified":"2017-09-20T15:15:23","modified_gmt":"2017-09-20T15:15:23","slug":"when-is-the-right-time-to-buy-a-property","status":"publish","type":"post","link":"https:\/\/poseidon-gp.com\/property\/when-is-the-right-time-to-buy-a-property\/","title":{"rendered":"When is the right time to buy a property?"},"content":{"rendered":"

Q<\/strong>\u00a0I live in a university town in the south-east of England. I am contracted to stay here for two years. After that I may or may not get another job in the same town, but I\u2019m not so attached to it that I\u2019d want to stay if there wasn\u2019t the compelling reason of a job.<\/p>\n

I have \u00a3280,000 invested offshore (a combination of life savings and proceeds from the sale of a flat) which is earning capital growth of \u00a32,000 a month. I am single and paying only \u00a3400 a month in rent in cramped quarters. I could probably get something more comfortable for about \u00a3800 a month.<\/p>\n

If I were going to be staying here long term it would doubtless make sense to buy a place of my own. In the shorter term, however, I\u2019m not sure. The capital growth on my investments far exceeds my monthly rental payments.<\/p>\n

If I were to purchase a house or flat it would be something in the range of \u00a3350,000-\u00a3400,000, so stamp duty would be in the region of \u00a38,000. Using my savings as the deposit, I would forfeit the capital growth I currently get.<\/p>\n

Property<\/a>\u00a0values seem unlikely to increase much over the next two years, and the stamp duty is obviously money I will never get back. So according to my estimates, if I buy now I could end up worse off in two years\u2019 time if I have to sell up and move on. So in financial terms I should continue renting.<\/p>\n

If we were talking a small amount of money it would be worth it for the sake of having my own place \u2013 I\u2019m not getting any younger. But as far as I can see, if I buy now I will end up two years hence thousands of pounds worse off than if I continue renting while my invested assets grow. Or have I somehow got this wrong?\u00a0JP<\/strong><\/p>\n

A<\/strong>\u00a0You are right that buying property is an expensive business. And it\u2019s not just the stamp duty land tax (SDLT) that you won\u2019t get back when you come to sell: it\u2019s also legal fees and the possible valuation and survey fees. But as you say, the biggest hit is from the SDLT, which would be \u00a37,500 on a property costing \u00a3350,000, but \u00a310,000 if you bought somewhere for \u00a3400,000. Because of these un-refundable costs, as a general rule of thumb, if you don\u2019t plan to stay in the same place for at least two years you are probably better off renting.<\/p>\n

However, it also has to be said that at the end of two years you won\u2019t get back the \u00a39,600 in rent you will have paid \u2013 or \u00a319,200 if you were to move to somewhere less cramped.<\/p>\n

It\u2019s also true that if you were to use your entire invested assets to buy a property you would lose out on the \u00a32,000 it is growing by each month (assuming that level of growth continues).<\/p>\n

So, on the face of it, because you might be moving on in two years\u2019 time it seems to make financial sense to carry on renting. But what if you don\u2019t change towns at the end of your current contract? Will you kick yourself for not having bought? If there is a high chance you\u2019ll be staying put, there could be a good reason for coming up with a compromise solution.<\/p>\n

Instead of using all your invested assets to buy a home, you could use only as much as you need to put down as a deposit to get an affordable mortgage for the rest of the purchase price. It\u2019s true that reducing the amount you have invested won\u2019t produce the same amount of growth as now, but on the plus side capital gains made on a home of your own are tax-free, while gains on investments \u2013 even if held offshore \u2013 attract capital gains tax. Income from offshore investments is also liable for income tax if you are a UK resident. If UK taxpayers don\u2019t tell HM Revenue & Customs about offshore income and gains they are breaking the law.<\/p>\n","protected":false},"excerpt":{"rendered":"

Q\u00a0I live in a university town in the south-east of England. I am contracted to stay here for two years. After that I may or may not get another job in the same town, but I\u2019m not so attached to it that I\u2019d want to stay if there wasn\u2019t the compelling reason of a job. […]<\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3],"tags":[],"class_list":["post-2904","post","type-post","status-publish","format-standard","hentry","category-news"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p9PjAq-KQ","_links":{"self":[{"href":"https:\/\/poseidon-gp.com\/property\/wp-json\/wp\/v2\/posts\/2904","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/poseidon-gp.com\/property\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/poseidon-gp.com\/property\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/poseidon-gp.com\/property\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/poseidon-gp.com\/property\/wp-json\/wp\/v2\/comments?post=2904"}],"version-history":[{"count":0,"href":"https:\/\/poseidon-gp.com\/property\/wp-json\/wp\/v2\/posts\/2904\/revisions"}],"wp:attachment":[{"href":"https:\/\/poseidon-gp.com\/property\/wp-json\/wp\/v2\/media?parent=2904"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/poseidon-gp.com\/property\/wp-json\/wp\/v2\/categories?post=2904"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/poseidon-gp.com\/property\/wp-json\/wp\/v2\/tags?post=2904"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}