I haven't bought a new property since 2018. I enjoyed the cashflow from my investments extensively for a few years (well, let's just say up to the point a global sniffle shut the world down). Out of all the investments I've made over the years I must say that property has, and continues to serve me well. The actual ownership of property not so - hear me out.
I don't like paying for repairs.
On my rental properties I see it as a cost of business. It's a simple equation. Rent comes in, costs go out, I reinvest the profits - be it at the local bookies or otherwise. But living in my own property - I don't like being unable to move. I don't like being tied down. And that is exactly why I wouldn't buy a property to live in, unless I'm dead set on staying somewhere for at least 10 years; because that is roughly the amount of time you'll need these days to wash the costs involved with moving. Banks, conveyancers, estate agents - everyone gets paid before you do, so any equity you may have created dwindles away quite quickly if you need to sell up before 5-10 years have past. Of course this depends on a lot of factors, but over the past 5 years I've seen zero growth in my rental properties for example - a zero sum game. In fact I've just agreed a sale at exactly the level I refinanced one out at in 2018. Surprised? Well, we have had a pandemic and a mass exodus from London over that time, and my properties aren't exactly first time buyer flats (I trust that had I purchased smaller units they would prove more popular) which would have seen a bit higher demand. The 5 yearly rigmarole of refinancing really gets my goat as well. Other countries in Europe or even the USA offer 25-35 year fixed terms, negating the need for income reassessment, changes in rates, unnecessary red tape to create industries, the list goes on.
We've just had half a decade of turmoil in the property market. So if you're a first time buyer just think long and hard what you'd do if you had to move tomorrow for your job etc. What would you do with this shiny new flat? Sell it? At a loss? Let it? probably at a loss. Rent it out? Hmmm, not really because you need the rent to be 145% of the gross rental amount. Unlikely this will be attained if you've taken out a 65% or higher loan to value mortgage.
The right time?
Perhaps now is exactly the right time to buy if you're a first time buyer (investment or live-in) if capital growth is your game. Be aware that we've seen little to no capital growth over the last few years (certainly not if you're looking to break even after fees and stamp duty and so on). If a mortgage however means security for you that you won't have to move until you want to (rather than a landlord giving you notice) perhaps it is right for you. Just be aware that if flexibility is a concern, just think that the mortgage payment outgoings are not necessarily going to be less than what you pay in rent. If you are thinking of purchasing a property - for investment, to live in, whatever - and you need some advice, reach out! I've been involved in letting, selling, buying and renting property in South London for 20 years now and I'm happy to share my expertise. Find me on linkedin, instagram, or old fashioned email: firstname.lastname@example.org