Key Post: Property Investment in UK

E

Elcato

Guest
Our mortgage is now paid off which means we have E400 a month to play around with. Both self and spouse are saving maximum SSIA contribution. We also save 225 Euro in Unit Linked Fund for kids education for past 11 years - current value 23,000 Euro. We will not require to draw on it for a few years yet. We also save about 200 Euro in small savings accounts.
We could afford a deposit of approx. 30,000 Euro for property investment. Now that mortgage is paid off we could easily afford 600 Euro loan repayment.
I do not wish to borrow more than say 120,000 Euro which means there is nothing much in Ireland we can afford. I am considering buying a small house or apt. in Manchester. I have done a liitle research on the net and it seems attractive. Am I mad?
 
....

Hi,

Do you have someone in mind, who you can trust to manage the property on your behalf ? (.... that won't charge you for it ?)

If not, are you willing to pay an agent to manage it for you ? (... obviously reducing your net rental income !)

Failing the above, are you prepared to make a commitment to commute to the location, at short notice ? (.... maybe costly, not realistic at short notice etc.)

Are you intending to only acquire it for your own personal use & not rent it to any unknown parties ?


If you can't answer one of the above questions with a definite & condition free Yes, then I'm afraid my response to your question asking if you are mad .... must be Yes ;) :)

No offense intended, but one must consider the above before going after an investment property abroad :)

Regards

G>
 
Property Investment in UK

Hi Garretod,

Thanks for your reply.

It had been my intention to pay an agent to manage the property and accept the reduction in rental income. Capital appreciation is my priority as I consider this as a long term investment.

Am I still mad? Would it be wiser to take on a larger loan and purchase in Ireland?
 
Lease-back

We are in the same position. Mortgage nearly cleared. Max being paid into SSIA. Are the lease-back schemes in France a good vehicle to invest in apart from the obvious benefits of having the use of a holiday home. Does anyone know of any agents in Ireland who can give advice in this area.
Many Thanks.
 
Re: Lease-back

throws up a couple of links including at least . Always view the projections made by a middleman/agent with a vested interest critically and do your own investigations of the viability of the plan! Just for the record, I have no direct personal experience of this at all.
 
Re: Lease-back

We discussed the merits or otherwise of investing in Budapest on another thread. On that thread, I complied a of questions that an Irish investor would need to consider before investing there. Some of these questions would also apply to a UK investment.
 
Property Investment in UK

To get back to Manchester

I suppose what I was wondering is if there anyone out there who purchased in the UK in recent times an how they found the experience.


Would they do so again?
 
Re: Property Investment in UK

Hi Baucus - Why would you be thinking of investing in Manchester (given the extra hassle involved with managing from a distance and the extra currency risk) instead of Ireland?
 
Property Investment in UK

Hi Rainyday,

In a word PRICE.

Property prices are so expensive here that I decided to look overseas. The UK is obviously more convenient than mainland Europe and Manchester is reasonably accessable in UK terms.

It seems possible to purchase small house/apt there for stg£80k to stg£100k. One would hardly buy in property in our major cities for that kind of money.

I am first time investor and may be overlooking something. I expect to view some properties next week and may change my mind after that.

If you can think of any questions I should ask, let me know.

Thanks
 
....

Hi,

If your a first time investor, I would strongly recommend you keep your funds invested in Ireland.

Immediate concerns would come from my questions, as raised above - serious additional costs can be incurred as a result of agency fees, short notice travel etc.

As I see it, your quite right in so far as to say properties are cheaper in many parts of the UK, than in Ireland.

However, please remember these properties are cheaper, because they have to be .... most ordinary residents in almost all locations of the UK, cannot afford to buy properties at Irish prices these days !

Now, to take this a step further .... ask yourself, what kinda rent will you get in the UK ?

Furthermore, ask yourself, are you familiar with UK law, with regards to tenants rights etc ?

Another question to ask yourself is, do you borrow in GBP£ and hope you have enough rental income to service the debt .... each & every month ? Otherwise, you will have to convert Euro to GBP£ on a regular basis, with commisson, FX rates & time all to be considered.

If you borrow in Euro, when is the right time to exchange your money to GBP£ ? ..... remember, your income from rent is then in GBP£ & you have to convert this back to Euro regularly ... again, think FX costs, commissions & time spent going to & from the banks.

I'm sorry to be so negative on this, but I strongly advise against investing abroad, if it is your first ever property investment. While the Irish market is difficult to get into at the moment ..... at least you know it, you can access it more easily & it's the same currency !

On a final note: Many reports I have seen over the past few months have indicated that they think UK property prices are falling .... if this is the case, you could end up in a negative equity situation, by buying in the current economic climate !

regards

G>
 
....

Oh,

BTW, since I have taken it upon myself to tell you what to do with your funds ..... I thought I might aswell "do the dog on it" ;)

I'd personally suggest you find one or two trusted family members or friends who might have a similar amount available to them & buy something jointly, in a good location here in Ireland.

Very best of luck whatever you decide :)

regards

G>
 
Re: Property Investment in UK

It seems possible to purchase small house/apt there for stg£80k to stg£100k. One would hardly buy in property in our major cities for that kind of money.
Click to expand...


Hi Baucus - That is not true. A quick search on myhome.ie today shows a few houses for less than €150k in Dublin West, Cork city northside, Waterford City and Galway for sale today. This would equate to the £80k-£100k price range you mention. I can't understand why you want want to head off to Manchester with all the currency risk & management hassle that this entails.

Granted, these houses be appearing in the Irish Times on a Thursday and may not be in what would be broadly considered to be desireable locations - But how do you know whether the Manchester properties that you will look at are in desireable locations (apart from the word of the estate agent who has a vested interest in making a sale, of course).

Cheers - RainyDay
 
Re: Property Investment in UK

these houses may not be in what would be broadly considered to be desireable locations

Just on that point - some would argue that buying property with a view to capital appreciation in areas such as this - i.e. that are relatively low in price and thus have the potential for significant gains compared to more desirable/mature areas - is exactly what investors should be doing.
 
Re: Property Investment in UK

One of the problems with the Northwest of England is that with the decline in industrial manufacturing / traditional employes, many residential areas have been depresssed for years and show no signs of improving - ideally there would be capital appreciation but I think its a risk unless you clearly know your market.

mf
 
Re: Property Investment in UK

Sorry - I was thinking more of Ireland, and specifically Dublin.
 
Re: Property Investment in UK

People often forget that the UK has experienced a house price boom in the past 5-7 years on a par with the Irish experience. If there are still cheap properties here or there, one has to ask why they are still cheap, i.e. why there has not yet been enough demand for them to stimulate price increases in line with the rest of the market. The obvious conclusion must be that they have proved to be unattractive investments in the past. (That is not to say that this will necessarily hold true in the future.)
 
Property Investment in UK

Well I must say the negative comment is causing me to stop and think. No positive comment at all.

I will be visiting Manchester for next few days and have lined up viewing of properties in the stg£75k to stg£80k range. I will also have a look aroud the various areas on my own if possible i.e. without an estate agent at my side.

After that I may decide that Ireland is the best place to invest after all(if I can afford it).

One final query: Is there anything positive at all that can be said about a UK investment? What about spreading of risk in the event of a market downturn here given I own my own home here
 
Re: Property Investment in UK

Hi Baucus

I'll go against the grain here and point out some positives in investing in the UK.

The long term prospects for property prices in the UK (outside London &SE) are good. The statistics are something like their housestarts are only 3x Irelands with 15x the population.

The basis of a lot of the negative comments were about getting a bad location. Some advice, nice areas are obvious, city centre, near business / hotel districts. Alternatively go to the city councils website or offices and take a look at the city plans. See what areas are due for redevelopment. Post questions on a local website.....whats moss side like?

Check out demand by placing phony adds on websites for areas you are thinking of. E-mail every letting agent in the city centre and correlate their responses. Ask them straight out what the buy to let market is like in this area, tell them you already have a property in the areas you are thinking of. This way theres no conflict of interest, in a similar situation I found that out of 15 agents I received replies from 10 and they all had very practical reasonable advice.

Regarding currency risk. The Euro is at a high now versus the GBP (71p). It is tipped that the recommended entry point for sterling to Euro is ~70p. This makes it relatively cheap now to pay a 20% sterling deposit (as opposed to last year when it was at something like 62p). You'll receive your rent in Sterling into a sterling bank account paying off a sterling mortgage and if this is a long term investment, by the time you sell I'll wager Sterling will be a distant memory. There are no currency fees besides the initial deposit.

Regarding managing the property. My letting agent fees in Glasgow are one off payment of £150 + 10%. For this my tenants have been procured (2 year lease), they handle all tenancy issues repairs etc (these are at cost) and most of all I don't have to do a thing.

So in short if you buy a property thats not falling apart and is in a sound location (rules that apply anywhere) then theres absolutely no reason to exclude the UK.

Other benefits, only 1% stamp duty. Some negatives not mentioned, sterling mortgages interest rates are higher . You have to file a UK tax return.

Hope this balances the argument a bit. Go for it.
 
Re: Property Investment in UK

The long term prospects for property prices in the UK (outside London &SE) are good.
Click to expand...
This has been contradicted a number of times recently by "expert" comment in The Financial Times and other apparently authorative sources. BTW, I'm not saying these sources are necessarily correct.

The statistics are something like their housestarts are only 3x Irelands with 15x the population
Click to expand...
This statistic does not necessarily mean anything for the future prospects of UK property market as opposed to the corresponding market in Ireland. The UK has for generations had a much more plentiful supply of housing due to the major public housing initiatives undertaken by successive UK govts in the middle decades of the 20th century.

This did not apply in Ireland where house construction rates were depressed for decades due to the effects of emigration. Because the UK has a much higher housing stock relative to its needs, there has been no real demand to justify an exceptional surge in house construction along the lines of what has happened in Ireland in the past 10 years.
 
Re: Property Investment in UK

This has been contradicted a number of times recently by "expert" comment in The Financial Times and other apparently authorative sources. BTW, I'm not saying these sources are necessarily correct.

Predictions of the future are only ever correct with hindsight! ;)
 
You must log in or register to reply here.
Back
Top