Should I buy a section23

G

Grace

Guest
We are a married couple with one residental property with a current outstanding mortgage of 180K. Our previous home is now rented out, with a rental income of 1000 euro p.m.and has a tax liability of 500 per month(no mortgage). We are thinking of buying a section23 property costing 215K in midlands, to enable us to eliminate current tax burden. Rent is estimated at 500E p.m. Cost of new mortgage is 1200E p.m. approx. Do you think this is a wise decision or could we do something better with the money.All opinions gratefully accepted.
 
Take a look at what is happening to the UK housing market

The number of properties sold in England and Wales has fallen by more than a third on 12 months ago, according to Land Registry figures.
The volume of house sales in the first three months of 2005 was down 34.8% compared with 2004's similar period.
Sales fell to 159,116 between January and March, down from 243,914 in 2004.
Annual price growth continued to ease, with prices up 10.3% on the same period in 2004, compared with annual growth of 11.8% seen in the previous quarter.
Recent surveys from mortgage lenders have hinted that the market is cooling.
Standoff
Economic forecast group Capital Economics recently said that the UK housing market was at an "impasse", with buyers no longer willing, or able, to meet asking prices and sellers reluctant to lower them.
The Land Registry figures also show a decline in the number of properties being sold for more than £1m, dropping to 655 from 795 in 2004.
The average house price in England and Wales was £183,486 in the January to March period, up from £166,404 in the same period for 2004.
The Land Registry said that all regions of England and Wales had seen an increase in average prices.
Wales managed to record both the highest and lowest average price increases for the quarter. Prices in Merthyr soared 44% over the year, whereas in the Vale of Glamorgan they edged up by less than 1%.
Mixed signals
Last week, the latest survey from the Halifax said annual price inflation in the UK fell to 7.8% in April from 9.7% in March, and the bank noted that prices had remained unchanged since the start of the year.
April's survey from the Nationwide building society found the annual price falling to 7% from 7.9% in March, and the building society said the overall trend remained "broadly flat".
However, the uncertain state of the housing market was underlined on Monday when a study by the Office of the Deputy Prime Minister - a study which uses a different methodology to the Halifax and Nationwide surveys - found annual house price inflation increased to 12.6% in March.
Land Registry figures are less up to date than those of banks and building societies, since they record completions not mortgage approvals.
However, the figures are viewed as the most accurate measure of house prices as they include all property transactions, including cash sales.
Rates on hold
Worries over soaring UK house price rises contributed to the Bank of England raising interest rates five times between late 2003 and August 2004.
Recent signs of the slowdown in the housing market - coupled with signs that consumers are reining back their spending on the High Street - are an indication that these rate rises are now having an impact, analysts say.
On Monday, the Bank of England held rates at 4.75%, and some analysts are now speculating they may have peaked with the next move being downwards.
Housing experts are split over what will happen to the UK market. Some analysts have predicted that prices will fall over the next couple of years, while others forecast a 'soft landing.
 
grace, if your rent is 1000 per month it is unlikely your tax liability will be 500 per month, what with allowances etc. section 23's are overpriced and probably wouldnt justify your tax savings if you buy it. renting is a problem in smaller towns-you can really only count on the equivalent of 9 months rent, if even that when you take into account expenses of renting. however disregard the tax break in your thinking and is the property good value
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Guys. Thanks very much for the help. It is certainly food for thought. I wish I had a crystal ball. Grace
 
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