UKH

I would really appreciate understanding people's thoughts on purchasing a property now ( need to pay the deposit next week! ) or post the dreaded Brexit….

I have been property hunting for the past year and last month came across our dream home in Aylesbury. We currently live in my partners property in London which he intends to rent out if this property is purchased. I am a FTB and the Aylesbury home will be under my name.

The home in question is £325k for a 3 bedroom and I’ve been able to obtain a 2 year fixed rate mortgage of 1.59% with Santander. My biggest concern is that house prices will take a massive hit post Brexit and I will be left in negative equity.

New homes are being built in this development but they will be a starting from £340k - £360k, this property I keen to buy was the last remaining in this current plot , hence the discount.

This will not be our forever home so we would be looking to sell the property in Aylesbury after 3 years and purchase something together in both our names.

I’ve read so many articles about the risk of buying pre and post Brexit but I’m struggling to decide!

In an ideal scenario I’d love to go ahead with the purchase and ride out the Brexit storm with a low rate mortgage for the next 2 years….

Any thoughts or insights would be much appreciated please 😊 Thanks in advance!

Reading between the lines, you’re looking at a new or nearly new build.  I wouldn’t touch one with a barge pole, Brexit or not.  I have yet to see a new build house on an estate that isn’t a horror story of substandard design, substandard construction, bodges and the exact same leaks and cracks as the other identikit houses on the estate…

I can see lots of ways that house prices are going down after Brexit and few in which they are going up.   

If there was serious damage to the economy, large-scale state funded house building is one of the few things that could make a big difference to putting some life in it, at the expense of existing, overvalued houses.

If you are really confident that your job will survive Brexit, and that you’re not planning to sell for the next 20 years then at 1.59%, you’re not going to break the bank come what may. You just might end up with buyers remorse if prices tank, but if they do that we probably all have bigger problems…

If your job is safe and you don't intend to sell then there's no problem. If you and your partner want to mitigate the risk why not sell the London place then you're not as exposed to property prices (that will also depend on rental yield).

If you are buying to invest I'd say wait it out, there are other economic headwinds as well.

A couple of thoughts for you to mull over...

You haven't said how big your deposit is (so therefore how easily you could end up in ne) but normally negative equity isn't a problem unless you need (want?) to sell, however if you are already planning to move again in 3 years it's a bit of a gamble. 

The FT did a good article recently about 'should you buy in London now' (equally applicable to Aylesbury I should think.) The bottom line was it depends (as ever!) on your circumstances and what you want - basically not as a short term investment or quick turnaround, yes if you aren't stretching yourself and it's going to be a home

Are you using help to buy? I don’t have recent first hand experience, but I get the impression that help to buy creates a premium on new build property, so new build may be worse value if you don’t need HTB. 

I’d echo every word of this.

cheers

Toby

If you can live with the possibility that you may end up being stuck in the house for 10 years or so despite your wishes for the future (and slightly ignoring unknown changes in your personal lives - because that pretty much starts a what if scenario) buy, if not it isn't a good time to be buying.

Is the property Freehold or Leasehold?

Freehold

Totally agree and that's why the plan is to move out within 3 years in order to get rid of the htb loan. 

I missed the bit in your OP about selling after three years, in which case I change my advice to don't buy. SDLT is £6250

Thanks Tyler, as a FTB I am not paying any stamp duty on the Aylesbury home as the developers will pay that for me. 

For the future joint purchase, we will indeed have to pay the stamp duty

From all your answers it's seems like I should be waiting for brexit to happen. Thank you!

It's just such a shame to have to put our lives on hold just to see what happens. 

Nobody can tell you what's going to happen with respect to house prices, with or without Brexit.

Check the Leaseholding, a lot of new builds have extortionate lease terms, these are sold on by the developers to sharks who will charge ££££ for permission for any work to be done and apply an escalator to the ground rent, potentially making the property unsellable. Use your own solicitor for conveyancing not the solicitor provided by the developer for 'convenience'. Fortunately I haven't learned about this the hard way but listening to https://www.bbc.co.uk/programmes/m00045l2 I feel for those caught by this outrageous practice.

Edit, just seen the property is freehold, but I'll leave my post, the more people are aware of this the better!

Not so much Brexit, but new builds are sold at a significant premium anyway. Add on the inflation caused by HTB too and I'd worry that over a timescale of 3yrs you'd be nursing a loss on it. That's fine if you were planning on staying there long term, but no use if you're moving on

Anecdotally, new build, 4 bed houses were £500k on a new build estate I saw. On the opposite side of the road, older, larger properties with larger gardens were £100k less. 

Thanks Mik

The reason I am using the HTB is because this property would only based on my financial and I would have enough to purchase anything bigger than a one bed flat which is where we currently live.

Partner doesn't want to sell him place in London just yet as the development around us is being built up so estimating the property will have more value in the next few years. 

Would be really great if there is a crystal ball that I could use 😊😜

We moved into our new house at Easter and went through with the purchase despite the Brexit uncertainty. However:

• This is our family home so we won't be moving for 10yrs plus
• We had a decent deposit so we shouldn't have the stress of being in negative equity 
• My job is safe-ish, my wife's very safe

We didn't want to put our family life on hold whilst waiting (we'd already had one house fall through) so thought he risks were mitigated enough so worth it.

In your case, wanting to sell up in three years that seems like more risk than I would be willing to shoulder.

Nobody knows if or when brexit will happen, what it will look like nor what effect it will have on house prices, so it is more a question of your priorities and attitude to risk.

If it's the right house for you and you are reasonably confident you can cover the mortgage for the next few years *I* would just buy it, live in it, and stop worrying about its value. But you may have different priorities.

It’s the same in what I suspect is my more northerly location.  What I don’t know is how quickly the “new build premium” evaporates when selling them as “used”.  

Up here, large developments of modern small properties seems to have permanently depressed the price of solidly built ex-council 3-bed semis to about £65k-£80k, and 2-bed red brick mid terraces to £40k-£60k.    The ex-council ones in particular tend to have nice big gardens.

Actually being freehold doesn't exclude you from liabilities that are comparable with leaseholds. We nearly bought a house that had contributions to a management company in the deeds, to cover maintenance of the estate as it wasn't adopted by the council. Traditionally the management company would be wound up by the developer on adoption, but increasingly they are holding onto these contracts. Ours had been bought by the residents but it was a level of faff I could do without. 

We walked away and bought an older house. The only restriction on our deeds now is we can't have a fair or keep horses on the front garden. 

I would never buy a new build. Too pokey, no storage, tiny gardens and all bathrooms no living space.

Sounds speculative. 3 years is a really short time horizon for owning a house. Aside from the risk of general movement in house prices and the amplified risk of it being a leveraged bet the transaction costs of stamp duty and fees when buying and more fees when selling are more more significant than with longer term ownership.

Yep, throw this into the equation too!

Stamp duty could be scrapped for all homes worth under £500,000 if Boris Johnson becomes the next UK prime minister, according to reports. Analysis by Yahoo Finance UK suggests the move could save first-time buyers up to £10,000 on their first home and give buy-to-let landlords and second homeowners a £30,000 

 3 years is a really short time horizon for owning a house.

This. This. And This.

I think you hoped everyone would say go for it, but they haven't.

You can't predict property prices over a 3 year time frame (you can't really predict them at all but that is another thread). 

I can understand why people want to, but trying to game the system when you are on a low budget and don't have a lot of resources is a fools errand. Boris may get in, then he may, or may not, scrap stamp duty, then this may, or may not, be overturned. Prices may plunge after a hard brexit, or they may rise after a soft brexit etc etc.

Your best bet is to understand that if you buy the house now then in 3 years time you _may_ be able to sell it on and follow your plan, or you may not - but be under no illusions as to the certainty of your plans. People have become very blase in this country that if you buy a property it will go up in value.

And Brexit isn't really making you put your life on hold, it just means you might pause on buying a property.

The basic one is that we somehow end up with one of the less destructive options, the economy doesn't tank very much, and all the people who've spent the last couple of years thinking about buying but holding off due to the uncertainty pile back into the market with a vengeance.

But obviously it could easily go the other way...

That seems to be happening in my neck of the woods already; I think as summer broke a lot of people who had been holding off for 2 years finally lost the will to wait, and it’s lubricated a lot of chains.

Along I think your lines of thought - any Brexit at least brings certainty to that issue which could see a lot more movement.

My tuppence: don't

At the very least, saying no now will get you £10k off

Like others are saying, 3 years is too short a period. 

Why not just wait a little longer or rent and then buy house jointly ?

Btw if you do buy it, please send us all an invite to the house-warming.

Where is this? And how "desirable" is the local area?

Rob! Your comment made me chuckle Highly highly highly doubt that I'll be buying based on all this information, will keep you updated!

Above the coal fields of County Durham.

Some of the villages are a bit rough like but others are pretty decent.  Reasonable commutes to Newcastle, Darlington and Durham.  Some are on the edge of the Durham Dales and Northumberland and North Yorkshire aren’t far away.  I go to some of these villages for shopping and the occasional pint.

Other places are Ferryhill and West Cornforth.  I don’t go there.

An example picked at random - 
https://www.rightmove.co.uk/property-for-sale/property-79137563.html