I'm just wondering if I'm being thick or snesible with this theory? It's kind of a two part question?
DS2 is looking to be a first time buyer in a few months time. His real budget is £250K but could pay a tiny more.
In the area that he is looking there are lots of lovely flats at that price, presumably due to the fact that the stamp duty threshold changes from 1% to 3% on the WHOLE AMOUNT, when you pay over £250k.
He also may well sell up in two to three years after buying as he'd really prefer be in nearer London (he's moving for a job and doesn't want to rent for a long time).
Given the above conditions, are these two statements then a sensible conclusion:
If he buys at over £250k it will cost him a lot more than if he buys at £249,999.
He would be much wiser to buy something at £240k in that he hopes to sell in a few years and if he buys at £250+ it would need the property to rise in value by a significant amount over that short period in order for propsective purchasors not to want to only pay up to £249,999 - i.e. the price he bought it for.
So what I mean is, if he buys at £240 there is some hope of an increase in value (especially if he does a bit of work in the property), but if he buys at v close to £250 there is very little hope and it is hard to significantly improve a flat by, say £20,000 as you can't really extend!
I think I'm being logical but I'm not quite sure. Can you let me know? Thank you.
I agree with you trill. It should be like income tax bands. Anything else just isn't fair and skews the property market.
He's not going to buy to make money but lucky thing doesn't need too huge a mortgage so compared with renting and keeping the money in a paltrey paying account it seems sensible to buy.
He just doesn't want to loose money and would hope that over, say 2 or three years, it would go up by say £5000 due to perhaps changing the kitchen doors and redecoration plus inflation. This slight would be ignored by any potential buyers in the future thus, I believe, making it more sensible to buy a bit under £250k.
OK I'm not being silly then and the old adage of "buy the best you can afford" is not so relevant in this case. We are talking about the Brighton/Hove area by the way, so fairly vibrant property wise I think.