Buy property now or wait?

[Firefretted]

I'm in my early 30s. No children (and not planning to have any), no partner and both parents deceased so don't need to think about caregiving responsibilities in the future.

I have been saving half my salary each month (£1k) for a year towards a mortgage deposit. My original plan was to save up 34k in three years to have a 20% deposit on a 170k property.

I will be buying a property for the 1st time but don't count as a ftb as my siblings and I inherited our family home, which we rent out (I would prefer to sell it but the others are against this so this is not an option unfortunately). I know that I will need to pay higher rate stamp duty when I buy my own place. My share of rental income from family home is approximately £6k a year before tax/repair bills.

I currently live in London and need to stay here for at least the next 2 years for work. I lodge, which is very cheap: £500 pm all bills included and no commute costs. I currently earn £36k, this will rise to £44k in November. After my current job ends, I will need to leave London as I can't afford to buy here. I can work anywhere (hcp) but my salary will fall to £38k outside of London.

The housing market has shot up so much since I did my original figures that my original plan is not realistic anymore and I'm worried that the market will climb even further out of reach if I wait another 2 years.

I have £13k saved, which is enough to buy a basic 1 bedroom flat with a 10% deposit in the cheapest area I'm looking at. I have the legal fees saved too. Should I just go for it? I wouldn't be able to live there fulltime for at least a couple of years but I could go down at weekends and holidays to do it up, spend time in the area etc. Presumably, if my plans change and I want to move elsewhere, it will have gone up in value more than the equivalent savings in Premium Bonds would.

A bit of me feels really sad at the loss of my plan to buy my 'perfect' first home and depressed at thought of going through the stress of the housebuying process now without the pay off of actually getting to move in properly at the end. Would you go for it or wait?

Hi OP.

I think that because you are able to lodge so cheaply and therefore not spending much on rent, you should maximise saving until you are ready to relocate and buy. Could you reframe the big savings on rent as "profit" in your head, kind of? Maybe be extra frugal and save a bit more each month so you get even more satisfaction seeing your savings grow. You are still making progress towards your goal even if not buying just yet.

I think now is a very bad time to buy, if you can wait. The market is so skewed to sellers, people are snapping up houses and paying way over the odds right now.

Shared ownership? Find one where you can staircase to 100%

I'd probably wait, but start gently scouting areas I might like to live, viewing properties but not being very active about it. Put yourself in a position where you are really ready to move and know how the market is moving in your favourite neighbourhoods.

Don't be too cold-hearted. Everyone has a dream of finding a perfect home at a bargain price but this generation is unlikely to be that lucky. After I bought my first home with my partner, we went into negative equity for a while! But things have worked out ok for us. Wish you happiness and luck in your search.

I would definitely wait in your circumstances. You are managing to rent very cheaply and save significant money for a deposit.

It's a terrible time to buy at present, a seller's market in most areas. Things won't continue like this. I haven't seen any forecasts with this projection and no trends even continue forever.

I would wait if I were you. Your current situation is short term (although probably doesn't feel that way). It could take a year to buy one of these flats you are looking at, in which case you've got a year left on your contract, then what?

You are able to save so much at the moment,and the market is unlikely to keep up at this current pace so I wouldn't worry too much about loosing out.

I agree with waiting. I thought prices would come down. Instead they've gone up.

I don't think the mortgage company would allow this. You need to be the full time occupant. Also you wouldn't get insurance either if you didn't live there. You could apply for permission to let it almost straight away but it's unlikely to be granted straight away.

I’d wait too. You are in a great position if you are able to save that much per month, and now is not a good time to buy as pp have said.

Is there a chance that in another year or so your siblings may have had a change of heart about the former family home, currently rented out? For instance, if you collectively start needing to carry out significant maintenance/ big bills. People are often less keen on being a landlord when faced with the financial realities of maintaining big, old properties.

That could give you another huge chunk of deposit if you are able to sell and realise that capital.

Waiting makes 0 financials sense. The sums just don’t work. You are spending money on rent that could be paying rent your mortgage. Those who have been waiting for prices to be lower than they are have been waiting a long time, wasting money in the process.

It depends on the market in the area you're considering buying in.

I believe you wouldn't pay the higher second home rate of stamp duty provided you don't let out any flat you buy (but do take legal advice), because the flat would be intended as your primary residence. Your current lodging is not your permanent address- many people lodge M-F for work and go home at the weekend.

You would have to fork out for council tax, insurance and bills on a flat you're living in part-time, so would you pass the affordability criteria for a mortgage?

Id advise against waiting. House prices won't fall much, if at all. Each month you're saving which is good, but wasting money on rent.
Paying into a mortgage and house price increases is a better investment

Thanks everyone, lots to think about

I wouldn’t in your situation, you don’t know where your next job will be and in two years you could be in a serious relationship that may narrow where you’d like to live. Buying/selling to move is a massive pain, and I don’t think it’s worth paying the higher stamp duty just to get on the ladder. £500pm is likely less than what you’d “waste” on interest at the beginning of a mortgage anyway. You’re not waiting for prices to be lower, you’re waiting for the right time for you. If you were waiting only for lower prices my advice would be different.

I would wait and save.
I'd also research FIRE principles and consider a 2 year plan to boost deposit.

I'd also try and stretch to a two bed if you can at all and rent a room (i made 35k tax free doing that and it really helped me move up the ladder)

One thought that strikes me OP, is whether there is scope for your siblings to buy you out of your share of the inherited property?

That way you would have a sizeable deposit, no additional Stamp Duty and possibly be able to buy a much better place,. Possibly even one you could live in now?