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First time buyers in London

18 OCT 2012

Media 20121121_1350Buying a property requires a vast amount of money. Even when buying your first home, always think of it as an investment. 

There are 4 questions you need to  ask yourself before buying a property:

Why? How much? Where? Who?

1-Why?

Are you buying a home for yourself or your family?

Are you making an investment? If yes, is it because you wish to finance your children’s university tuitions? Is it to enjoy a reliable income when you retire? or is it because bank savings  no longer give you satisfactory returns? 

2-How much?

Are you a cash buyer? 

Is it worth putting all your cash  into one property? If you have  been living in London for less than 2 years, you will not be eligible for a Buy-to-Let mortgage. So a cash purchase may be mandatory.

Will you need a mortgage? 

If so, you will need to think about the length of the mortgage.

For a sole investment you may choose an “interest only” repayment mortgage.

If you wish to put money aside for your retirement or are buying a home for yourself or your family, an interest and capital repayment mortgage is a safe option.

3-Where?

Location is  a key element. Whether it be to benefit from a good transport link, a quality school, not being close to a railway or a noisy road, such things are important to keep in mind. You may also need to check planning consents, rights of light, to avoid any bad surprises later.

The tenure is important: Leasehold? Freehold? Share of Freehold? 

The best option for flats is share of freehold. But  depending on your location and budget, having leasehold for  over 100 years is usually recommended. If you wish to purchase a property on a short lease make sure that the extension permit is granted before exchanging. You should be aware of the extension cost.

For a house, you may look for a freehold  that allows you to do whatever you wish in the property (as long as you have permission from the council).

4-Who?

Who will your tenants be? You do not want a non-paying tenant, or wait for a very long time  for someone to  rent your place. Make sure your property matches the local demand and is located in an area that attracts people with good incomes. The usual way to rent a property is through an Assured Shorthold Tenancy agreement. The minimum length of the contract is 6 months but it can go up to 2 years. 

You may decide to do a short let. You need to check that your council allows short lets in your area. Another thing to bear in mind is that shortlets are time-consuming. It can also be money-consuming (cleaning costs, furniture, appliances…)

 

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