Buying your first house in the UK in 2007

in France it's considered somewhat strange behaviour to think about buying a house before you're in your late 30s, at the earliest

That may have been the case fifteen years ago, but it isn't now. Rents have become ridiculous in Paris (although still not as ridiculous as in London), and anyone who can scrape up the finance (easier than it used to be) is buying. Stories about real estate now staple in the media.

or one of these

http://www.flickr.com/photos/charltonlido/458837686/in/set-72157594561590745/

doesnt france have some weird two-tier market, one for french people, and one for mad dogs and englishmen looking to make a killing without doing any work?

australia certainly penalises foreigners super-harshly should they have the temerity to express an interest in buying property there.

doesnt france have some weird two-tier market, one for french people, and one for mad dogs and englishmen looking to make a killing without doing any work?

No, never heard that. There is a wealth tax though, applicable to second homes and not primary residences. What France does have is a pretty expensive conveyancing model which probably slows down the market somewhat.

In fact, for all you wealthy investors out there, the French market is set to fly, given that Sarkozy has promised that interest on home loans will be deductible from income tax.

nathalie i thought you lived in belgium!

i knew rents were high in Paris, but i didn't realise young people were buying houses more - maybe this is a difference in the kinds of people you know there, Zelda, and the kinds of people i know

Maybe! Nonetheless, I think there's been a significant swing towards buying, in a hitherto renting culture.

...Sarkozy has promised that interest on home loans will be deductible from income tax.

-- Zelda Zonk, Wednesday, June 20, 2007 10:50 AM (19 minutes ago) Bookmark Link

Please explain further. Or link. Thank you.

http://www.expatica.com/actual/article.asp?subchannel_id=25&story_id=40688

The bill also proposes tax credits of 20 percent of the interest paid for the first five years of repayments for home loans.

This measure, according to opinion polls, is one of the top topics of conversation among French people at the moment.

And there are a lot of other Sarkozy-related reasons why the housing market in France is set to boom.

I do, TH, I do. sorry if my post seemed confusing.

Hah, and now a different username will even confuse you more.:-D

And here was me thinking the Parisian market looked cheaper than London, and me wanting to sell up and move...

Well, Paris is still much cheaper than London, and even with a price hike, it will certainly remain so. It's the silly money earned in the City that fucks up the London market, and Paris has no equivalent to that.

Yeah, but I rely on that City Money to pay my mortgage. I'd have nowhere to work in Paris. :-(

(my info re: French young people not really buying houses comes from a Bordeaux perspective by the way)

...This measure, according to opinion polls, is one of the top topics of conversation among French people at the moment

Welcome to our world.

my point about the two-tier market wasn't really about paris either, but about...southern france i guess (or wherever english people have gone to buy crumbling farmhouses)

Welcome to our world.

Exactly. Sarkozy wants a UK-style home-owning democracy. Shades of Thatcher in the 80s.

lots of properties in the rural north west snapped up by brits i think

Yep. Lots of Brits, Germans, Dutch buying in Brittany, Normandy. Still incredibly cheap there compared to the other side of the channel.

Can anyone trace the origins of the UK's obsession with home ownership?

I would guess the whole 'right to buy' thing for council tennants coupled with the 80s boom in house prices.

We're pretty much unique in Europe in this regard - my friends in Germany and France just laugh at the insane amounts of lifelong debt we Brits gleefully sign ourselves up for, while they live in lovely long-term lease not wildly expensive properties - and (if possible) slowly save for a holiday home for their dotage.

Those aren't the choices facing people in Britain. My mortgage isn't substantially different from what my rent was, so it's not necessarily costing me (much) more to 'own' a flat. In thirty-odd years time I'll have to retire and take a massive cut in my income. Rent/Mortgage has always been my biggest expense - hopefully it will be paid off when I retire, whereas if I was still renting I would have to keep paying until I died.

the thing that bemuses me right now is interest-only mortgages being sold to people. that way people what people would have paid off in capital they can now invest somewhere else.

of course the logical extension of this argument is that if you rented you would have even more money to invest this way as rent will be lower than the interest on a mortgage

ie for the above to actually work house prices must continue to grow faster than wages... for the length of your mortgage

Is that true, though? I would have said rent was higher than an interest-only mortgage, but lower than a repayment mortgage. (xpost)

i think rent and interest only are kind of comparable, but you have to factor in, that with rent, your deposit is still in the bank getting interest, with an interest only your deposit is gone

True. Another factor: your mortgage repayments would stay the same every month for 20-30 years (well, they'd go up and down in line with the interest rate, but they would stay broadly the same in nominal terms and would gradually fall in real terms), whereas your rent will rise in line with inflation. So even if, for example, they're both £700 a month in 2007, by 2030 the mortgage might still be £700, but the rent could be £3,000 a month.

absolutely true, and this is the argument for buying in a nutshell, some pain now but win out in the longer term, right?

but it also requires that property increases of more than 5% a year continue for all of those 23 years, something which is..debatable. if you put your money somewhere else for those 23 years (or perhaps for 6-8 of those 23 years) it may well grow faster than it would have done in your hosue, offsetting your increased rent. houses have been the best place to put it for the last 10 years (not the last two if you live in the north though), doesnt mean that is the default best place

also rents have remained static for pretty much all of the latter half of the boom (though you are right, they are likely to start rising in the next 2 years)

also when rates are low money is cheap, disincentive to save, as assets rise faster than money. if rates go high, then the opposite will be true

unless we're going to go 70s style

Hi. Tell me about extending the lease on a leasehold flat.

Ours is down to 80 years or so, so we should do something about it. Asked the solicitors of the freeholder about extending or possibility of buying freehold and got very curt response with a no to buying and a request for £117 to value the lease.

Anyone know roughly how much they are going to charge us? Are they going to use this as an opportunity to massively increase the ground rent? Are they allowed to just say no to a request to buy the freehold?

Ta.

Also, I like blueski's attitude, despite my home-owning, cat-owning, parent, bourgeois existence.

By the time we pay the mortgage off, we'd get housing benefit for rent anyway.

The main problem I had with renting was the insecurity, having to move every 12 months or so for one reason or another. That and not being able to screw things in walls. The first thing I did when we bought our flat was go to Argos and get an electric drill and make holes in the wall. Happy days.

I'm still too scared to make holes in the walls. But I did paint all the walls purple and fuchsia.

God, reading this thread is just like being at work. ARGH!

i've only ever rented yet i put holes in walls with abandon - that's what the walls are there for!

You're right. Thye're gonna keep your deposit anyway. Damn my timidity!

Jamie, good luck extending your lease.... We gave up in the end and sold ours with a 62 year lease, as they were asking £17K to extend. We obviously could have contested and even gone to the leasehold tribunal, but we just wanted to sell.

http://www.lease-advice.org/ is your friend, everything you've ever wanted to know about extending your lease, and lots more besides. It should answer your questions above - they can't refuse to sell you the freehold; legally it's set out how much extending the lease/buying the freehold should cost, but it involves getting a valuation as it involves the difference in value between the flat now and the flat with an extended lease/freehold etc; and legally they can't increase the ground rent, though they'll give it a bloody good try.

Fill the holes up with toothpaste when you leave.

Jamie, spackle and white paint is very cheap

Colgate, even cheaper </person you'd never want to rent to>

So did you have trouble selling with a 62-year lease? I thought mortgage companies were iffy on lending on properties with less than a 75 (or 70, can't remember) lease.

Will check out that site. Cheers.

17K? Ouch!

thats interesting that its so much just to extend the lease. wonder how much it would be to get a share of the freehold

not looked at this at all, but it seems the only reason to charge so much would be to discourage renewal thereby devaluing the leasehold flat with the hope of picking it up cheap when the leasehold flat owner eventually moves on (because the freeholder would now be the only person for who the leasehold flat now represents an attractive deal)

?

what about 'No More Nails'?

They didn't seem to have a problem getting a mortgage, nor did we when we bought it 4 years previously. We didn't have as much interest in it as we would have if there hadn't been a problem with the lease, but it didn't take that long to shift it.

It's crazy really. The estate agents reach the asking price by taking off how much it would cost to extend the lease from the price they'd value it at with a good lease. But the way to work out the lease extension price is to half the difference between the value as it is now against how much it would be worth with the extended lease.... chicken/egg situation. We paid for a valuation and it came back at £8K, but our solicitor messed up serving notice on the freeholder but didn't realise or tell us until three months later, so we didn't have time to go through the official channels to wear the freeholder down.

It's not that much more to buy the freehold, but you have to have the other flat/flats agree to it too - you can't just buy your own. We were terraced upstairs downstairs so could have bought the freehold with downstairs, but they weren't interested and we couldn't afford to buy the freehold for both.

The freeholder asks for so much money because they know people are too scared to not extend the lease and don't know what their rights are and don't realise that there's an act of parliament been passed which sets out the criteria for extending the lease, including how to work out how much it costs. So people fork out the cash because they don't realise there's an alternative.

http://www.lease-advice.org/decisions/pdf/1450_dir/1450_page1.htm

^ this one came out at 17k also

No more nails is good for skirting boards, not picture hanging.

£17k to buy the freehold for 4 flats, which would make it £4,250 for each flat to buy their freehold, I'd go for that!

oh yes, didnt notice there were 4, and it was for freehold

http://img.photobucket.com/albums/v236/njsouthall/Places/IMG_7598.jpg
http://img.photobucket.com/albums/v236/njsouthall/Places/IMG_7632.jpg
http://img.photobucket.com/albums/v236/njsouthall/Places/IMG_7620.jpg