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Let to buy – how to move home without selling your existing property? Property market experts have been talking about a temporary slowdown in the London property market as we head towards the May 2015 General Election. The combined effect of political uncertainty and stamp duty rises for luxury homes has caused a slight downward adjustment at the top end of the market in the last couple of months of 2014.
However, this short-term phenomenon should be viewed against the background of the surge in London property prices over recent years. The difference between the average price of property in London (£406,730) and the UK as a whole (£189,002) is now greater than it has ever been before, according to Nationwide’s latest figures (Nationwide House Price Index Q4 2014). London’s average property price has increased by 17.8% in the last year, whereas the overall UK average has increased by 8.3%.
Of particular relevance to London residents is the fact that, if they had bought a flat in the capital at the end of 1984 for the then average price of £46,000, by the end of 2014 their property was worth, on average, almost £407,000, nearly 9 times their initial investment.
London’s property market may be pausing for breath, but in the long term, it remains strong, based on the city’s status as an attractive and relatively safe haven for international investors. Many London homeowners will be thinking about moving out of the metropolis to take advantage of the value to be found in the region, but are loath to give up the capital appreciation potential of their London property. If the period 2015-2045 matches 1984-2014, their London property will be worth many multiples of its current value in thirty years’ time and that could be an important factor in their standard of living in retirement. This is exacrtly the momwnt when let to buy becomes a perfect solutions.
We’re finding that many clients who wish to retain their investment in London (or any other area of long-term house price inflation) and continue to benefit from owning such a property are actively considering ‘let to buy’. This is where you keep your existing property and rent it out, at the same time as buying your new home. You are likely to need bespoke property finance to support this type of transaction and it pays to take independent professional advice in such a specialist area. If you are moving out of London, make sure you contact a London-based independent mortgage broker who has in-depth knowledge of the particular factors at play in the London property finance market.
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