Right time to buy apartment in manchester?

M

Michael

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Hello, I am considering buying a 1 Bed in Manchester for 120K STG. I read an article recently that 1 April 2006 is being called A Day in the UK. From this day onwards pension holders can use their fund that they have built up to purchase an investment property. This can then form part of their pension portfolio. The max they can borrow cannot exceed the equivalent of their fund. There is also a cap on the overall amount that can be used to buy a property (not sure what that is). A conservative estimate is that 10% of people with pension funds greater than 50,000 will take the property route. This would add 3 Billion to the annual property market in the UK. It seems that the sector that will benefit most will be the 1 and 2 Bed apartments. Although I don't expect any significant capital appreciation would you agree (all things considered) that with A Day looming this is a good time to buy?
 
Hi Michael - Have you considered the currency risk you'll take on a UK investment? Have you clarified the tax impacts? How do you plan to manage the property (find tenants, upkeep etc)? What kind of vacancy periods have you allowed for in your calculations?
 
This would add 3 Billion to the annual property market in the UK.
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This assumes that all new pension portfolio investment will be confined to properties in the UK. If foreign property investment is allowed, that wil hardly be the case as at least some investors will invest abroad.

It would be unrealistic to expect that the effects of A Day have not been already factored into prices.
 
Hi
I agree there are negatives (1)The currency Risk (2) tax on the rent, (3) cost of mgt co. to get tenants (4)uncertainty about UK market

Positives
(1)The property is off plan and I only need to put 10% up front right now. It will complete in late 2007. I see this as a positive due to the facts mentioned in my earlier peice.
(2) Low entry costs in UK. No Stamp duty at this level.
(3) I am in for long haul and have no intention of selling


Can you confirm what tax I pay on the rental income in the UK? How much can I offset against interest taken out on a loan here in Ireland?

Thanks
 
House prices continue downward path

Are you aware that UK property prices have fallen every month for the past 15 months...

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[/font][font=Arial, Helvetica, sans-serif] The Hometrack September survey of the national housing market reports a further fall of -0.1%. House prices have now been falling for 15 consecutive months. The national average house price now stands at £160,900, down from a peak of £167,700 in June 2004 and down over 3.7% in the past 12 months.[/font][font=Arial, Helvetica, sans-serif]
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I bought a 1 bedroomed apt, off the plans in Manchester about 3 years ago. It was completed over a year ago. Initially I had a few teething problems but now everything is fine. I bought for 97k and it's now worth 135k and the rental income more than covers my mortgage.
 
Does this mean that the right time to buy was three years ago?

Past performance is no guide to future returns.
 
I don't know. I'm not an expert. I'm just giving my experience. It really depends what part of manchester he is buying in. If it's the city centre he should receive between £550-650 per month which should cover the mortgage.
 
Thanks, I am aware of the overall property price drop in the UK but certain locations performed better than others. Also I am hoping that the time is right due to the re-generation in Manchester City Centre + the impending pension rule changes, recent cut in UK rates . But I am still not sure.

The apartment is in the city centre and has a lead in time of 2 years similar to yours' Dub75. What teething problems did you have? Did you have trouble letting it?
 
I just had a few problems with my letting company. I always had to chase them up for payment. Everything is fine now.

The apt. wasn't let for the first 3 months which had me a little worried but since then it has been continually let.
 
When complete ,I am considering taking out an 'Interest Only' Mrgt from an Irish Bank in Euros and converting the amount to Sterling for payment. The loan would then be at Euro Interest rates which are lower than Sterling rates(although not guaranteed when sale is completed). The rent will be coming in through as Sterling. Should I set up a Sterling account for the Rent? What is the most economical way to do it?
 
Michael can you do this? Thought you could not take out loan here secured on property in uk unless equity release on existing property here and secured on irish property? If you could do this there are obvious advantages re rate.
 
Michael said:
Hello, I am considering buying a 1 Bed in Manchester for 120K STG. I read an article recently that 1 April 2006 is being called A Day in the UK. From this day onwards pension holders can use their fund that they have built up to purchase an investment property.
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Hi Michael,

Is there not also such a plan in Ireland also?

ie allow people manage their own pensions by borrowing based
on their expected pension savings. The idea is that if you
can make pension contributions (eventually) up to the value of the
property then you can borrow that amount to purchase a property.

If it will be introduced in Ireland then maybe Ireland is a good bet also?

And while I'm at it: why not consider taking out such a pension yourself?
 
Thanks, with reagard to the pension I don't think Ireland offers the same property options that will be available in the UK.


With regard to the mortgage, I will be releasing equity from my own home to pay for the property in the UK. The plan would be to take out an Interest Only mortgage in Euros at euro interest rates , convert it to sterling for the payment and collect the rent into a Sterling Bank account. Pay off the loan from my own other bank account(euros) and convert the sterling to euros at irregular intervals(when the exchnage rate is good). Is this the best approach? Anything obvious that I am missing? Thanks
 
Michael, I think that's the best way to do it. I got an interest only loan from IIB in Sterling. If I was to do it again I'd definitely release equity over here as the rates are much lower. IIB are charging me over 6%!!!
I opened an account with AIB GB in manchester and I get the rent payed into that account.
 
Michael Wrote:
With regard to the mortgage, I will be releasing equity from my own home to pay for the property in the UK.

As far as I know, doing this means that you will not be able to claim interest relief against the rental income you receive on the Manchester property.
 
As far as I am aware I will not be able to claim mortgage interest relief . However I will be able to offset the rent and other expenses against the interest on the loan taken out for the Investment Property (even if the loan is an equity release where the investment property is stated as the purpose of the loan). Am I correct here?
 
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