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TO BUY OR NOT TO BUY

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TO BUY OR NOT TO BUY Powered By Docstoc
					                           Busbys Solicitors


                          To Buy or Not to Buy



“Should I Buy or Rent a Property?” is probably the most frequently asked
question alongside “How much is my property worth?” if you speak to any
Estate Agent, local or national.


Most Estate Agents, who deal in both property sales and lettings, will be well
placed to give a balanced view on both questions and will usually be happy to
discuss this with you.


                                   Affordability


The flexibility of renting makes an attractive option, in a wide range of
circumstances. Affordability for first time Buyers is an obvious example, but in the
present economic climate, tighter lending criteria may mean renting rather than
buying is a more viable option for many. Clearly raising the required deposit to
purchase is the main problem for most first time Buyers, especially whilst paying
rent in the meantime.


                                   Stay at Home


The alternative, which more and more young adults are doing, is to remain living
at home with parents for longer, to save quicker. This usually works out a little
more expensive for the parents – but no change there!


According to the Office for National Statistics social trends report approximately
60% of men and 40% of women aged 20-24 in England were still living with their


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parents. Unfortunately, as we are all aware over the past decade, the rise in
average house prices paid by first time Buyers has been far greater than their
average incomes. The choice for them is really no choice at all-stay put with
Mum and Dad-providing they are agreeable!


                               Benefits of Renting


In addition, the ability to view a rented property and move in within days can be
important, if you are starting a new job, or perhaps do not wish to lose the perfect
Buyer for your existing property.


Certainly renting when you are relocating can be very helpful. You get a much
greater feel of the local area and where you would like and more importantly not
like to live. But equally important, it is much easier to buy when you are on the
doorstep and of course being in rented property without a property to sell, your
bargaining position could not be better!


If you want the option to move back in the future, you can always rent in the new
area and instead of selling, rent out your existing home at the same time. That
way, you will be insulating against any steep rises in property values compared
to the new area. Not a problem, whilst you continue to receive your rent on your
existing property, to cover the rent on your new property – but if problems occur
as regards the Tenancy of the property you own, then that will obviously have
knock on effect in your ability to pay your own rent.


                             Availability of Tenants


There’s certainly no shortage of tenants seeking properties in the South West
and this is emphasised in recent Reports. In a Report released in August 2010,
the Council of Mortgage Lenders (CML) are quoted as saying that the buy-to-let




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market has continued to grow and concludes “Tenant demand for private rented
property will remain strong”.


                                   Strong desire


At the same time as the scrapping of the Home Information Packs (HIPS) and
many first purchasers bringing their plans forward in later 2009 and earlier 2010,
to take advantage of Stamp Duty concessions, has resulted in an excellent
choice of properties for sale at present, especially in the first time Buyer part of
the market, which is often particularly favoured by investors.


                                     Buy to Let


Strong demand from Tenants and a lack of rental property to choose from, has
led to attractive rents being achieved locally. Combine this with a good choice of
property for sale and it opens up excellent opportunities for those considering
buy-to-lets, whether existing landlords or first time investors.


Although lending criteria has tightened, do not think that banks are not lending.
The Council of Mortgage Lenders (CML) Report shows that buy-to-let lending in
the second quarter of 2010 is up by 13% on the first quarter and whilst you will
need to put some capital in, you need to consider what those funds are earning
elsewhere with saving bringing such a low return at the moment. Alternatively,
many take advantage of current new low mortgage rates to release equity from
their existing property to go towards the buy-to-let purchase.


When one looks at the likely rental values for some properties, compared with
mortgage costs, it is quite easy to see why buy-to-let is seen as such an
attractive option.




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                                     Buy or Rent?


The growth in renting certainly hasn’t dampened the country’s enthusiasm for
owning a property. Long term certainty and securing is still seen as important and
people recognise the benefit of the medium to long term capital growth and at the
same time having somewhere to live and of course later in life your Mortgage is
paid off, you will not be paying out rent from your reduced income as a
pensioner.


Once they can, most people will buy. According to property website Zoopla,
taking out a mortgage is cheaper than paying rent, in 75% of British towns, as
low interest rates have kept down Mortgage payments and the shortage of
property to let has pushed the rent up.


Figures show we are not building enough houses and our population is growing
greatly. The demand for property to buy will continue whether it is from investors,
or people simply wanting to buy a property to live in. After all, every property has
to be owned by someone!


                                          Action


The decision whether to buy, to rent, or to buy to let is your decision. But you will need
good legal advice to help you achieve your objectives. Here at Busbys we can help.
David Helman and I have decades of experience in dealing with all aspects of property
purchase, property sales and renting. You can rely on our experience. Busbys has the
Lexcel accreditation-Lexcel stands for “legal excellence” so contact us on 01288 35
9000.


Ian Osborne
Busbys Solicitors
Bude & Holsworthy.




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