I've been itching to buy a property for a while but was never really in the right situation.. but then again.. I think I could always think of excuses not to buy. I am currently based in London(have been here 1.5yrs) and will be based here for at least the next few years. I have no property and have about £20 000 saved (about $40, 000AUD). I'm wondering whether to
a/ buy an investment property in Australia and keep renting in London
b/ buy an investment property in the UK and keep renting in London
c/ buy a home in London and stop renting.
My question might be a bit complex but I'd be interested to hear people's opinions on the current markets in Aus and UK and any tax implications.Richard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,024
I was back in London about 8 months ago which was the first time for a couple of years and the prices still alarmed me.
I guess it all depends on where you believe your long term future will lie.
Personally if i thought i would return to Australia one day then i would be looking over her to invest due to the lower prices and better yield and security.
There are a couple of Aussie Banks that will go to 95% for an expat loan at normal interest rates so assuming your pound / dollar earnings are sufficient to show serviceability then no reason why you would qualify.
Rents certainly in SE Qld havent slowed at all so yields are holding with prices coming back a little.
Other important long term difference is in Australia you can claim the building write off and depreciation on the property when you are back in the Country which you are unable to do in the UK.
Also as long as you have never purchased a owner occupied property in Oz before you will still qualify for the First Home Owners Grant when you do purchase your own residence here.
Hope this helps. Any other questions ask away.
Fingers crossed the English summer isnt too bad this year and go the Blues come Aug.
Yeah, prices in London are high but they seem to be going down lately with everyone talking about the credit crunch.
Do you know how I would be taxed on rental income on an IP in Aus as I am currently a non-resident for tax purposes and do not have to do any tax returns?
The other factors that I was considering was the high interest rates in Aus and the strength of the Aussie dollar (Roughly: $2 = £1). With a 40k deposit do you think it is possible to buy a positively geared property?
Thanks again for your first response.
Looks like I may also have some problems getting a loan as I am currently contracting (through my own limited company) since the start of this year.creanyParticipant@creanyJoin Date: 2007Post Count: 5
you will be suprised that most of the aussie big banks are in london and you can borrow £ to buy aussie property. I assume for ausie citizen of coure. while this may not be a big part of their interest in UK it could be worth having a chat to them. at least this way you are paying £ then sending money home each month and paying all the conversion fees etc. if the £ gets stronger then you can benefit this way as well! it could not get too much weaker then now.
creanyBreakEvenParticipant@breakevenJoin Date: 2006Post Count: 80
Ive been back in Aus for about 3 years, but was in London for 4-5 years before that. What we did was temporarily lower our living standards drastically…. The results have been very worthwile.
We bought our first 2 properties while in the UK, both sight unseen. Our first purchase was in Vanuatu – I got a personal loan from HSBC and paid that off in one year. It was tough, we moved to a cheaper part of town to save money, a ruff-neck corner of south london – a flat above shops that was jammed between a brothel and a pakistani restaurant. I rode a bicycle to work and my wife worked shifts as we had a new born baby. It certainly wasnt easy, but we had goals – that property has now increased by 800% in 6 years.
After paying this off, we got used to some serious scrimping and we were motivated for more. So we found a cheap apartment in brisbane. It bought if from an old lady who had painted the place a rancid pink colour – it was pretty nasty. But the rooms were fairly large and it was directly opposite a large shopping centre, close to town in a bustling part of south-west Brisbane. Everyone told us not to buy this apartment, and thought we were crazy. All I have done to the place is paint it white, and added new blinds – thats all. Four years later, that apartment is cash positive and its never been unrented – except for a short period when we returned from London. It worked out beautifully, because we got the first home buyers grant as we fullfilled out obligitory residence within the first 12 months of purchase and it was our first property in Aus. We managed to get a NAB loan while working in the UK. This place has since increased in value buy nearly 100%.
Since then we have used the equity in this property to buy a third property on the city fringe that has had a large increase in value over the last 2 years. Hence the duplication has started…
We chose to buy in Oz and Vanu because this is where we saw our future. London was very expensive to buy, but by purchasing a property there, we would have been tied into a hefty self-funded mortgage. By renting and drastically lowing our standards, we were able to save money and redirect that to our Oz investment, where we could take advantage of the exchange rate (then 2.5). Our mortgage was subsidised by the rental income from the apartment.
We are now paying off our own PPoR in Brisbane. We have 2 kids and we are both working. Its still not easy, but we are heading in the right direction. If we didnt make the decision to do something now, while we were in london – we would probably be renting a suburban house and saving a deposit to buy…
Good luck with it all, I know exactly what situation you are in – hence my rambling reply……
My advice is make the most of the exchange rate, live simply and buy well..
The rest is focusing on the finish line and discipline, discipline, discipline…