Is now the right time to buy?
This must be a question being asked by many households who are currently living in rented accommodation. Should they join the 68% of all households in England and become an owner occupier? The main reasons for remaining in rented accommodation seem to be the flexibility that it gives: being able to give notice to a Landlord at the end of the term, the financial benefits of not having to provide capital and the rent being less than mortgage payments.
With the decline in accommodation being provided by the MOD many service personnel chose to remain in the rented sector, which suited their postings and maintained maximum flexibility. With the substantial house price increases and high mortgage rates in the late 1990s and early 2000s, there was often little opportunity to get a foot on a rung of the housing ladder.
However, with the decline in the property market since September 2007 and the recent steep reduction in mortgage rates, should the question to buy a property be revisited and if so, is now the right time? I believe it is.
Owning a property gives stability for a family whilst still in the Forces and after retirement. It provides a safe home for capital investment, especially now when the savings interest rate is so low and the stock market so volatile. It should be seen as one part of an individual’s investment strategy. Should relocation be necessary the property can be let out to cover any mortgage payments and yet retain the capital investment.
Most buyers (currently 63% of householders) need a mortgage to buy a property and there are currently many mortgage products available at rates (highly competitive to rental fees) for borrowers with at least 10% capital and a good credit rating. Forces personnel also have a benefit in the Long Service Advance of Pay (LSAP) Scheme, which can provide some capital for assisted house purchase, subject to satisfying the criteria.
Property prices today are at their lowest level in most areas of the country for probably the last 6 years and confidence appears to be returning with a stabilising of prices in the Yorkshire area and an increase in viewings and sales since January 2009.
If I have encouraged you to rethink your situation, please bear in mind the general principles of successful property ownership. Research the type and location of property - the Land Registry web site www.landreg.gov.uk is useful for comparable (but historic) property prices. In addition, do seek the advice of an experienced local valuer and instruct an experienced property lawyer who will work with you, your valuer, your mortgage advisor and financial adviser to maximise the benefits of property ownership, both in the short term and for the future.
Linton Links, spring 2009