ASHP for retrofit into small flat

[AliG]

Oh yes it will be hers, basically gifting her the money.

 

But the sellers own it as a holiday home and I have to believe that a large part of the market is holiday homes and student lets, especially looking at small flats. These have to be worth less than they were 6 months ago due to tax increases. I just don't want to overpay, pointed this out to the agent. Interestingly he didn't push back or suggest any other offers had been made.

 

Main reason to do this is she wants to live on her own and also I don't want issues with trying to find a rental every year, dealing with landlords and so on. A lot of student rental stock is pretty poor, the new purpose built stuff is crazy expensive for what you get, you're talking £14000 a year for a 20sq metre room.

 

However, a bonus, if you are in the fortunate position of having cash available, is that the return on cash after tax is appalling. So, say I am getting 4% interest on cash, this is only 2.2% after tax. Higher inflation makes tax on interest basically a wealth tax (You earn more interest to cover higher inflation, so are effectively paying tax on inflation). Therefore the loss of interest after tax is way way less than I would be paying in rent. I would save the equivalent of around £6000 a year, basically covers transaction costs after 1 year.

 

 

[JohnMo]

38 minutes ago, AliG said:

Oh yes it will be hers, basically gifting her the money.

So there is no second home taxes to pay, or increased council tax etc. Not sure why there would be unless she already has a house registered in her name. As first time buyer not even sure there is stamp duty to pay.

 

What the property firmer use was, is nothing to do with what you purchase for. For this purchase it will be your daughter's primary home. 

[G and J]

57 minutes ago, AliG said:

this is only 2.2% after tax

Your daughter is a higher rate tax payer?

[SteamyTea]

1 hour ago, AliG said:

Main reason to do this is she wants to live on her own

That is the best if reasons.

 

When I first went to university in Bournemouth, I had just bought my first place in High Wycombe. I rented that out, lived in a mobile home, and was 10 quid a week better off than my classmates.

I did suggest to my Parents that they buy a place for me to live in, got turned down flat.

Bournemouth was pretty scummy in the student area around Winton back then, you could get a 3 or 4 bed semi for under £30k.

Those places are now, 42 years later, going for around £330k, so 11 times the value.

Using the Rule of 72, that is a growth of 1.7%.

Not that great when you look at it.

Edited 18 hours ago by SteamyTea

[AliG]

3 hours ago, JohnMo said:

So there is no second home taxes to pay, or increased council tax etc. Not sure why there would be unless she already has a house registered in her name. As first time buyer not even sure there is stamp duty to pay.

 

What the property firmer use was, is nothing to do with what you purchase for. For this purchase it will be your daughter's primary home. 

The point I am trying to make is simply how to value the property.

 

A large number of the possible buyers of the flat would have to pay second home related taxes so the value has likely fallen due to that.

 

It is also worth considering who we might be able to sell it to after university.

 

I had a discussion about this a few years ago at work and was very much persuaded by a colleague who I didn’t always agree with. Despite stamp duty being paid by buyers in terms of who settles the bill. Stamp duty goes up, prices go down and vice versa. Buyers have fixed buying power set by wages, savings, mortgage rates etc. If they have a large extra bill to pay then that reduces what they can pay for something.

 

Even if we don’t have to pay the extra I am still considering how it has impacted the value to other buyers.

 

Scottish first time buyers only pay no stamp duty below £175k. Over that they get a fixed £600 off what the stamp duty would have been.