In our bi-weekly series, readers can email in with any questions about property to be answered by our expert, Jonathan Rolande. Jonathan is a professional property buyer and housing commentator who has bought and sold over 1,000 properties. If you have a question for him, email us at money@theipaper.com.
Question: I’m a first-time buyer and about to exchange contracts on a flat worth £210,000. Although it’s nearly completed, I’m worried about what might be in the Budget, Should I wait until we know what’s in it before I complete?
Answer: I completely understand your concern. Buying a home takes a huge amount of effort, commitment and investment. Then the headlines start.
No wonder you feel nervous. Buying a home is the biggest financial step most of us take, and every Budget comes with weeks of speculation and it’s almost never optimistic.
So let’s look at what we know.
The Chancellor, John Healey, delivers his Budget this week on 28 October. I don’t expect huge surprises. The Government knows the economy needs stability and a dose of optimism, and a punishing Budget would deliver neither.
There is a “but”. The Treasury is short of money and the Government has failed to cut costs, just look at the welfare bill.
If ministers can’t find savings elsewhere, they may have to raise taxes. Add inflation pushing up prices and all of us will have less to spend. That could slow the property market, and prices could dip.
We’ve seen some retraction already. So should you wait?
Well, that carries its own risks. Your mortgage offer won’t last forever, and if it expires you could lose the rate you’ve secured. Nobody knows which way rates will move next but upwards is likely.
Locking in now is a gamble, but so is holding off. Your seller may not wait for you either and fees you have paid would be lost if the whole thing collapses.
Under today’s rules, a first-time buyer pays no stamp duty at £210,000 – and wouldn’t for homes up to £300,000 – it’s unlikely to change, but it could.
Away from the financial aspect, it’s important to remember that you’re buying somewhere to live.
It must work for you as a home first and an investment second. If prices slip next year, it isn’t a disaster if you plan to stay for several years.
Over the long run, property has proved a sound investment in Britain. Your own home is also one of the few places where you can make a large gain tax-free, because you pay no capital gains tax when you sell your main home.
As the saying goes, “time in the market beats timing the market”.
Nobody, me included, can tell you what prices will do over the next six months. I can tell you that people who bought with care and held on for ten years or more rarely regret it.
Like you, I’m cautious, but still buying properties whenever I can.
Finally, ask yourself this question. Can you afford the payments now, and could you still afford them if rates or bills rise?
If the answer is yes, I’d go ahead and exchange. Then you can watch the Budget in the comfort of your very own home. Even if you are hiding behind the sofa.
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