To sell or not to sell in the UK

Discussion in 'Investment Strategy' started by Melbcr, 21st Jul, 2016.

Join Australia's most dynamic and respected property investment community
Tags:
  1. Melbcr

    Melbcr Member

    Joined:
    17th Jul, 2016
    Posts:
    7
    Location:
    Melbourne
    Hi

    I have a query related to a property I have in the UK. I bought the property in 2005, and it was a PPOR, prior to moving to Melbourne in 2006. It has been rented out since moving to Melbourne. This is the only property that I own.

    I have been renting in Melbourne all the while (South East suburbs), but want to buy my first place here. The UK property has had some growth (finally) in the last 3 to 4 years.

    I have also checked to see if I could use the equity from the UK property as a deposit here, but can't find any lenders here in Australia or in the UK to allow me to use it as security.

    I have also considered the tax implications with respect to CGT in both the UK and here and this deters me from selling it.

    Given that I want to buy here, it makes sense to sell the UK property and use the proceeds towards a deposit for the place here. However, I wanted to know what others on this forum thought.

    Thanks
    Melbcr
     
  2. ellejay

    ellejay Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    1,775
    Location:
    Kimberley and NZ
    We've just managed to sell ours but the issue now is the rubbish exchange rate if we bring the money over and also the rubbish interest rate of .5% if we leave the money in the bank over there. Can you keep the UK house, save a deposit and buy here?
     
  3. Melbcr

    Melbcr Member

    Joined:
    17th Jul, 2016
    Posts:
    7
    Location:
    Melbourne
    Hi ellejay
    Have been working towards a deposit to buy, but with what we have currently, it would mean moving much further out plus other factors like LMI as compared to having a larger deposit. Also rate of saving versus rate of property prices can be challenging, though working towards it. ​
     
  4. ellejay

    ellejay Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    1,775
    Location:
    Kimberley and NZ
    Moving much further out may well be a much smarter move than not buying anything, if you can get the deposit. LMI sticks in the throat a bit but the way the Melbourne market is going it could end up saving you a fair chunk of money by at least getting your foot in the door in a rising market.
     
    Gypsyblood, Cia and ashish1137 like this.
  5. geoffw

    geoffw Moderator Staff Member

    Joined:
    15th Jun, 2015
    Posts:
    3,698
    Location:
    Canberra
    Hi @Melbcr - did you end up doing anything on this?
     
  6. Melbcr

    Melbcr Member

    Joined:
    17th Jul, 2016
    Posts:
    7
    Location:
    Melbourne
    Hi @geoffw - have left the UK property as is for now. Am looking into land and home packages, but further out from where I am currently. Contemplating if I continue renting where I am and lease the land and home one out once it is built or not.
     
    geoffw likes this.
  7. Tony3008

    Tony3008 Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    156
    Location:
    Docklands, Victoria
    The issue re the exchange rate is not that it's rubbish looked at in a historic sense (though today's 1.72 is usefully better than 2012-13's 1.50), but where it will go in the future. As the owner of a one-person software business that sells 100% to UK in sterling, I wish I knew!
     
  8. Ross Forrester

    Ross Forrester Well-Known Member Business Member

    Joined:
    30th Oct, 2016
    Posts:
    1,258
    Location:
    Perth, Western Australia
    The lurking trap in holding UK property is the massive death duties (40% over a threshold!).

    And if the asset is in a trust the trust pays a tax on the increased value.

    Make sure your tax advisor in Australia has a good person for the UK system so you get one piece of advice.