Split the Difference - second home ideas

Split the Difference - second home ideas

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NickCQ

Original Poster:

5,392 posts

95 months

Thursday 2nd July 2020
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Like many of us, lockdown has caused me to think a bit more deeply about where I want to live and why.

I live in west London / work in central London, but during lockdown I've been camping out at my parents' place in Surrey (outer stockbroker belt), which has been rather nice (they are away). I couldn't hack a 1hr each way commute with my current working hours though (and assume WFH will not continue).

Pre-lockdown, the plan was to buy a 3-4 bed place near where I am at the moment (renting, have accepted an offer on my old flat), which I suppose would have been about £1.3-1.5 MM depending on how much space we decided to go for. The big issue there is about £95k of stamp duty (6.3%), as the 10% marginal rate above £925k is quite painful. That's 3.5x the annual rent we are paying now for a comparable place - I don't think this would be a 'forever' home (5-10 years max).

It looks like even with the 3% additional stamp duty rate I could actually pay about £20k less tax by buying a London place for £925k and then getting somewhere for weekends for about £600k. Hopefully the weekend place would be a longer-term hold and I could upgrade / move around in London as time passes.

Has anyone done this? All thoughts welcome.

anonymous-user

53 months

Thursday 2nd July 2020
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I've got no help for you but your problem neatly highlights the absurdity of this "South of England" tax.

The problem with having two properties is one of them will be subject to CGT in due course at the enhanced CGT rate, probably landing you right back where you started.

Is it worth paying £150k of relocation costs just to live in a house for a couple of years? I'd say not. Might as well rent and retain flexibility..

DonkeyApple

54,923 posts

168 months

Sunday 5th July 2020
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It’s close to the impossible question. Primarily because of: children!!!

If you have them or plan to have them then they very much dictate your logic.

We ran the central London flat plus weekend home for years and the assumption was that when children came along they would do central London prep and then off to boarding. Nice and simple.

They then came along and closer inspection of the prep schools revealed that they were nothing like my experience. Ghastly parents. Money obsessed, neurotic, drug addled. Long gone were the local businessmen and in were the oligarchs, celebrities and hideous detritus of the modern world. Plus the shock realisation that selfishly, I enjoy my children’s company and the day local schools just weren’t what I remembered for the same reasons.

Luckily for me the world of tech allowed me to move my business out of London and my children are having an upbringing that is what Inpersonally fewlnis more suitable.

Do I miss London? Of course. It’s 44 years of my life but there are plenty of fellow Londoners out here and instead of heading out to the countryside at weekends as before, we now head into London.

If you don’t yet have children then the only advice I can give is that it would be madnto buy a family home before you do and they are a few years old. Keep the convenience of the London lifestyle and appreciate that you simply don’t know where the best place is for the family home until you’ve been a ‘family’ for a few years.

As for getting a weekend pad, I was very happy going to the same place every weekend. But the key was not to buy such a large place that I felt any obligation to go so was still free to head to their airport or someone else’s weekend escape.


NickCQ

Original Poster:

5,392 posts

95 months

Tuesday 7th July 2020
quotequote all
Thanks for the views chaps, all helpful.
Kids are not on the menu at the moment but you never know how views on that will change.

If the rumoured stamp duty holiday around £500k does come to pass it makes this plan potentially more attractive.