Life
    Money

    Dear James: should I sell up and move out of London?

    12 December 2019

    I’m about to start a family and my wife has been badgering me for a year now to make the move out of London. I agree we would benefit from the extra space but I’m concerned that, once we give up our foothold on the capital’s property market, there’s no going back. Where should I buy outside the capital if I want to see a good return on my money?

    A house move determined by financial measures alone is likely to go wrong. Before I even answer your question, you need to make up your mind. Are you going to move for the right reasons? You’re mixing oil and water by determining your move solely by monetary measures. Every home move should be primarily determined by where you want to live and how you want to live your life.

    Start with making a list of features that you want to have and the space you need. How many bedrooms? What kind of property (old, new, “done” or a project), what kind of kitchen, do you need a garden? What about off street parking or a garage? Perhaps you want to be near transport or decent schools. Or local shopping and amenities or a nice local pub is what you want. All of these features, requirements and aspects will help you to make the right decision. Then, once you’ve factored your requirements into your thinking, turn your attention to how to fund your purchase, the opportunity cost and your longer term home investment strategy.

    A home that’s your primary residence should not be viewed as a cash generating machine. After all, we could see a significant rise in supply, a sluggish market, more taxation or an economic slowdown. All of these things could mean that you are going to be in your house for longer that you might expect. As a result, the money return will mean very little if you are as miserable as sin.

    It is true that the Capital’s housing market is very much an ecosystem and once you have left it, you may find it difficult to get back. The requirement for extra space is going to be more important than simply keeping pace with a market. After all, what’s the good of a house worth zillions if it isn’t right for you? Life will change and so will your priorities. You don’t want to be mortgaged up to the hilt and still clambering over each other in a shoe box. The only exception to this is if you expect your job to significantly increase your pay or bonus payments to swell your bank account. However, for most of us that’s not a reality.

    When it comes to location, be prepared to think outside the box if you want more space.

    My recommended starting point to research is The Elizabeth Line. Every time people think it’s about to open, it doesn’t. So, it falls off the radar as a locational talking point. However, in the next 12 – 18 months it will be fully operational from Reading in the west to Shenfield in the east. People have been going on about the east for quite a few years now and if you don’t mind a commute then maybe you should consider it… but if that’s what you want to do you’d be better off looking in Colchester or Chelmsford rather than Shenfield or Abbey Wood.

    An investment prospect that’s yet to see significant growth is towards Reading. You’ll stil be within reach of Central London under an hour with enough of a local scene to keep you entertained. Outside of Reading you have Henley, Sonning and a range of wonderful places to visit or even live. However, you probably need to keep your search urban. Going for a move into a village from your urban lifestyle may be a step too far! I’d also suggest you may want to look in Twyford or Maidenhead rather than right at the end of the line. After all, Maidenhead to Bond Street will take just 39 minutes.

    Here’s my check list to help you make sense of what to do:

    • Agree your top ten requirements for your new home.
    • Identify three locations with research online to see what you can afford within your budget
    • Don’t forget to factor in moving costs and maybe a small prospect once you’re in.
    • Visit those locations and by all means take a car but also try the journey on public transport. See if you like the walks, parks, amenities, schools and pubs.
    • Organise some viewings of potential properties with local agents. Don’t rush into anything as at this point in the cycle, time is on your side.
    • If space is what you need, make sure you can expand the property – after all, you are more likely to grow the asset’s value with expansion than market movement.
    • If you don’t love the property within the first few minutes, don’t compromise or make a bad decision, that could be a costly mistake.

    Of course it will be hard to adapt to a lifestyle where everything a global city offers is no longer on your doorstep. London remains the greatest city in the world but it doesn’t mean you need to live there, particularly if the surroundings once you close that door are better suited to raising a family. A good return on your money isn’t just a figure you can tell your friends. It’s when you can genuinely smile as you call the place you live in your home.