Advice for relocating to London

[s1ap]

Hi All,

Glad to have discovered this site and I have read quite a few threads and found some valuable information. But I will greatly appreciate if anyone can please advise me of my situation and plan to move to London. I do have a Tier 1 visa.

1) I found that I can earn about £350 per day as a contractor vs £65k per yr as a perm employee (both gross). As a contractor, you can minimize your tax and hence increase take-home pay. I believe it makes more monetary sense to go via the contractor route. Anyone has any comments on this?

2) I want to buy a property in London instead of renting. So far I found that the West has older properties and are more costly compared to some properties at the East ie Canning Town/Canary Wharf. Is that generally the case? Why? Is it due to the East being not as “friendly” as the West?

3) Can I buy property in London? If so, can I qualify for a home loan? Note that I want to purchase a property before I start working in London, thus I will be jobless when I first arrive in London. I will be able to make about £100k deposit. Would it be better if I started with a job first to show some income? But if I am a contractor working via a LTD company, will I still qualify for a loan? If someone has any experience on this, please advise me.

Lastly, if there is anything else I should consider, please let me know.

Thanks!

[Bevdeforges]

Originally Posted by s1ap

1) I found that I can earn about £350 per day as a contractor vs £65k per yr as a perm employee (both gross). As a contractor, you can minimize your tax and hence increase take-home pay. I believe it makes more monetary sense to go via the contractor route. Anyone has any comments on this?

You're assuming that you'll be working full time as a contractor. The big advantage of contractor status for employers is that they can simply tell you not to come in to work if they run out of stuff for you to do. And if you don't work, you're not being paid.

On the tax side of things, you're paid gross, which means you have to set aside money to pay your taxes rather than having taken out of each pay cheque. You also have to pay your own national insurances. Check into that before you decide which way to go.

2) I want to buy a property in London instead of renting. So far I found that the West has older properties and are more costly compared to some properties at the East ie Canning Town/Canary Wharf. Is that generally the case? Why? Is it due to the East being not as “friendly” as the West?

In most of Europe and North America, the prevailing winds come from the west. Most large, industrial cities developed their "upper class" districts on the west side of town, because the smoke and smog from the industries was blown to the east. The east side of many towns has traditionally housed the working classes. That is starting to change and the eastern side of many big cities are undergoing gentrification.

3) Can I buy property in London? If so, can I qualify for a home loan? Note that I want to purchase a property before I start working in London, thus I will be jobless when I first arrive in London. I will be able to make about £100k deposit. Would it be better if I started with a job first to show some income? But if I am a contractor working via a LTD company, will I still qualify for a loan? If someone has any experience on this, please advise me.

Nothing to stop you from buying property in London, but qualifying for a mortgage could be very difficult until you have a job and a few months worth of payslips to validate your salary level. As a contractor, you're considered "self-employed" and would probably do better if you had a year or two of financials to show to the bank. (Relates to the fact that, as a contractor, you have no guarantees that the work will continue past the current project.)
Cheers,
Bev

[s1ap]

Originally Posted by Bevdeforges

You're assuming that you'll be working full time as a contractor. The big advantage of contractor status for employers is that they can simply tell you not to come in to work if they run out of stuff for you to do. And if you don't work, you're not being paid.

On the tax side of things, you're paid gross, which means you have to set aside money to pay your taxes rather than having taken out of each pay cheque. You also have to pay your own national insurances. Check into that before you decide which way to go.

Yes this is true. But I think in today's economy, having a perm job is not a sure thing too... Difference to a contractor is another 1 or 2 months notice period. Another thing I am considering is that being a contractor, one will not experience career progression as a perm.

Oh I wasnt aware of having to pay national insurances as a contractor. Thanks for this, I will look it up.

In most of Europe and North America, the prevailing winds come from the west. Most large, industrial cities developed their "upper class" districts on the west side of town, because the smoke and smog from the industries was blown to the east. The east side of many towns has traditionally housed the working classes. That is starting to change and the eastern side of many big cities are undergoing gentrification.

Good explanation. How is the property investment outlook for London? I heard that areas such as Canary Wharf is overbuilt hence prices have been kept very low for quite a while.

Nothing to stop you from buying property in London, but qualifying for a mortgage could be very difficult until you have a job and a few months worth of payslips to validate your salary level. As a contractor, you're considered "self-employed" and would probably do better if you had a year or two of financials to show to the bank. (Relates to the fact that, as a contractor, you have no guarantees that the work will continue past the current project.)

I might have to consider co-sharing a property with a mate who is already in London. He is working as a perm employee.
Or what about making a loan from Singapore for a property in London?
Are there any grants given for a first-home owner? I know they have something like that in Australia.

[Joppa]

Originally Posted by s1ap

Are there any grants given for a first-home owner? I know they have something like that in Australia.

The government has just given a stamp duty holiday for first-time buyer of a property up to £250,000, saving a government tax of 1%. To qualify, all buyers (in case of shared ownership) must not have bought a property or a building land anywhere in the world.

[BabsM]

Originally Posted by Joppa

To qualify, all buyers (in case of shared ownership) must not have bought a property or a building land anywhere in the world.

Are you sure about the 'anywhere in the world' bit? I don't see how that can be verified? Anywhere in the UK would be more likely but even that includes Scotland and property law is different in Scotland. I would expect it to be where none of the buyers own property or a share of property in England or Wales. S1ap checks the qualifying criteria.

As regards shared ownership, that has a specific meaning in England. These are usually low-cost housing where you buy a certain percentage of a property, probably from a housing trust or a council, using a mortgage. The percentage that you do not buy is then rented from the housing trust or council so you end up paying a mortgage AND rent. The arrangement is aimed at first-time buyers who do not have enough money to buy property outright. Indeed these properties are unlikely to have attracted Stamp Duty anyway. In later years the buyer has the option of purchasing extra shares until he owns the whole property. Again there are usually strict qualifying criteria. For example there is often an upper limit on income and the buyer sometimes has to have lived in the catchment area for a minimum number of years. There are usually restrictions on selling the property too. Shared Ownership properties on offer are few and far between. If the prospective buyer sees one they need to move quickly.

[Joppa]

Originally Posted by BabsM

Are you sure about the 'anywhere in the world' bit? I don't see how that can be verified? Anywhere in the UK would be more likely but even that includes Scotland and property law is different in Scotland. I would expect it to be where none of the buyers own property or a share of property in England or Wales. S1ap checks the qualifying criteria.

As regards shared ownership, that has a specific meaning in England. These are usually low-cost housing where you buy a certain percentage of a property, probably from a housing trust or a council, using a mortgage. The percentage that you do not buy is then rented from the housing trust or council so you end up paying a mortgage AND rent. The arrangement is aimed at first-time buyers who do not have enough money to buy property outright. Indeed these properties are unlikely to have attracted Stamp Duty anyway. In later years the buyer has the option of purchasing extra shares until he owns the whole property. Again there are usually strict qualifying criteria. For example there is often an upper limit on income and the buyer sometimes has to have lived in the catchment area for a minimum number of years. There are usually restrictions on selling the property too. Shared Ownership properties on offer are few and far between. If the prospective buyer sees one they need to move quickly.

Anywhere in the world is true! See HM Revenue & Customs: The Budget 2010: Stamp Duty Land Tax (SDLT)
I used the words 'shared ownership' in the conventional sense of several people clubbing together to buy a property - joint ownership in fact.

[BabsM]

Originally Posted by Joppa

Anywhere in the world is true! See HM Revenue & Customs: The Budget 2010: Stamp Duty Land Tax (SDLT)
I used the words 'shared ownership' in the conventional sense of several people clubbing together to buy a property - joint ownership in fact.

Goodness! I wonder how they are going to 'police' that Stamp Duty. How do they know whether or not someone owns property abroad?

Yes. I guessed you meant buying property 'in common' as opposed to 'shared ownership' but though it was worth pointing out about actual shared ownership schemes as they are a way of people obtaining property if they can't afford to buy outright.

I'm just gobsmacked by the 'anywhere in the world' bit..... that's going to be playing on my mind all day now

[s1ap]

Yes, I find it quite hard for the to check if you do own property overseas. Anyway, I dont currently own any properties.

1) I was recently in London for a short holiday and wow the cost of living is really very high. Each meal easily costs about 15pounds on average and my 1 week there, I spent close to 40pounds on tube travel alone! (includes to and from airport). If I do earn about 350pounds a day, is that enough? I am not even sure how much medical and other micellaneous costs are!

2) Do people that first relocate to London buy a property and not rent? I checked with a mortgage online site, and it seems impossible to get a mortgage because I do not have any credit score. How can I build this before arriving into London?

3) Can someone please give me some tips on good value locations to look at and locations to avoid?

Cheers!

[Jessica_Williams]

Hi there!

1. The cost of living is indeed high, but bear in mind that if you are here on a permanent basis you will learn to make savings. For example, 1 one-month zones 1-2 travelcard will give you unlimited travel throughout the whole of central London, on buses, tubes and some overground trains. It costs 99.10GBP per month. If you cook at home rather than eat out every night, you’ll save a lot of money. People tend to cook at home a lot more in the UK than in Singapore. Online supermarkets like Ocado can just deliver you ready meals every week if you really hate cooking from scratch – this will save you lots. Some things in the UK are cheaper than in Singapore – for example, if you drink wine, you will find it much cheaper to buy decent wine here.

2. In my experience, most people seem to rent in London before buying. Reasons for this are simple; renting gives you a change to check out an area before buying – if you find you don’t like it, you can move much more easily. Mortages will take some time to get, and you will spend some time finding the right property for you. Your best option would be to rent a flat on a 12-month lease with a 6-month break clause, in an area you think you might want to buy in. Spend this time investigating flats, and then after 6 months you have the flexibility to stay or go, motnh by month (does this make sense?)

3. Good value locations to look at – depends what you like doing, interests, how far you want to be from the City, where you are working, what your budget is, etc! Speaking from my own experience, Greenwich is good – very good value, lots to see, great rail links and DLR into town or Canary Wharf. London bridge / Borough / Shad Thames is also really nice if you have the budget for it, and more central. I’d avoid Elephant and Castle if I were you, though.

Hope this helps!

Jess

[s1ap]

Hi Jessica,

Thanks so much for your insight. I agree with what you said. Really appreciate you giving me advise on some good locations, I was actually looking at Elephant and Castles thinking its quite well located and value in money.