Proceeds from UK house sale

For residents of the United Arab Emirates.
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Pacific1982
Posts: 1
Joined: Mon Jul 13, 2020 2:21 am

Proceeds from UK house sale

Post by Pacific1982 »

I am a UK expat in UAE. Having sold my property in the UK last year, I have the proceeds of the sale in my UK current account - £250,000. I do not think that purchasing property in the UK is the right move at the moment and although I could buy a rental property mortgage free with this money, I did not want to do so as it would not be the property we would live in on our return to the UK (i.e. I would be paying SDLT and other fees twice over).

Now that SDLT is 0 on purchases up to 500k, I am wondering whether property is in fact the right investment or if there is any other option that can get my money working for me rather than just sitting in a current account. The issue is of course, this is the money I will use for a deposit on my next house in the UK, so I need to access it relatively quickly (i.e. 6 months notice ideally) so I can’t lock it up for too long.

I also have c.40kGBP in the UK that I can lock up for longer but I have putting off investing given the current climate. Is the best thing to simply follow the SimplyFI method and go down the ETF route. I am super risk adverse (as is my other half) and I need to do something that generates a return but that isn’t going to cause me much worry (in the knowledge that of course, all investments are subject to a degree of risk.

Many thanks
Valuethinker
Posts: 48944
Joined: Fri May 11, 2007 11:07 am

Re: Proceeds from UK house sale

Post by Valuethinker »

Pacific1982 wrote: Mon Jul 13, 2020 3:05 am I am a UK expat in UAE. Having sold my property in the UK last year, I have the proceeds of the sale in my UK current account - £250,000. I do not think that purchasing property in the UK is the right move at the moment and although I could buy a rental property mortgage free with this money, I did not want to do so as it would not be the property we would live in on our return to the UK (i.e. I would be paying SDLT and other fees twice over).

Now that SDLT is 0 on purchases up to 500k, I am wondering whether property is in fact the right investment or if there is any other option that can get my money working for me rather than just sitting in a current account. The issue is of course, this is the money I will use for a deposit on my next house in the UK, so I need to access it relatively quickly (i.e. 6 months notice ideally) so I can’t lock it up for too long.

I also have c.40kGBP in the UK that I can lock up for longer but I have putting off investing given the current climate. Is the best thing to simply follow the SimplyFI method and go down the ETF route. I am super risk adverse (as is my other half) and I need to do something that generates a return but that isn’t going to cause me much worry (in the knowledge that of course, all investments are subject to a degree of risk.

Many thanks
I am guessing you cannot do new ISAs while non-resident in the UK for tax purposes? Just so when you return you have not lost those allowances.

My own feeling is that the Stamp Duty drop will "bring forward" sales. However afterwards the market will just adjust - prices will fall by some proportion of the restored SDRT, and demand will drop as well.

Unless you feel owning a home as an investment in the UK is a good idea - and the government has done pretty much everything to discourage Buy To Let (don't they pay a different and higher SDRT?) - then I would not commit to a UK property (that you had no intention of living in) just because of an SDRT holiday. As we will go through what is possibly a hard Brexit in January, it might also be worth seeing what that does to market confidence (London house prices are down at least 10% in nominal terms since 2016, and adjusted for inflation that's more like 16-18%, at least that's my read of it "on the street" as opposed to what house price indices might be saying).

There isn't really an opportunity that can "get your money working" that does not also increase your risk. Gilts (UK govt bonds) actually yield less than Notice accounts at banks. You could buy property (with a mortgage) and that would leverage up your risk & return. Equities offer higher long run returns but are volatile - in a bear market they can easily drop 50%.

Generally you should set your asset allocation and stick to it, thick or thin. However you should match the duration of your investment to the duration of your need for that cash. So if you think you will buy a home in the next 5 years say, either bank deposits, notice accounts or Short Term bond funds.

If I had a forecast it would be "expect volatility". With everything going on in the world, Covid-19, recession, political factors, markets are sure to be jumpy.
Bdzyd
Posts: 5
Joined: Sun Jul 19, 2020 2:09 am

Re: Proceeds from UK house sale

Post by Bdzyd »

My philosophy on this is to dump all available funds into my two-fund etf portfolio. I invest quarterly and stick to it. However, I have already set this up after much research and learning. My partner and I do not own any property and for reasons of liquidity and uncertain future plans, we have decided not to invest in property. Setting up an investment account takes time and thought-but it is well worth it.

The advantages of investing in equities/bonds: You can always sell if you need the cash to buy more property. ETFs are very liquid, you can have cash in hand in a matter of days (the delay mostly being in moving funds between your own accounts)

You say you will have 6 months notice, so you can simply stop sending savings over to your ETFs for that 6 months and save up a substantial portion of the cost of the house then only liquidate some of original invested money.
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