Wealth Check: A house is the magnum opus of an opera singer


The problem: Should an Aussie buy a home in the UK?

Australian-born opera singer Daniella Ehrlich, in the UK on a "highly-skilled work permit", is seeking to invest savings built up over the past few years in a first home.

But the full-time Welsh National Opera (WNO) chorus singer faces a dilemma: should she buy here or wait until she returns to Sydney?

Daniella, 34, has been renting in Cardiff for two years and plans to stay in the UK until 2008. "I've found a property I like [here] for £130,000, but if I buy, I would either have to sell my home when I come to leave or rent it out," she says. "I wonder if buying in Australia might turn out to be a better investment, and might make more sense if I decide to go back there when I leave the UK."

She is also toying with the idea of going to continental Europe to try to find work as a freelance soloist. "If I do this, I worry whether I'll be able to afford my mortgage," she adds.

"I have many decisions to make about my life - let alone my finances - and wonder if I should hold fire on buying until I know what my future holds."

Daniella earns around £29,000 a year with the WNO, and another £10,000 from extra performances and teaching.

She has been disciplined about building up her savings and has £12,000 in a Lloyds TSB offshore international savings account, paying 1.65 per cent.

She has also taken steps to clear her debts. "I spent two years in New York doing my masters of music degree, but I don't have any student debt remaining as I managed to pay [it] off by working as a waitress and a bartender."

Daniella is currently paying £475 a month in rent, not including bills, and is a member of her company pension scheme, contributing £22 a week. She has no protection policies in place.

The cure: Keep the property in the wings but save smarter

Buying a property may not be the best idea for Daniella at the moment, says Keith Churchouse of independent financial adviser (IFA) Churchouse Financial Planning. "I suggest she stays renting to give her flexibility while she considers what she wants to do next. A quick jump on the property ladder now may tie her down in future decisions."

Justin Modray at IFA Best-invest agrees: "Daniella needs to think very carefully about buying, especially as she may well move overseas in the next couple of years, and may also go freelance. Two years is too short a period to view the property as an investment."

Should she try to sell in this time, she would be gambling on the home rising enough in value to offset the considerable fees of both purchasing and selling.

Savings and debts

Mr Modray says there is no advantage for Daniella in holding an offshore account. "She is a UK tax resident and must pay income tax on the interest received from savings - regardless of whether they are onshore or offshore." He recommends she move her money to a higher-paying account such as Bradford & Bingley's eSavings 2, which offers a rate of 4.85 per cent.

Mr Churchouse urges Daniella to make use of her annual £3,000 tax-free mini cash individual savings account (ISA) allowance. "National Savings & Investments is currently paying 5.3 per cent on its Direct ISA, and Yorkshire building society is paying 5.25 per cent," he says. "An equity ISA is a medium- to long-term investment, and not suitable for Daniella as she may leave the country in the next few years."

Property

If Daniella does buy the Cardiff property for £130,000 and takes out a mortgage for £123,000, say, she could expect to make monthly repayments of around £700, says Amanda Davidson at IFA Baigrie Davies. "This is £225 more than she is paying in rent.

"Looking at her budget, it seems she could afford this, but she needs to decide if she is happy to pay the extra amount."

If Daniella opts to let her home out, she must ensure the rent covers the mortgage payments, adds Ms Davidson.

Retirement

With her employer's contribution, Daniella's monthly pension payments work out at around 8 per cent of her salary. "She should look to increase this up to about 20 per cent if she wants to retire on a reasonable income," says Ms Davidson.

When Daniella goes back to Australia, she must act quickly to turn her British retirement funds into an Australian pension. "She needs to make [a pension] transfer within six months of returning or suffer additional tax payments."

Protection

Mr Modray recommends that Daniella find out what protection policies, if any, are offered by her employer. If none, it could be worth taking out income protection insurance, although "it's not cheap".

These policies vary enormously. Some pay out on a claim if you can't carry on your chosen profession because of illness or injury, while others will pay out only if you can't do any job.

Daniella must take specialist advice to make sure she is aware of her options.

If you would like a makeover, write to Sam Dunn at The Independent on Sunday, Independent House, 191 Marsh Wall, London E14 9RS, or email s.dunn@independent.co.uk

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
John Travolta is a qualified airline captain and employed the pilot with his company, Alto
people'That was the lowest I’d ever felt'
Life and Style
healthIt isn’t greasy. It doesn’t smell. And moreover, it costs nothing
News
i100

Other places that have held independence referendums
Arts and Entertainment
Pharrell dismissed the controversy surrounding
musicThe singer said 'the last thing I want to do is degrade'
PROMOTED VIDEO
News
news

Arts and Entertainment
Blossoming love: Colin Firth as Stanley and Emma Stone as Sophie, in 'Magic in the Moonlight'
film

Actors star in Woody Allen's 'Magic in the Moonlight'

News
A male driver reverses his Vauxhall Astra from a tow truck
newsThe 'extremely dangerous' attempt to avoid being impounded has been heavily criticised
News
peopleThe Times of India said actress should treat it as a 'compliment'
Arts and Entertainment
Jack Huston is the new Ben-Hur
film

It scooped up an unprecedented 11 Academy Awards when it was first remade in 1959

News
news

Watch this commuter wage a one-man war against the Circle Line
Property
Home body: Badger stays safe indoors
lifeShould we feel guilty about keeping cats inside?
Life and Style
fashion

Olympic diver has made his modelling debut for Adidas

Arts and Entertainment
Maxine Peake plays Hamlet at Manchester's Royal Exchange
theatreReview: Maxine Peake brings emotional ferocity to Shakespeare's starring part
Travel
travel

...and the perfect time to visit them

Sport
Jonas Gutierrez (r) competes with Yaya Toure (l)
football

Newcastle winger reveals he has testicular cancer - and is losing his trademark long hair as a result

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Trainee Recruitment Consultant Birmingham

    £18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

    Trainee Recruitment Consultant - Birmingham - Real Staffing

    £18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

    Recruitment Consultant - Soho - IT, Pharma, Public Sector

    £20000 - £25000 per annum + OTE £35,000 first year: SThree: The SThree group i...

    Sales Executive

    £20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

    Day In a Page

    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    Exclusive extract from Janis Winehouse's poignant new memoir
    Is this the role to win Cumberbatch an Oscar?

    Is this the role to win Cumberbatch an Oscar?

    The Imitation Game, film review
    England and Roy Hodgson take a joint step towards redemption in Basel

    England and Hodgson take a joint step towards redemption

    Welbeck double puts England on the road to Euro 2016
    Relatives fight over Vivian Maier’s rare photos

    Relatives fight over Vivian Maier’s rare photos

    Pictures removed from public view as courts decide ownership
    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    Donatella Versace at New York Fashion Week